UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4494
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The Gabelli Asset Fund
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Annual Report to Shareholders is attached herewith.
THE GABELLI ASSET FUND
ANNUAL REPORT
DECEMBER 31, 2003
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a Fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2003 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
After three years of nothing but coal in their stockings, equity investors
enjoyed a bountiful Christmas in 2003. Small-cap, mid-cap and technology sector
investors received the biggest gifts, with the Russell 2000, Russell Mid-Cap and
Nasdaq Composite Indices gaining 47.3%, 40.1%, and 50.0% respectively during
2003, versus the Standard & Poor's ("S&P") 500 Index's 28.7% advance. We are
pleased to report that the Gabelli Asset Fund's (the "Fund") portfolio surpassed
our long-term goal of ten percent plus inflation, rising 30.6% in 2003.
As is often the case following major market turns, some of last year's
biggest laggards were among this year's biggest winners, most notably telecom
equipment makers Corning and Lucent Technologies. Our wireless communications
industry investments also excelled, with Rogers Wireless and Nextel
Communications near the top of our leader board. Larger Fund holdings such as
Neiman Marcus and Navistar also boosted returns. Consistent with trends in the
market, our small and mid-cap sector holdings outperformed large-cap portfolio
companies.
Looked at from a different point of view, our success in 2003 was due to
the investments we made prior to the beginning of the year. We have low
portfolio turnover.
Our pharmaceuticals industry investments disappointed, with Johnson &
Johnson, Merck and Schering-Plough finishing 2003 in the red. Our utilities
investments proved mixed with AES Corp. more than doubling but with Southwest
Gas and DTE Energy posting losses for the year.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 24, 2004
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GABELLI ASSET FUND,
THE CONSUMER PRICE INDEX +10% AND THE S&P 500 INDEX
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
Gabelli Asset Fund Consumer Price Index S&P 500 Index
+0.16% +11.60% -11.89%
3/3/86 10,000 10,000 10,000
12/86 11,280 11,110 10,930
12/87 13,107 12,713 11,487
12/88 17,184 14,546 13,383
12/89 21,686 16,677 17,612
12/90 20,602 19,364 17,066
12/91 24,331 21,893 22,271
12/92 27,956 24,717 23,384
12/93 34,051 27,869 25,746
12/94 34,017 31,400 26,081
12/95 42,530 35,337 35,884
12/96 48,229 40,044 44,137
12/97 66,590 44,729 58,857
12/98 77,178 49,923 75,749
12/99 99,166 56,263 91,679
12/00 96,816 63,802 83,336
12/01 96,971 71,203 73,427
12/02 83,133 80,032 57,207
12/03 108,547 89,556 73,608
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and
graph do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2003 (A)
SINCE
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR 15 YEAR INCEPTION (B)
------- ------ ------ ------ ------ ------- -------------
Gabelli Asset Fund ................ 14.38% 30.57% 3.89% 7.06% 12.28% 13.07% 14.30%
S&P 500 Index ..................... 12.17% 28.67% (4.05)% (0.57)% 11.06% 12.20% 12.02%
Dow Jones Industrial Average ...... 13.33% 28.27% 1.01% 4.57% 13.09% 13.88% 13.69%
Nasdaq Composite Index ............ 12.11% 50.01% (6.75)% (1.79)% 9.94% 11.69% 10.11%
(a) Returns represent past performance and do not guarantee future results.
Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses. 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. The Dow
Jones Industrial Average is an unmanaged index of 30 large industrial
stocks. The S&P 500 Index and the Nasdaq Composite Index are unmanaged
indicators of stock market performance. Dividends are considered reinvested
(except for the Nasdaq Composite Index). Performance for periods less than
one year is not annualized.
(b) From commencement of investment operations on March 3, 1986.
2
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------- ---- ------
COMMON STOCKS -- 94.3%
AEROSPACE -- 0.9%
84,000 Boeing Co. ................... $ 2,874,265 $ 3,539,760
115,000 Lockheed Martin Corp. ........ 3,045,114 5,911,000
90,000 Northrop Grumman Corp. ....... 5,536,641 8,604,000
-------------- --------------
11,456,020 18,054,760
AGRICULTURE -- 0.7%
800,000 Archer-Daniels-Midland Co. ... 11,058,748 12,176,000
15,000 Delta & Pine Land Co. ........ 260,292 381,000
40,529 Monsanto Co. ................. 647,780 1,166,425
-------------- --------------
11,966,820 13,723,425
-------------- --------------
AUTOMOTIVE -- 0.6%
195,000 General Motors Corp. ......... 8,533,865 10,413,000
30,000 Volkswagen AG ................ 1,246,577 1,670,661
-------------- --------------
9,780,442 12,083,661
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 4.1%
58,000 BorgWarner Inc. .............. 2,146,710 4,934,060
125,000 CLARCOR Inc. ................. 1,777,793 5,512,500
570,000 Dana Corp. ................... 8,891,297 10,459,500
210,000 Federal-Mogul Corp.+ ......... 467,782 47,250
650,000 GenCorp Inc. ................. 2,404,331 7,000,500
500,000 Genuine Parts Co. ............ 12,026,034 16,600,000
145,000 Johnson Controls Inc. ........ 5,174,020 16,837,400
145,000 Midas Inc.+ .................. 1,808,827 2,073,500
305,000 Modine Manufacturing Co. ..... 7,126,610 8,228,900
198,000 Scheib (Earl) Inc.+ .......... 1,389,292 485,100
205,000 Standard Motor
Products Inc. .............. 3,007,687 2,490,750
70,000 Superior Industries
International Inc. ......... 1,780,210 3,046,400
385,000 Tenneco Automotive Inc.+ ..... 2,846,771 2,575,650
100,000 TransPro Inc.+ ............... 788,321 419,000
-------------- --------------
51,635,685 80,710,510
-------------- --------------
AVIATION: PARTS AND SERVICES -- 1.9%
75,000 Aviall Inc.+ ................. 750,124 1,163,250
264,000 Curtiss-Wright Corp. ......... 1,617,012 11,882,640
67,000 Curtiss-Wright Corp., Cl. B .. 2,209,093 3,008,300
215,000 Fairchild Corp., Cl. A+ ...... 1,335,029 1,083,600
100,000 Kaman Corp., Cl. A ........... 1,413,770 1,273,000
172,460 Precision Castparts Corp. .... 4,272,056 7,831,409
109,000 Sequa Corp., Cl. A+ .......... 4,666,598 5,341,000
104,000 Sequa Corp., Cl. B+ .......... 5,329,579 5,189,600
-------------- --------------
21,593,261 36,772,799
-------------- --------------
BROADCASTING -- 1.6%
20,000 Corus Entertainment Inc.,
Cl. B ...................... 64,982 425,614
55,000 Fisher
Communications Inc.+ ....... 3,177,478 2,805,000
230,000 Granite Broadcasting Corp.+ .. 1,109,343 379,500
MARKET
SHARES COST VALUE
------- ---- ------
300,000 Gray Television Inc. ......... $ 3,796,331 $ 4,536,000
15,000 Gray Television Inc., Cl. A .. 163,763 227,550
165,000 Grupo Televisa SA, ADR ....... 4,491,076 6,576,900
170,000 Liberty Corp. ................ 6,268,553 7,682,300
50,000 Lin TV Corp., Cl. A+ ......... 1,128,137 1,290,500
190,000 Paxson Communications
Corp.+ ..................... 1,674,514 731,500
400,000 Television Broadcasts Ltd. ... 1,815,551 2,019,682
230,000 Young Broadcasting Inc.,
Cl. A+ ..................... 5,101,700 4,609,200
-------------- --------------
28,791,428 31,283,746
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.0%
80,111 Huttig Building
Products Inc.+ ............. 243,014 240,333
-------------- --------------
BUSINESS SERVICES -- 1.1%
480,000 Cendant Corp.+ ............... 4,891,205 10,689,600
200,000 Ecolab Inc. .................. 1,876,865 5,474,000
10,000 Imation Corp. ................ 203,344 351,500
66,500 Landauer Inc. ................ 412,455 2,711,870
119,000 Nashua Corp.+ ................ 1,745,996 1,011,500
50,000 Roto-Rooter Inc. ............. 1,509,519 2,305,000
-------------- --------------
10,639,384 22,543,470
-------------- --------------
CABLE -- 3.3%
2,035,000 Cablevision Systems Corp.,
Cl. A+ ..................... 21,347,420 47,598,650
30,000 Charter Communications
Inc., Cl. A+ ............... 138,876 120,600
300,000 Comcast Corp., Cl. A+ ........ 8,368,051 9,861,000
40,000 Comcast Corp., Cl. A,
Special+ ................... 306,462 1,251,200
60,000 Shaw Communications Inc.,
Cl. B ...................... 164,952 936,506
80,000 Shaw Communications Inc.,
Cl. B, Non-Voting .......... 312,647 1,241,600
475,000 UnitedGlobalCom Inc.,
Cl. A+ ..................... 3,883,814 4,028,000
-------------- --------------
34,522,222 65,037,556
-------------- --------------
CLOSED END FUNDS -- 0.1%
80,734 Royce Value Trust Inc. ....... 942,452 1,395,891
-------------- --------------
COMMERCIAL SERVICES -- 0.1%
50,000 ChoicePoint Inc.+ ............ 1,773,215 1,904,500
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.9%
270,000 Andrew Corp.+ ................ 943,309 3,107,700
600,000 Corning Inc.+ ................ 4,374,877 6,258,000
800,000 Lucent Technologies Inc.+ .... 4,533,822 2,272,000
300,000 Motorola Inc. ................ 3,094,981 4,221,000
240,000 Nortel Networks Corp.+ ....... 1,202,804 1,015,200
-------------- --------------
14,149,793 16,873,900
-------------- --------------
See accompanying notes to financial statements.
3
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------- ---- ------
COMMON STOCKS (CONTINUED)
COMPUTER HARDWARE -- 0.1%
100,000 Maxtor Corp.+ ................ $ 924,280 $ 1,110,000
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.3%
15,000 Computer Associates
International Inc. ......... 205,450 410,100
35,000 Electronic Data
Systems Corp. .............. 488,644 858,900
190,000 EMC Corp.+ ................... 2,665,848 2,454,800
48,000 Jupitermedia Corp.+ .......... 241,259 220,800
100,000 PeopleSoft Inc.+ ............. 1,803,358 2,280,000
26,026 Telecom Italia Media SpA+ .... 26,184 12,934
-------------- --------------
5,430,743 6,237,534
-------------- --------------
CONSUMER PRODUCTS -- 4.9%
26,300 Alberto-Culver Co., Cl. B .... 1,031,027 1,659,004
15,000 Altria Group Inc. ............ 471,973 816,300
11,000 Christian Dior SA ............ 307,335 666,410
195,000 Church & Dwight Co. Inc. ..... 1,923,569 7,722,000
1,000 Clorox Co. ................... 30,050 48,560
60,000 Department 56 Inc.+ .......... 651,832 786,000
95,000 Eastman Kodak Co. ............ 2,554,763 2,438,650
345,000 Energizer Holdings Inc.+ ..... 5,701,130 12,958,200
120,000 Fortune Brands Inc. .......... 2,780,745 8,578,800
298,800 Gallaher Group plc, ADR ...... 4,766,373 12,710,952
340,000 Gillette Co. ................. 10,616,028 12,488,200
3,000 Givaudan SA .................. 1,028,013 1,557,308
38,000 Harley-Davidson Inc. ......... 95,712 1,806,140
40,000 International Flavors &
Fragrances Inc. ............ 773,336 1,396,800
210,000 Mattel Inc. .................. 3,080,668 4,046,700
55,000 Maytag Corp. ................. 1,540,092 1,531,750
68,000 National Presto
Industries Inc. ............ 2,314,244 2,458,200
190,000 Procter & Gamble Co. ......... 13,165,749 18,977,200
10,000 Syratech Corp.+ .............. 2,000 4,750
160,000 Wolverine World Wide Inc. .... 2,232,256 3,260,800
-------------- --------------
55,066,895 95,912,724
-------------- --------------
CONSUMER SERVICES -- 1.8%
800 eBay Inc.+ ................... 24,652 51,672
850,000 InterActiveCorp.+ ............ 6,584,957 28,840,500
298,650 Rollins Inc. ................. 3,453,596 6,734,558
-------------- --------------
10,063,205 35,626,730
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 5.6%
145,400 Acuity Brands Inc. ........... 2,380,500 3,751,320
5,000 Anixter International Inc.+ .. 45,044 129,400
200,000 Cooper Industries Ltd., Cl. A 8,199,845 11,586,000
440,000 Crane Co. .................... 6,818,102 13,525,600
100,000 Gardner Denver Inc.+ ......... 1,461,588 2,387,000
250,000 GATX Corp. ................... 5,594,297 6,995,000
40,000 General Electric Co. ......... 1,153,580 1,239,200
221,100 Greif Inc., Cl. A ............ 4,775,892 7,851,261
MARKET
SHARES COST VALUE
------- ---- ------
30,000 Harbor Global Co. Ltd.+ ...... $ 52,965 $ 273,000
450,000 Honeywell International Inc. . 14,675,742 15,043,500
300,000 ITT Industries Inc. .......... 9,410,611 22,263,000
150,000 Katy Industries Inc.+ ........ 1,369,925 856,500
320,000 Lamson & Sessions Co.+ ....... 1,748,797 1,846,400
40,000 MagneTek Inc.+ ............... 309,670 263,600
225,000 Myers Industries Inc. ........ 1,557,014 2,727,000
38,000 Pentair Inc. ................. 1,028,258 1,736,600
305,000 Sensient Technologies Corp. .. 5,902,692 6,029,850
90,000 Smiths Group plc ............. 1,005,041 1,064,964
155,000 Thomas Industries Inc. ....... 1,971,325 5,372,300
75,000 Trinity Industries Inc. ...... 931,715 2,313,000
70,000 Tyco International Ltd. ...... 954,067 1,855,000
-------------- --------------
71,346,670 109,109,495
-------------- --------------
ELECTRONICS -- 1.5%
460,000 Agere Systems Inc., Cl. B+ ... 1,625,270 1,334,000
2,400 Fargo Electronics+ ........... 17,016 30,528
3,000 Hitachi Ltd., ADR ............ 172,200 180,210
13,000 Kyocera Corp., ADR ........... 448,062 871,000
25,000 Molex Inc., Cl. A ............ 719,620 734,000
40,000 Samsung Electronics Co.
Ltd., GDR .................. 7,538,426 7,570,288
138,000 Sony Corp., ADR .............. 5,468,915 4,784,460
210,000 Texas Instruments Inc. ....... 5,357,155 6,169,800
300,000 Thomas & Betts Corp. ......... 5,602,016 6,867,000
-------------- --------------
26,948,680 28,541,286
-------------- --------------
ENERGY AND UTILITIES -- 6.0%
160,000 AES Corp.+ ................... 631,439 1,510,400
95,000 AGL Resources Inc. ........... 1,656,210 2,764,500
125,000 Allegheny Energy Inc.+ ....... 1,142,942 1,595,000
240,000 BP plc, ADR .................. 6,441,908 11,844,000
35,000 Brown (Tom) Inc.+ ............ 576,200 1,128,750
125,000 Burlington Resources Inc. .... 4,842,969 6,922,500
25,000 CH Energy Group Inc. ......... 1,040,745 1,172,500
170,000 ChevronTexaco Corp. .......... 9,356,732 14,686,300
95,000 ConocoPhillips ............... 5,513,340 6,229,150
20,000 Constellation Energy
Group Inc. ................. 484,262 783,200
62,000 Devon Energy Corp. ........... 1,695,494 3,550,120
75,000 DPL Inc. ..................... 1,506,159 1,566,000
20,000 DTE Energy Co. ............... 832,127 788,000
590,000 Duke Energy Corp. ............ 10,826,500 12,065,500
150,000 Duquesne Light
Holdings Inc. .............. 2,292,412 2,751,000
35,000 Edison International+ ........ 593,330 767,550
260,000 El Paso Corp. ................ 2,784,201 2,129,400
286,700 El Paso Electric Co.+ ........ 3,312,006 3,827,445
140,000 Energy East Corp. ............ 2,829,373 3,136,000
55,000 EOG Resources Inc. ........... 503,773 2,539,350
310,000 Exxon Mobil Corp. ............ 6,624,170 12,710,000
8,000 FPL Group Inc. ............... 463,741 523,360
31,625 GlobalSantaFe Corp. .......... 743,538 785,249
See accompanying notes to financial statements.
4
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------- ---- ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
10,000 Halliburton Co. .............. $ 104,525 $ 260,000
54,000 Kerr-McGee Corp. ............. 2,987,951 2,510,460
200,000 Mirant Corp.+ ................ 912,239 78,000
180,000 NiSource Inc.+ ............... 360,000 460,800
200,000 Northeast Utilities .......... 3,859,076 4,034,000
100,000 Progress Energy Inc., CVO+ ... 52,000 23,000
50,000 Royal Dutch Petroleum Co. .... 2,278,059 2,619,500
22,500 SJW Corp. .................... 2,210,933 2,008,125
325,000 Southwest Gas Corp. .......... 5,939,311 7,296,250
60,000 TXU Corp. .................... 1,117,420 1,423,200
13,000 UIL Holdings Corp. ........... 566,946 586,300
-------------- --------------
87,082,031 117,074,909
-------------- --------------
ENTERTAINMENT -- 8.1%
19,406 EMI Group plc ................ 75,408 55,149
195,000 EMI Group plc, ADR ........... 1,693,472 1,108,341
180,000 Fox Entertainment Group
Inc., Cl. A+ ............... 4,181,356 5,247,000
200,000 GC Companies Inc.+ ........... 218,000 70,000
400,000 Gemstar-TV Guide
International Inc.+ ........ 1,667,924 2,020,000
4,650,000 Liberty Media Corp., Cl. A+ .. 14,119,238 55,288,500
360,000 Metro-Goldwyn-Mayer Inc.+ .... 5,681,407 6,152,400
12,000 Regal Entertainment Group,
Cl. A ...................... 228,000 246,240
300,000 Six Flags Inc.+ .............. 2,370,300 2,256,000
470,000 The Walt Disney Co. .......... 9,995,873 10,965,100
1,400,000 Time Warner Inc.+ ............ 18,346,908 25,186,000
835,000 Viacom Inc., Cl. A ........... 20,051,192 36,965,450
540,000 Vivendi Universal SA, ADR+ ... 11,132,933 13,111,200
60,000 World Wrestling
Entertainment Inc. ......... 612,234 786,000
-------------- --------------
90,374,245 159,457,380
-------------- --------------
ENVIRONMENTAL SERVICES -- 1.3%
350,000 Allied Waste Industries Inc.+ 3,121,796 4,858,000
300,000 Republic Services Inc. ....... 3,560,581 7,689,000
425,000 Waste Management Inc. ........ 7,906,058 12,580,000
-------------- --------------
14,588,435 25,127,000
-------------- --------------
EQUIPMENT AND SUPPLIES -- 7.6%
278,000 AMETEK Inc. .................. 3,223,059 13,416,280
3,000 Amphenol Corp., Cl. A+ ....... 45,862 191,790
70,000 Caterpillar Inc. ............. 927,858 5,811,400
105,000 CIRCOR International Inc. .... 907,143 2,530,500
190,000 Crown Holdings Inc.+ ......... 856,577 1,721,400
150,000 CTS Corp. .................... 755,149 1,725,000
2,000 Danaher Corp. ................ 70,641 183,500
400,000 Deere & Co. .................. 6,703,065 26,020,000
5,500 DENTSPLY International Inc. .. 209,434 248,435
206,000 Donaldson Co. Inc. ........... 1,566,157 12,186,960
323,150 Fedders Corp. ................ 1,384,241 2,326,680
MARKET
SHARES COST VALUE
------- ---- ------
423,800 Flowserve Corp.+ ............. $ 5,931,619 $ 8,848,944
170,000 Gerber Scientific Inc.+ ...... 1,650,756 1,353,200
195,000 GrafTech International Ltd.+ . 3,023,123 2,632,500
385,000 IDEX Corp. ................... 3,273,588 16,012,150
2,000 Imagistics International Inc.+ 39,950 75,000
12,000 Ingersoll-Rand Co., Cl. A .... 501,720 814,560
800,000 Interpump Group SpA .......... 3,144,069 3,582,240
100,000 Lufkin Industries Inc. ....... 1,810,811 2,879,000
18,000 Manitowoc Co. Inc. ........... 131,305 561,600
37,333 Met-Pro Corp. ................ 338,090 602,928
560,000 Navistar International Corp.+ 10,418,723 26,818,400
30,000 PACCAR Inc. .................. 522,021 2,553,600
10,000 Sealed Air Corp.+ ............ 168,679 541,400
150,000 Sybron Dental
Specialties Inc.+ .......... 2,817,765 4,215,000
30,000 Valmont Industries Inc. ...... 242,908 694,500
435,000 Watts Water Technologies
Inc., Cl. A ................ 5,006,660 9,657,000
120,000 Weir Group plc ............... 504,947 550,473
-------------- --------------
56,175,920 148,754,440
-------------- --------------
FINANCIAL SERVICES -- 5.5%
25,000 Aegon NV, ADR ................ 393,387 370,000
15,480 Alleghany Corp.+ ............. 2,874,528 3,444,300
25,000 Allstate Corp. ............... 563,281 1,075,500
360,000 American Express Co. ......... 7,870,155 17,362,800
55,000 Argonaut Group Inc.+ ......... 1,333,591 854,700
60,000 Bank of New York Co. Inc. .... 2,076,956 1,987,200
30,000 Bank One Corp. ............... 793,020 1,367,700
220 Berkshire Hathaway Inc.,
Cl. A+ ..................... 874,549 18,535,000
50,000 BKF Capital Group Inc.+ ...... 933,375 1,234,000
35,000 Commerzbank AG ............... 624,519 686,491
112,000 Commerzbank AG, ADR .......... 2,379,080 2,185,467
155,000 Deutsche Bank AG, ADR ........ 7,004,175 12,742,550
15,000 FleetBoston Financial Corp. .. 314,250 654,750
25,000 H&R Block Inc. ............... 478,832 1,384,250
15,000 Janus Capital Group Inc. ..... 220,569 246,150
6,000 Lehman Brothers
Holdings Inc. .............. 54,150 463,320
40,000 Leucadia National Corp. ...... 992,730 1,844,000
100,000 Mellon Financial Corp. ....... 3,451,607 3,211,000
23,000 Merrill Lynch & Co. Inc. ..... 948,745 1,348,950
38,000 Metris Companies Inc. ........ 347,786 168,720
390,000 Midland Co. .................. 2,003,425 9,211,800
100,000 MONY Group Inc.+ ............. 3,160,062 3,129,000
190,000 Phoenix Companies Inc. ....... 2,908,583 2,287,600
30,000 PNC Financial Services Group . 1,456,850 1,641,900
2,500 Prudential Financial Inc. .... 68,750 104,425
22,000 Schwab (Charles) Corp. ....... 274,010 260,480
70,000 St. Paul Companies Inc. ...... 2,440,394 2,775,500
85,000 State Street Corp. ........... 661,975 4,426,800
20,000 SunTrust Banks Inc. .......... 424,879 1,430,000
30,000 T. Rowe Price Group Inc. ..... 1,012,984 1,422,300
See accompanying notes to financial statements.
5
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
30,000 Unitrin Inc. ................. $ 882,033 $ 1,242,300
8,500 Value Line Inc. .............. 136,515 424,150
100,000 Wachovia Corp. ............... 3,042,448 4,659,000
120,000 Waddell & Reed Financial
Inc., Cl. A ................ 2,485,919 2,815,200
-------------- --------------
55,488,112 106,997,303
-------------- --------------
FOOD AND BEVERAGE -- 8.7%
20,000 Allied Domecq plc, ADR ....... 467,434 631,800
15,000 Brau und Brunnen AG+ ......... 198,150 1,229,818
175,500 Brown-Forman Corp., Cl. A .... 8,578,881 17,014,725
35,000 Cadbury Schweppes plc, ADR ... 860,906 1,046,150
130,000 Campbell Soup Co. ............ 3,556,101 3,484,000
105,000 Coca-Cola Co. ................ 3,236,639 5,328,750
60,000 Coca-Cola Enterprises Inc. ... 1,074,778 1,312,200
250,000 Corn Products
International Inc. ......... 6,435,426 8,612,500
180,587 Del Monte Foods Co.+ ......... 1,494,335 1,878,105
318,000 Diageo plc, ADR .............. 11,903,832 16,809,480
7,400 Farmer Brothers Co. .......... 975,514 2,303,250
290,000 Flowers Foods Inc. ........... 2,727,372 7,482,000
240,000 General Mills Inc. ........... 6,475,473 10,872,000
1,167,800 Grupo Bimbo SA de CV,
Cl. A ...................... 2,042,187 2,191,720
10,000 Hain Celestial Group Inc.+ . 141,134 232,100
200,000 Heinz (H.J.) Co. ............. 7,241,965 7,286,000
57,000 Hershey Foods Corp. .......... 1,937,482 4,388,430
315,000 Kellogg Co. .................. 7,839,056 11,995,200
100,000 Kerry Group plc, Cl. A ....... 1,179,128 1,853,887
33,000 LVMH Moet Hennessy
Louis Vuitton SA ........... 1,150,670 2,401,741
9,000 Nestle SA .................... 1,868,526 2,248,635
1,066,800 PepsiAmericas Inc. ........... 13,468,522 18,263,616
375,000 PepsiCo Inc. ................. 9,501,772 17,482,500
150,000 Ralcorp Holdings Inc.+ ....... 2,240,767 4,704,000
20,000 Smucker (J.M.) Co. ........... 547,733 905,800
144,700 Tootsie Roll Industries Inc. . 2,005,314 5,209,200
249,000 Wrigley (Wm.) Jr. Co. ........ 7,564,004 13,996,290
-------------- --------------
106,713,101 171,163,897
-------------- --------------
HEALTH CARE -- 2.7%
47,000 Amgen Inc.+ .................. 216,038 2,904,600
3,000 ArthroCare Corp.+ ............ 34,530 73,500
700 Bio-Rad Laboratories Inc.,
Cl. B+ ..................... 25,810 40,600
45,000 Biogen Idec Inc.+ ............ 416,226 1,655,100
4,000 Biomet Inc. .................. 120,840 145,640
190,000 Bristol-Myers Squibb Co. ..... 5,392,595 5,434,000
40,000 Chiron Corp.+ ................ 550,315 2,279,600
1,000 CONMED Corp.+ ................ 15,430 23,800
22,000 Eli Lilly & Co. .............. 1,313,580 1,547,260
20,000 Exactech Inc.+ ............... 303,566 295,000
MARKET
SHARES COST VALUE
------- ---- ------
12,000 Henry Schein Inc.+ ........... $ 584,789 $ 810,960
7,500 INAMED Corp.+ ................ 342,696 360,450
1,000 Integra LifeSciences
Holdings+ .................. 19,480 28,630
10,000 Interpore International Inc.+ 84,040 130,000
25,000 Inverness Medical
Innovations Inc.+ .......... 424,748 544,500
55,000 Invitrogen Corp.+ ............ 2,725,343 3,850,000
60,000 Johnson & Johnson ............ 624,750 3,099,600
25,000 Medco Health
Solutions Inc.+ ............ 528,675 849,750
155,000 Merck & Co. Inc. ............. 4,827,898 7,161,000
5,500 Orthofix International NV+ ... 155,186 269,390
4,000 OrthoLogic Corp.+ ............ 13,880 24,520
4,000 Osteotech Inc.+ .............. 26,900 35,200
16,000 Patterson Dental Co.+ ........ 702,130 1,026,560
425,000 Pfizer Inc. .................. 7,013,003 15,015,250
150,000 Schering-Plough Corp. ........ 3,107,230 2,608,500
1,000 Stryker Corp. ................ 65,440 85,010
70,000 Women First
HealthCare Inc.+ ........... 124,375 104,300
1,000 Wright Medical Group Inc.+ ... 16,460 30,440
55,000 Wyeth ........................ 2,169,854 2,334,750
1,000 Young Innovations Inc. ....... 30,000 36,000
-------------- --------------
31,975,807 52,803,910
-------------- --------------
HOTELS AND GAMING -- 2.6%
90,000 Aztar Corp.+ ................. 906,574 2,025,000
153,100 Boca Resorts Inc., Cl. A+ .... 1,629,715 2,290,376
365,000 Gaylord Entertainment Co.+ ... 9,694,168 10,895,250
40,000 GTECH Holdings Corp. ......... 404,713 1,979,600
12,000 Harrah's Entertainment Inc. .. 113,002 597,240
2,750,000 Hilton Group plc ............. 9,857,105 11,064,289
740,000 Hilton Hotels Corp. .......... 8,392,741 12,676,200
60,000 Mandalay Resort Group ........ 726,750 2,683,200
25,000 MGM Mirage+ .................. 619,881 940,250
220,000 Park Place
Entertainment Corp.+ ....... 1,231,329 2,382,600
100,000 Starwood Hotels & Resorts
Worldwide Inc. ............. 2,620,305 3,597,000
50,000 Trump Hotels & Casino
Resorts Inc.+ .............. 158,680 108,000
-------------- --------------
36,354,963 51,239,005
-------------- --------------
METALS AND MINING -- 1.9%
50,000 Alcoa Inc. ................... 1,349,157 1,900,000
255,000 Barrick Gold Corp. ........... 3,244,173 5,791,050
12,525 Freeport-McMoRan Copper
& Gold Inc., Cl. B ......... 272,500 527,678
50,000 Kinross Gold Corp.+ .......... 359,224 399,500
515,000 Newmont Mining Corp. ......... 9,699,426 25,034,150
170,000 Placer Dome Inc. ............. 1,576,429 3,044,700
-------------- --------------
16,500,909 36,697,078
-------------- --------------
See accompanying notes to financial statements.
6
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------- ---- ------
COMMON STOCKS (CONTINUED)
PAPER AND FOREST PRODUCTS -- 0.0%
10,000 MeadWestvaco Corp. ........... $ 207,620 $ 297,500
-------------- --------------
PUBLISHING -- 5.1%
225,000 Belo Corp., Cl. A ............ 4,060,533 6,376,500
22,000 Dow Jones & Co. Inc. ......... 1,000,419 1,096,700
30,000 EMAP plc ..................... 362,733 460,249
40,000 Lee Enterprises Inc. ......... 921,940 1,746,000
60,000 McClatchy Co., Cl. A ......... 1,240,718 4,128,000
140,000 McGraw-Hill Companies Inc. ... 2,576,918 9,788,800
370,000 Media General Inc., Cl. A .... 10,364,815 24,087,000
80,000 Meredith Corp. ............... 1,650,283 3,904,800
132,000 New York Times Co., Cl. A .... 1,094,267 6,308,280
14,000 News Corp. Ltd., ADR 246,049 505,400
620,000 PRIMEDIA Inc.+ ............... 2,896,371 1,754,600
152,900 Pulitzer Inc. ................ 6,769,980 8,256,600
220,000 Reader's Digest
Association Inc. ........... 4,126,876 3,225,200
124,000 Scripps (E.W.) Co., Cl. A .... 7,804,763 11,673,360
68,614 Seat Pagine Gialle SpA+ ...... 172,631 65,343
120,000 Thomas Nelson Inc. ........... 1,535,734 2,319,600
290,000 Tribune Co. .................. 10,098,557 14,964,000
-------------- --------------
56,923,587 100,660,432
-------------- --------------
REAL ESTATE -- 1.3%
349,489 Catellus Development Corp. ... 3,932,848 8,429,675
120,082 Florida East Coast
Industries Inc., Cl. A ..... 1,856,261 3,974,714
95,000 Griffin Land & Nurseries Inc.+ 1,237,966 1,350,045
310,000 St. Joe Co. .................. 2,361,650 11,559,900
-------------- --------------
9,388,725 25,314,334
-------------- --------------
RETAIL -- 2.7%
32,500 Aaron Rents Inc. ............. 94,337 654,225
40,500 Aaron Rents Inc., Cl. A ...... 287,231 748,845
170,000 Albertson's Inc. ............. 3,621,513 3,850,500
450,000 AutoNation Inc.+ ............. 4,523,837 8,266,500
12,000 Blockbuster Inc., Cl. A ...... 120,433 215,400
145,000 Burlington Coat Factory
Warehouse Corp. ............ 1,677,843 3,068,200
9,000 Coldwater Creek Inc.+ ........ 50,700 99,000
130,000 Kroger Co.+ .................. 761,625 2,406,300
660,000 Neiman Marcus Group Inc.,
Cl. B+ ..................... 15,984,491 33,000,000
-------------- --------------
27,122,010 52,308,970
-------------- --------------
SATELLITE -- 0.2%
275,777 Hughes Electronics Corp.+ .... 5,397,176 4,564,116
-------------- --------------
SPECIALTY CHEMICALS -- 1.4%
434,000 Ferro Corp. .................. 7,006,970 11,809,140
120,000 Fuller (H.B.) Co. ............ 2,014,683 3,568,800
130,000 General Chemical
Group Inc.+ ................ 502,184 5,200
MARKET
SHARES COST VALUE
------- ---- ------
105,000 Great Lakes Chemical Corp. ... $ 2,781,423 $ 2,854,950
320,000 Hercules Inc.+ ............... 5,104,946 3,904,000
180,000 Material Sciences Corp.+ ..... 1,567,715 1,819,800
650,000 Omnova Solutions Inc.+ ....... 2,051,888 3,120,000
-------------- --------------
21,029,809 27,081,890
-------------- --------------
TELECOMMUNICATIONS -- 5.7%
90,000 ALLTEL Corp. ................. 2,757,227 4,192,200
200,000 AT&T Corp. ................... 6,358,573 4,060,000
14,000 Brasil Telecom Participacoes
SA, ADR .................... 810,959 529,200
300,000 BT Group plc ................. 1,190,878 1,010,991
25,000 BT Group plc, ADR ............ 919,418 855,500
525,000 CenturyTel Inc. .............. 6,423,670 17,125,500
600,000 Cincinnati Bell Inc.+ ........ 5,165,983 3,030,000
360,000 Citizens
Communications Co.+ ........ 3,651,435 4,471,200
313,600 Commonwealth Telephone
Enterprises Inc.+ .......... 5,392,797 11,838,400
86,000 Deutsche Telekom AG, ADR+ .... 1,299,156 1,559,180
38,000 France Telecom SA, ADR ....... 760,378 1,086,420
2,750,000 Qwest Communications
International Inc.+ ........ 12,102,526 11,880,000
10,000 Rogers Communications
Inc., Cl. B ................ 77,553 165,138
422,000 Rogers Communications
Inc., Cl. B, ADR ........... 4,153,290 6,963,000
170,000 SBC Communications Inc. ...... 5,751,064 4,431,900
420,000 Sprint Corp. - FON Group ..... 6,101,769 6,896,400
10,000 Swisscom AG, ADR ............. 292,659 328,400
75,403 Tele Norte Leste
Participacoes SA, ADR ...... 1,032,454 1,163,468
1,650,435 Telecom Italia SpA+ .......... 1,032,880 4,892,183
317,000 Telecom Italia SpA, ADR+ ..... 2,146,495 9,411,730
96,649 Telefonica SA, ADR ........... 3,462,539 4,270,919
12,567 Telefonica SA, BDR ........... 147,383 183,387
20,000 Telefonos de Mexico SA de
CV, Cl. L, ADR+ ............ 171,746 660,600
37,500 TELUS Corp. .................. 658,391 753,047
17,500 TELUS Corp., ADR ............. 316,603 351,422
282,000 Verizon Communications Inc. .. 8,989,893 9,892,560
-------------- --------------
81,167,719 112,002,745
-------------- --------------
TRANSPORTATION -- 0.1%
85,000 AMR Corp.+ ................... 1,245,603 1,100,750
50,000 Grupo TMM SA de CV,
Cl. A, ADR+ ................ 391,821 212,000
4,000 Kansas City Southern+ ........ 7,317 57,280
4,000 Providence & Worcester
Railroad Co. ............... 44,669 35,560
-------------- --------------
1,689,410 1,405,590
-------------- --------------
See accompanying notes to financial statements.
7
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------- ---- ------
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS -- 3.9%
73,000 America Movil SA de CV,
Cl. L, ADR ............... $ 1,161,189 $ 1,995,820
500,000 AT&T Wireless Services Inc.+ 6,025,445 3,995,000
75,000 Leap Wireless
International Inc.+ ........ 17,985 2,475
300,000 mm02 plc+ .................... 348,979 413,526
150,000 mm02 plc, ADR+ ............... 1,656,011 2,049,000
180,000 Nextel Communications Inc.,
Cl. A+ ..................... 2,509,066 5,050,800
80,000 Nextel Partners Inc., Cl. A+ . 841,733 1,076,000
72,100 Price Communications
Corp.+ ..................... 1,192,126 989,933
220,000 Rogers Wireless
Communications Inc., Cl. B+ 3,731,352 4,708,000
800,000 Sprint Corp. - PCS Group+ .... 7,658,875 4,496,000
6,750 Tele Celular Sul Participacoes
SA, ADR .................... 107,916 96,862
22,500 Tele Centro Oeste Celular
Participacoes SA, ADR+ ..... 67,448 221,625
1,350 Tele Leste Celular
Participacoes SA, ADR+ ..... 36,110 18,724
3,375 Tele Nordeste Celular
Participacoes SA, ADR ...... 49,807 94,298
1,350 Tele Norte Celular
Participacoes SA, ADR+ 20,857 14,742
1,800,000 Telecom Italia Mobile SpA+ ... 1,661,797 9,785,570
3,375 Telemig Celular
Participacoes SA, ADR ...... 97,539 108,338
650,000 Telephone & Data
Systems Inc. ............... 24,520,624 40,657,500
25,000 Telesp Celular
Participacoes SA, ADR+ ..... 562,137 164,500
20,000 United States
Cellular Corp.+ ............ 609,674 710,000
12,000 Vodafone Group plc, ADR ...... 237,532 300,480
-------------- --------------
53,114,202 76,949,193
-------------- --------------
TOTAL COMMON STOCKS .......... 1,118,567,990 1,847,062,012
-------------- --------------
PREFERRED STOCKS -- 3.6%
AEROSPACE -- 0.2%
30,000 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .... 3,495,600 3,742,500
-------------- --------------
PUBLISHING -- 3.4%
2,230,845 News Corp. Ltd., Pfd., ADR ... 32,035,395 67,483,058
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.0%
7,686,101 Telesp Celular Participacoes
SA, Pfd.+ .................. 60,929 20,168
-------------- --------------
TOTAL PREFERRED STOCKS ....... 35,591,924 71,245,726
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- ------
CORPORATE BONDS -- 0.3%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$ 1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ........... $ 910,078 $ 940,000
-------------- --------------
CABLE -- 0.0%
1,000,000 Charter Communications
Inc., Cv.,
4.750%, 06/01/06 ........... 634,048 890,000
-------------- --------------
ELECTRONICS -- 0.2%
2,000,000 Agere Systems Inc.,
Sub. Deb. Cv.,
6.500%, 12/15/09 ........... 1,917,433 2,750,000
500,000 Oak Industries Inc.,
Sub. Deb. Cv.,
4.875%, 03/01/08 ........... 339,138 499,375
-------------- --------------
2,256,571 3,249,375
-------------- --------------
TOTAL CORPORATE BONDS ........ 3,800,697 5,079,375
-------------- --------------
SHARES
------
RIGHTS -- 0.0%
EQUIPMENT AND SUPPLIES -- 0.0%
323,150 Fedders Corp.+ ............... 0 19,389
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS -- 1.8%
PRINCIPAL
AMOUNT
------
$34,319,000 U.S. Treasury Bills++,
0.867% to 0.956%,
01/02/04 to 03/04/04 ....... 34,305,133 34,305,447
-------------- --------------
TOTAL INVESTMENTS --
100.0% ..................... $1,192,265,744 1,957,711,949
==============
OTHER ASSETS AND LIABILITIES (NET) -- 0.0% 718,665
--------------
NET ASSETS -- 100.0% ......... ................ $1,958,430,614
==============
- ----------------
For Federal tax purposes:
Aggregate cost ............... ................ $1,199,698,711
==============
Gross unrealized appreciation ................. $ 792,395,339
Gross unrealized depreciation ................. (34,382,101)
--------------
Net unrealized appreciation ................... $ 758,013,238
==============
- ----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
BDR - Brazilian Depository Receipt.
CVO - Contingent Value Obligation.
GDR - Global Depository Receipt.
See accompanying notes to financial statements.
8
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $1,192,265,744) ............... $1,957,711,949
Cash and foreign currency, at value (cost $1,020) ......... 1,020
Dividends and interest receivable ......................... 1,945,306
Receivable for investments sold ........................... 2,287,246
Receivable for Fund shares sold ........................... 1,662,785
Other assets .............................................. 69,952
--------------
TOTAL ASSETS .............................................. 1,963,678,258
--------------
LIABILITIES:
Payable for Fund shares redeemed .......................... 2,614,067
Payable for investment advisory fees ...................... 1,622,311
Payable for distribution fees ............................. 404,863
Payable for shareholder services fees ..................... 351,403
Payable to custodian ...................................... 96,913
Other accrued expenses .................................... 158,087
--------------
TOTAL LIABILITIES ......................................... 5,247,644
--------------
NET ASSETS applicable to 54,004,167
shares outstanding ...................................... $1,958,430,614
==============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par value ............... $ 540,042
Additional paid-in capital ................................ 1,199,650,557
Accumulated net investment income ......................... 164,909
Accumulated net realized loss on
investments and foreign currency transactions ........... (7,374,702)
Net unrealized appreciation on investments
and foreign currency transactions ....................... 765,449,808
--------------
TOTAL NET ASSETS .......................................... $1,958,430,614
==============
NET ASSET VALUE, offering and redemption
price per share ($1,958,430,614 /
54,004,167* shares outstanding;
unlimited number of shares authorized of
$0.01 par value) ........................................ $36.26
======
- ------------
*Refer to Note 9 in the Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $410,000) ................. $ 24,349,136
Interest ..................................................... 588,209
------------
TOTAL INVESTMENT INCOME ...................................... 24,937,345
------------
EXPENSES:
Investment advisory fees ..................................... 16,682,239
Distribution fees ............................................ 4,170,964
Shareholder services fees .................................... 1,279,679
Custodian fees ............................................... 317,750
Shareholder communications expenses .......................... 275,730
Legal and audit fees ......................................... 96,370
Trustees' fees ............................................... 57,250
Registration expenses ........................................ 48,733
Miscellaneous expenses ....................................... 156,690
------------
TOTAL EXPENSES ............................................... 23,085,405
------------
NET INVESTMENT INCOME ........................................ 1,851,940
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and
foreign currency transactions .............................. 43,687,872
Net change in unrealized appreciation/
(depreciation) on investments and foreign
currency transactions ...................................... 420,113,505
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ............................................... 463,801,377
------------
Net Increase in Net Assets Resulting
from Operations ............................................ $465,653,317
============
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
OPERATIONS:
Net investment income ..................................................... $ 1,851,940 $ 654,868
Net realized gain/(loss) on investments and foreign currency transactions 43,687,872 (13,133,504)
Net change in unrealized appreciation/(depreciation) on investments
and foreign currency transactions ....................................... 420,113,505 (263,964,124)
-------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........... 465,653,317 (276,442,760)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ..................................................... (1,651,347) (638,198)
Net realized short-term gain on investments ............................... -- (42,547)
Net realized long-term gain on investments ................................ (31,641,902) (200,099)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................... (33,293,249) (880,844)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net increase/(decrease) in net assets from shares of beneficial interest
transactions ........................................................... 24,650,514 (132,263,045)
-------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS ..................................... 457,010,582 (409,586,649)
NET ASSETS:
Beginning of period ....................................................... 1,501,420,032 1,911,006,681
-------------- --------------
End of period (including undistributed net investment
income of $164,909 and $27,000, respectively ............................ $1,958,430,614 $1,501,420,032
============== ==============
See accompanying notes to financial statements.
9
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli Asset Fund (the "Fund") was organized on November
25, 1985 as a Massachusetts Business Trust. The Fund is a 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 growth of
capital. The Fund commenced investment operations on March 3, 1986.
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 in the U.S.
over-the-counter market for which market quotations are readily available are
valued at the last quoted sale price on that exchange or market 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. If no bid or asked prices are
quoted on such day, the security is valued at the most recently available price
or, if the Board of Trustees so determines, by such other method as the Board of
Trustees shall determine in good faith, to reflect its fair market value.
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"). Portfolio securities primarily
traded on foreign markets are generally valued at the preceding closing values
of such securities on their respective exchanges. 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 Trustees. Short-term debt securities with
remaining maturities of 60 days or less, are valued at amortized cost, unless
the Board of Trustees determines such does not reflect the securities fair
value, in which case these securities will be valued at their fair value as
determined by the Board of Trustees. Debt instruments having a maturity greater
than 60 days for which market quotations are readily available are valued at the
latest average of the bid and asked prices. If there were no asked prices quoted
on such day, the security is valued using the closing bid price. 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.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency transactions. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
10
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain/(loss) that might result
should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. There were no forward foreign exchange contracts on
December 31, 2003.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Fund
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
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 Federal income tax
regulations which may differ from accounting principles generally accepted in
the United States. 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.
For the year ended December 31, 2003, reclassifications were made to decrease
accumulated net investment income for $62,684 and to decrease accumulated net
realized loss on investments and foreign currency transactions for $62,684.
The tax character of distributions paid during the fiscal year ended December
31, 2003 and December 31, 2002 were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short term capital gains) . $ 1,651,347 $686,994
Net long term capital gains ................ 31,641,902 193,850
----------- --------
Total distributions paid ................... $33,293,249 $880,844
=========== ========
11
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
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. It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties.
As of December 31, 2003, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Accumulated net investment income ................ $ 164,909
Accumulated net realized capital gains ........... 58,265
Net unrealized appreciation ...................... 758,013,238
Net unrealized appreciation on
foreign currency transactions .................. 3,603
------------
Total accumulated gain ........................... $758,240,015
============
During the year ended December 31, 2003, the Fund fully utilized and deducted
net capital loss carryovers from prior years against its current year net
capital gains in the amount of $12,117,065.
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 Trustees of the Fund who are its affiliates.
4. DISTRIBUTION PLAN. The Fund's Board of Trustees has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the year ended
December 31, 2003, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $4,170,964 or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and sales of securities for the year ended
December 31, 2003, other than short-term securities, aggregated $116,252,733 and
$163,166,623, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2003, the
Fund paid brokerage commissions of $384,352 to Gabelli & Company, Inc.
The cost of calculating the Fund's net asset value per share is a Fund expense
pursuant to the Investment Advisory Agreement between the Fund and the Adviser.
During the year ended December 31, 2003, the Fund reimbursed the Adviser $34,800
in connection with the cost of computing the Fund's net asset value.
12
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
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 December 31, 2003
under this line of credit.
The average daily amount of borrowings outstanding during the year ended
December 31, 2003, was $2,124,197 with a related weighted average interest rate
of 2.03%. The maximum amount borrowed under this line of credit at any time
during the year ended December 31, 2003 was $25,000,000.
8. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------------- ----------- -------------
Shares sold ...................................... 8,795,029 $ 263,911,171 9,646,239 $ 299,285,909
Shares issued upon reinvestment of dividends ..... 866,201 31,347,814 29,507 825,063
Shares redeemed .................................. (8,795,505) (270,608,471) (14,490,845) (432,374,017)
---------- -------------- ----------- -------------
Net increase/(decrease) .......................... 865,725 $ 24,650,514 (4,815,099) $(132,263,045)
========== ============== =========== =============
9. MULTIPLE SHARE CLASSES. The Board of Directors of the Fund approved a Rule
18f-3 Multi-Class Plan relating to the various classes of shares of the Fund --
Class AAA Shares, Class A Shares, Class B Shares and Class C Shares (the
"Multi-Class Shares"). In addition, the Board had also approved a Distribution
Agreement and Rule 12b-1 plans providing for payments of 0.25% of average net
assets for Class A Shares and 1.00% of average net assets for Class B and C
Shares. The existing shares were redesignated as Class AAA shares, which were
first offered on March 3, 1986, and do not impose a sales load. The Class A
Shares, Class B Shares and Class C Shares were first offered to the public on
December 31, 2003 and were seeded with $1,000 (27.579 shares at $36.26 per
share) by Gabelli Asset Management Inc. as of December 31, 2003. Class A Shares
are subject to a maximum front-end sales charge of 5.75%. Class B Shares are
subject to a contingent deferred sales charge (CDSC) upon redemption within six
years of purchase. The applicable CDSC is equal to a declining percentage of the
lesser of the net asset value per share at the date of original purchase or at
the date of redemption, based on the length of time held. Class C Shares are
subject to a 1% CDSC for two years after purchase.
10. OTHER MATTERS. On October 7, 2003, the Fund's Adviser received a subpoena
from the Attorney General of the State of New York requesting information on
mutual fund shares trading practices. The Adviser is fully cooperating in
responding to the request. The Fund does not believe that this matter will have
a material adverse effect on the Fund's financial position or results of the
operations.
13
THE GABELLI ASSET FUND
FINANCIAL HIGHLIGHTS (B)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period:
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
OPERATING PERFORMANCE:
Net asset value, beginning of period ................ $ 28.25 $ 32.97 $ 33.90 $ 40.84 $ 35.47
---------- ---------- ---------- ---------- ----------
Net investment income (loss) ........................ 0.04 0.02 (0.00)(a) 0.31 (0.06)
Net realized and unrealized gain (loss) on investments 8.60 (4.72) 0.05 (1.37) 10.06
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .................... 8.64 (4.70) 0.05 (1.06) 10.00
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ............................... (0.03) (0.02) -- (0.31) --
Net realized gain on investments .................... (0.60) (0.00)(a) (0.98) (5.57) (4.63)
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS ................................. (0.63) (0.02) (0.98) (5.88) (4.63)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD ...................... $ 36.26 $ 28.25 $ 32.97 $ 33.90 $ 40.84
========== ========== ========== ========== ==========
TOTAL RETURN+ ....................................... 30.6% (14.3)% 0.2% (2.4)% 28.5%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ................ $1,958,431 $1,501,420 $1,911,007 $1,906,095 $1,993,875
Ratio of net investment income (loss)
to average net assets ............................ 0.11% 0.04% (0.00)% 0.77% (0.10)%
Ratio of operating expenses to average net assets ... 1.38% 1.38% 1.36% 1.36% 1.37%
Portfolio turnover rate ............................. 7% 8% 15% 48% 32%
- --------------------------------------------------------------------------------
+ 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.
(a) Amount represents less than $0.005 per share.
(b) Class A, Class B and Class C Shares were outstanding as of December 31,
2003. Financial Highlights are not presented for Class A, Class B and Class
C Shares as the information is not considered meaningful.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
THE GABELLI ASSET FUND
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To The Board of Trustees and Shareholders of
The Gabelli Asset Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Asset Fund (the "Fund")
at December 31, 2003, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2003 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2004
- --------------------------------------------------------------------------------
2003 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2003, the Fund paid to shareholders,
on December 27, 2003, an ordinary income dividend (inclusive of short-term
capital gains) totaling $0.0346 per share and long-term capital gains
totaling $0.5904 per share. For the fiscal year ended December 31, 2003, 100%
of the ordinary income dividend qualifies for the dividend received deduction
available to corporations, and 100% of the ordinary income distributions was
qualifying dividend income.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2003 which was derived from U.S. Treasury securities was 0.03%. Such
income is exempt from state and local tax in all states. However, many
states, including New York and California, allow a tax exemption for a
portion of the income earned only if a mutual fund has invested at least 50%
of its assets at the end of each quarter of the Fund's fiscal year in U.S.
Government securities. The Gabelli Asset Fund did not meet this strict
requirement in 2003. Due to the diversity in state and local tax law, it is
recommended that you consult your personal tax advisor as to the
applicability of the information provided to your specific situation.
- --------------------------------------------------------------------------------
15
THE GABELLI ASSET FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about The Gabelli Asset Fund Trustees and is
available, without charge, upon request, by calling 800-GABELLI (800-422-3554)
or by writing to The Gabelli Asset Fund at One Corporate Center, Rye, NY 10580.
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE
- ---------------- ---------- ----------- ---------------------- -------------------
INTERESTED TRUSTEES 3:
- ----------------------
MARIO J. GABELLI Since 1986 24 Chairman of the Board and Chief Executive Director of Morgan Group
Trustee and Chairman Officer of Gabelli Asset Management Inc. and Holdings, Inc. (holding
Age: 61 Chief Investment Officer of Gabelli Funds, company); Vice Chairman of
LLC and GAMCO Investors, Inc.; Vice Lynch Corporation (diversified
Chairman and Chief Executive Officer of manufacturing)
Lynch Interactive Corporation (multimedia
and services)
JOHN D. GABELLI Since 1999 10 Senior Vice President of Gabelli & --
Trustee Company, Inc.; Director of Gabelli Advisers, Inc.
Age: 59
KARL OTTO POHL Since 1992 33 Member of the Shareholder Committee of Sal Director of Gabelli Asset
Trustee Oppenheim Jr. & Cie (private investment Management Inc. (investment
Age: 74 bank); Former President of the management); Chairman,
Deutsche Bundesbank and Chairman of its Incentive Capital and
Central Bank Council (1980-1991) Incentive Asset Management
(Zurich); Director at Sal
Oppenheim, Jr. & Cie, Zurich
NON-INTERESTED TRUSTEES:
- -----------------------
ANTHONY J. COLAVITA Since 1989 35 President and Attorney at Law in the law firm --
Trustee of Anthony J. Colavita P.C.
Age: 68
JAMES P. CONN Since 1992 12 Former Managing Director and Chief Director of LaQuinta Corp.
Trustee Investment Officer of Financial Security (hotels) and First Republic Bank
Age: 65 Assurance Holdings, Ltd. (1992-1998)
ANTHONY R. PUSTORINO Since 1986 17 Certified Public Accountant; Professor Director of Lynch Corporation
Trustee Emeritus, Pace University (diversified manufacturing)
Age: 78
WERNER J. ROEDER, MD Since 2001 26 Vice President/Medical Affairs of Lawrence --
Trustee Hospital Center and practicing private physician
Age: 63
ANTHONIE C. VAN EKRIS 1986-1989 20 Managing Director of BALMAC Director of Aurado
Trustee 1992-present International, Inc. (commodities) Explorations Inc.
Age: 69 (oil and gas operations)
SALVATORE J. ZIZZA 1986-1996 11 Chairman, Hallmark Electrical Suppliers Corp. Director of Hollis
Trustee 2000-present Eden Pharmaceuticals
Age: 58
16
THE GABELLI ASSET FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE
- ---------------- ---------- ----------- ---------------------- -------------------
OFFICERS:
- ---------
BRUCE N. ALPERT Since 1994 -- Executive Vice President and Chief Operating --
President Officer of Gabelli Funds, LLC since 1988 and
Age: 52 an officer of all mutual funds advised by
Gabelli Funds, LLC and its affiliates.
Director and President of Gabelli Advisers, Inc.
JAMES E. MCKEE Since 1995 -- Vice President, General Counsel and Secretary --
Secretary of Gabelli Asset Management Inc. since 1999
Age: 40 and GAMCO Investors, Inc. since 1993; Secretary
of all mutual funds advised by Gabelli Advisers,
Inc. and Gabelli Funds, LLC
- --------------------------------------------------------------------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Trustee will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders if any, called for the purpose of
considering the election or re-election of such Trustee and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Trustee resigns or retires, or a Trustee is
removed by the Board of Trustees or shareholders, in accordance with the
Fund's By-Laws and Declaration of Trust.
3 "Interested person" of the Fund as defined in the Investment Company Act of
1940. Messrs. M. Gabelli, J. Gabelli and Pohl are each considered an
"interested person" because of their affiliation with Gabelli Funds, LLC
which acts as the Fund's investment adviser. Mario J. Gabelli and John D.
Gabelli are brothers.
16
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
- --------------------------------------------------------------------------------
WHO ARE WE?
The Gabelli Funds are investment companies registered with the Securities
and Exchange Commission under the Investment Company Act of 1940. We are
managed by Gabelli Funds LLC, Gabelli Advisers, Inc. and Gabelli Fixed
Income, LLC, which are affiliated with Gabelli Asset Management Inc.
Gabelli Asset Management is a publicly-held company that has subsidiaries
that provide investment advisory or brokerage services for a variety of
clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR
AFFILIATES AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE SERVICES
TO YOU. This would include information about the shares that you buy or
redeem, and the deposits and withdrawals that you make. If we hire
someone else to provide services--like a transfer agent--we will also
havE information about the transactions that you conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
- --------------------------------------------------------------------------------
GABELLI FAMILY OF FUNDS
VALUE ________________________________________
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. (MULTICLASS)
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 established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
GABELLI WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well-seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE ______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE ____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $1 billion) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations less than $1.5 billion) believed to be undervalued with
shareholder oriented management teams that are employing strategies to grow the
company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
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. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH _________________________
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. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
GABELLI WESTWOOD MIGHTY MITES(SM) 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.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) 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.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
GABELLI WESTWOOD REALTY FUND
Seeks to invest in securities that are primarily engaged in or related to the
real estate industry. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
SPECIALTY EQUITY ____________________________
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. (MULTICLASS) 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.
(MULTICLASS) TEAM MANAGED
SECTOR ______________________________________
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. (MULTICLASS) 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. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE _____________________
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
CONTRARIAN_________________________________
Gabelli Mathers Fund
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of the debt instrument. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
QUANTITATIVE_________________________________
NED DAVIS RESEARCH ASSET ALLOCATION FUND
Seeks to achieve returns greater then the weighted composite benchmark
consisting of 60% in the S&P 500 Index and 40% in the Lehman Long Term U.S.
Government Bond Index through a flexible asset allocation strategy. The Fund's
primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
SMALL CAP GROWTH __________________________
GABELLI WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $1.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS)
CO-PORTFOLIO MANAGERS: CHRISTOPHER J. MACDONALD, CFA
FIXED INCOME ________________________________
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.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET __________
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
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 securities and repurchase agreements. 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
THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC AND POLITICAL RISKS.
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.
TO RECEIVE A PROSPECTUS, CALL 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.
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: WWW.GABELLI.COM
E-MAIL: INFO@GABELLI.COM
Net Asset Value available daily by calling
800-GABELLI after 6:00 P.M.
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Anthony R. Pustorino
CHAIRMAN AND CHIEF CERTIFIED PUBLIC ACCOUNTANT
INVESTMENT OFFICER PROFESSOR EMERITUS
GABELLI ASSET MANAGEMENT INC. PACE UNIVERSITY
Anthony J. Colavita Werner J. Roeder, MD
ATTORNEY-AT-LAW VICE PRESIDENT/MEDICAL AFFAIRS
ANTHONY J. COLAVITA, P.C. LAWRENCE HOSPITAL CENTER
James P. Conn Anthonie C. van Ekris
FORMER CHIEF INVESTMENT OFFICER MANAGING DIRECTOR
FINANCIAL SECURITY ASSURANCE BALMAC INTERNATIONAL, INC.
HOLDINGS LTD.
John D. Gabelli Salvatore J. Zizza
SENIOR VICE PRESIDENT CHAIRMAN
GABELLI & COMPANY, INC. HALLMARK ELECTRICAL SUPPLIES
CORP.
Karl Otto Pohl
FORMER PRESIDENT
DEUTSCHE BUNDESBANK
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT 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
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This report is submitted for the general information of the shareholders of The
Gabelli Asset Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
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GAB405Q403SR
[GRAPHIC OMITTED]
PICTURE OF MARIO GABELLI
THE
GABELLI
ASSET
FUND
ANNUAL REPORT
DECEMBER 31, 2003
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(b) No response required.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
trustees has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: The aggregate fees billed for each of the last two fiscal
years for professional services rendered by the principal accountant
for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements for those fiscal
years are $32,000 in 2003 and $36,689 in 2002.
(b) AUDIT-RELATED FEES: The aggregate fees billed in each of the last two
fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item are $0 in 2003 and $0 in 2002.
(c) TAX FEES: The aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning are $2,350 in 2003
and $2,250 in 2002.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
(d) ALL OTHER FEES: The aggregate fees billed in each of the last two
fiscal years for products and services provided by the principal
accountant, other than the services reported in paragraphs (a) through
(c) of this Item are $0 for 2003 and $0 for 2002.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee
("Committee") of the registrant is responsible for pre-approving
(i) all audit and permissible non-audit services to be provided by
the independent auditors to the registrant and (ii) all
permissible non-audit services to be provided by the independent
auditors to Gabelli and any affiliate of Gabelli that provides
services to the registrant (a "Covered Services Provider") if the
independent auditors' engagement relates directly to the
operations and financial reporting of the registrant. The
Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at
its next regularly scheduled meeting after the Chairperson's
pre-approval of such services, his or her decision(s). The
Committee may also establish detailed pre-approval policies and
procedures for pre-approval of such services in accordance with
applicable laws, including the delegation of some or all of the
Committee's pre-approval responsibilities to other persons (other
than Gabelli or the registrant's officers). Pre-approval by the
Committee of any permissible non-audit services is not required so
long as: (i) the aggregate amount of all such permissible
non-audit services provided to the registrant, Gabelli and any
Covered Services Provider constitutes not more than 5% of the
total amount of revenues paid by the registrant to its independent
auditors during the fiscal year in which the permissible non-audit
services are provided; (ii) the permissible non-audit services
were not recognized by the registrant at the time of the
engagement to be non-audit services; and (iii) such services are
promptly brought to the attention of the Committee and approved by
the Committee or the Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X
are as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $0 in 2003 and $0 in 2002.
(h) The registrant's audit committee of the board of directors HAS
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END \
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not yet applicable.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's last
fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) of the Investment Company
Act of 1940, as amended, are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company
Act of 1940, as amended, are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Asset Fund
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By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive
Officer
Date March 9, 2004
---------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive
Officer and Principal Financial
Officer
Date March 9, 2004
---------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.