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 811-04494
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The Gabelli Asset Fund
------------------------------------------------------------
(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, 2004
------------------
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 Report to Shareholders is attached herewith.
[PHOTO OMITTED]
THE
GABELLI
ASSET
FUND
ANNUAL REPORT
DECEMBER 31, 2004
THE GABELLI ASSET FUND
ANNUAL REPORT
DECEMBER 31, 2004
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, 2004 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
Through most of the first ten months of 2004, it appeared equity investors
wouldn't be experiencing a very merry Christmas. Then a strong, broad based
market rally that began in late October and extended through the end of the year
put everyone in a festive mood. We are pleased to report that for the full year
2004, the Gabelli Asset Fund returned 16.5% compared to the Dow Jones Industrial
Average's 5.4% gain and the S&P 500's 10.87% advance. In this context, we note
that the Gabelli Asset Fund outpaced the broad benchmarks for the one, three,
five, ten and fifteen year and since inception periods.
As noted above, equity investors spent most of the first ten months of
2004 finding things to worry about. Early in the year it was the economy, as
anemic job growth caused investors to question the strength and endurance of the
recovery. As we headed into the spring it was interest rates, as surprisingly
strong March employment data convinced investors the Federal Reserve would soon
begin tightening. From July through October, it was back to the economy, which
stalled suddenly in the summer and remained soft through the early fall.
Throughout this period, rapidly rising oil prices and uncertainty created by
what appeared to be a "too close to call" presidential election also undermined
investor confidence.
Late in October, the market started to improve. Oil prices declined
significantly and the economy regained momentum. The conclusive Republican
victory eliminated uncertainty regarding government policies on certain issues.
Investors focused on the positives -- a sturdy economy and respectable corporate
earnings growth -- and stocks took off. Through the end of October, 2004, the
Dow Jones Industrials ("DJIA") and NASDAQ Composite were down -2.4% and -1.42%
respectively and the S&P 500 was up 3.06%. At the end of 2004, the DJIA had
gained 5.4%, the NASDAQ Composite was up 8.59%, and the S&P 500 had advanced
10.87% for the year.
As evidenced by the Asset Fund's solid performance, our research driven,
value oriented investment discipline was productive. Approximately 70% of our
portfolio holdings posted positive returns, with more than half gaining 10% or
more. In general, our investments in the hotel/gaming, housing, and utilities
industries performed very well. In addition, eleven portfolio companies were the
subject of merger and acquisition activity (completed deals, pending deals, and
companies putting themselves up for sale) or major restructurings. So, deal
activity had a direct impact on portfolio performance and helped surface values
in other portfolio holdings in the same industry groups as well. The lackluster
performance of advertising supported media stocks, a sector in which we have
substantial commitments, prevented the Fund from achieving even better returns.
Stock specific, Homebuilders Southern Energy Homes, Nobility Homes, and
Cavalier Homes finished near the top of our portfolio rankings this year.
Gaming/hospitality companies MGM Mirage, Starwood Hotels and Resorts, and
Mandalay Resort Group were also stellar performers. Real estate development
company St. Joe (the largest private landholder in Florida) and auto parts
manufacturer Tenneco Automotive made substantial
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
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS:
Gabelli Asset Fund S&P 500 Consumer Price
(Class AAA) Index Index + 10%
------------------ -------- --------------
3/3/86 $10,000 $10,000 $10,000
12/31/86 11,280 10,980 11,160
12/31/87 13,111 11,556 12,678
12/31/88 17,189 13,470 14,503
12/31/89 21,691 17,731 16,621
12/31/90 20,611 17,179 19,297
12/31/91 24,350 22,402 21,825
12/31/92 27,976 24,107 24,640
12/31/93 34,086 26,532 27,769
12/31/94 34,035 26,879 31,296
12/31/95 42,523 36,967 35,208
12/31/96 48,204 45,451 39,891
12/31/97 66,555 60,609 44,558
12/31/98 77,157 77,943 49,727
12/31/99 99,139 94,335 56,042
12/31/00 96,790 85,751 63,552
12/31/01 96,945 75,563 70,924
12/31/02 83,111 58,871 79,718
12/31/03 108,518 75,750 89,205
12/31/04 126,382 83,984 101,069
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and
graph do not reflect the deduction of taxes that shareholder would pay on fund
distributions or the redemption of fund shares.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2004 (a)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (3/3/86)
- -----------------------------------------------------------------------------------------------------------
GABELLI ASSET FUND CLASS AAA .... 12.88% 16.50% 9.25% 4.98% 14.02% 14.41%
S&P 500 Index ................... 9.23 10.87 3.58 (2.30) 12.07 11.97
Dow Jones Industrial Average .... 7.62 5.40 4.73 0.70 13.13 13.23
Nasdaq Composite Index .......... 14.69 8.59 3.71 (11.77) 11.21 10.03
Class A ......................... 12.91 16.49 9.25 4.98 14.02 14.41
6.43(b) 9.80(b) 7.12(b) 3.75(b) 13.35(b) 14.04(b)
Class B ......................... 12.76 15.63 8.98 4.83 13.94 14.37
7.76(c) 10.63(c) 8.13(c) 4.49(c) 13.94(c) 14.37(c)
Class C ......................... 12.67 15.62 8.98 4.82 13.94 14.36
11.67(c) 14.62(c) 8.98(c) 4.82(c) 13.94(c) 14.36(c)
<FN>
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL
RETURNS REFLECT CHANGES IN SHARE PRICES 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. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. VISIT
WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER
THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE
PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE
INVESTING. THE CLASS AAA SHARES' NET ASSET VALUE ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR
TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON DECEMBER 31, 2003. THE ACTUAL
PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL
EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. THE DOW JONES INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX
OF 30 LARGE CAPITALIZATION STOCKS. THE S&P 500 INDEX AND THE NASDAQ COMPOSITE INDEX ARE UNMANAGED
INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE REINVESTED EXCEPT FOR THE NASDAQ COMPOSITE INDEX.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF THE PERIOD.
(c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT THE END OF THE PERIOD SHOWN FOR
CLASS B AND CLASS C SHARES, RESPECTIVELY. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
- -------------------------------------------------------------------------------------------------------------
</FN>
2
performance contributions. The letter G stood for good this year, with GenCorp,
Gaylord, Greif, Grupo Televisa, and Genuine Parts posting Good with a capital G
returns.
Our substantial commitment to ad supported media companies was
counterproductive in 2004. In general, media stocks were victims of
expectations. The consensus (including us) anticipated a substantial increase in
ad spending resulting from the strong economy and further enhanced by the summer
Olympics and hotly contested presidential and congressional elections. This
unfolded as anticipated, but was already fully discounted in stock prices, and
therefore failed to excite investors. We also expected increased deal activity
to surface value. This failed to materialize. Broadcasters were awful
performers, and following their excellent performance in 2003, newspaper
publishers produced lackluster returns.
Specifically, the advertising supported media holdings we held ranging
from small group broadcasters such as Paxson Communications and Young
Broadcasting to newspaper publishers New York Times and Belo to diversified
media giants Viacom and Tribune disappointed. Additionally, pharmaceuticals
industry investments such as Merck, Pfizer, and Eli Lilly also penalized
returns.
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
Under SEC rules, all funds are required to include in their annual and
semi-annual shareholder reports a presentation of portfolio holdings in a table,
chart or graph by reasonably identifiable categories. The following table which
presents portfolio holdings as a percent of total net assets is provided in
compliance with such requirement.
GABELLI ASSET FUND
Food and Beverage .................................................... 8.9%
Publishing ........................................................... 8.6%
Entertainment ........................................................ 7.5%
Telecommunications ................................................... 6.6%
Energy and Utilities ................................................. 5.9%
Consumer Products .................................................... 5.3%
Diversified Industrial ............................................... 5.2%
Financial Services ................................................... 5.0%
Equipment and Supplies ............................................... 4.6%
Cable and Satellite .................................................. 4.0%
Automotive: Parts and Accessories .................................... 4.0%
Wireless Communications .............................................. 3.4%
Hotels and Gaming .................................................... 3.1%
Health Care .......................................................... 3.1%
Retail ............................................................... 2.9%
Aviation: Parts and Services ......................................... 2.5%
Specialty Chemicals .................................................. 1.7%
Machinery ............................................................ 1.7%
Communications Equipment ............................................. 1.6%
Metals and Mining .................................................... 1.6%
U.S. Government Obligations .......................................... 1.6%
Real Estate .......................................................... 1.5%
Automotive ........................................................... 1.5%
Consumer Services .................................................... 1.4%
Environmental Services ............................................... 1.2%
Business Services .................................................... 1.2%
Broadcasting ......................................................... 1.1%
Electronics .......................................................... 1.0%
Agriculture .......................................................... 0.9%
Aerospace ............................................................ 0.9%
Manufactured Housing and Recreational Vehicles ....................... 0.3%
Closed-End Funds ..................................................... 0.1%
Computer Software and Services ....................................... 0.1%
Transportation ....................................................... 0.1%
Other Assets and Liabilities - Net ................................... (0.1%)
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE FIRST OF WHICH WAS
FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2004. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies and procedures are available (i) without charge,
upon request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The
Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting
the Securities and Exchange Commission's website at www.sec.gov.
3
THE GABELLI ASSET FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2004 through December 31, 2004
EXPENSE TABLE
- --------------------------------------------------------------------------------
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing cost (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case -- because the hypothetical return used is NOT
the Fund's actual return -- the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the year ended December 31, 2004.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
7/1/04 12/31/04 Ratio Period*
- --------------------------------------------------------------------------------
GABELLI ASSET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,109.90 1.40% $ 7.43
Class A $1,000.00 $1,110.10 1.40% $ 7.43
Class B $1,000.00 $1,106.50 2.15% $11.38
Class C $1,000.00 $1,105.90 2.15% $11.38
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,018.10 1.40% $ 7.10
Class A $1,000.00 $1,018.10 1.40% $ 7.10
Class B $1,000.00 $1,014.33 2.15% $10.89
Class C $1,000.00 $1,014.33 2.15% $10.89
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 366.
4
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
COMMON STOCKS -- 97.9%
AEROSPACE -- 0.7%
75,000 Boeing Co. ............... $ 2,587,078 $ 3,882,750
15,300 Herley Industries Inc.+ .. 292,591 311,202
70,000 Lockheed Martin Corp. .... 1,963,076 3,888,500
150,000 Northrop Grumman Corp. ... 4,667,966 8,154,000
-------------- --------------
9,510,711 16,236,452
-------------- --------------
AGRICULTURE -- 0.9%
790,000 Archer-Daniels-Midland Co. 10,916,590 17,624,900
15,000 Delta & Pine Land Co. .... 260,292 409,200
40,529 Monsanto Co. ............. 647,781 2,251,386
10,000 Mosaic Co.+ .............. 139,584 163,200
1,000 Potash Corp. of
Saskatchewan Inc. ...... 41,185 83,060
-------------- --------------
12,005,432 20,531,746
-------------- --------------
AUTOMOTIVE -- 1.5%
150,000 General Motors Corp. ..... 6,420,210 6,009,000
520,000 Navistar International Corp.+ 9,543,722 22,869,600
45,000 PACCAR Inc. .............. 522,021 3,621,600
27,000 Volkswagen AG ............ 1,125,088 1,223,936
-------------- --------------
17,611,041 33,724,136
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.9%
110,000 BorgWarner Inc. .......... 2,079,060 5,958,700
122,000 CLARCOR Inc. ............. 1,741,943 6,681,940
570,000 Dana Corp. ............... 8,891,297 9,878,100
210,000 Federal-Mogul Corp.+ ..... 467,782 75,600
500,000 Genuine Parts Co. ........ 12,026,034 22,030,000
235,000 Johnson Controls Inc. .... 4,769,020 14,908,400
170,000 Midas Inc.+ .............. 2,224,151 3,400,000
300,000 Modine Manufacturing Co. . 7,078,060 10,131,000
219,600 Scheib (Earl) Inc.+ ...... 1,458,955 718,092
205,000 Standard Motor Products Inc. 3,007,686 3,239,000
65,000 Superior Industries
International Inc. ..... 1,642,639 1,888,250
300,000 Tenneco Automotive Inc.+ . 1,840,227 5,172,000
100,000 TransPro Inc.+ ........... 788,321 610,000
100,000 TRW Automotive
Holdings Corp.+ .......... 2,571,485 2,070,000
-------------- --------------
50,586,660 86,761,082
-------------- --------------
AVIATION: PARTS AND SERVICES -- 2.5%
75,000 Aviall Inc.+ ............. 750,124 1,722,750
214,000 Curtiss-Wright Corp. ..... 1,310,760 12,285,740
67,000 Curtiss-Wright Corp., Cl .B 2,209,093 3,769,420
230,000 Fairchild Corp., Cl. A+ .. 1,401,907 848,700
620,000 GenCorp Inc. ............. 2,313,974 11,513,400
110,000 Kaman Corp., Cl. A ....... 1,534,270 1,391,500
170,000 Precision Castparts Corp. 4,207,013 11,165,600
109,000 Sequa Corp., Cl. A+ ...... 4,666,598 6,665,350
105,000 Sequa Corp., Cl. B+ ...... 5,381,629 6,483,750
-------------- --------------
23,775,368 55,846,210
-------------- --------------
BROADCASTING -- 1.1%
20,000 Corus Entertainment Inc.,
Cl. B ................... 64,982 417,310
MARKET
SHARES COST VALUE
--------- -------------- --------------
80,000 Fisher Communications Inc.+ $ 4,393,988 $ 3,910,400
166,000 Granite Broadcasting Corp.+ 69,153 68,060
310,000 Gray Television Inc. ...... 3,936,811 4,805,000
10,000 Gray Television Inc., Cl. A 109,420 141,500
170,000 Liberty Corp. 6,268,553 7,473,200
135,000 Lin TV Corp., Cl. A+ 2,865,853 2,578,500
160,000 Paxson
Communications Corp.+ 1,343,205 220,800
400,000 Television Broadcasts Ltd. 1,815,551 1,857,784
240,000 Young Broadcasting Inc.,
Cl. A+ .................. 4,594,131 2,534,400
-------------- --------------
25,461,647 24,006,954
-------------- --------------
BUSINESS SERVICES -- 1.1%
480,000 Cendant Corp. ............ 4,891,205 11,222,400
50,000 ChoicePoint Inc.+ ........ 1,773,215 2,299,500
200,000 Ecolab Inc. .............. 1,876,865 7,026,000
10,000 Imation Corp. ............ 203,344 318,300
65,000 Landauer Inc. ............ 402,818 2,970,500
119,000 Nashua Corp.+ ............ 1,745,996 1,351,840
-------------- --------------
10,893,443 25,188,540
-------------- --------------
CABLE AND SATELLITE -- 4.0%
2,030,000 Cablevision Systems Corp.,
Cl. A+ ................. 21,325,960 50,547,000
30,000 Charter Communications
Inc., Cl. A+ ........... 138,876 67,200
300,000 Comcast Corp., Cl. A+ .... 8,368,051 9,984,000
40,000 Comcast Corp., Cl. A,
Special+ ............... 306,462 1,313,600
275,000 DIRECTV Group Inc.+ ...... 5,438,062 4,603,500
30,000 EchoStar Communications
Corp., Cl. A ........... 921,111 997,200
285,000 Liberty Media International
Inc., Cl. A+ ........... 3,759,992 13,175,550
60,000 Shaw Communications Inc.,
Cl. B .................. 164,952 1,098,193
80,000 Shaw Communications Inc.,
Cl. B, Non-Voting ...... 312,647 1,463,200
605,000 UnitedGlobalCom
Inc., Cl. A+ ........... 4,627,094 5,844,300
-------------- --------------
45,363,207 89,093,743
-------------- --------------
CLOSED-END FUNDS -- 0.1%
80,001 Royce Value Trust Inc. ... 953,886 1,635,220
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 1.4%
380,000 Agere Systems Inc., Cl. B+ 1,136,696 513,000
180,000 Andrew Corp.+ ............ 688,270 2,453,400
600,000 Corning Inc.+ ............ 4,374,876 7,062,000
800,000 Lucent Technologies Inc.+ 4,465,766 3,008,000
300,000 Motorola Inc. ............ 2,779,293 5,160,000
240,000 Nortel Networks Corp.+ ... 1,202,804 837,600
400,000 Thomas & Betts Corp.+ .... 7,934,757 12,300,000
-------------- --------------
22,582,462 31,334,000
-------------- --------------
COMPUTER HARDWARE -- 0.0%
40,000 Maxtor Corp.+ ............ 314,584 212,000
-------------- --------------
See accompanying notes to financial statements.
5
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE AND SERVICES -- 0.1%
10,000 Computer Associates
International Inc. ..... $ 145,700 $ 310,600
48,000 Jupitermedia Corp.+ ...... 241,258 1,141,440
26,026 Telecom Italia Media SpA+ 26,184 11,780
-------------- --------------
413,142 1,463,820
-------------- --------------
CONSUMER PRODUCTS -- 5.3%
40,500 Alberto-Culver Co. ....... 1,073,604 1,967,085
12,000 Altria Group Inc. ........ 360,636 733,200
11,000 Christian Dior SA ........ 307,335 748,335
285,000 Church & Dwight Co. Inc. . 1,872,507 9,581,700
30,000 Clorox Co. ............... 1,637,346 1,767,900
1,000 Colgate-Palmolive Co. .... 50,430 51,160
60,000 Department 56 Inc.+ ...... 651,832 999,000
80,000 Eastman Kodak Co. ........ 2,128,338 2,580,000
305,000 Energizer Holdings Inc.+ . 5,264,268 15,155,450
110,000 Fortune Brands Inc. ...... 2,536,232 8,489,800
290,000 Gallaher Group plc, ADR .. 4,661,436 17,605,900
250,000 Gillette Co. ............. 8,034,142 11,195,000
3,000 Givaudan SA .............. 1,028,013 1,976,080
38,000 Harley-Davidson Inc. ..... 95,713 2,308,500
160,000 Mattel Inc. .............. 2,466,356 3,118,400
50,000 Maytag Corp. ............. 1,118,418 1,055,000
62,000 National Presto
Industries Inc. ........ 2,088,819 2,821,000
370,000 Procter & Gamble Co. ..... 12,802,755 20,379,600
1,000,000 Swedish Match AB ......... 10,327,823 11,586,962
10,000 Syratech Corp.+ .......... 2,000 1,100
140,000 Wolverine World Wide Inc. 1,953,224 4,398,800
-------------- --------------
60,461,227 118,519,972
-------------- --------------
CONSUMER SERVICES -- 1.4%
800 eBay Inc.+ ............... 24,652 93,024
830,000 IAC/InterActiveCorp+ ..... 6,466,832 22,924,600
298,650 Rollins Inc. ............. 3,453,596 7,860,468
-------------- --------------
9,945,080 30,878,092
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 5.2%
144,000 Acuity Brands Inc. ....... 2,344,464 4,579,200
5,000 Anixter International Inc. 45,044 179,950
180,000 Cooper Industries Ltd., Cl. A 7,326,626 12,220,200
425,000 Crane Co. ................ 6,646,604 12,257,000
76,000 Gardner Denver Inc.+ ..... 1,148,950 2,758,040
253,500 GATX Corp. ............... 5,681,476 7,493,460
25,000 General Electric Co. ..... 776,165 912,500
240,000 Greif Inc., Cl. A ........ 5,453,716 13,440,000
30,000 Harbor Global Co. Ltd.+ .. 52,965 279,000
425,000 Honeywell International Inc. 13,730,962 15,049,250
300,000 ITT Industries Inc. ...... 9,410,611 25,335,000
150,000 Katy Industries Inc.+ .... 1,369,925 777,000
320,000 Lamson & Sessions Co.+ ... 1,748,797 2,912,000
40,000 MagneTek Inc.+ ........... 309,670 276,000
247,500 Myers Industries Inc. .... 1,557,014 3,168,000
51,000 Pentair Inc. ............. 730,157 2,221,560
80,000 Smiths Group plc ......... 880,176 1,262,527
MARKET
SHARES COST VALUE
--------- -------------- --------------
155,000 Thomas Industries Inc. ... $ 1,971,325 $ 6,187,600
75,000 Trinity Industries Inc. .. 931,715 2,556,000
38,000 Tyco International Ltd. .. 519,098 1,358,120
-------------- --------------
62,635,460 115,222,407
-------------- --------------
ELECTRONICS -- 1.0%
30,000 Freescale Semiconductor
Inc., Cl. B+ ............. 303,199 550,800
3,000 Hitachi Ltd., ADR ........ 172,200 208,290
13,000 Kyocera Corp., ADR ....... 448,062 1,000,740
25,000 Molex Inc., Cl. A ........ 719,620 666,250
46,000 Samsung Electronics Co. ..
Ltd., GDR (a) ............ 8,616,601 10,009,177
135,000 Sony Corp., ADR .......... 5,285,746 5,259,600
205,000 Texas Instruments Inc. ... 5,187,155 5,047,100
-------------- --------------
20,732,583 22,741,957
-------------- --------------
ENERGY AND UTILITIES -- 5.9%
110,000 AES Corp.+ ............... 434,151 1,503,700
50,000 AGL Resources Inc. ....... 839,802 1,662,000
150,000 Allegheny Energy Inc.+ ... 1,510,942 2,956,500
235,000 BP plc, ADR .............. 6,274,016 13,724,000
250,000 Burlington Resources Inc. 4,842,969 10,875,000
25,000 CH Energy Group Inc. ..... 1,040,745 1,201,250
330,000 ChevronTexaco Corp. ...... 9,189,420 17,328,300
95,000 ConocoPhillips ........... 5,513,340 8,248,850
20,000 Constellation Energy
Group Inc. ............. 484,262 874,200
124,000 Devon Energy Corp. ....... 1,695,494 4,826,080
70,000 DPL Inc. ................. 1,408,409 1,757,700
20,000 DTE Energy Co. ........... 832,127 862,600
318,000 Duke Energy Corp. ........ 5,835,300 8,054,940
110,000 Duquesne Light
Holdings Inc. ............ 1,579,788 2,073,500
30,000 Edison International ..... 510,000 960,900
225,000 El Paso Corp. ............ 1,667,558 2,340,000
285,000 El Paso Electric Co.+ .... 3,296,727 5,397,900
155,000 Energy East Corp. ........ 3,179,893 4,135,400
55,000 EOG Resources Inc. ....... 503,772 3,924,800
310,000 Exxon Mobil Corp. ........ 6,624,170 15,890,600
7,000 FPL Group Inc. ........... 401,591 523,250
31,625 GlobalSantaFe Corp. ...... 743,538 1,047,104
10,000 Halliburton Co. .......... 104,525 392,400
50,000 Kerr-McGee Corp. ......... 2,729,556 2,889,500
180,000 Mirant Corp.+ ............ 708,578 69,300
22,086 NiSource Inc. ............ 475,953 503,119
190,000 Northeast Utilities ...... 3,643,888 3,581,500
100,000 Progress Energy Inc., CVO+ 52,000 13,000
66,000 SJW Corp. ................ 2,151,408 2,402,400
310,000 Southwest Gas Corp. ...... 5,639,091 7,874,000
52,000 TXU Corp. ................ 931,823 3,357,120
10,000 UIL Holdings Corp. ....... 426,389 513,000
-------------- --------------
75,271,225 131,763,913
-------------- --------------
ENTERTAINMENT -- 7.5%
19,406 EMI Group plc ............ 75,408 98,733
195,000 EMI Group plc, ADR ....... 1,693,472 1,984,222
See accompanying notes to financial statements.
6
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
185,000 Fox Entertainment Group
Inc., Cl. A+ ........... $ 4,339,217 $ 5,783,100
200,000 GC Companies Inc.+ (b) ... 218,000 172,000
500,000 Gemstar-TV Guide
International Inc.+ .... 2,181,174 2,960,000
165,000 Grupo Televisa SA, ADR ... 4,491,076 9,982,500
4,650,000 Liberty Media Corp., Cl. A+ 11,718,968 51,057,000
130,000 Metro-Goldwyn-Mayer Inc.+ 782,635 1,544,400
20,000 Regal Entertainment Group,
Cl. A .................. 393,316 415,000
220,000 Six Flags Inc.+ .......... 1,256,628 1,181,400
500,000 The Walt Disney Co. ...... 10,720,267 13,900,000
1,500,000 Time Warner Inc.+ ........ 20,133,908 29,160,000
835,000 Viacom Inc., Cl. A ....... 20,051,192 30,961,800
520,000 Vivendi Universal SA, ADR+ 10,471,933 16,676,400
60,000 World Wrestling
Entertainment Inc. ..... 612,234 727,800
-------------- --------------
89,139,428 166,604,355
-------------- --------------
ENVIRONMENTAL SERVICES -- 1.2%
320,000 Allied Waste Industries Inc.+ 2,860,139 2,969,600
300,000 Republic Services Inc. ... 3,560,581 10,062,000
450,000 Waste Management Inc. .... 8,677,342 13,473,000
-------------- --------------
15,098,062 26,504,600
-------------- --------------
EQUIPMENT AND SUPPLIES -- 4.6%
525,000 AMETEK Inc. .............. 3,039,407 18,726,750
3,000 Amphenol Corp., Cl. A+ ... 23,162 110,220
105,000 CIRCOR International Inc. 907,143 2,431,800
185,000 Crown Holdings Inc.+ ..... 834,035 2,541,900
155,000 CTS Corp. ................ 815,744 2,059,950
4,000 Danaher Corp. ............ 70,641 229,640
404,000 Donaldson Co. Inc. ....... 1,542,170 13,162,320
323,550 Fedders Corp. ............ 1,385,781 1,171,251
415,000 Flowserve Corp.+ ......... 5,764,416 11,429,100
179,800 Gerber Scientific Inc.+ .. 1,712,068 1,368,278
195,000 GrafTech International Ltd.+ 2,594,065 1,844,700
560,000 IDEX Corp. ............... 3,178,528 22,680,000
2,000 Imagistics International
Inc.+ ................... 39,950 67,320
12,000 Ingersoll-Rand Co., Cl. A 501,720 963,600
400,000 Interpump Group SpA ...... 1,572,035 2,299,850
100,000 Lufkin Industries Inc. ... 1,810,811 3,990,800
18,000 Manitowoc Co. Inc. ....... 131,305 677,700
35,900 Met-Pro Corp. ............ 321,984 477,470
10,000 Sealed Air Corp.+ ........ 168,679 532,700
30,000 Valmont Industries Inc. .. 242,908 753,300
435,000 Watts Water Technologies
Inc., Cl. A .............. 5,006,660 14,024,400
120,000 Weir Group plc ........... 504,947 740,698
-------------- --------------
32,168,159 102,283,747
-------------- --------------
FINANCIAL SERVICES -- 5.0%
15,000 Alleghany Corp.+ ......... 2,724,804 4,278,750
2,000 Allstate Corp. ........... 47,350 103,440
MARKET
SHARES COST VALUE
--------- -------------- --------------
400,000 American Express Co. ..... $ 9,964,607 $ 22,548,000
55,000 Argonaut Group Inc.+ ..... 1,333,591 1,162,150
15,000 Bank of America Corp. .... 282,955 704,850
59,000 Bank of New York Co. Inc. 2,033,306 1,971,780
220 Berkshire Hathaway Inc.,
Cl. A+ ................. 874,549 19,338,000
50,000 BKF Capital Group Inc. ... 933,375 1,895,000
7,500 Calamos Asset Management
Inc., Cl. A+ ........... 135,000 202,500
35,000 Commerzbank AG+ .......... 624,519 721,218
110,000 Commerzbank AG, ADR+ ..... 2,308,920 2,268,178
155,000 Deutsche Bank AG, ADR .... 7,004,175 13,796,550
30,000 H&R Block Inc. ........... 720,982 1,470,000
26,400 JPMorgan Chase & Co. ..... 535,615 1,029,864
6,000 Lehman Brothers
Holdings Inc. .......... 54,150 524,880
28,000 Leucadia National Corp. .. 721,175 1,945,440
30,000 Marsh & McLennan
Companies Inc. ......... 847,179 987,000
120,000 Mellon Financial Corp. ... 4,103,607 3,733,200
23,000 Merrill Lynch & Co. Inc. . 948,745 1,374,710
38,000 Metris Companies Inc.+ ... 347,786 484,500
385,000 Midland Co. .............. 1,978,452 12,038,950
160,000 Phoenix Companies Inc. ... 2,392,173 2,000,000
30,000 PNC Financial Services
Group .................. 1,456,850 1,723,200
2,500 Prudential Financial Inc. 68,750 137,400
50,000 St. Paul Travelers
Companies Inc. ......... 1,890,906 1,853,500
85,000 State Street Corp. ....... 661,975 4,175,200
20,000 SunTrust Banks Inc. ...... 424,879 1,477,600
30,000 T. Rowe Price Group Inc. . 1,012,984 1,866,000
20,000 Unitrin Inc. ............. 522,263 909,000
8,500 Value Line Inc. .......... 136,515 333,523
115,000 Waddell & Reed Financial
Inc., Cl. A ............ 2,331,754 2,747,350
-------------- --------------
49,423,891 109,801,733
-------------- --------------
FOOD AND BEVERAGE -- 8.9%
70,000 Allied Domecq plc, ADR ... 2,204,828 2,793,700
345,000 Brown-Forman Corp., Cl. A 8,539,615 17,512,200
37,000 Cadbury Schweppes
plc, ADR ............... 926,106 1,394,900
125,000 Campbell Soup Co. ........ 3,400,652 3,736,250
105,000 Coca-Cola Co. ............ 3,236,639 4,371,150
10,000 Coca-Cola Enterprises Inc. 183,697 208,500
9,500 Coca-Cola Hellenic Bottling
Co. SA ................. 231,686 224,675
225,000 Corn Products
International Inc. ..... 5,622,183 12,051,000
250,000 Del Monte Foods Co.+ ..... 2,354,135 2,755,000
318,000 Diageo plc, ADR .......... 11,903,832 18,405,840
70,000 Farmer Brothers Co. ...... 943,094 1,696,800
270,000 Flowers Foods Inc. ....... 2,549,594 8,526,600
280,000 General Mills Inc. ....... 8,447,097 13,918,800
See accompanying notes to financial statements.
7
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE (CONTINUED)
70,000 Groupe Danone ............ $ 5,997,841 $ 6,465,271
1,267,800 Grupo Bimbo SA de CV,
Cl. A .................. 2,247,680 3,202,767
10,000 Hain Celestial Group Inc.+ 141,134 206,700
200,000 Heinz (H.J.) Co. ......... 7,241,965 7,798,000
80,000 Hershey Foods Corp. ...... 1,387,857 4,443,200
230,000 Kellogg Co. .............. 5,933,962 10,271,800
100,000 Kerry Group plc, Cl. A ... 1,179,129 2,412,663
33,000 LVMH Moet Hennessy
Louis Vuitton SA ....... 1,150,670 2,527,593
9,000 Nestle SA ................ 1,868,527 2,354,674
960,000 PepsiAmericas Inc. ....... 12,302,726 20,390,400
355,000 PepsiCo Inc. ............. 9,198,266 18,531,000
150,000 Ralcorp Holdings Inc. .... 2,240,767 6,289,500
20,000 Smucker (J.M.) Co. ....... 547,733 941,400
149,041 Tootsie Roll Industries Inc. 2,005,314 5,161,290
255,000 Wrigley (Wm.) Jr. Co. .... 7,899,994 17,643,450
-------------- --------------
111,886,723 196,235,123
-------------- --------------
HEALTH CARE -- 3.1%
44,000 Amgen Inc.+ .............. 203,194 2,822,600
3,000 ArthroCare Corp.+ ........ 34,530 96,180
44,000 Biogen Idec Inc.+ ........ 409,921 2,930,840
4,000 Biomet Inc. .............. 120,840 173,560
165,000 Bristol-Myers Squibb Co. . 4,554,462 4,227,300
52,000 Chemed Corp. ............. 1,605,605 3,489,720
40,000 Chiron Corp.+ ............ 550,315 1,333,200
1,000 CONMED Corp.+ ............ 15,430 28,420
5,500 DENTSPLY International Inc. 209,434 309,100
65,000 Eli Lilly & Co. .......... 3,977,030 3,688,750
27,100 Exactech Inc.+ ........... 431,718 495,659
20,000 Henry Schein Inc.+ ....... 1,091,829 1,392,800
58,000 INAMED Corp.+ ............ 2,545,038 3,668,500
1,000 Integra LifeSciences
Holdings+ .............. 19,480 36,930
25,000 Inverness Medical
Innovations Inc.+ ...... 424,748 627,500
52,000 Invitrogen Corp.+ ........ 2,603,325 3,490,760
70,000 Johnson & Johnson ........ 1,140,150 4,439,400
120,000 Medco Health
Solutions Inc.+ ........ 3,628,666 4,992,000
155,000 Merck & Co. Inc. ......... 4,827,898 4,981,700
2,000 Nobel Biocare Holding AG . 285,863 362,325
15,000 Orthofix International NV+ 501,240 592,185
4,000 OrthoLogic Corp.+ ........ 13,880 25,000
32,000 Patterson Companies Inc.+ 702,130 1,388,480
440,000 Pfizer Inc. .............. 7,544,903 11,831,600
135,000 Schering-Plough Corp. .... 2,580,980 2,818,800
2,000 Stryker Corp. ............ 65,440 96,500
150,000 Sybron Dental
Specialties Inc.+ ...... 2,817,765 5,307,000
30,000 Thoratec Corp.+ .......... 369,898 312,600
10,000 William Demant Holding A/S+ 448,464 469,617
MARKET
SHARES COST VALUE
--------- -------------- --------------
70,000 Women First
HealthCare Inc.+ ....... $ 124,375 $ 70
1,000 Wright Medical Group Inc.+ 16,460 28,500
55,000 Wyeth .................... 2,169,854 2,342,450
1,000 Young Innovations Inc. ... 30,000 33,730
-------------- --------------
46,064,865 68,833,776
-------------- --------------
HOTELS AND GAMING -- 3.1%
90,000 Aztar Corp.+ ............. 906,574 3,142,800
160,000 Caesars Entertainment Inc.+ 918,206 3,222,400
365,000 Gaylord Entertainment Co.+ 9,694,168 15,158,450
80,000 GTECH Holdings Corp. ..... 404,713 2,076,000
10,000 Harrah's Entertainment Inc. 94,169 668,900
2,832,300 Hilton Group plc ......... 10,264,349 15,470,358
740,000 Hilton Hotels Corp. ...... 8,392,741 16,827,600
21,500 Kerzner International Ltd.+ 968,335 1,291,075
60,000 Mandalay Resort Group 726,750 4,225,800
25,000 MGM Mirage+ .............. 619,881 1,818,500
90,000 Starwood Hotels & Resorts
Worldwide Inc. ........... 2,370,235 5,256,000
-------------- --------------
35,360,121 69,157,883
-------------- --------------
MACHINERY -- 1.7%
70,000 Caterpillar Inc. ......... 927,858 6,825,700
400,000 Deere & Co. .............. 6,703,065 29,760,000
-------------- --------------
7,630,923 36,585,700
-------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.3%
57,200 Cavalier Homes Inc.+ ..... 289,788 336,908
16,100 Cavco Industries Inc.+ ... 609,204 723,695
100,000 Champion Enterprises Inc.+ 951,245 1,182,000
15,000 Coachmen Industries Inc. . 246,594 260,400
100,000 Fleetwood Enterprises Inc.+ 1,316,778 1,346,000
80,111 Huttig Building
Products Inc.+ ......... 243,014 837,160
12,500 Nobility Homes Inc. ...... 260,493 291,250
20,000 Palm Harbor Homes Inc.+ .. 346,431 337,600
30,000 Skyline Corp. ............ 1,179,310 1,224,000
11,000 Southern Energy
Homes Inc.+ ............ 43,900 51,535
-------------- --------------
5,486,757 6,590,548
-------------- --------------
METALS AND MINING -- 1.6%
45,000 Alcoa Inc. ............... 1,224,220 1,413,900
255,000 Barrick Gold Corp. ....... 3,244,173 6,176,100
12,525 Freeport-McMoRan Copper
& Gold Inc., Cl. B ..... 272,500 478,831
50,000 Kinross Gold Corp.+ ...... 359,224 352,000
515,000 Newmont Mining Corp. ..... 9,699,426 22,871,150
170,000 Placer Dome Inc. ......... 1,576,429 3,206,200
-------------- --------------
16,375,972 34,498,181
-------------- --------------
PUBLISHING -- 8.6%
225,000 Belo Corp., Cl. A ........ 4,060,533 5,904,000
22,000 Dow Jones & Co. Inc. ..... 1,000,419 947,320
30,000 EMAP plc ................. 362,733 469,704
See accompanying notes to financial statements.
8
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
COMMON STOCKS (CONTINUED)
PUBLISHING (CONTINUED)
38,000 Lee Enterprises Inc. ..... $ 875,843 $ 1,751,040
60,000 McClatchy Co., Cl. A ..... 1,240,718 4,308,600
140,000 McGraw-Hill Companies Inc. 2,576,918 12,815,600
370,000 Media General Inc., Cl. A 10,364,815 23,979,700
80,000 Meredith Corp. ........... 1,650,283 4,336,000
135,000 New York Times Co., Cl. A 1,230,827 5,508,000
4,460,000 News Corp., Cl. A ........ 32,029,721 83,223,600
24,000 News Corp., Cl. B ........ 227,345 460,800
700,000 PRIMEDIA Inc.+ ........... 2,895,356 2,660,000
200,000 Pulitzer Inc. ............ 9,206,927 12,970,000
250,000 Reader's Digest
Association Inc. ....... 4,550,868 3,477,500
248,000 Scripps (E.W.) Co., Cl. A 7,804,764 11,973,440
68,614 Seat Pagine Gialle SpA ... 172,632 31,616
120,000 Thomas Nelson Inc. ....... 1,535,734 2,712,000
290,000 Tribune Co. .............. 10,098,557 12,220,600
1,000 VNU NV ................... 29,111 29,537
-------------- --------------
91,914,104 189,779,057
-------------- --------------
REAL ESTATE -- 1.5%
230,000 Catellus Development Corp. 2,776,068 7,038,000
120,082 Florida East Coast
Industries Inc. ........ 1,856,261 5,415,698
100,000 Griffin Land &
Nurseries Inc.+ .......... 1,372,091 2,575,000
295,000 St. Joe Co. .............. 2,247,748 18,939,000
-------------- --------------
8,252,168 33,967,698
-------------- --------------
RETAIL -- 2.9%
40,000 Aaron Rents Inc. ......... 82,258 1,000,000
60,750 Aaron Rents Inc., Cl. A .. 287,231 1,374,469
160,000 Albertson's Inc. ......... 3,394,168 3,820,800
400,000 AutoNation Inc.+ ......... 3,907,791 7,684,000
140,000 Burlington Coat Factory
Warehouse Corp. ........ 1,620,864 3,178,000
13,500 Coldwater Creek Inc.+ .... 50,700 416,745
130,000 Kroger Co.+ .............. 761,625 2,280,200
660,000 Neiman Marcus Group Inc.,
Cl. B .................. 15,984,491 44,088,000
-------------- --------------
26,089,128 63,842,214
-------------- --------------
SPECIALTY CHEMICALS -- 1.7%
450,000 Ferro Corp. .............. 7,347,884 10,435,500
105,000 Fuller (H.B.) Co. ........ 1,723,277 2,993,550
130,000 General Chemical
Group Inc.+ ............ 502,184 2,600
105,000 Great Lakes Chemical Corp. 2,781,423 2,991,450
310,000 Hercules Inc.+ ........... 4,915,696 4,603,500
38,000 International Flavors &
Fragrances Inc. ........ 737,444 1,627,920
160,000 Material Sciences Corp.+ . 1,390,040 2,878,400
650,000 Omnova Solutions Inc.+ ... 2,051,888 3,653,000
350,000 Sensient Technologies Corp. 6,822,604 8,396,500
-------------- --------------
28,272,440 37,582,420
-------------- --------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
TELECOMMUNICATIONS -- 6.6%
66,000 ALLTEL Corp. ............. $ 2,088,222 $ 3,878,160
150,000 AT&T Corp. ............... 3,743,176 2,859,000
14,000 Brasil Telecom Participacoes
SA, ADR .................. 810,959 534,100
280,000 BT Group plc ............. 1,103,373 1,091,272
30,000 BT Group plc, ADR ........ 1,082,623 1,185,900
455,000 CenturyTel Inc. .......... 5,373,842 16,138,850
600,000 Cincinnati Bell Inc.+ .... 3,839,116 2,490,000
300,000 Citizens
Communications Co. ....... 2,996,415 4,137,000
300,000 Commonwealth Telephone
Enterprises Inc.+ ........ 5,360,976 14,898,000
80,000 Deutsche Telekom AG, ADR+ 1,229,873 1,814,400
35,000 France Telecom SA, ADR ... 683,990 1,157,800
2,750,000 Qwest Communications
International Inc.+ ..... 10,590,300 12,210,000
776,550 Rogers Communications Inc.,
Cl. B, New York ......... 7,666,353 20,306,782
10,000 Rogers Communications Inc.,
Cl. B, Toronto .......... 77,553 262,404
160,000 SBC Communications Inc. .. 5,329,234 4,123,200
940,000 Sprint Corp. ............. 15,654,834 23,359,000
10,000 Swisscom AG, ADR ......... 292,659 395,300
75,403 Tele Norte Leste Participacoes
SA, ADR ................ 1,032,454 1,272,049
1,500,435 Telecom Italia SpA ....... 939,006 6,138,792
295,000 Telecom Italia SpA, ADR .. 2,009,130 12,056,650
95,000 Telefonica SA, ADR ....... 3,448,619 5,367,500
12,567 Telefonica SA, BDR ....... 147,383 231,846
20,000 Telefonos de Mexico SA de
CV, Cl. L, ADR ......... 171,746 766,400
32,500 TELUS Corp. .............. 572,039 982,473
17,500 TELUS Corp., ADR ......... 316,603 529,024
210,000 Verizon
Communications Inc. .... 6,612,906 8,507,100
-------------- --------------
83,173,384 146,693,002
-------------- --------------
TRANSPORTATION -- 0.1%
85,000 AMR Corp.+ ............... 1,245,603 930,750
55,000 Grupo TMM SA, Cl. A, ADR+ 396,879 201,300
4,000 Kansas City Southern+ .... 7,317 70,920
4,000 Providence & Worcester
Railroad Co. ........... 44,669 53,960
-------------- --------------
1,694,468 1,256,930
-------------- --------------
WIRELESS COMMUNICATIONS -- 3.4%
65,000 America Movil SA de CV,
Cl. L, ADR .............. 1,117,669 3,402,750
300,000 mm02 plc+ ................ 348,979 707,004
140,000 mm02 plc, ADR+ ........... 1,526,021 3,299,800
120,000 Nextel Communications Inc.,
Cl. A+ .................. 1,364,944 3,600,000
70,000 Nextel Partners Inc., Cl .A+ 691,833 1,367,800
72,000 Price
Communications Corp.+ ... 1,120,226 1,338,480
See accompanying notes to financial statements.
9
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
--------- -------------- --------------
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
10,019 Tele Centro Oeste Celular
Participacoes SA, ADR ... $ 30,034 $ 98,888
776 Tele Leste Celular
Participacoes SA, ADR+ .. 20,757 9,428
1,350 Tele Norte Celular
Participacoes SA, ADR ... 20,857 12,326
1,800,000 Telecom Italia Mobile SpA . 1,661,797 13,456,572
3,375 Telemig Celular
Participacoes SA, ADR ..... 97,539 95,276
593,500 Telephone & Data
Systems Inc. ............ 23,240,247 45,669,825
33,764 Telesp Celular
Participacoes SA, ADR+ .. 602,880 229,595
13,001 Tim Participacoes SA, ADR 157,722 200,475
30,000 United States
Cellular Corp.+ ......... 1,063,446 1,342,800
12,000 Vodafone Group plc, ADR 237,532 328,560
-------------- --------------
33,302,483 75,159,579
-------------- --------------
TOTAL COMMON STOCKS ....... 1,129,850,234 2,170,536,790
-------------- --------------
PREFERRED STOCKS -- 0.2%
AEROSPACE -- 0.2%
29,500 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .. 3,437,340 3,894,295
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.0%
7,686,101 Telesp Celular Participacoes
SA, Pfd.+ ............... 60,929 20,807
2,752,134 Telesp Celular Participacoes
SA, Pfd., Receipts+ ...... 5,096 7,201
-------------- --------------
66,025 28,008
-------------- --------------
TOTAL PREFERRED STOCKS .... 3,503,365 3,922,303
-------------- --------------
PRINCIPAL
AMOUNT
-----------
CONVERTIBLE CORPORATE BONDS -- 0.4%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$ 1,500,000 Pep Boys - Manny, Moe & Jack, Cv.,
4.250%, 06/01/07 ........ 1,491,518 1,533,750
1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ........ 921,415 977,500
-------------- --------------
2,412,933 2,511,250
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
500,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ........ 504,404 549,375
-------------- --------------
BUSINESS SERVICES -- 0.1%
1,000,000 Trans-Lux Corp., Sub. Deb. Cv.,
7.500%, 12/01/06 ........ 1,005,384 1,015,000
-------------- --------------
CABLE AND SATELLITE -- 0.0%
1,000,000 Charter Communications Inc., Cv.,
4.750%, 06/01/06 ......... 750,828 1,005,000
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
----------- -------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.2%
$ 2,000,000 Agere Systems Inc., Sub. Deb. Cv.,
6.500%, 12/15/09 ........ $ 1,924,333 $ 2,125,000
1,000,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ......... 967,402 977,500
1,000,000 TriQuint Semiconductor Inc.,
Sub. Deb. Cv.,
4.000%, 03/01/07 ........ 968,861 972,500
-------------- --------------
3,860,596 4,075,000
-------------- --------------
ELECTRONICS -- 0.0%
500,000 Oak Industries Inc., Sub. Deb. Cv.,
4.875%, 03/01/08 366,968 520,000
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS ......... 8,901,113 9,675,625
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS -- 1.6%
34,574,000 U.S. Treasury Bills,
1.776% to 2.202%++,
01/06/05 to 03/17/05 .... 34,460,359 34,465,617
-------------- --------------
SHARES
----------
WARRANTS -- 0.0%
COMMUNICATIONS EQUIPMENT -- 0.0%
1,097 Lucent Technologies Inc.,
expires 12/10/07+ ....... 1,821 1,733
-------------- --------------
TOTAL
INVESTMENTS -- 100.1% $1,176,716,892 2,218,602,068
==============
OTHER ASSETS AND
LIABILITIES (NET) -- (0.1)% ............. (1,851,502)
--------------
NET ASSETS -- 100.0% ...................... $2,216,750,566
==============
- ----------
For Federal tax purposes:
Aggregate cost ............................ $1,183,302,111
==============
Gross unrealized appreciation ............. $1,064,812,645
Gross unrealized depreciation ............. (29,512,688)
==============
Net unrealized appreciation (depreciation) $1,035,299,957
==============
- ----------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At December
31, 2004, the Rule 144A securities are considered liquid and the market
value amounted to $10,009,177 or 0.5% of total net assets.
(b) Security fair valued under procedures established by the Board of
Trustees. The procedures may include reviewing available financial
information about the company and reviewing valuation of comparable
securities and other factors on a regular basis. At December 31, 2004, the
market value of fair valued securities amounted to $172,000 or 0.01% of
total net assets.
+ 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.
10
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $1,176,716,892) ............ $2,218,602,068
Cash and foreign currency, at value
(cost $1,430) ........................................ 1,433
Receivable for Fund shares sold ........................ 1,451,358
Dividends and interest receivable ...................... 2,236,305
Receivable for investments sold ........................ 125,479
Other assets ........................................... 74,522
--------------
TOTAL ASSETS ........................................... 2,222,491,165
--------------
LIABILITIES:
Payable for Fund shares redeemed ....................... 2,770,377
Payable for investment advisory fees ................... 1,848,164
Payable for distribution fees .......................... 462,258
Payable for shareholder services fees .................. 363,023
Payable for shareholder communications fees ............ 170,074
Other accrued expenses ................................. 126,703
--------------
TOTAL LIABILITIES ...................................... 5,740,599
--------------
NET ASSETS applicable to 53,474,817
shares outstanding ................................... $2,216,750,566
==============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at $0.01 par value ...... $ 534,748
Additional paid-in capital ............................. 1,180,878,296
Accumulated distributions in excess of
net investment income ................................ (6,974)
Accumulated net realized loss on investments
and foreign currency transactions .................... (6,543,466)
Net unrealized appreciation on investments
and foreign currency translations .................... 1,041,887,962
--------------
NET ASSETS ............................................. $2,216,750,566
==============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($2,216,049,748 / 53,457,834.248
shares outstanding) .................................. $41.45
======
CLASS A:
Net Asset Value and redemption price per share
($350,464 / 8,467.263 shares outstanding) .......... $41.39
======
Maximum offering price per share (NAV / 0.9425,
based on maximum sales charge of 5.75% of
the offering price) .................................. $43.92
======
CLASS B:
Net Asset Value and offering price per share
($1,156 / 28.085 shares outstanding) ............... $41.16(a)
======
CLASS C:
Net Asset Value and offering price per share
($349,198 / 8,487.167 shares outstanding) .......... $41.14(a)
======
- ----------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $476,400) ........... $ 28,432,393
Interest ............................................... 933,076
------------
TOTAL INVESTMENT INCOME ................................ 29,365,469
------------
EXPENSES:
Investment advisory fees ............................... 20,317,306
Distribution fees -- Class AAA ......................... 5,078,789
Distribution fees -- Class A ........................... 318
Distribution fees -- Class B ........................... 10
Distribution fees -- Class C ........................... 872
Shareholder services fees .............................. 1,472,139
Shareholder communications expenses .................... 485,806
Custodian fees ......................................... 343,935
Legal and audit fees ................................... 76,866
Trustees' fees ......................................... 57,000
Registration expenses .................................. 55,579
Miscellaneous expenses ................................. 178,188
------------
TOTAL EXPENSES ......................................... 28,066,808
------------
NET INVESTMENT INCOME .................................. 1,298,661
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investments ....................... 40,899,377
Net realized gain on foreign
currency transactions ................................ 18,554
Net change in unrealized appreciation /
depreciation on investments and foreign
currency translations ................................ 276,438,154
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ......................................... 317,356,085
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $318,654,746
============
See accompanying notes to financial statements.
11
THE GABELLI ASSET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------
OPERATIONS:
Net investment income ................................................... $ 1,298,661 $ 1,851,940
Net realized gain on investments
and foreign currency transactions ....................................... 40,917,931 43,687,872
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations ..................................... 276,438,154 420,113,505
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................... 318,654,746 465,653,317
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ............................................................. (1,324,870) (1,651,347)
Class A ............................................................... (693) --
Class B ............................................................... -- --
Class C ............................................................... (143) --
-------------- --------------
(1,325,706) (1,651,347)
-------------- --------------
Net realized gain on investments
Class AAA ............................................................. (40,218,795) (31,641,902)
Class A ............................................................... (6,345) --
Class B ............................................................... (21) --
Class C ............................................................... (6,372) --
-------------- --------------
(40,231,533) (31,641,902)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (41,557,239) (33,293,249)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ............................................................... (19,448,643) 24,647,514
Class A ................................................................. 325,037 1,000
Class B ................................................................. -- 1,000
Class C ................................................................. 329,814 1,000
-------------- --------------
Net increase / (decrease) in net assets from shares of
beneficial interest transactions ...................................... (18,793,792) 24,650,514
-------------- --------------
REDEMPTION FEES ......................................................... 16,237 --
-------------- --------------
NET INCREASE IN NET ASSETS .............................................. 258,319,952 457,010,582
NET ASSETS:
Beginning of period ..................................................... 1,958,430,614 1,501,420,032
-------------- --------------
End of period (including undistributed net investment income of
$0 and $164,909, respectively) ........................................ $2,216,750,566 $1,958,430,614
============== ==============
See accompanying notes to financial statements.
12
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 U.S. 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 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 or a market's official closing price 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 (the "Board") so determines, by such other method as the Board
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 or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments that are not credit impaired with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be valued at their fair value as determined by the
Board. 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. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
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. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
13
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 translations. 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.
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 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. At December 31, 2004, there were no open forward foreign exchange
contracts.
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 translations. 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.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
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.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
14
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
In calculating net asset value per share of each class, investment income,
realized and unrealized gains and losses, redemption fees and expenses other
than class specific expenses, are allocated daily to each class of shares based
upon the proportion of net assets of each class at the beginning of each day.
Distribution expenses are solely borne by the class incurring the expense.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on ordinary income and long-term capital gain amounts as determined in
accordance with Federal income tax regulations, which may differ from income and
capital gains as determined under U.S. generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
For the year ended December 31, 2004, reclassifications were made to decrease
accumulated net investment income by $144,838 and to decrease accumulated net
realized loss on investments and foreign currency transactions by $144,838.
The tax character of distributions paid during the fiscal years ended December
31, 2004 and December 31, 2003 were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short term capital gains) $ 3,054,945 $ 1,651,347
Net long term capital gains .................. 38,502,294 31,641,902
----------- ------------
Total distributions paid ..................... $41,557,239 $ 33,293,249
=========== ============
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 (the "Code"). It is the Fund's policy to comply with the
requirements of the 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, 2004, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Accumulated net realized capital gains ....... $ 34,782
Net unrealized appreciation .................. 1,035,299,957
Net unrealized appreciation on
foreign currency transactions .............. 2,783
--------------
Total accumulated gain ....................... $1,035,337,522
==============
15
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00% and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities
for the year ended December 31, 2004, other than short term securities,
aggregated $137,591,797 and $159,508,285, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2004, the
Fund paid brokerage commissions of $336,270 to Gabelli & Company. During the
year ended December 31, 2004, Gabelli & Company informed the Fund that it
received $1,303 from investors representing commissions (sales charges and
underwriting fees) on sales and redemptions of Fund shares.
The cost of calculating the Fund's net asset value per share is a Fund expense
pursuant to the Advisory Agreement between the Fund and the Adviser. During the
year ended December 31, 2004, the Fund reimbursed the Adviser $34,800 in
connection with the cost of computing the Fund's net asset value which is
included in miscellaneous expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of 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. During the year ended December 31, 2004, there were no
borrowings from the line of credit.
8. SHARES OF BENEFICIAL INTEREST. The Fund offers four classes of shares --
Class AAA Shares, Class A Shares, Class B Shares and Class C Shares. Class AAA
Shares are offered only to investors who acquire them directly from Gabelli &
Company or through selected broker/dealers without a sales charge. 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 and automatically convert to Class A Shares after
eight years from the original 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 one year after purchase. As of
July 27, 2004, Class B Shares are available only through exchange of Class B
Shares of other Funds distributed by Gabelli & Company.
The Fund imposes a redemption fee of 2.00% on Class AAA Shares, Class A Shares,
Class B Shares and Class C Shares that are redeemed or exchanged within 60 days
after the date of a purchase. For Class AAA, Class A, Class B and Class C
Shares, the 2.00% redemption fee applied to shares purchased on or after
16
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
November 1, 2004. The redemption fee is deducted from the proceeds otherwise
payable to the redeeming shareholders and retained by the Fund. The redemption
fees retained by the Fund during the year ended December 31, 2004 amounted to
$16,237.
The redemption fee did not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension until March 31, 2005 to implement
such systems.
Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ...................................... 7,073,000 $ 266,326,783 8,794,945 $ 263,908,171
Shares issued upon reinvestment of dividends ..... 952,780 39,435,639 866,201 31,347,814
Shares redeemed .................................. (8,572,029) (325,211,065) (8,795,505) (270,608,471)
---------- ------------- ---------- -------------
Net increase / (decrease) .................... (546,249) $ (19,448,643) 865,641 $ 24,647,514
========== ============= ========== =============
CLASS A CLASS A*
---------------------------- ---------------------------
Shares sold ...................................... 8,269 $ 317,999 28 $ 1,000
Shares issued upon reinvestment of dividends ..... 170 7,038 -- --
Shares redeemed .................................. -- -- -- --
---------- ------------- ---------- -------------
Net increase ................................. 8,439 $ 325,037 28 $ 1,000
========== ============= ========== =============
CLASS B CLASS B*
---------------------------- ---------------------------
Shares sold ...................................... -- $ -- 28 $ 1,000
Shares issued upon reinvestment of dividends ..... -- -- -- --
Shares redeemed .................................. -- -- -- --
---------- ------------- ---------- -------------
Net increase ................................. -- $ -- 28 $ 1,000
========== ============= ========== =============
CLASS C CLASS C*
---------------------------- ---------------------------
Shares sold ...................................... 9,071 $ 354,240 28 $ 1,000
Shares issued upon reinvestment of dividends ..... 156 6,395 -- --
Shares redeemed .................................. (767) (30,821) -- --
---------- ------------- ---------- -------------
Net increase ................................. 8,460 $ 329,814 28 $ 1,000
========== ============= ========== =============
<FN>
- ----------
*Commencement of share offering to the public on December 31, 2003.
</FN>
9. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests. The Fund does not
believe that these matters will have a material adverse effect on the Fund's
financial position or the results of its operations.
10. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
17
THE GABELLI ASSET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
---------------------------------------------------------- -----------------------------------------
Net
Net Asset Realized and Total Net
Period Value, Net Unrealized from Net Realized
Ended Beginning Investment Gain/(Loss) on Investment Investment Gain on Total
December 31 of Period Income/(Loss)(c) Investments Operations Income Investments Distributions
- ----------- --------- ---------------- -------------- ---------- ---------- ----------- -------------
CLASS AAA
2004 $36.26 $ 0.02 $ 5.96 $ 5.98 $(0.03) $(0.76) $(0.79)
2003 28.25 0.04 8.60 8.64 (0.03) (0.60) (0.63)
2002 32.97 0.02 (4.72) (4.70) (0.02) (0.00)(a) (0.02)
2001 33.90 (0.00)(a) 0.05 0.05 -- (0.98) (0.98)
2000 40.84 0.31 (1.37) (1.06) (0.31) (5.57) (5.88)
CLASS A(b)
2004 $36.26 $ 0.03 $ 5.94 $ 5.97 $(0.08) $(0.76) $(0.84)
CLASS B(b)
2004 $36.26 $(0.25) $ 5.91 $ 5.66 -- $(0.76) $(0.76)
CLASS C(b)
2004 $36.26 $(0.26) $ 5.92 $ 5.66 $(0.02) $(0.76) $(0.78)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------
Net Asset Net Assets Net
Period Value, End of Investment Portfolio
Ended Redemption End of Total Period Income/ Operating Turnover
December 31 Fees(c) Period Return+ (in 000's) (Loss) Expenses Rate
- ----------- ---------- --------- ------- ----------- ---------- --------- ---------
CLASS AAA
2004 $0.00(a) $41.45 16.5% $2,216,050 0.06% 1.38% 7%
2003 -- 36.26 30.6 1,958,431 0.11 1.38 7
2002 -- 28.25 (14.3) 1,501,420 0.04 1.38 8
2001 -- 32.97 0.2 1,911,007 (0.00) 1.36 15
2000 -- 33.90 (2.4) 1,906,095 0.77 1.36 48
CLASS A(b)
2004 $0.00(a) $41.39 16.5% $351 0.07% 1.40% 7%
CLASS B(b)
2004 $0.00(a) $41.16 15.6% $1 (0.67)% 2.07% 7%
CLASS C(b)
2004 $0.00(a) $41.14 15.6% $349 (0.68)% 2.15% 7%
<FN>
- -------------------------
+ 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 and does not reflect applicable sales charges. Total return for the period of less
than one year is not annualized.
(a) Amount represents less than $0.005 per share.
(b) Class A, Class B and Class C shares were initially offered on December 31, 2003.
(c) Per share amounts have been calculated using the average shares outstanding method.
</FN>
See accompanying notes to financial statements.
18
THE GABELLI ASSET FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
The Gabelli Asset Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule 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, 2004, 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 periods presented, 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 the standards of the Public Company Accounting Oversight Board
(United States). Those standards 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, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 28, 2005
19
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
10580-1422.
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 4
- ----------------- ---------- ------------- --------------------------------------------- ----------------------------
INTERESTED TRUSTEES 3:
- ----------------------
MARIO J. GABELLI Since 1986 24 Chairman of the Board, Chief Executive Director of Morgan Group
Trustee and Chairman Officer of Gabelli Asset Management Inc. an Holdings, Inc. (holding
Age: 62 Chief Investment Officer of Gabelli Funds, company)
LLC and GAMCO Investors, Inc.; Vice Chairman
and Chief Executive Officer of Lynch
Interactive Corporation (multimedia and
services)
JOHN D. GABELLI Since 1999 10 Senior Vice President of Gabelli & --
Trustee Company, Inc.; Director of Gabelli Advisers,
Age: 60 Inc.
KARL OTTO POHL Since 1992 34 Member of the Shareholder Committee of Sal Director of Gabelli Asset
Trustee Oppenheim Jr. & Cie (private investment bank); Management Inc. (investment
Age: 75 Former President of the Deutsche Bundesbank management); Chairman,
and Chairman of its Central Bank Council Incentive Capital and
(1980-1991) Incentive Asset Management
(Zurich); Director at Sal
Oppenheim Jr. & Cie, Zurich
NON-INTERESTED TRUSTEES:
- ------------------------
ANTHONY J. COLAVITA Since 1989 36 President and Attorney at Law in the law firm --
Trustee of Anthony J. Colavita P.C.
Age: 69
JAMES P. CONN Since 1992 13 Former Managing Director and Chief Investment Director of LaQuinta Corp.
Trustee Officer of Financial Security Assurance (hotels) and First Republic
Age: 66 Holdings, Ltd. (1992-1998) Bank
ANTHONY R. PUSTORINO Since 1986 17 Certified Public Accountant; Professor Director of Lynch
Trustee Emeritus, Pace University Corporation (diversified
Age: 79 manufacturing)
WERNER J. ROEDER, MD Since 2001 26 Medical Director of Lawrence Hospital and --
Trustee practicing private physician
Age: 64
ANTHONIE C. VAN EKRIS 1986-1989 20 Managing Director of BALMAC Director of Aurado Energy
Trustee 1992-present International, Inc. (commodities) Inc. (oil and gas
Age: 70 operations)
SALVATORE J. ZIZZA 1986-1996 24 Chairman, Hallmark Electrical Supplies Corp. Director of Hollis Eden
Trustee 2000-present Pharmaceuticals; Director
Age: 59 of Earl Scheib, Inc.
(automotive services)
20
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 4
- ----------------- ---------- ------------- --------------------------------------------- ----------------------------
OFFICERS:
- ---------
BRUCE N. ALPERT Since 1994 -- Executive Vice President and Chief Operating --
President and Treasurer Officer of Gabelli Funds, LLC since 1988 and
Age: 53 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: 41 and GAMCO Investors, Inc. since 1993;
Secretary of all mutual funds advised by
Gabelli Advisers, Inc. and Gabelli Funds, LLC
PETER GOLDSTEIN Since 2004 -- Director of Regulatory Affairs at Gabelli --
Chief Compliance Officer Asset Management Inc. since February 2004;
Age: 51 Vice President of Goldman Sachs Asset
Management from November 2000 through January
2004; Deputy GeneralCounsel at Gabelli Asset
Management Inc. from February 1998 through
November 2000
<FN>
- ----------
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. Each officer will hold office
for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified.
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.
4 This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934
(i.e. public companies) or other investment companies registered under the 1940 Act.
</FN>
- --------------------------------------------------------------------------------
2004 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2004, the Fund paid to shareholders on
December 29, 2004 ordinary income dividends (comprised of net investment income
and short-term capital gains) totaling $0.0612, $0.1195, $0.0360 and $0.0532 and
long term capital gains totaling $0.7288, $0.7288, $0.7288 and $0.7288 per share
for Class AAA, Class A, Class B and Class C, respectively. For the fiscal year
ended December 31, 2004, 100% of the ordinary income dividend qualifies for the
dividend received deduction available to corporations and 100% of the ordinary
income distribution was qualifying dividend income.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2004 which was derived from U.S. Treasury securities was 0.55%. 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 2004. 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.
- --------------------------------------------------------------------------------
21
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 MEDICAL DIRECTOR
ANTHONY J. COLAVITA, P.C. LAWRENCE HOSPITAL
James P. Conn Anthonie C. van Ekris
FORMER CHIEF INVESTMENT OFFICER MANAGING DIRECTOR
FINANCIAL SECURITY ASSURANCE BALMAC INTERNATIONAL, INC.
HOLDINGS LTD.
Salvatore J. Zizza
John D. Gabelli CHAIRMAN
SENIOR VICE PRESIDENT HALLMARK ELECTRICAL SUPPLIES
GABELLI & COMPANY, INC. CORP.
Karl Otto Pohl
FORMER PRESIDENT
DEUTSCHE BUNDESBANK
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Asset Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB405Q404SR
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.
(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 Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
- ----------
(a) 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 $43,429 in
2004 and $34,259 in 2003.
Audit-Related Fees
- ------------------
(b) 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 2004 and $0 in 2003.
Tax Fees
- --------
(c) 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 $2,550 in 2004 and $2,450
in 2003.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
All Other Fees
- --------------
(d) 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
in 2004 and $0 in 2003.
(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 the
Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC
("Gabelli") that provides services to the registrant (a "Covered
Services Provider") if the independent auditors' engagement related
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 the 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 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 2004 and $0 in 2003.
(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. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Board of Trustees has a Nominating Committee comprised of three
"non-interested" (as such term is defined by the Investment Company Act of 1940,
as amended) Trustees, namely James P. Conn, Werner J. Roeder and Salvatore J.
Zizza. The Nominating Committee is responsible for identifying individuals
believed to be qualified to become Board members in the event that a position is
vacated or created. The Nominating Committee will consider Trustee candidates
recommended by shareholders. In considering candidates submitted by
shareholders, the Nominating Committee will take into consideration the needs of
the Board of Trustees, the qualifications of the candidate and the interests of
shareholders. The Nominating Committee may also take into consideration the
number of shares held by the recommending shareholder and the length of time
that such shares have been held. To have a candidate considered by the
Nominating Committee, a shareholder must submit the recommendation in writing
and must include the following information:
o The name of the shareholder and evidence of the person's ownership of
shares of the Fund, including the number of shares owned and the length
of time of ownership;
o The name of the candidate, the candidate's resume or a listing of his or
her qualifications to be a Trustee of the Fund and the person's consent
to be named as a Trustee if selected by the Nominating Committee and
nominated by the Board of Trustees; and
o If requested by the Nominating Committee, a completed and signed
Trustees questionnaire.
The shareholder recommendation and information described above must be sent to
the Fund's Secretary c/o Gabelli Funds, LLC, James E. McKee, and must be
received by the Secretary no less than 120 days prior to the anniversary date of
the Fund's most recent annual meeting of shareholders or, if the meeting has
moved by more than 30 days, a reasonable amount of time before the meeting.
The Nominating Committee believes that the minimum qualifications for serving as
a Trustee of the Fund are that the individual demonstrate, by significant
accomplishment in his or her field, an ability to make a meaningful contribution
to the Board of Trustees' oversight on the business and affairs of the Fund and
have an impeccable record and reputation for honest and ethical conduct in both
his or her professional and personal activities. In addition, the Nominating
Committee examines a candidate's specific experiences and skills, time
availability in light of other commitments, potential conflicts of interest and
independence from management and the Fund. The Nominating Committee also seeks
to have the Board of Trustees represent a diversity of backgrounds and
experience.
The Fund's Nominating Committee has adopted a Nominating Committee Charter.
ITEM 11. 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 second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, that is the subject of disclosure required by Item 2,
filed as exhibit (a)(1) to the Registrant's Form N-CSR, filed on
March 10, 2004 (Accession No. 0000935069-04-000472).
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 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
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-----------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date March 9, 2005
----------------------------------------------------------------------------
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 &
Principal Financial Officer
Date March 9, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.