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
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2006
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. 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.
THE GABELLI ASSET FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
TO OUR SHAREHOLDERS,
During the second quarter of 2006, The Gabelli Asset Fund (the "Fund")
rose 0.9%, while the Standard & Poor's ("S&P") 500 Index declined 1.4% and the
Dow Jones Industrial Average rose 0.9%. For the six month period ended June 30,
2006, the Fund was up 8.3% versus gains of 2.7% and 5.3% for the S&P 500 Index
and the Dow Jones Industrial Average, respectively.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2006.
COMPARATIVE RESULTS
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AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2006 (A)
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Since
Year to Inception
Quarter Date 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year (3/3/86)
------- ---- ------ ------ ------ ------- ------- ------- --------
GABELLI ASSET FUND CLASS AAA ..... 0.93% 8.29% 11.47% 15.56% 7.15% 11.91% 12.99% 13.58% 13.97%
S&P 500 Index ....................(1.44) 2.71 8.62 11.21 2.49 8.32 10.73 11.02 11.44
Dow Jones Industrial Average ..... 0.93 5.25 11.07 9.95 3.47 9.17 11.87 12.16 12.58
Nasdaq Composite Index ...........(7.17) (1.51) 5.60 10.21 0.10 6.25 10.65 8.75 9.25
Class A .......................... 0.91 8.29 11.48 15.55 7.15 11.91 12.99 13.57 13.98
(4.89)(b) 2.06(b) 5.07(b) 13.29(b) 5.88(b) 11.25(b) 12.54(b) 13.24(b) 13.64(b)
Class B .......................... 0.73 7.95 10.72 14.88 6.77 11.72 12.86 13.47 13.88
(4.27)(c) 2.95(c) 5.72(c) 14.11(c) 6.46(c) 11.72(c) 12.86(c) 13.47(c) 13.88(c)
Class C .......................... 0.71 7.89 10.63 14.83 6.75 11.70 12.85 13.47 13.88
(0.29)(c) 6.89(c) 9.63(c) 14.83(c) 6.75(c) 11.70(c) 12.85(c) 13.47(c) 13.88(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DISTRIBUTIONS 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 CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE
PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND
SHOULD BE READ CAREFULLY BEFORE INVESTING. 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. THE CLASS AAA SHARES' NET ASSET VALUES 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.
(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.
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The
financial statements and investment portfolio are mailed separately from the
commentary. Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com/funds.
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THE GABELLI ASSET FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2006 through June 30, 2006
EXPENSE TABLE
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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 costs (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 six months ended June 30, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/06 06/30/06 Ratio Period*
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THE GABELLI ASSET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,082.90 1.37% $ 7.08
Class A $1,000.00 $1,082.90 1.37% $ 7.08
Class B $1,000.00 $1,079.50 2.12% $10.93
Class C $1,000.00 $1,078.90 2.12% $10.93
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,018.00 1.37% $ 6.85
Class A $1,000.00 $1,018.00 1.37% $ 6.85
Class B $1,000.00 $1,014.28 2.12% $10.59
Class C $1,000.00 $1,014.28 2.12% $10.59
* 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 365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of June 30, 2006:
THE GABELLI ASSET FUND
Food and Beverage .................................. 10.4%
Energy and Utilities ............................... 8.8%
Publishing ......................................... 7.2%
Telecommunications ................................. 6.5%
Diversified Industrial ............................. 6.0%
Financial Services ................................. 5.9%
Equipment and Supplies ............................. 5.7%
Consumer Products .................................. 5.3%
Entertainment ...................................... 5.1%
Cable and Satellite ................................ 4.7%
Health Care ........................................ 3.2%
Automotive: Parts and Accessories .................. 3.1%
Aviation: Parts and Services ....................... 3.0%
Hotels and Gaming .................................. 2.9%
Communications Equipment ........................... 2.0%
Metals and Mining .................................. 1.9%
Machinery .......................................... 1.9%
Broadcasting ....................................... 1.9%
Consumer Services .................................. 1.7%
Agriculture ........................................ 1.5%
Environmental Services ............................. 1.4%
Specialty Chemicals ................................ 1.3%
Aerospace .......................................... 1.3%
Real Estate ........................................ 1.1%
Electronics ........................................ 1.1%
Business Services .................................. 0.8%
Automotive ......................................... 0.8%
Wireless Communications ............................ 0.8%
Retail ............................................. 0.7%
Transportation ..................................... 0.6%
U.S. Government Obligations ........................ 0.6%
Manufactured Housing and
Recreational Vehicles ............................ 0.4%
Computer Software and Services ..................... 0.4%
Closed-End Funds ................................... 0.1%
Paper and Forest Products .......................... 0.0%
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 LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED MARCH 31, 2006. 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, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, (i)
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
SCHEDULE OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 99.1%
AEROSPACE -- 1.1%
70,000 Boeing Co. ....................... $ 2,424,385 $ 5,733,700
30,000 Herley Industries Inc.+ .......... 487,927 336,300
12,000 Lockheed Martin Corp. ............ 354,600 860,880
31,000 Northrop Grumman Corp. ........... 1,491,426 1,985,860
2,000,000 Rolls-Royce Group plc+ ........... 14,749,075 15,311,500
80,700,000 Rolls-Royce Group plc, Cl. B ..... 82,717 152,963
-------------- --------------
19,590,130 24,381,203
-------------- --------------
AGRICULTURE -- 1.5%
705,000 Archer-Daniels-Midland Co. ....... 9,772,128 29,102,400
15,000 Delta & Pine Land Co. ............ 260,292 441,000
40,529 Monsanto Co. ..................... 647,781 3,412,137
50,000 Mosaic Co.+ ...................... 763,480 782,500
1,000 Potash Corp. of Saskatchewan Inc. 41,184 85,970
-------------- --------------
11,484,865 33,824,007
-------------- --------------
AUTOMOTIVE -- 0.8%
20,000 General Motors Corp. ............. 539,120 595,800
500,000 Navistar International Corp.+ .... 8,980,097 12,305,000
45,000 PACCAR Inc. ...................... 522,021 3,707,100
25,000 Volkswagen AG .................... 1,044,095 1,753,258
-------------- --------------
11,085,333 18,361,158
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.0%
105,000 BorgWarner Inc. .................. 2,017,206 6,835,500
240,000 CLARCOR Inc. ..................... 1,718,044 7,149,600
300,000 Dana Corp. ....................... 3,509,791 792,000
260,000 Earl Scheib Inc.+ ................ 1,603,290 975,000
195,000 Federal-Mogul Corp.+ ............. 411,720 70,200
520,000 Genuine Parts Co. ................ 12,888,512 21,663,200
167,000 Johnson Controls Inc. ............ 4,231,320 13,730,740
170,000 Midas Inc.+ ...................... 2,224,151 3,128,000
285,000 Modine Manufacturing Co. ......... 6,650,816 6,657,600
150,000 Proliance International Inc.+ .... 908,409 693,000
180,000 Standard Motor Products Inc. ..... 2,488,936 1,501,200
70,000 Superior Industries
International Inc. ............. 1,762,639 1,280,300
130,000 Tenneco Inc.+ .................... 475,684 3,380,000
-------------- --------------
40,890,518 67,856,340
-------------- --------------
AVIATION: PARTS AND SERVICES -- 3.0%
60,000 Aviall Inc.+ ..................... 539,651 2,851,200
520,000 Curtiss-Wright Corp. ............. 3,391,227 16,057,600
15,000 EDO Corp. ........................ 431,784 365,100
225,000 Fairchild Corp., Cl. A+ .......... 1,287,962 468,000
570,000 GenCorp Inc.+ .................... 2,079,772 9,137,100
110,000 Kaman Corp. ...................... 1,534,269 2,002,000
MARKET
SHARES COST VALUE
------ ---- ------
340,000 Precision Castparts Corp. ........ $ 4,207,013 $ 20,318,400
107,000 Sequa Corp., Cl. A+ .............. 4,551,858 8,720,500
105,000 Sequa Corp., Cl. B+ .............. 5,381,629 8,583,750
-------------- --------------
23,405,165 68,503,650
-------------- --------------
BROADCASTING -- 1.9%
401,000 CBS Corp., Cl. A ................. 7,023,402 10,851,060
50,000 CBS Corp., Cl. B ................. 1,257,800 1,352,500
10,000 Cogeco Inc. ...................... 194,764 179,163
20,000 Corus Entertainment Inc., Cl. B .. 64,982 649,467
79,000 Fisher Communications Inc.+ ...... 4,323,030 3,328,270
166,000 Granite Broadcasting Corp.+ ...... 69,153 28,220
310,000 Gray Television Inc. ............. 3,464,394 1,794,900
8,000 Gray Television Inc., Cl. A ...... 76,929 48,880
30,000 ION Media Networks Inc.+ ......... 45,132 27,600
230,000 Liberty Media Holding Corp. -
Capital, Cl. A+ ................ 4,578,481 19,267,100
180,000 Lin TV Corp., Cl. A+ ............. 3,468,291 1,359,000
40,000 Sinclair Broadcast
Group Inc., Cl. A .............. 358,285 342,400
400,000 Television Broadcasts Ltd. ....... 1,815,551 2,472,220
22,000 Univision Communications
Inc., Cl. A+ ................... 745,607 737,000
217,000 Young Broadcasting Inc., Cl. A+ .. 2,684,914 681,380
-------------- --------------
30,170,715 43,119,160
-------------- --------------
BUSINESS SERVICES -- 0.8%
25,851 Acco Brands Corp.+ ............... 152,168 566,137
150,000 Cendant Corp. .................... 1,623,750 2,443,500
45,000 ChoicePoint Inc.+ ................ 1,609,312 1,879,650
11,000 Clear Channel Outdoor Holdings
Inc., Cl. A+ .................. 228,770 230,560
195,000 Ecolab Inc. ...................... 1,837,427 7,913,100
10,000 Imation Corp. .................... 203,344 410,500
65,000 Landauer Inc. .................... 402,818 3,113,500
23,500 MasterCard Inc., Cl. A+ .......... 916,500 1,128,000
114,000 Nashua Corp.+ .................... 1,677,155 783,180
-------------- --------------
8,651,244 18,468,127
-------------- --------------
CABLE AND SATELLITE -- 4.7%
2,000,000 Cablevision Systems Corp., Cl. A+ 5,712,539 42,900,000
240,000 Comcast Corp., Cl. A+ ............ 6,284,344 7,857,600
40,000 Comcast Corp., Cl. A, Special+ ... 306,462 1,311,200
264,396 DIRECTV Group Inc.+ .............. 5,082,757 4,362,534
100,000 EchoStar Communications
Corp., Cl. A+ .................. 2,982,011 3,081,000
320,096 Liberty Global Inc., Cl. A+ ...... 3,187,437 6,882,064
260,000 Liberty Global Inc., Cl. C+ ...... 2,801,037 5,348,200
See accompanying notes to financial statements.
4
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINTUED) -- JUNE 30, 2006 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
CABLE AND SATELLITE (CONTINUED)
750,000 Rogers Communications Inc.,
Cl. B, New York ................ $ 7,404,026 $ 30,300,000
10,000 Rogers Communications Inc.,
Cl. B, Toronto ................. 77,553 402,311
60,000 Shaw Communications Inc., Cl. B .. 164,952 1,695,781
80,000 Shaw Communications Inc., Cl. B,
Non-Voting ..................... 312,647 2,263,200
-------------- --------------
34,315,765 106,403,890
-------------- --------------
CLOSED-END FUNDS -- 0.1%
78,001 Royce Value Trust Inc. ........... 938,786 1,510,100
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 1.9%
113,223 Agere Systems Inc.+ .............. 1,631,136 1,664,378
565,000 Corning Inc.+ .................... 4,174,676 13,667,350
830,000 Lucent Technologies Inc.+ ........ 4,490,495 2,008,600
300,000 Motorola Inc. .................... 2,779,293 6,045,000
235,000 Nortel Networks Corp.+ ........... 1,163,604 526,400
390,000 Thomas & Betts Corp.+ ............ 7,652,903 20,007,000
-------------- --------------
21,892,107 43,918,728
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.4%
10,000 CA Inc. .......................... 145,700 205,500
1,600 eBay Inc.+ ....................... 24,652 46,864
50,000 Jupitermedia Corp.+ .............. 287,066 650,000
26,026 Telecom Italia Media SpA ......... 26,184 12,150
225,000 Yahoo! Inc.+ ..................... 7,608,400 7,425,000
-------------- --------------
8,092,002 8,339,514
-------------- --------------
CONSUMER PRODUCTS -- 5.3%
40,500 Alberto-Culver Co. ............... 1,073,604 1,973,160
12,000 Altria Group Inc. ................ 360,636 881,160
11,000 Christian Dior SA ................ 307,335 1,078,431
285,000 Church & Dwight Co. Inc. ......... 1,872,507 10,379,700
38,000 Clorox Co. ....................... 2,111,402 2,316,860
40,000 Colgate-Palmolive Co. ............ 2,092,913 2,396,000
40,000 Eastman Kodak Co. ................ 950,513 951,200
275,000 Energizer Holdings Inc.+ ......... 4,987,400 16,106,750
110,000 Fortune Brands Inc. .............. 2,384,058 7,811,100
290,000 Gallaher Group plc, ADR .......... 4,661,436 18,136,600
3,000 Givaudan SA ...................... 1,028,013 2,361,867
37,000 Harley-Davidson Inc. ............. 93,194 2,030,930
80,000 Lenox Group Inc.+ ................ 882,810 567,200
100,000 Mattel Inc. ...................... 1,731,397 1,651,000
48,000 National Presto Industries Inc. .. 1,568,057 2,509,440
520,000 Procter & Gamble Co. ............. 17,588,062 28,912,000
50,000 Reckitt Benckiser plc ............ 1,570,345 1,867,707
30,000 Spectrum Brands Inc.+ ............ 378,201 387,600
1,000,000 Swedish Match AB ................. 10,327,823 16,118,387
MARKET
SHARES COST VALUE
------ ---- ------
10,000 Syratech Corp.+ .................. $ 2,000 $ 500
82,000 Wolverine World Wide Inc. ........ 762,687 1,913,060
-------------- --------------
56,734,393 120,350,652
-------------- --------------
CONSUMER SERVICES -- 1.7%
6,000 Expedia Inc.+ .................... 126,986 89,820
450,000 IAC/InterActiveCorp+ ............. 4,668,684 11,920,500
1,100,000 Liberty Media Holding Corp. -
Interactive, Cl. A+ ............ 5,674,009 18,986,000
445,000 Rollins Inc. ..................... 3,437,602 8,739,800
-------------- --------------
13,907,281 39,736,120
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 6.0%
115,000 Acuity Brands Inc. ............... 1,678,840 4,474,650
5,000 Anixter International Inc. ....... 45,044 237,300
75,403 Contax Participacoes SA, ADR ..... 30,974 66,890
250,000 Cooper Industries Ltd., Cl. A .... 12,260,110 23,230,000
420,000 Crane Co. ........................ 6,593,275 17,472,000
124,000 Gardner Denver Inc.+ ............. 983,688 4,774,000
240,000 Greif Inc., Cl. A ................ 5,453,716 17,990,400
30,000 Harbor Global Co. Ltd.+ .......... 52,965 273,300
425,000 Honeywell International Inc. ..... 13,730,962 17,127,500
590,000 ITT Industries Inc. .............. 9,292,829 29,205,000
139,000 Katy Industries Inc.+ ............ 1,257,950 325,260
185,000 Lamson & Sessions Co.+ ........... 1,134,427 5,246,600
21,000 MagneTek Inc.+ ................... 109,503 56,700
240,000 Myers Industries Inc. ............ 1,460,520 4,125,600
51,000 Pentair Inc. ..................... 730,157 1,743,690
80,000 Smiths Group plc ................. 880,176 1,318,120
112,500 Trinity Industries Inc. .......... 931,715 4,545,000
130,000 Tyco International Ltd. .......... 3,144,915 3,575,000
10,000 Walter Industries Inc. ........... 463,587 576,500
-------------- --------------
60,235,353 136,363,510
-------------- --------------
ELECTRONICS -- 1.1%
9,600 Chemring Group plc ............... 125,113 207,615
3,000 Hitachi Ltd., ADR ................ 172,200 198,210
13,000 Kyocera Corp., ADR ............... 448,063 1,010,750
22,000 Molex Inc., Cl. A ................ 609,932 632,060
46,000 Samsung Electronics Co.
Ltd., GDR (a) .................. 8,616,601 14,618,952
50,000 Sony Corp., ADR .................. 1,447,492 2,202,000
205,000 Texas Instruments Inc. ........... 5,187,155 6,209,450
-------------- --------------
16,606,556 25,079,037
-------------- --------------
ENERGY AND UTILITIES -- 8.8%
110,000 AES Corp.+ ....................... 434,151 2,029,500
40,000 AGL Resources Inc. ............... 667,750 1,524,800
150,000 Allegheny Energy Inc.+ ........... 1,510,942 5,560,500
120,000 Aquila Inc.+ ..................... 474,410 505,200
See accompanying notes to financial statements.
5
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINTUED) -- JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
250,000 BP plc, ADR ...................... $ 7,151,966 $ 17,402,500
2,000 Cameron International Corp.+ ..... 69,450 95,540
25,000 CH Energy Group Inc. ............. 1,040,745 1,200,000
354,000 Chevron Corp. .................... 13,555,634 21,969,240
365,922 ConocoPhillips ................... 10,424,879 23,978,869
20,000 Constellation Energy Group ....... 484,262 1,090,400
124,000 Devon Energy Corp. ............... 1,695,494 7,490,840
120,000 DPL Inc. ......................... 2,716,196 3,216,000
20,000 DTE Energy Co. ................... 832,127 814,800
240,000 Duke Energy Corp. ................ 4,598,908 7,048,800
120,000 Duquesne Light Holdings Inc. ..... 1,746,573 1,972,800
25,000 Edison International ............. 425,000 975,000
350,000 El Paso Corp. .................... 3,048,363 5,250,000
280,000 El Paso Electric Co.+ ............ 3,251,790 5,644,800
150,000 Energy East Corp. ................ 3,072,446 3,589,500
110,000 EOG Resources Inc. ............... 503,773 7,627,400
340,000 Exxon Mobil Corp. ................ 8,166,149 20,859,000
14,000 FPL Group Inc. ................... 401,591 579,320
40,625 GlobalSantaFe Corp. .............. 1,058,988 2,346,094
10,000 Halliburton Co. .................. 104,525 742,100
252,716 Kerr-McGee Corp. ................. 11,881,869 17,525,855
1,000 Niko Resources Ltd. .............. 57,456 56,472
22,086 NiSource Inc. .................... 475,953 482,358
185,000 Northeast Utilities .............. 3,536,826 3,823,950
10,000 NSTAR ............................ 284,757 286,000
24,000 Oceaneering International Inc.+ .. 650,712 1,100,400
1,000 PetroChina Co. Ltd., ADR ......... 61,027 107,970
100,000 Progress Energy Inc., CVO+ ....... 52,000 30,000
50,000 Royal Dutch Shell plc, Cl. A, ADR 2,980,580 3,349,000
132,000 SJW Corp. ........................ 2,151,408 3,359,400
300,000 Southwest Gas Corp. .............. 5,300,745 9,402,000
65,000 Transocean Inc.+ ................. 3,979,635 5,220,800
67,000 TXU Corp. ........................ 502,630 4,005,930
10,000 UIL Holdings Corp. ............... 426,389 562,900
75,000 Weatherford International Ltd.+ .. 3,407,062 3,721,500
50,000 Western Gas Resources Inc. ....... 2,984,875 2,992,500
-------------- --------------
106,170,036 199,540,038
-------------- --------------
ENTERTAINMENT -- 5.1%
8,010 Chestnut Hill Ventures+ (b) ...... 218,000 172,005
715,000 Discovery Holding Co., Cl. A+ .... 5,339,540 10,460,450
45,000 DreamWorks Animation SKG
Inc., Cl. A+ ................... 1,084,168 1,030,500
19,406 EMI Group plc .................... 75,408 109,003
MARKET
SHARES COST VALUE
------ ---- ------
185,000 EMI Group plc, ADR ............... $ 1,538,472 $ 2,078,679
600,000 Gemstar-TV Guide International
Inc.+ .......................... 2,634,671 2,112,000
620,000 Grupo Televisa SA, ADR ........... 4,249,951 11,972,200
2,000,000 Rank Group plc ................... 9,837,464 7,378,368
20,000 Regal Entertainment Group, Cl. A . 290,903 406,400
100,000 Six Flags Inc.+ .................. 450,414 562,000
600,000 The Walt Disney Co. .............. 13,491,340 18,000,000
1,510,000 Time Warner Inc. ................. 20,179,133 26,123,000
50,000 Triple Crown Media Inc.+ ......... 549,453 433,500
401,000 Viacom Inc., Cl. A+ .............. 10,985,321 14,415,950
25,000 Viacom Inc., Cl. B+ .............. 1,026,100 896,000
530,000 Vivendi SA, ADR .................. 10,600,520 18,502,300
60,000 World Wrestling Entertainment Inc. 612,234 1,013,400
-------------- --------------
83,163,092 115,665,755
-------------- --------------
ENVIRONMENTAL SERVICES -- 1.4%
350,000 Allied Waste Industries Inc.+ .... 3,229,628 3,976,000
300,000 Republic Services Inc. ........... 3,560,581 12,102,000
450,000 Waste Management Inc. ............ 8,655,112 16,146,000
-------------- --------------
15,445,321 32,224,000
-------------- --------------
EQUIPMENT AND SUPPLIES -- 5.7%
475,000 AMETEK Inc. ...................... 2,763,994 22,505,500
3,000 Amphenol Corp., Cl. A ............ 23,163 167,880
106,000 CIRCOR International Inc. ........ 932,373 3,231,940
170,000 Crown Holdings Inc.+ ............. 766,411 2,646,900
155,000 CTS Corp. ........................ 815,744 2,307,950
4,000 Danaher Corp. .................... 70,641 257,280
396,000 Donaldson Co. Inc. ............... 1,518,184 13,412,520
292,000 Fedders Corp.+ ................... 1,205,333 706,640
402,000 Flowserve Corp.+ ................. 5,865,524 22,873,800
175,000 Gerber Scientific Inc.+ .......... 1,663,028 2,276,750
210,000 GrafTech International Ltd.+ ..... 2,278,198 1,218,000
520,000 IDEX Corp. ....................... 2,958,676 24,544,000
24,000 Ingersoll-Rand Co. Ltd., Cl. A ... 501,720 1,026,720
250,000 Interpump Group SpA .............. 982,522 2,190,374
200,000 Lufkin Industries Inc. ........... 1,810,811 11,886,000
35,000 Manitowoc Co. Inc. ............... 127,596 1,557,500
47,866 Met-Pro Corp. .................... 321,979 598,804
10,000 Sealed Air Corp. ................. 168,679 520,800
30,000 Valmont Industries Inc. .......... 242,908 1,394,700
435,000 Watts Water Technologies
Inc., Cl. A .................... 5,006,660 14,594,250
120,000 Weir Group plc ................... 504,947 960,852
-------------- --------------
30,529,091 130,879,160
-------------- --------------
See accompanying notes to financial statements.
6
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINTUED) -- JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES -- 5.9%
15,300 Alleghany Corp.+ ................. $ 2,667,117 $ 4,228,308
420,000 American Express Co. ............. 9,628,368 22,352,400
90,000 Ameriprise Financial Inc. ........ 1,652,563 4,020,300
50,000 Argonaut Group Inc.+ ............. 1,184,298 1,502,000
10,000 Bank of America Corp. ............ 188,637 481,000
55,000 Bank of New York Co. Inc. ........ 1,858,706 1,771,000
220 Berkshire Hathaway Inc., Cl. A+ .. 874,549 20,164,980
48,000 BKF Capital Group Inc. ........... 814,715 300,000
7,500 Calamos Asset Management
Inc., Cl. A .................... 135,000 217,425
220,000 Citigroup Inc. ................... 10,672,338 10,612,800
35,000 Commerzbank AG ................... 624,519 1,273,167
110,000 Commerzbank AG, ADR .............. 2,308,920 3,993,121
155,000 Deutsche Bank AG ................. 7,004,175 17,437,500
55,000 H&R Block Inc. ................... 694,635 1,312,300
85,000 Janus Capital Group Inc. ......... 1,649,762 1,521,500
26,400 JPMorgan Chase & Co. ............. 535,615 1,108,800
12,000 Lehman Brothers Holdings Inc. .... 54,150 781,800
76,000 Leucadia National Corp. .......... 662,967 2,218,440
120,000 Mellon Financial Corp. ........... 4,103,607 4,131,600
23,000 Merrill Lynch & Co. Inc. ......... 948,745 1,599,880
378,000 Midland Co. ...................... 1,942,907 14,356,440
150,000 Phoenix Companies Inc. ........... 2,222,423 2,112,000
30,000 PNC Financial Services Group Inc. 1,456,850 2,105,100
2,500 Prudential Financial Inc. ........ 68,750 194,250
40,000 St. Paul Travelers Companies Inc. 1,575,006 1,783,200
85,000 State Street Corp. ............... 661,975 4,937,650
20,000 SunTrust Banks Inc. .............. 424,879 1,525,200
60,000 T. Rowe Price Group Inc. ......... 1,012,984 2,268,600
1,000 The Allstate Corp. ............... 23,675 54,730
19,000 Unitrin Inc. ..................... 498,464 828,210
8,500 Value Line Inc. .................. 136,515 362,950
198,000 Waddell & Reed Financial Inc.,
Cl. A .......................... 3,970,134 4,070,880
-------------- --------------
62,257,948 135,627,531
-------------- --------------
FOOD AND BEVERAGE -- 10.4%
344,000 Brown-Forman Corp., Cl. A ........ 8,522,627 24,699,200
80,000 Cadbury Schweppes plc, ADR ....... 2,626,975 3,105,600
150,000 Campbell Soup Co. ................ 4,181,186 5,566,500
220,000 Coca-Cola Co. .................... 8,229,353 9,464,400
80,000 Coca-Cola Enterprises Inc. ....... 1,573,687 1,629,600
11,000 Coca-Cola Hellenic Bottling Co. SA 268,442 332,200
MARKET
SHARES COST VALUE
------ ---- ------
368,000 Corn Products International Inc. $ 4,468,951 $ 11,260,800
220,000 Del Monte Foods Co. .............. 2,111,834 2,470,600
318,000 Diageo plc, ADR .................. 11,903,832 21,480,900
70,000 Farmer Brothers Co. .............. 943,094 1,517,600
358,000 Flowers Foods Inc. ............... 2,271,075 10,253,120
3,000 Fomento Economico Mexicano
SA de CV, ADR 162,855 251,160
350,000 General Mills Inc. ............... 11,981,370 18,081,000
210,000 Groupe Danone .................... 20,879,524 26,685,469
90,000 Groupe Danone, ADR ............... 1,851,062 2,400,300
1,267,800 Grupo Bimbo SA de CV, Cl. A ...... 2,247,680 3,799,627
200,000 H.J. Heinz Co. ................... 7,031,246 8,244,000
10,000 Hain Celestial Group Inc.+ ....... 141,134 257,600
135,000 Kellogg Co. ...................... 3,562,192 6,538,050
95,000 Kerry Group plc, Cl. A ........... 1,122,284 2,016,069
33,000 LVMH Moet Hennessy Louis
Vuitton SA ..................... 1,150,670 3,275,393
9,000 Nestle SA ........................ 1,868,526 2,826,878
770,000 PepsiAmericas Inc. ............... 11,293,018 17,024,700
355,000 PepsiCo Inc. ..................... 9,198,266 21,314,200
25,280 Pernod-Ricard SA, ADR ............ 1,071,872 1,253,153
155,000 Ralcorp Holdings Inc.+ ........... 2,450,803 6,592,150
65,000 The Hershey Co. .................. 1,230,126 3,579,550
20,000 The J.M. Smucker Co. ............. 547,733 894,000
158,117 Tootsie Roll Industries Inc. ..... 2,005,307 4,605,948
255,000 Wm. Wrigley Jr. Co. .............. 6,240,995 11,566,800
63,750 Wm. Wrigley Jr. Co., Cl. B ....... 1,658,999 2,887,875
-------------- --------------
134,796,718 235,874,442
-------------- --------------
HEALTH CARE -- 3.2%
26,222 Allergan Inc. .................... 2,458,117 2,812,572
44,000 Amgen Inc.+ ...................... 203,194 2,870,120
24,000 AngioDynamics Inc.+ .............. 550,004 649,200
3,000 ArthroCare Corp.+ ................ 34,530 126,030
44,000 Biogen Idec Inc.+ ................ 409,921 2,038,520
5,000 Biomet Inc. ...................... 156,210 156,450
20,000 Biosite Inc.+ .................... 963,067 913,200
155,000 Bristol-Myers Squibb Co. ......... 4,244,679 4,008,300
85,000 Chemed Corp. ..................... 1,326,740 4,635,050
60,000 CONMED Corp.+ .................... 1,316,339 1,242,000
5,500 DENTSPLY International Inc. ...... 209,434 333,300
90,000 Eli Lilly & Co. .................. 5,261,954 4,974,300
35,000 Exactech Inc.+ ................... 543,108 481,250
40,000 Henry Schein Inc.+ ............... 1,091,829 1,869,200
15,000 Hospira Inc.+ .................... 522,370 644,100
25,000 IMS Health Inc. .................. 662,906 671,250
15,000 Inverness Medical
Innovations Inc.+ .............. 255,011 423,450
45,000 Invitrogen Corp.+ ................ 2,307,565 2,973,150
100,000 Johnson & Johnson ................ 2,951,660 5,992,000
See accompanying notes to financial statements.
7
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINTUED) -- JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
120,000 Medco Health Solutions Inc.+ ..... $ 3,781,261 $ 6,873,600
150,000 Merck & Co. Inc. ................. 4,480,183 5,464,500
2,000 Nobel Biocare Holding AG ......... 285,863 474,827
15,000 Orthofix International NV+ ....... 501,240 571,950
4,000 OrthoLogic Corp.+ ................ 13,880 6,480
32,000 Patterson Companies Inc.+ ........ 702,130 1,117,760
475,000 Pfizer Inc. ...................... 8,375,103 11,148,250
133,000 Schering-Plough Corp. ............ 2,512,360 2,530,990
2,000 Stryker Corp. .................... 65,440 84,220
40,000 Thoratec Corp.+ .................. 514,145 554,800
10,000 UnitedHealth Group Inc. .......... 450,804 447,800
35,000 William Demant Holding A/S+ ...... 1,644,239 2,616,665
5,000 Wright Medical Group Inc.+ ....... 92,660 104,650
55,000 Wyeth ............................ 2,169,854 2,442,550
1,000 Young Innovations Inc. ........... 30,000 35,230
-------------- --------------
51,087,800 72,287,714
-------------- --------------
HOTELS AND GAMING -- 2.9%
55,000 Aztar Corp.+ ..................... 1,243,242 2,857,800
10,000 Churchill Downs Inc. ............. 394,854 374,500
336,000 Gaylord Entertainment Co.+ ....... 9,094,116 14,663,040
95,000 GTECH Holdings Corp. ............. 918,276 3,304,100
35,000 Harrah's Entertainment Inc. ...... 765,198 2,491,300
590,000 Hilton Hotels Corp. .............. 6,738,575 16,685,200
55,098 Host Hotels & Resorts Inc. ....... 1,126,479 1,204,993
39,600 International Game Technology .... 1,114,521 1,502,424
21,000 Kerzner International Ltd.+ ...... 947,011 1,664,880
1,582,576 Ladbrokes plc .................... 15,136,688 11,925,583
22,000 Las Vegas Sands Corp.+ ........... 809,047 1,712,920
50,000 MGM Mirage+ ...................... 619,882 2,040,000
10,000 Pinnacle Entertainment Inc.+ ..... 176,000 306,500
90,000 Starwood Hotels & Resorts
Worldwide Inc. ................. 1,823,635 5,430,600
-------------- --------------
40,907,524 66,163,840
-------------- --------------
MACHINERY -- 1.9%
140,000 Caterpillar Inc. ................. 927,858 10,427,200
20,000 CNH Global NV .................... 351,118 478,400
395,000 Deere & Co. ...................... 6,618,190 32,978,550
-------------- --------------
7,897,166 43,884,150
-------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.4%
100,000 Cavalier Homes Inc.+ ............. 509,259 530,000
32,200 Cavco Industries Inc.+ ........... 609,204 1,430,968
110,000 Champion Enterprises Inc.+ ....... 1,051,665 1,214,400
30,000 Coachmen Industries Inc. ......... 431,876 358,200
120,000 Fleetwood Enterprises Inc.+ ...... 1,387,305 904,800
MARKET
SHARES COST VALUE
------ ---- ------
76,000 Huttig Building Products Inc.+ ... $ 232,463 $ 615,600
12,500 Nobility Homes Inc. .............. 260,493 339,625
20,000 Palm Harbor Homes Inc.+ .......... 346,431 351,800
71,500 Skyline Corp. .................... 2,837,933 3,058,770
11,000 Southern Energy Homes Inc.+ ...... 43,900 74,250
-------------- --------------
7,710,529 8,878,413
-------------- --------------
METALS AND MINING -- 1.9%
50,000 Alcoa Inc. ....................... 1,385,170 1,618,000
82,000 Arizona Star Resource Corp.+ ..... 335,639 936,576
403,580 Barrick Gold Corp. ............... 7,594,595 11,945,968
12,525 Freeport-McMoRan Copper &
Gold Inc., Cl. B ............... 272,500 694,010
10,000 Inco Ltd. ........................ 380,400 659,000
100,000 Ivanhoe Mines Ltd.+ .............. 775,931 682,000
50,000 Kinross Gold Corp.+ .............. 359,224 544,500
510,000 Newmont Mining Corp. ............. 9,521,832 26,994,300
4,000 Peabody Energy Corp. ............. 225,134 223,000
-------------- --------------
20,850,425 44,297,354
-------------- --------------
PAPER AND FOREST PRODUCTS -- 0.0%
12,000 Svenska Cellulosa AB, Cl. B ...... 530,327 496,057
-------------- --------------
PUBLISHING -- 7.2%
230,000 Belo Corp., Cl. A ................ 4,146,932 3,588,000
66,000 Dow Jones & Co. Inc. ............. 2,679,328 2,310,660
30,000 EMAP plc ......................... 362,733 472,382
200,000 Independent News & Media plc ..... 614,273 585,805
38,000 Lee Enterprises Inc. ............. 875,843 1,024,100
65,535 McClatchy Co., Cl. A ............. 1,572,431 2,629,280
280,000 McGraw-Hill Companies Inc. ....... 2,576,918 14,064,400
364,000 Media General Inc., Cl. A ........ 10,175,790 15,247,960
80,000 Meredith Corp. ................... 1,650,283 3,963,200
132,000 New York Times Co., Cl. A ........ 1,094,267 3,239,280
4,835,000 News Corp., Cl. A ................ 36,360,879 92,735,300
24,000 News Corp., Cl. B ................ 227,345 484,320
650,000 PRIMEDIA Inc.+ ................... 2,384,453 1,189,500
235,000 Reader's Digest Association Inc. . 4,197,819 3,280,600
20,300 Seat Pagine Gialle SpA ........... 11,997 9,451
245,000 The E.W. Scripps Co., Cl. A ...... 7,786,098 10,569,300
300,000 Tribune Co. ...................... 10,377,723 9,729,000
-------------- --------------
87,095,112 165,122,538
-------------- --------------
REAL ESTATE -- 1.1%
120,082 Florida East Coast Industries Inc. 1,856,261 6,283,891
100,000 Griffin Land & Nurseries Inc.+ ... 1,372,091 3,125,000
See accompanying notes to financial statements.
8
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINTUED) -- JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
REAL ESTATE (CONTINUED)
75,000 ProLogis ......................... $ 1,893,259 $ 3,909,000
259,000 St. Joe Co. ...................... 1,978,948 12,053,860
-------------- --------------
7,100,559 25,371,751
-------------- --------------
RETAIL -- 0.7%
30,000 Aaron Rents Inc. ................. 68,259 806,400
60,750 Aaron Rents Inc., Cl. A .......... 287,231 1,470,757
253,877 AutoNation Inc.+ ................. 2,169,222 5,443,123
20,000 AutoZone Inc.+ ................... 1,681,602 1,764,000
20,000 Coldwater Creek Inc.+ ............ 33,827 535,200
35,000 Costco Wholesale Corp. ........... 1,579,106 1,999,550
35,000 CSK Auto Corp.+ .................. 561,129 418,950
118,000 Kroger Co. ....................... 693,975 2,579,480
10,000 Safeway Inc. ..................... 224,866 260,000
14,560 SUPERVALU Inc. ................... 433,160 446,992
-------------- --------------
7,732,377 15,724,452
-------------- --------------
SPECIALTY CHEMICALS -- 1.3%
150,000 Chemtura Corp. ................... 1,690,094 1,401,000
467,500 Ferro Corp. ...................... 7,668,635 7,461,300
130,000 General Chemical Group Inc.+ ..... 502,184 1,950
70,000 H.B. Fuller Co. .................. 1,076,987 3,049,900
248,000 Hercules Inc.+ ................... 3,750,623 3,784,480
40,000 International Flavors &
Fragrances Inc. ................ 802,624 1,409,600
110,000 Material Sciences Corp.+ ......... 1,014,398 993,300
648,000 Omnova Solutions Inc.+ ........... 2,046,412 3,680,640
350,000 Sensient Technologies Corp. ...... 6,822,604 7,318,500
13,380 Tronox Inc., Cl. B ............... 152,038 176,215
-------------- --------------
25,526,599 29,276,885
-------------- --------------
TELECOMMUNICATIONS -- 6.5%
40,000 ALLTEL Corp. ..................... 1,509,532 2,553,200
250,000 AT&T Inc. ........................ 6,719,008 6,972,500
14,000 Brasil Telecom Participacoes
SA, ADR ........................ 810,959 455,980
260,000 BT Group plc ..................... 1,015,869 1,150,304
20,000 BT Group plc, ADR ................ 674,674 885,800
67,000 CenturyTel Inc. .................. 961,785 2,489,050
520,000 Cincinnati Bell Inc.+ ............ 3,080,199 2,132,000
105,000 Citizens Communications Co. ...... 1,159,420 1,370,250
280,000 Commonwealth Telephone
Enterprises Inc. ............... 5,196,101 9,284,800
80,000 Deutsche Telekom AG, ADR ......... 1,229,873 1,283,200
52,000 Embarq Corp.+ .................... 1,469,768 2,131,480
35,000 France Telecom SA, ADR ........... 683,989 765,100
2,180,000 Qwest Communications
International Inc.+ ............ 6,409,196 17,636,200
MARKET
SHARES COST VALUE
------ ---- ------
1,040,000 Sprint Nextel Corp. .............. $ 14,860,987 $ 20,789,600
75,403 Tele Norte Leste Participacoes
SA, ADR ........................ 1,001,480 961,388
4,300,935 Telecom Italia SpA ............... 2,446,277 11,978,673
280,000 Telecom Italia SpA, ADR .......... 1,913,792 7,817,600
94,000 Telefonica SA, ADR ............... 3,341,710 4,675,560
10,400 Telefonica SA, BDR ............... 119,280 168,060
40,000 Telefonos de Mexico SA de CV,
Cl. L, ADR ..................... 171,746 833,200
592,000 Telephone & Data Systems Inc. .... 12,078,671 24,508,800
527,000 Telephone & Data Systems Inc.,
Special ........................ 10,638,955 20,500,300
180,000 Verizon Communications Inc. ...... 5,855,429 6,028,200
-------------- --------------
83,348,700 147,371,245
-------------- --------------
TRANSPORTATION -- 0.6%
85,000 AMR Corp.+ ....................... 1,245,604 2,160,700
260,000 GATX Corp. ....................... 5,898,347 11,050,000
63,000 Grupo TMM SA, Cl. A, ADR+ ........ 411,039 256,410
4,000 Kansas City Southern+ ............ 7,317 110,800
7,900 Providence & Worcester
Railroad Co. ................... 103,258 161,160
-------------- --------------
7,665,565 13,739,070
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.8%
145,000 America Movil SA de CV, Cl. L, ADR 927,492 4,822,700
72,000 Price Communications Corp.+ ...... 1,120,226 1,220,400
1,350 Tele Norte Celular Participacoes
SA, ADR ........................ 20,857 12,690
3,375 Telemig Celular Participacoes SA,
ADR ............................ 97,539 119,475
13,001 Tim Participacoes SA, ADR ........ 157,722 358,178
175,200 United States Cellular Corp.+ .... 8,337,306 10,617,120
192 Vivo Participacoes SA+ ........... 670 850
67,505 Vivo Participacoes SA, ADR ....... 648,113 166,062
4,174 Vivo Participacoes SA, Pfd.+ ..... 66,002 10,175
5,000 Vodafone Group plc, ADR .......... 43,962 106,500
-------------- --------------
11,419,889 17,434,150
-------------- --------------
TOTAL COMMON STOCKS ............. 1,149,234,991 2,256,073,741
-------------- --------------
PREFERRED STOCKS -- 0.2%
AEROSPACE -- 0.2%
29,500 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B ........ 3,437,340 3,731,750
-------------- --------------
See accompanying notes to financial statements.
9
THE GABELLI ASSET FUND
SCHEDULE OF INVESTMENTS (CONTINTUED) -- JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- ------
CONVERTIBLE CORPORATE BONDS -- 0.2%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$ 1,500,000 Pep Boys -
Manny, Moe & Jack, Cv.,
4.250%, 06/01/07 ............... $ 1,498,103 $ 1,477,500
1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ............... 941,850 887,500
-------------- --------------
2,439,953 2,365,000
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
500,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ............... 501,588 531,875
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.1%
2,000,000 Agere Systems Inc., Sub. Deb. Cv.,
6.500%, 12/15/09 ............... 1,934,628 1,987,500
1,100,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ............... 1,074,417 1,042,250
-------------- --------------
3,009,045 3,029,750
-------------- --------------
METALS AND MINING -- 0.0%
100,000 Inco Ltd., Cv.,
Zero Coupon, 03/29/21 .......... 99,768 175,500
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS ................ 6,050,354 6,102,125
-------------- --------------
SHARES
------
WARRANTS -- 0.0%
COMMUNICATIONS EQUIPMENT -- 0.0%
1,097 Lucent Technologies Inc.,
expire 12/10/07+ ............... 1,821 296
-------------- --------------
ENERGY AND UTILITIES -- 0.0%
11,313 Mirant Corp., Ser. A,
expire 01/03/11+ ............... 149,058 114,262
-------------- --------------
TOTAL WARRANTS ................... 150,879 114,558
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- ------
U.S. GOVERNMENT OBLIGATIONS -- 0.6%
$13,061,000 U.S. Treasury Bills,
4.160% to 5.153%++,
07/06/06 to 12/14/06 ........... $ 12,946,308 $ 12,947,824
-------------- --------------
TOTAL INVESTMENTS -- 100.1% ..... $1,171,819,872 2,278,969,998
==============
OTHER ASSETS AND LIABILITIES (NET) -- (0.1)%... (2,732,010)
--------------
NET ASSETS -- 100.0% .......................... $2,276,237,988
==============
- ---------------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 2006,
the Rule 144A security is considered liquid and the market value amounted to
$14,618,952 or 0.64% 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 June 30, 2006, the market value of the fair
valued security amounted to $172,005 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
JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $1,171,819,872) .............. $2,278,969,998
Foreign currency, at value (cost $3) ..................... 4
Cash ..................................................... 66,671
Dividends and interest receivable ........................ 1,845,237
Receivable for Fund shares sold .......................... 608,692
Other assets ............................................. 36,960
--------------
TOTAL ASSETS ............................................. 2,281,527,562
--------------
LIABILITIES:
Payable for investment advisory fees ..................... 1,832,073
Payable for Fund shares redeemed ......................... 1,845,322
Payable for investments purchased ........................ 471,780
Payable for Trustees' fees ............................... 449
Payable for distribution fees ............................ 459,640
Payable for shareholder services fees .................... 375,233
Payable for shareholder
communications expenses ................................ 185,528
Other accrued expenses ................................... 119,549
--------------
TOTAL LIABILITIES ........................................ 5,289,574
--------------
NET ASSETS applicable to 51,111,195
shares outstanding ...................................... $2,276,237,988
==============
NET ASSETS CONSIST OF:
Paid-in capital .......................................... $1,073,604,289
Accumulated net investment income ........................ 15,098,793
Accumulated net realized gain on investments
and foreign currency transactions ...................... 80,383,307
Net unrealized appreciation on investments ............... 1,107,150,126
Net unrealized appreciation on foreign
currency translations .................................. 1,473
--------------
NET ASSETS ............................................... $2,276,237,988
==============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption
price per share ($2,270,337,814 / 50,977,400
shares outstanding; unlimited number of shares
authorized) ............................................ $44.54
======
CLASS A:
Net Asset Value and redemption price per share
($3,185,450 / 71,730 shares outstanding;
unlimited number of shares authorized) ................. $44.41
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ................................. $47.12
======
CLASS B:
Net Asset Value and offering price per share
($7,111 / 162.1 shares outstanding;
unlimited number of shares authorized) ................. $43.87(a)
======
CLASS C:
Net Asset Value and offering price per share
($2,707,613 / 61,903 shares outstanding;
unlimited number of shares authorized) ................. $43.74(a)
======
- --------------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $590,735) ............. $ 29,964,631
Interest ................................................. 641,717
------------
TOTAL INVESTMENT INCOME .................................. 30,606,348
------------
EXPENSES:
Investment advisory fees ................................. 11,367,430
Distribution fees - Class AAA ............................ 2,835,344
Distribution fees - Class A .............................. 3,336
Distribution fees - Class B .............................. 26
Distribution fees - Class C .............................. 12,686
Shareholder services fees ................................ 764,171
Shareholder communications expenses ...................... 199,689
Custodian fees ........................................... 168,728
Legal and audit fees ..................................... 38,583
Interest expense ......................................... 33,053
Registration expenses .................................... 29,839
Trustees' fees ........................................... 25,444
Miscellaneous expenses ................................... 120,547
------------
TOTAL EXPENSES ........................................... 15,598,876
Less: Custodian fee credits .............................. (14,441)
------------
TOTAL NET EXPENSES ....................................... 15,584,435
------------
NET INVESTMENT INCOME .................................... 15,021,913
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ......................... 86,682,068
Net realized gain on foreign
currency transactions .................................. 111,248
------------
Net realized gain on investments and
foreign currency transactions .......................... 86,793,316
------------
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations .......................... 80,749,222
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ....................... 167,542,538
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ $182,564,451
============
See accompanying notes to financial statements.
11
THE GABELLI ASSET FUND
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
---------------- -----------------
OPERATIONS:
Net investment income ...................................................... $ 15,021,913 $ 6,498,797
Net realized gain on investments and
foreign currency transactions ............................................ 86,793,316 107,057,442
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations .................................................... 80,749,222 (15,485,585)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................... 182,564,451 98,070,654
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ................................................................ -- (6,113,895)
Class A .................................................................. -- (7,382)
Class C .................................................................. -- (3,075)
-------------- --------------
-- (6,124,352)
-------------- --------------
Net realized gain on investments
Class AAA ................................................................ -- (107,016,495)
Class A .................................................................. -- (89,587)
Class B .................................................................. -- (57)
Class C .................................................................. -- (108,437)
-------------- --------------
-- (107,214,576)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................ -- (113,338,928)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ................................................................ (158,302,818) 45,495,325
Class A .................................................................. 1,015,828 1,689,183
Class B .................................................................. 5,658 58
Class C .................................................................. 259,525 1,985,171
-------------- --------------
Net increase (decrease) in net assets from shares of
beneficial interest transactions ......................................... (157,021,807) 49,169,737
-------------- --------------
REDEMPTION FEES ............................................................ 3,660 39,655
-------------- --------------
NET INCREASE IN NET ASSETS ................................................. 25,546,304 33,941,118
NET ASSETS:
Beginning of period ........................................................ 2,250,691,684 2,216,750,566
-------------- --------------
End of period (including undistributed net investment income of
$15,098,793 and $76,880, respectively) ................................... $2,276,237,988 $2,250,691,684
============== ==============
See accompanying notes to financial statements.
12
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 United States ("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 a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired 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 fair valued 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 average of the latest 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
fair valued as determined by 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.
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
13
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
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 June 30, 2006, there were no open forward foreign
exchange contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the current exchange rates.
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 that 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.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its net
assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely salable among qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission (the "SEC") may be treated as liquid if they satisfy
liquidity standards established by the Board. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and
accordingly the Board will monitor their liquidity.
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 on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
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) (UNAUDITED)
- --------------------------------------------------------------------------------
In calculating the net asset value ("NAV") 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 borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset, if any, shown
as "custodian fee credits".
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains 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 and foreign
currency transactions held by the Fund, timing differences, and differing
characterizations of distributions made by the Fund. Distributions from net
investment income include net realized gains on foreign currency transactions.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2005, reclassifications were made to decrease accumulated net
investment income by $290,591 and to increase accumulated distributions in
excess of net realized gain on investments and foreign currency transactions by
$290,591.
The tax character of distributions paid during the fiscal year ended December
31, 2005 was as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ........... $ 7,034,411
Net long-term capital gains ......................... 106,304,517
------------
Total distributions paid ............................ $113,338,928
============
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 policy of the Fund 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.
As of December 31, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed ordinary income .................... $ 27,810
Net unrealized appreciation on investments ....... 1,020,043,874
Net unrealized depreciation on
foreign currency transactions .................. (2,436)
--------------
Total ............................................ $1,020,069,248
==============
The following summarizes the tax cost of investments and the related unrealized
appreciation/depreciation at June 30, 2006:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ ---------------
Investments ............ $1,178,692,446 $1,144,348,733 $(44,071,181) $1,100,277,552
15
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
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 its 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 affiliated persons of the Adviser.
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 six months ended June 30, 2006, other than short-term securities, aggregated
$64,412,663 and $122,936,350, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2006, the
Fund paid brokerage commissions of $158,805 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $5,202 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the six months
ended June 30, 2006, the Fund paid or accrued $22,500 to the Adviser in
connection with the cost of computing the Fund's NAV 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 six months ended June 30, 2006, there were no
borrowings from the line of credit.
8. SHARES OF BENEFICIAL INTEREST. The Fund currently 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, or the transfer agent
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 approximately eight years after the original purchase.
The applicable CDSC is equal to a declining percentage of the lesser of the NAV
per share at the date of the original purchase or at the date of redemption,
based on the length of time held. Class C Shares are subject to a 1.00% CDSC for
one year after purchase. Class B Shares are available only through exchange of
Class B Shares of other funds distributed by Gabelli & Company. The Board has
approved Class I Shares which have not been offered publicly.
Effective June 15, 2005, the Fund imposed 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 on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged on or before the sixtieth day after the date of a purchase.) The
redemption fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the six months ended June 30, 2006 and the fiscal year ended
December 31, 2005 amounted to $3,660 and $39,655, respectively.
16
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
The redemption fee does 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 to implement such systems.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ....................................... 1,923,802 $ 83,644,112 5,862,472 $ 244,466,062
Shares issued upon reinvestment of dividends ...... (94) (3,832) 2,596,902 107,200,111
Shares redeemed ................................... (5,567,490) (241,943,098) (7,296,026) (306,170,848)
---------- ------------- ---------- -------------
Net increase (decrease) ......................... (3,643,782) $(158,302,818) 1,163,348 $ 45,495,325
========== ============= ========== =============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ....................................... 26,599 $ 1,163,360 41,938 $ 1,770,412
Shares issued upon reinvestment of dividends ...... -- -- 2,327 95,775
Shares redeemed ................................... (3,411) (147,532) (4,190) (177,004)
---------- ------------- ---------- -------------
Net increase .................................... 23,188 $ 1,015,828 40,075 $ 1,689,183
========== ============= ========== =============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ....................................... 132 $ 5,658 -- $ --
Shares issued upon reinvestment of dividends ...... -- -- 1 58
---------- ------------- ---------- -------------
Net increase .................................... 132 $ 5,658 1 $ 58
========== ============= ========== =============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ....................................... 8,630 $ 368,125 47,792 $ 2,009,812
Shares issued upon reinvestment of dividends ...... -- -- 2,732 111,189
Shares redeemed ................................... (2,508) (108,600) (3,230) (135,830)
---------- ------------- ---------- -------------
Net increase .................................... 6,122 $ 259,525 47,294 $ 1,985,171
========== ============= ========== =============
9. 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.
10. 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 trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company, is responding to
these requests for documents and testimony. In June 2006, GAMCO began
discussions with the SEC regarding a possible resolution of their inquiry. Since
these discussions are ongoing, it cannot be determined at this time whether they
will ultimately result in a settlement of this matter. On a separate matter, in
September 2005, the Adviser was informed by the staff of the SEC that the staff
may recommend to the Commission that an administrative remedy and a monetary
penalty be sought from the Adviser in connection with the actions of two of
seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule
19a-1 of the 1940 Act. These provisions require registered investment companies
to provide written statements to shareholders when a dividend is made from a
source other than net investment income. While the two closed-end funds sent
annual statements and provided other materials containing this information, the
funds did not send written statements to shareholders with each distribution in
2002 and 2003. The Adviser believes that all of the funds are now in compliance.
The Adviser believes that these matters would have no effect on the Fund or any
material adverse effect on the Adviser or its ability to manage the Fund.
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) Investment Investment Gain on Total
December 31 of Period Income (Loss)(a) on Investments Operations Income Investments Distributions
----------- ---------- ---------------- -------------- ---------- ---------- ----------- -------------
CLASS AAA
2006(b) $41.13 $ 0.29 $ 3.12 $ 3.41 -- -- --
2005 41.45 0.12 1.73 1.85 $(0.12) $(2.05) $(2.17)
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)(c) (0.02)
2001 33.90 (0.00)(c) 0.05 0.05 -- (0.98) (0.98)
CLASS A
2006(b) $41.01 $ 0.34 $ 3.06 $ 3.40 -- -- --
2005 41.39 0.10 1.74 1.84 $(0.17) $(2.05) $(2.22)
2004(e) 36.26 0.03 5.94 5.97 (0.08) (0.76) (0.84)
CLASS B
2006(b) $40.64 $ 0.26 $ 2.97 $ 3.23 -- -- --
2005 41.16 (0.17) 1.70 1.53 -- $(2.05) $(2.05)
2004(e) 36.26 (0.25) 5.91 5.66 -- (0.76) (0.76)
CLASS C
2006(b) $40.54 $ 0.14 $ 3.06 $ 3.20 -- -- --
2005 41.14 (0.20) 1.71 1.51 $(0.06) $(2.05) $(2.11)
2004(e) 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(a) Period Return+ (in 000's) (Loss) Expenses Rate
----------- ----------- -------- ------- ---------- ---------- -------- ---------
CLASS AAA
2006(b) $0.00(c) $44.54 8.3% $2,270,338 1.32%(d) 1.37%(d) 3%
2005 0.00(c) 41.13 4.4 2,246,439 0.29 1.37 6
2004 0.00(c) 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
CLASS A
2006(b) $0.00(c) $44.41 8.3% $ 3,185 1.59%(d) 1.37%(d) 3%
2005 0.00(c) 41.01 4.4 1,991 0.23 1.38 6
2004(e) 0.00(c) 41.39 16.5 351 0.07 1.40 7
CLASS B
2006(b) $0.00(c) $43.87 8.0% $ 7 1.20%(d) 2.12%(d) 3%
2005 0.00(c) 40.64 3.7 1 (0.41) 2.02 6
2004(e) 0.00(c) 41.16 15.6 1 (0.67) 2.07 7
CLASS C
2006(b) $0.00(c) $43.74 7.9% $ 2,708 0.66%(d) 2.12%(d) 3%
2005 0.00(c) 40.54 3.6 2,261 (0.49) 2.13 6
2004(e) 0.00(c) 41.14 15.6 349 (0.68) 2.15 7
- ------------
+ 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 distributions and does not reflect
applicable sales charges. Total return for the period of less than one year
is not annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) For the period ended June 30, 2006, unaudited.
(c) Amount represents less than $0.005 per share.
(d) Annualized.
(e) Class A, Class B, and Class C Shares were initially offered on December 31,
2003.
See accompanying notes to financial statements.
18
THE GABELLI ASSET FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
At its meeting on February 15, 2006, the Board of Trustees ("Board") of the Fund
approved the continuation of the investment advisory agreement with the Adviser
for the Fund on the basis of the recommendation by the trustees who are not
"interested persons" of the Fund (the "independent board members"). The
following paragraphs summarize the material information and factors considered
by the independent board members as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent board members considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder, and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The independent
board members noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The independent board members reviewed the short,
medium, and long-term performance of the Fund against a peer group of multi-cap
and core value funds chosen by Lipper as being comparable. The independent board
members noted that the Fund's performance was in or near the top one-third of
the funds in its category for the ten and five year periods, was in the top
one-half of the funds for the three year period and was in the bottom 25% of the
funds for the one year period.
PROFITABILITY. The independent board members reviewed summary data regarding the
profitability of the Fund to the Adviser both with an administrative overhead
charge and without such a charge. The independent board members also noted that
a substantial portion of the Fund's portfolio transactions were executed by an
affiliated broker and that the affiliated broker received distribution fees and
minor amounts of sales commissions.
ECONOMIES OF SCALE. The independent board members discussed the major elements
of the Adviser's cost structure and the relationship of those elements to
potential economies of scale.
SHARING OF ECONOMIES OF SCALE. The independent board members noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale that may develop or any losses or diminished
profitability to the Adviser in prior years.
SERVICE AND COST COMPARISONS. The independent board members compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of multi-cap and core value
funds and noted that the advisory fee includes substantially all administrative
services of the Fund as well as investment advisory services of the Adviser. The
independent board members noted that the Fund's expense ratios and the Fund's
size were above average within this group. The independent board members also
noted that the advisory fee structure was the same as that in effect for most of
the Gabelli funds. The independent board members were presented with, but did
not consider to be material to their decision, various information comparing the
advisory fee to the fee for other types of accounts managed by affiliates of the
Adviser.
CONCLUSIONS. The independent board members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
good performance record. The independent board members also concluded that the
Fund's expense ratios and the profitability to the Adviser of managing the Fund
were reasonable in light of the Fund's performance and that economies of scale
were not a significant factor in their thinking at this time. The independent
board members did not view the potential profitability of ancillary services as
material to their decision. On the basis of the foregoing and without assigning
particular weight to any single conclusion, the independent board members
determined to recommend continuation of the investment advisory agreement to the
full Board.
19
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,
EXECUTIVE OFFICER PROFESSOR EMERITUS
GAMCO INVESTORS, 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 CHAIRMAN
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.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER 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.
- --------------------------------------------------------------------------------
GAB405Q206SR
[GRAPHIC OMITTED] E P
Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GABELLI
ASSET
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
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.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
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) Not applicable.
(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 September 1, 2006
----------------------------------------------------------------------------
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
Date September 1, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady, Principal Financial Officer
& Treasurer
Date September 1, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.