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 811-07644
Gabelli Capital Series Funds, Inc.
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: December 31, 2008
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.
ANNUAL REPORT
GABELLI CAPITAL ASSET FUND TO CONTRACTOWNERS
(PHOTO OF MARIO GABELLI)
MARIO GABELLI, CFA,
PORTFOLIO MANAGER
OBJECTIVE:
Growth of capital. Current income is a secondary objective
PORTFOLIO:
At least 80% common stocks and securities convertible into common stocks
INCEPTION DATE:
May 1, 1995
NET ASSETS AT DECEMBER 31, 2008:
$108,862,763
AN UPDATE FROM FUND MANAGEMENT
In 2008, the Gabelli Capital Asset Fund (the "Fund") posted a decline of
(40.43)% versus (36.99)% for the S&P 500 Index.
The collapse in economic activity in the fourth quarter was extraordinary and
weighed heavily on our performance for the quarter, and hence the year, as the
fourth quarter was the worst quarter for stocks in many years. This was such a
miserable year, with the Dow's decline of 31.9%, its worst showing since 1931,
and the S&P 500's decline of 37.0%, its poorest performance since 1937. All ten
industry sectors in the S&P 500 posted declines, which might be a first. The
three best performing sectors were consumer staples, down 15%, health care, down
23%, and utilities, with a decline of 29%.
Cereal maker General Mills (0.3% of net assets as of December 31, 2008) and
trash collector Waste Management (1.8%) were major positive contributors to
performance. Griffin Land & Nurseries (1.7%), the real estate and landscape
nursery operator, was also up for the year and outperformed.
The Fund benefited from mergers and acquisitions, albeit muted, during the year.
Holdings of Wm. Wrigley Jr. Co. and Rohm and Haas (0.7%) were the subjects of
strategic buyouts during the year.
Several of the Fund's long-time media holdings were negatively impacted by the
severe downturn in advertising with News Corp. (0.2%) Viacom (1.8%), Liberty
Media (0.1%), and CBS Corp. (0.4%) among the biggest detractors from
performance. One of the Fund's largest financial holdings, American Express
(1.5%) suffered from its exposure to strained consumers and more costly funding,
despite its premium positioning.
THE VIEWS EXPRESSED ABOVE ARE THOSE OF THE FUND'S PORTFOLIO MANAGER AS OF
DECEMBER 31, 2008 AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. THEY DO NOT
NECESSARILY REPRESENT THE VIEWS OF GABELLI FUNDS. THE VIEWS EXPRESSED HEREIN ARE
BASED ON CURRENT MARKET CONDITIONS AND ARE NOT INTENDED TO PREDICT OR GUARANTEE
THE FUTURE PERFORMANCE OF ANY FUND, ANY INDIVIDUAL SECURITY, ANY MARKET OR
MARKET SEGMENT. THE COMPOSITION OF EACH FUND'S PORTFOLIO IS SUBJECT TO CHANGE.
NO RECOMMENDATION IS MADE WITH RESPECT TO ANY SECURITY DISCUSSED HEREIN.
ABOUT INFORMATION IN THIS REPORT:
- - It is important to consider carefully the Fund's investment objectives,
risks, fees, and expenses before investing. All funds involve some risk,
including possible loss of the principal amount invested.
- - The S&P 500 Index is an index of 500 primarily large cap U.S. stocks, which
is generally considered to be representative of U.S. stock market activity.
Index returns are provided for comparative purposes. Please note that the
index is unmanaged and not available for direct investment and its returns
do not reflect the fees and expenses that have been deducted from the Fund.
GABELLI CAPITAL ASSET FUND 1
ANNUAL REPORT
GABELLI CAPITAL ASSET FUND TO CONTRACTOWNERS
TOP TEN HOLDINGS (AS OF 12/31/2008) (UNAUDITED)
PERCENTAGE OF
COMPANY TOTAL NET ASSETS
- ------- ----------------
Diageo plc, ADR 2.5%
Honeywell International Inc. 2.5%
The Coca-Cola Co. 2.2%
Cablevision Systems Corp., Cl. A 2.2%
Pfizer Inc. 2.1%
Newmont Mining Corp. 1.9%
Allegheny Energy Inc. 1.9%
Waste Management Inc. 1.8%
Viacom Inc., Cl. A 1.8%
Griffin Land & Nurseries Inc. 1.7%
SECTOR WEIGHTINGS (PERCENTAGE OF TOTAL NET ASSETS AS OF 12/31/2008) (UNAUDITED)
(PIE CHART)
Aviation: Parts And Services 3.6%
Other 34.4%
Food And Beverage 13.5%
Energy And Utilities 10.4%
Financial Services 6.3%
Diversified Industrial 7.0%
Entertainment 6.9%
Retail 4.0%
Equipment And Supplies 5.3%
Health Care 4.3%
Cable And Satellite 4.3%
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED 12/31/2008)
1 5 10 SINCE INCEPTION
YR YRS YRS 5/1/1995
------- ------ ------ ---------------
Gabelli Capital Asset Fund (40.43)% (1.35)% 3.47% 7.52%
S&P 500 Index (36.99)% (2.19)% (1.38)% 6.06%
ABOUT INFORMATION IN THIS REPORT:
ALL PERFORMANCE DATA QUOTED IS HISTORICAL AND THE RESULTS REPRESENT PAST
PERFORMANCE AND NEITHER GUARANTEE NOR PREDICT FUTURE INVESTMENT RESULTS. To
obtain performance data current to the most recent month (availability within
seven business days of the most recent month end), please call us at (800)
221-3253 or visit our website at www.guardianinvestor.com. Current performance
may be higher or lower than the performance quoted here. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and
distributions and the deduction of all Fund expenses. The actual total returns
for owners of variable annuity contracts or variable life insurance policies
that provide for investment in the Fund will be lower to reflect separate
account and contract/policy charges. The return figures shown do not reflect the
deduction of taxes that a contractowner may pay on distributions or redemption
of units.
2 GABELLI CAPITAL ASSET FUND
ANNUAL REPORT
GABELLI CAPITAL ASSET FUND TO CONTRACTOWNERS
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (UNAUDITED)
To give you a comparison, this chart shows you the performance of a hypothetical
$10,000 investment made in the Fund and in the S&P 500 Index. Index returns do
not include the fees and expenses of the Fund, but do include the reinvestment
of dividends.
(PERFORMANCE GRAPH)
Gabelli Capital
Asset Fund S&P 500 Index
----------- -------------
5/1/1995 10000 10000
12/31/1995 10835 12176
12/31/1996 12029 14970
12/31/1997 17152 19963
12/31/1998 19161 25672
12/31/1999 22956 31071
12/31/2000 24233 28244
12/31/2001 24853 24889
12/31/2002 21297 19391
12/31/2003 28848 24950
12/31/2004 33332 27662
12/31/2005 34008 29020
12/31/2006 41466 33600
12/31/2007 45252 35444
12/31/2008 26957 22333
Past performance is not predictive of future results. The S&P 500 Index is an
unmanaged indicator of stock market performance.
The Fund files a complete schedule of portfolio holdings with the Securities and
Exchange Commission (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 September
30, 2008. 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 SEC'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, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
GABELLI CAPITAL ASSET FUND 3
ANNUAL REPORT
GABELLI CAPITAL ASSET FUND TO CONTRACTOWNERS
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2008 through December 31, 2008
EXPENSE TABLE
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing 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 would be
described in the Prospectus. If these costs were applied to your account, your
costs would be higher. Therefore, the 5% hypothetical return is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. The "Annualized Expense Ratio" represents the
actual expenses for the last six months and may be different from the expense
ratio in the Financial Highlights which is for the year ended December 31, 2008.
BEGINNING ENDING ANNUALIZED EXPENSES
ACCOUNT VALUE ACCOUNT VALUE EXPENSE PAID DURING
JULY 1, 2008 DECEMBER 31, 2008 RATIO PERIOD*
------------- ----------------- ---------- -----------
GABELLI CAPITAL ASSET FUND
ACTUAL FUND RETURN $1,000.00 $ 698.70 1.17% $5.00
HYPOTHETICAL 5% RETURN $1,000.00 $1,019.25 1.17% $5.94
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied
by the number of days in the most recent fiscal half-year, then divided by
366.
4 GABELLI CAPITAL ASSET FUND
Gabelli Capital Asset Fund
SCHEDULE OF INVESTMENTS
December 31, 2008
COMMON STOCKS -- 100.1%
MARKET
SHARES COST VALUE
- ------ ------------ ------------
AEROSPACE -- 1.3%
4,500 HEICO Corp. $ 107,359 $ 174,735
44,000 Herley Industries Inc.+ 744,877 540,320
150,000 Rolls-Royce Group plc+ 1,273,743 723,549
8,580,000 Rolls-Royce Group plc, Cl. C+ 13,378 12,336
------------ ------------
2,139,357 1,450,940
------------ ------------
AGRICULTURE -- 1.3%
50,000 Archer-Daniels-Midland Co. 1,324,216 1,441,500
500 The Mosaic Co. 10,688 17,300
------------ ------------
1,334,904 1,458,800
------------ ------------
AUTOMOTIVE -- 0.6%
60,000 General Motors Corp. 1,046,859 192,000
20,000 Navistar International Corp.+ 504,789 427,600
------------ ------------
1,551,648 619,600
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.0%
1,000 BERU AG 106,336 102,863
10,000 BorgWarner Inc. 198,525 217,700
32,000 CLARCOR Inc. 295,800 1,061,760
85,000 Earl Scheib Inc.+ 483,196 52,700
30,000 Midas Inc.+ 555,276 314,700
12,000 Modine Manufacturing Co. 247,615 58,440
20,000 Proliance International Inc.+ 93,443 7,200
100,000 Standard Motor Products Inc. 921,909 346,000
------------ ------------
2,902,100 2,161,363
------------ ------------
AVIATION: PARTS AND SERVICES -- 3.6%
34,000 Curtiss-Wright Corp. 491,261 1,135,260
80,000 GenCorp Inc.+ 747,293 294,400
50,000 Kaman Corp. 623,073 906,500
26,000 Precision Castparts Corp. 800,795 1,546,480
115,000 The Fairchild Corp., Cl. A+ 424,824 34,500
------------ ------------
3,087,246 3,917,140
------------ ------------
BROADCASTING -- 2.0%
50,000 CBS Corp., Cl. A 985,124 412,000
10,000 Cogeco Inc. 195,072 201,701
54,000 Fisher Communications Inc. 2,673,403 1,114,560
115,000 Gray Television Inc. 832,255 46,000
18,000 Liberty Media Corp. -
Capital, Cl. A+ 150,773 84,780
70,000 LIN TV Corp., Cl. A+ 627,707 76,300
80,000 Sinclair Broadcast Group Inc., Cl. A 672,744 248,000
------------ ------------
6,137,078 2,183,341
------------ ------------
BUSINESS SERVICES -- 2.1%
2,500 Ascent Media Corp., Cl. A+ 43,340 54,600
40,000 Diebold Inc. 1,500,622 1,123,600
55,000 Intermec Inc.+ 1,046,429 730,400
75,000 Nashua Corp.+ 623,470 393,750
------------ ------------
3,213,861 2,302,350
------------ ------------
CABLE AND SATELLITE -- 4.3%
5,000 Adelphia Communications Corp.,
Cl. A+ (a) 5,250 0
5,000 Adelphia Communications Corp.,
Cl. A, Escrow+ (a) 0 0
5,000 Adelphia Recovery Trust+ 0 2
140,000 Cablevision Systems Corp.,
Cl. A 913,899 2,357,600
MARKET
SHARES COST VALUE
- ------ ------------ ------------
10,000 DISH Network Corp., Cl. A+ $ 241,539 $ 110,900
2,000 EchoStar Corp., Cl. A+ 53,021 29,740
25,000 Liberty Global Inc., Cl. A+ 363,484 398,000
9,315 Liberty Global Inc., Cl. C+ 155,984 141,402
5,000 Scripps Networks Interactive Inc.,
Cl. A 212,424 110,000
65,000 The DIRECTV Group Inc.+ 1,540,273 1,489,150
------------ ------------
3,485,874 4,636,794
------------ ------------
COMMUNICATIONS EQUIPMENT -- 1.7%
78,000 Corning Inc. 505,460 743,340
43,000 Nortel Networks Corp.,
New York+ 141,799 11,180
44,000 Thomas & Betts Corp.+ 1,047,018 1,056,880
------------ ------------
1,694,277 1,811,400
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 1.4%
125,000 Furmanite Corp.+ 434,644 673,750
4,000 NCR Corp.+ 108,982 56,560
64,000 Yahoo! Inc.+ 1,995,758 780,800
------------ ------------
2,539,384 1,511,110
------------ ------------
CONSUMER PRODUCTS -- 1.5%
15,000 Pactiv Corp.+ 152,305 373,200
14,000 Procter & Gamble Co. 892,133 865,480
7,000 Revlon Inc., Cl. A+ 184,193 46,690
65,000 Schiff Nutrition International Inc.+ 178,934 388,050
------------ ------------
1,407,565 1,673,420
------------ ------------
CONSUMER SERVICES -- 1.5%
5,000 Liberty Media Corp. -
Interactive, Cl. A+ 93,974 15,600
88,000 Rollins Inc. 453,101 1,591,040
------------ ------------
547,075 1,606,640
------------ ------------
DIVERSIFIED INDUSTRIAL -- 7.0%
29,000 Ampco-Pittsburgh Corp. 469,223 629,300
70,000 Baldor Electric Co. 2,306,374 1,249,500
25,000 Cooper Industries Ltd., Cl. A 814,394 730,750
30,000 Crane Co. 605,650 517,200
4,000 Greif Inc., Cl. A 46,099 133,720
82,000 Honeywell International Inc. 2,497,596 2,692,060
24,000 ITT Corp. 1,081,200 1,103,760
23,000 Katy Industries Inc.+ 62,153 26,450
65,000 Myers Industries Inc. 693,228 520,000
------------ ------------
8,575,917 7,602,740
------------ ------------
ELECTRONICS -- 1.6%
30,000 Cypress Semiconductor Corp.+ 130,598 134,100
20,000 Intel Corp. 416,200 293,200
30,000 LSI Corp.+ 154,117 98,700
75,000 Texas Instruments Inc. 1,772,274 1,164,000
------------ ------------
2,473,189 1,690,000
------------ ------------
ENERGY AND UTILITIES -- 10.4%
60,000 Allegheny Energy Inc. 601,525 2,031,600
13,000 Cameron International Corp.+ 187,927 266,500
9,000 Chevron Corp. 562,320 665,730
22,000 ConocoPhillips 615,765 1,139,600
10,000 Devon Energy Corp. 322,357 657,100
38,000 DPL Inc. 1,032,670 867,920
90,000 El Paso Corp. 807,999 704,700
See accompanying notes to financial statements.
5
Gabelli Capital Asset Fund
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 2008
MARKET
SHARES COST VALUE
- ------ ------------ ------------
ENERGY AND UTILITIES (CONTINUED)
27,000 El Paso Electric Co.+ $ 242,555 $ 488,430
16,000 Exxon Mobil Corp. 589,965 1,277,280
6,500 Florida Public Utilities Co. 51,350 68,315
15,408 Great Plains Energy Inc. 399,375 297,837
20,000 Mirant Corp., Escrow+ (a) 0 0
27,000 NSTAR 642,662 985,230
17,000 Progress Energy Inc., CVO+ (a) 7,800 5,610
15,000 Royal Dutch Shell plc, Cl. A, ADR 937,915 794,100
75,000 RPC Inc. 715,212 732,000
9,000 Southwest Gas Corp. 253,261 226,980
3,291 Sunpower Corp., Cl. B+ 187,651 100,178
------------ ------------
8,158,309 11,309,110
------------ ------------
ENTERTAINMENT -- 6.9%
25,000 Discovery Communications Inc.,
Cl. A+ 229,703 354,000
25,000 Discovery Communications Inc.,
Cl. C+ 160,359 334,750
100,000 Grupo Televisa SA, ADR 1,404,653 1,494,000
72,000 Liberty Media Corp. -
Entertainment, Cl. A+ 791,557 1,258,560
140,000 Time Warner Inc. 2,239,377 1,408,400
95,000 Viacom Inc., Cl. A+ 3,980,097 1,911,400
25,000 Vivendi 833,081 808,486
------------ ------------
9,638,827 7,569,596
------------ ------------
ENVIRONMENTAL SERVICES -- 1.8%
60,000 Waste Management Inc. 2,096,890 1,988,400
------------ ------------
EQUIPMENT AND SUPPLIES -- 5.3%
32,000 AMETEK Inc. 218,856 966,720
38,000 Baldwin Technology Co. Inc., Cl. A+ 52,525 60,800
16,000 Belden Inc. 244,993 334,080
40,000 Capstone Turbine Corp.+ 70,880 33,600
15,000 CIRCOR International Inc. 496,757 412,500
120,000 CTS Corp. 1,040,515 661,200
12,000 Flowserve Corp. 294,857 618,000
14,500 Franklin Electric Co. Inc. 144,478 407,595
40,000 GrafTech International Ltd.+ 352,242 332,800
40,000 IDEX Corp. 753,182 966,000
46,000 L.S. Starrett Co., Cl. A 677,849 740,600
1,000 Robbins & Myers Inc. 20,783 16,170
13,000 The Eastern Co. 119,954 111,800
6,000 Watts Water Technologies Inc., Cl. A 82,477 149,820
------------ ------------
4,570,348 5,811,685
------------ ------------
FINANCIAL SERVICES -- 6.3%
90,000 American Express Co. 2,813,015 1,669,500
12,000 Argo Group International
Holdings Ltd.+ 339,230 407,040
20,000 BKF Capital Group Inc. 102,267 16,000
68,000 Citigroup Inc. 2,216,727 456,280
12,000 Deutsche Bank AG 691,279 488,280
150,000 Epoch Holding Corp. 362,726 1,138,500
6,350 JPMorgan Chase & Co. 263,889 200,215
40,000 Marsh & McLennan Companies Inc. 1,190,259 970,800
MARKET
SHARES COST VALUE
- ------ ------------ ------------
20,151 The Bank of New York Mellon Corp. $ 664,517 $ 570,878
30,000 Wells Fargo & Co. 900,652 884,400
------------ ------------
9,544,561 6,801,893
------------ ------------
FOOD AND BEVERAGE -- 13.5%
28,000 Brown-Forman Corp., Cl. A 716,621 1,417,360
6,250 Brown-Forman Corp., Cl. B 193,489 321,812
37,000 Cadbury plc, ADR 2,149,249 1,319,790
15,000 Corn Products International Inc. 286,480 432,750
48,000 Diageo plc, ADR 1,921,883 2,723,520
20,000 Dr. Pepper Snapple Group Inc.+ 568,746 325,000
20,000 Fomento Economico Mexicano
SAB de CV, ADR 673,389 602,600
5,000 General Mills Inc. 247,450 303,750
140,000 Groupe Danone, ADR 1,505,770 1,691,200
5,000 H.J. Heinz Co. 157,866 188,000
90,000 PepsiAmericas Inc. 1,656,875 1,832,400
54,000 The Coca-Cola Co. 2,344,478 2,444,580
8,000 The Hershey Co. 299,455 277,920
32,001 Tootsie Roll Industries Inc. 564,005 819,546
------------ ------------
13,285,756 14,700,228
------------ ------------
HEALTH CARE -- 4.3%
110,000 Advanced Medical Optics Inc.+ 2,296,096 727,100
95,000 Boston Scientific Corp.+ 1,317,435 735,300
1,000 DENTSPLY International Inc. 21,925 28,240
6,000 Henry Schein Inc.+ 190,312 220,140
6,000 Laboratory Corp. of America
Holdings+ 425,913 386,460
4,000 Life Technologies Corp.+ 69,870 93,240
10,000 Patterson Companies Inc.+ 293,978 187,500
130,000 Pfizer Inc. 3,442,329 2,302,300
------------ ------------
8,057,858 4,680,280
------------ ------------
HOTELS AND GAMING -- 2.1%
40,000 Boyd Gaming Corp. 596,065 189,200
16,000 Canterbury Park Holding Corp. 201,300 94,560
19,800 Churchill Downs Inc. 797,510 800,316
2,000 Dover Downs Gaming &
Entertainment Inc. 12,605 6,360
70,000 Dover Motorsports Inc. 446,303 91,000
14,000 Gaylord Entertainment Co.+ 394,352 151,760
14,000 International Game Technology 365,678 166,460
50,000 Las Vegas Sands Corp.+ 820,709 296,500
35,000 MGM Mirage+ 1,614,162 481,600
------------ ------------
5,248,684 2,277,756
------------ ------------
MACHINERY -- 1.1%
50,000 CNH Global NV 951,228 780,000
12,000 Deere & Co. 365,420 459,840
------------ ------------
1,316,648 1,239,840
------------ ------------
MANUFACTURED HOUSING AND RECREATIONAL
VEHICLES -- 0.2%
4,000 Cavco Industries Inc.+ 113,920 107,560
50,000 Champion Enterprises Inc.+ 428,275 28,000
4,000 Skyline Corp. 144,238 79,960
------------ ------------
686,433 215,520
------------ ------------
See accompanying notes to financial statements.
6
Gabelli Capital Asset Fund
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 2008
MARKET
SHARES COST VALUE
- ------ ------------ ------------
METALS AND MINING -- 2.2%
15,000 Freeport-McMoRan Copper & Gold Inc. $ 636,573 $ 366,600
50,000 Newmont Mining Corp. 2,089,093 2,035,000
------------ ------------
2,725,666 2,401,600
------------ ------------
PUBLISHING -- 0.5%
80,000 Journal Communications Inc., Cl. A 773,811 196,000
40,000 Media General Inc., Cl. A 67,400 70,000
7,000 Meredith Corp. 150,900 119,840
20,000 News Corp., Cl. A 284,866 181,800
10,000 The E.W. Scripps Co., Cl. A 72,850 22,100
------------ ------------
1,349,827 589,740
------------ ------------
REAL ESTATE -- 1.7%
50,000 Griffin Land & Nurseries Inc. 753,028 1,843,000
------------ ------------
RETAIL -- 4.0%
32,000 Aaron Rents Inc., Cl. A 266,360 702,400
50,000 CVS Caremark Corp. 1,838,475 1,437,000
10,000 Ingles Markets Inc., Cl. A 125,475 175,900
15,000 Safeway Inc. 307,433 356,550
10,000 The Great Atlantic &
Pacific Tea Co. Inc.+ 109,631 62,700
64,000 Walgreen Co. 2,359,758 1,578,880
------------ ------------
5,007,132 4,313,430
------------ ------------
SPECIALTY CHEMICALS -- 3.5%
70,000 Ferro Corp. 1,446,718 493,500
45,000 Hawkins Inc. 627,063 688,050
22,000 International Flavors &
Fragrances Inc. 1,051,207 653,840
130,000 Omnova Solutions Inc.+ 838,833 84,500
5,000 Quaker Chemical Corp. 87,063 82,250
13,000 Rohm and Haas Co. 677,644 803,270
40,000 Sensient Technologies Corp. 843,930 955,200
------------ ------------
5,572,458 3,760,610
------------ ------------
TELECOMMUNICATIONS -- 2.5%
220,000 Cincinnati Bell Inc.+ 1,085,157 424,600
17,000 Nortel Networks Corp., Toronto+ 724,875 4,407
80,000 Qwest Communications
International Inc. 423,450 291,200
12,000 Rogers Communications Inc., Cl. B 164,214 360,960
160,000 Sprint Nextel Corp.+ 2,159,237 292,800
30,000 Telephone & Data Systems Inc. 1,107,385 952,500
8,000 Telephone & Data Systems Inc.,
Special 239,516 224,800
5,000 Verizon Communications Inc. 166,104 169,500
------------ ------------
6,069,938 2,720,767
------------ ------------
TRANSPORTATION -- 0.4%
15,000 GATX Corp. 602,933 464,550
------------ ------------
WIRELESS COMMUNICATIONS -- 1.5%
30,000 Price Communications Corp.,
Escrow+ (a) 0 0
38,000 United States Cellular Corp.+ 1,446,637 1,643,120
------------ ------------
1,446,637 1,643,120
------------ ------------
TOTAL COMMON STOCKS 127,221,408 108,956,763
------------ ------------
MARKET
SHARES COST VALUE
- ------ ------------ ------------
WARRANTS -- 0.0%
ENERGY AND UTILITIES -- 0.0%
1,000 Mirant Corp., Ser. A,
expire 01/03/11+ $ 2,199 $ 3,500
------------ ------------
TOTAL INVESTMENTS -- 100.1% $127,223,607 108,960,263
OTHER ASSETS AND LIABILITIES (NET) -- (0.1)% (97,500)
------------
NET ASSETS -- 100.0% $108,862,763
------------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing valuation of comparable
securities and other factors on a regular basis. At December 31, 2008, the
market value of fair valued securities amounted to $5,610 or 0.01% of net
assets.
+ Non-income producing security.
ADR - American Depositary Receipt
CVO - Contingent Value Obligation
See accompanying notes to financial statements.
7
Gabelli Capital Asset Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008
ASSETS:
Investments, at value (cost $127,223,607) $108,960,263
Foreign currency, at value (cost $20) 18
Cash 793
Receivable for investments sold 67,245
Receivable for Fund shares sold 284,675
Dividends receivable 160,989
Prepaid expense 5,492
------------
TOTAL ASSETS 109,479,475
------------
LIABILITIES:
Payable for investments purchased 67,400
Payable for Fund shares redeemed 224,460
Payable for investment management fees 88,308
Payable for accounting fees 7,501
Payable for legal and audit fees 52,754
Line of credit payable 150,000
Other accrued expenses 26,289
------------
TOTAL LIABILITIES 616,712
------------
NET ASSETS applicable to 10,014,447
shares outstanding $108,862,763
============
NET ASSETS CONSIST OF:
Paid-in capital, at $0.001 par value $132,452,129
Accumulated net realized loss on investments
and foreign currency transactions (5,326,020)
Net unrealized depreciation on investments (18,263,344)
Net unrealized depreciation on foreign
currency translations (2)
------------
NET ASSETS $108,862,763
============
NET ASSET VALUE, offering, and redemption price
per share ($108,862,763 / 10,014,447 shares
outstanding; 500,000,000 shares authorized) $10.87
============
STATEMENT OF OPERATIONS
For the Year Ended
December 31, 2008
INVESTMENT INCOME:
Dividends (net of foreign taxes of $40,562) $ 3,248,720
Interest 8,101
------------
TOTAL INVESTMENT INCOME 3,256,821
------------
EXPENSES:
Management fees 1,701,400
Legal and audit fees 69,683
Accounting fees 45,000
Custodian fees 36,657
Directors' fees 23,343
Shareholder communications expenses 20,558
Shareholder services fees 18,443
Interest expense 18,186
Miscellaneous expenses 31,069
------------
TOTAL EXPENSES 1,964,339
Less: Custodian fee credits (236)
------------
NET EXPENSES 1,964,103
------------
NET INVESTMENT INCOME 1,292,718
------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss on investments (923,685)
Net realized loss on foreign
currency transactions (320)
------------
Net realized loss on investments and
foreign currency transactions (924,005)
------------
Net change in unrealized appreciation/
(depreciation) on investments (83,762,977)
Net change in unrealized appreciation/
(depreciation) on foreign
currency translations (248)
------------
Net change in unrealized appreciation/
(depreciation) on investments and
foreign currency translations (83,763,225)
------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS AND FOREIGN CURRENCY (84,687,230)
------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $(83,394,512)
============
See accompanying notes to financial statements.
8
Gabelli Capital Asset Fund
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------- -----------------
OPERATIONS:
Net investment income $ 1,292,718 $ 1,094,241
Net realized gain/(loss) on investments and foreign currency transactions (924,005) 18,478,201
Net change in unrealized appreciation/(depreciation) on investments
and foreign currency translations (83,763,225) 1,794,539
------------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (83,394,512) 21,366,981
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,292,835) (1,085,270)
Net realized gain (989,215) (17,236,080)
Return of capital -- (43,265)
------------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,282,050) (18,364,615)
------------- ------------
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets from capital share transactions (34,404,626) (8,472,068)
------------- ------------
NET DECREASE IN NET ASSETS (120,081,188) (5,469,702)
NET ASSETS:
Beginning of period 228,943,951 234,413,653
------------- ------------
End of period (including undistributed net investment income of
$0 and $0, respectively) $ 108,862,763 $228,943,951
============= ============
See accompanying notes to financial statements.
9
Gabelli Capital Asset Fund
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIODS
INDICATED:
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2008 2007 2006 2005 2004
-------- -------- -------- -------- --------
OPERATING PERFORMANCE:
Net asset value, beginning of period $ 18.66 $ 18.58 $ 17.40 $ 18.28 $ 16.44
-------- -------- -------- -------- --------
Net investment income 0.12 0.10 0.06 0.05 0.06
Net realized and unrealized gain/(loss) on investments (7.68) 1.61 3.77 0.33 2.50
-------- -------- -------- -------- --------
Total from investment operations (7.56) 1.71 3.83 0.38 2.56
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (0.13) (0.10) (0.06) (0.05) (0.06)
Net realized gain on investments (0.10) (1.53) (2.59) (1.21) (0.66)
Return of capital -- (0.00)(c) (0.00)(c) -- --
-------- -------- -------- -------- --------
Total distributions (0.23) (1.63) (2.65) (1.26) (0.72)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.87 $ 18.66 $ 18.58 $ 17.40 $ 18.28
-------- -------- -------- -------- --------
TOTAL RETURN + (40.4)% 9.1% 21.9% 2.0% 15.5%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $108,863 $228,944 $234,414 $219,127 $240,035
Ratio of net investment income to average net assets 0.76% 0.45% 0.28% 0.26% 0.34%
Ratio of operating expenses to average net assets 1.15%(a) 1.10% 1.10%(b) 1.10% 1.10%
Portfolio turnover rate ++ 11% 24% 40% 25% 27%
+ 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.
++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate to include cash proceeds due
to mergers. Had this policy been adopted retroactively, the portfolio
turnover rate for the years ended December 31, 2007, 2005, and 2004 would
have been 33%, 28%, and 37%, respectively. The portfolio turnover rate for
the year ended 2006 would have been as shown.
(a) The Fund incurred interest expense during the year ended December 31, 2008.
If interest expense had not been incurred, the ratios of operating expenses
to average net assets would have been 1.14%.
(b) The ratio does not include a reduction of expenses for custodian fee
credits on cash balances maintained with the custodian. Including such
custodian fee credits, the expense ratio for the year ended December 31,
2006 would have been 1.09%. For the years ended December 31, 2008 and 2007,
the effect of the custodian fee credits was minimal.
(c) Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
10
Gabelli Capital Asset Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 2008
1. ORGANIZATION
The Gabelli Capital Asset Fund is a series of Gabelli Capital Series Funds,
Inc. (the "Company"), which was organized on April 8, 1993 as a Maryland
corporation. The Company is a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund's primary objective is growth of capital. Current income is a
secondary objective. The Fund commenced investment operations on May 1, 1995.
Shares of the Fund are available to the public only through the purchase of
certain variable annuity and variable life insurance contracts issued by The
Guardian Insurance & Annuity Company, Inc. ("Guardian") and other selected
insurance companies.
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
Directors (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 with the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities with 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.
Statement of Financial Accounting Standard No. 157, "Fair Value
Measurements" ("SFAS 157") clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value, and requires
additional disclosures about the use of fair value measurements. The three
levels of the fair value hierarchy under SFAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities;
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit
risk, etc.); and
- Level 3 - significant unobservable inputs (including the Fund's
determinations as to the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities. The
summary of the Fund's investments, by inputs used to value the
Fund's investments as of December 31, 2008 is, as follows:
INVESTMENTS IN
SECURITIES
(MARKET VALUE)
VALUATION INPUTS ASSETS
- ---------------- --------------
Level 1 - Quoted Prices $108,942,317
Level 2 - Other Significant Observable Inputs 12,336
Level 3 - Significant Unobservable Inputs 5,610
------------
TOTAL $108,960,263
============
11
Gabelli Capital Asset Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 2008
The following is a reconciliation of Level 3 investments for which
significant unobservable inputs were used to determine fair value:
INVESTMENTS IN
SECURITIES
(MARKET VALUE)
--------------
BALANCE AS OF 12/31/07 $ 5,610
Accrued discounts/(premiums) --
Realized gain/(loss) (144,933)
Change in unrealized appreciation/(depreciation)+ 144,935
Net purchases/(sales) 0
Transfers in and/or out of Level 3 (2)
---------
BALANCE AS OF 12/31/08 $ 5,610
=========
Net change in unrealized appreciation/(depreciation)
during the period on Level 3 investments held at
12/31/08+ $ 0
---------
- ----------
+ Net change in unrealized appreciation/(depreciation) is included in the
related amounts on investments in the Statement of Operations.
In March 2008, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard No.161, "Disclosures about Derivative
Instruments and Hedging Activities" ("SFAS 161") that is effective for fiscal
years beginning after November 15, 2008. SFAS 161 is intended to improve
financial reporting for derivative instruments by requiring enhanced disclosure
that enables investors to understand how and why an entity uses derivatives, how
derivatives are accounted for, and how derivative instruments affect an entity's
results of operations and financial position. Management is currently evaluating
the implications of SFAS 161 on the Fund's financial statement disclosures.
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.
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.
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.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE
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." When cash balances are overdrawn, the Fund is charged an overdraft
fee equal to 2.00% above the federal funds rate on outstanding balances. This
amount, if any, would be included in "interest expense" in the Statement of
Operations.
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
12
Gabelli Capital Asset Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 2008
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 net asset value ("NAV") per share of the
Fund. For the year ended December 31, 2008, reclassifications were made to
decrease accumulated distributions in excess of net investment income by $117
and to increase accumulated net realized loss on investments and foreign
currency transactions by $117.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2008 2007
------------ ------------
DISTRIBUTIONS PAID FROM:
Ordinary income $1,292,398 $ 2,625,614
Net long-term capital gains 989,652 15,695,736
Return of capital -- 43,265
---------- -----------
Total distributions paid $2,282,050 $18,364,615
========== ===========
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.
At December 31, 2008, the difference between book basis and tax basis
unrealized depreciation was primarily due to deferral of losses from wash sales
for tax purposes.
As of December 31, 2008, the components of accumulated earnings/losses on a
tax basis were as follows:
Undistributed long-term gains $ 153,814
Net unrealized depreciation on investments
and foreign currency translations (23,743,180)
------------
Total $(23,589,366)
============
The following summarizes the tax cost of investments and the related
unrealized appreciation/depreciation at December 31, 2008:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
------------ ------------ ------------ ------------
Investments $132,703,443 $18,982,519 $(42,725,699) $(23,743,180)
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
("FIN 48") provides guidance for how uncertain tax positions should be
recognized, measured, presented, and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the "more-likely-than-not" threshold
are recorded as a tax benefit or expense in the current year. In accordance with
FIN 48, management has analyzed the Fund's tax positions taken on the federal
and state income tax returns for all open tax years (the current and prior three
tax years) and has concluded that no provision for income tax is required in the
Fund's financial statements. Management's determination regarding FIN 48 may be
subject to review and adjustment at a later date based on factors including, but
not limited to, an ongoing analysis of tax laws, regulations, and
interpretations thereof.
3. AGREEMENTS WITH AFFILIATED PARTIES
Pursuant to a management agreement (the "Management Agreement"), the Fund
will pay Guardian Investor Services Corporation (the "Manager") a fee, computed
daily and paid monthly, at the annual rate of 1.00% of the value of its average
daily net assets. Pursuant to an Investment Advisory Agreement among the Fund,
the Manager, and the Adviser, the Adviser, under the supervision of the
Company's Board and the Manager, manages the Fund's assets in accordance with
the Fund's investment objectives and policies, makes investment decisions for
the Fund, places purchase and sale orders on behalf of the Fund, provides
investment research, and provides facilities and personnel required for the
Fund's administrative needs. The Adviser may delegate its administrative role
and currently has done so to PNC Global Investment Servicing (U.S.) Inc.
(formerly PFPC Inc.), the Fund's sub-administrator (the "Sub-Administrator").
The Adviser will supervise the performance of administrative and professional
services provided by others and pays the compensation of the Sub-Administrator
and all Officers and Directors of the Company who are its affiliates. As
compensation for its services and the related expenses borne by the Adviser, the
Manager pays the Adviser a fee, computed daily and paid monthly, at the annual
rate of 0.75% of the value of the Fund's average daily net assets.
The Fund pays each Director who is not considered to be an affiliated
person an annual retainer of $3,000 plus $500 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $500 per meeting attended and the
Chairman of the Audit Committee and the Lead Director each receives an annual
fee of $1,000. Directors who are directors or employees of the Adviser or an
affiliated company receive no compensation or expense reimbursement from the
Fund.
4. PORTFOLIO SECURITIES
Purchases and proceeds from the sales of securities during 2008, other than
short-term securities and U.S. Government obligations aggregated $17,824,133 and
$52,690,885, respectively.
Purchases and proceeds from the sales of U.S. Government obligations during
2008, other than short-term obligations, aggregated $338,455 and $337,931,
respectively.
13
Gabelli Capital Asset Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 2008
5. TRANSACTIONS WITH AFFILIATES
During 2008, the Fund paid brokerage commissions on security trades of
$84,235 to Gabelli & Company, Inc.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant
to the Investment Advisory Agreement between the Fund and the Adviser.
During 2008, the Fund paid or accrued $45,000 to the Adviser in connection with
the cost of computing the Fund's NAV.
The Fund is assuming its portion of the allocated cost of the Gabelli
Funds' Chief Compliance Officer in the amount of $4,081 for the year ended
December 31, 2008, which is included in miscellaneous expenses in the Statement
of Operations.
6. LINE OF CREDIT
The Fund participates in an unsecured line of credit of up to
$75,000,000 from which it may borrow up to 10% of its net assets from the
custodian for temporary borrowing purposes. Borrowings under this arrangement
bear interest at 0.75% above the federal funds rate on outstanding balances.
This amount, if any, would be included in "interest expense" in the Statement of
Operations. At December 31, 2008, borrowings outstanding under the line of
credit amounted to $150,000.
The average daily amount of borrowings outstanding under the line of credit
in 2008 was $500,134 with a weighted average interest rate of 3.60%. The maximum
amount borrowed at any time during 2008 was $7,121,000.
7. CAPITAL STOCK TRANSACTIONS
Transactions in shares of capital stock were as follows:
Year Ended Year Ended Year Ended Year Ended
December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007
----------------- ----------------- ----------------- -----------------
Shares Amount
------------------------------------- -------------------------------------
Shares sold 319,154 803,368 $ 4,959,818 $ 16,086,710
Shares issued upon reinvestment
of distributions 221,344 979,446 2,282,050 18,364,615
Shares redeemed (2,798,278) (2,124,404) (41,646,494) (42,923,393)
---------- ---------- ------------ ------------
NET DECREASE (2,257,780) (341,590) $(34,404,626) $ (8,472,068)
========== ========== ============ ============
8. 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.
9. OTHER MATTERS
On April 24, 2008, the Adviser entered into an administrative settlement
with the SEC to resolve the SEC's inquiry regarding prior frequent trading
activity in shares of the GAMCO Global Growth Fund (the "Global Growth Fund") by
one investor who was banned from the Global Growth Fund in August 2002. In the
settlement, the SEC found that the Adviser had violated Section 206(2) of the
Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule 17d-1
thereunder and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement is not expected to impact the Fund and will not
have a material adverse impact on the Adviser or its ability to fulfill its
obligations under the Advisory Agreement. On the same day, the SEC filed a civil
action against the Executive Vice President and Chief Operating Officer of the
Adviser, alleging violations of certain federal securities laws arising from the
same matter. The officer is also an officer of the Global Growth Fund and other
funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies
the allegations and is continuing in his positions with the Adviser and the
funds. The Adviser currently expects that any resolution of the action against
the officer will not have a material adverse impact on the Adviser or its
ability to fulfill its obligations under the Advisory Agreement.
In a separate matter, on January 12, 2009, the SEC issued an administrative
action approving a final settlement of a previously disclosed matter with the
Adviser involving compliance with Section 19(a) of the Investment Company Act of
1940 and Rule 19a-1 thereunder by two closed-end funds. These provisions require
registered investment companies when making a distribution in the nature of a
dividend from sources other than net investment income to contemporaneously
provide written statements to shareholders, which adequately disclose the source
or sources of such distribution. While the two funds sent annual statements and
provided other materials containing this information, the shareholders did not
receive the notices required by Rule 19a-1 with any of the distributions that
were made for 2002 and 2003. The Adviser believes that the funds have been in
compliance with Section 19(a) and Rule 19a-1 since the beginning of 2004. As
part of the settlement, in which the Adviser neither admits nor denies the
findings by the SEC, the Adviser agreed to pay a civil monetary penalty of
$450,000 and to cease and desist from causing violations of Section 19(a) and
Rule 19a-1. In connection with the settlement, the SEC noted the remedial
actions previously undertaken by the Adviser.
14
Gabelli Capital Series Fund, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF GABELLI CAPITAL SERIES FUNDS, INC.
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Gabelli Capital Asset Fund (the
"Fund"), a series of Gabelli Capital Series Funds, Inc., as of December 31,
2008, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2008, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Gabelli Capital Asset Fund, a series of Gabelli Capital Series Funds, Inc., at
December 31, 2008, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
(Ernst & Young LLP)
Philadelphia, Pennsylvania
February 24, 2009
15
Gabelli Capital Asset Fund
ADDITIONAL INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Company's Board of Directors. Information pertaining to the Directors and
Officers of the Fund is set forth below. The Fund's Statement of Additional
Information includes additional information about the Fund's Directors and
Officers and is available without charge, upon request, by writing to Gabelli
Capital Series Funds, Inc. at One Corporate Center, Rye, NY 10580-1422.
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND COMPLEX
NAME, POSITION(S) LENGTH OF TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
ADDRESS(1) AND AGE SERVED(2) DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR(4)
- ----------------------- -------------- ------------ -------------------------------------------- -------------------------
INTERESTED DIRECTORS(3)
Mario J. Gabelli Since 1995 26 Chairman and Chief Executive Officer of Director of Morgan Group
Director and Chief GAMCO Investors, Inc. and Chief Investment Holdings, Inc. (holding
Investment Officer Officer - Value Portfolios of Gabelli Funds, company); Chairman of the
Age: 66 LLC and GAMCO Asset Management Inc.; Board of LICT Corp.
Director/Trustee or Chief Investment Officer (multimedia and
of other registered investment companies in communication services
the Gabelli/GAMCO Funds complex; company)
Chairman and Chief Executive Officer
of GGCP, Inc.
Arthur V. Ferrara Since 1995 8 Former Chairman of the Board and Chief --
Director Executive Officer of The Guardian Life
Age: 78 Insurance Company of America (1993-1995)
INDEPENDENT DIRECTORS
Anthony J. Colavita Since 1995 36 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 73
Anthony R. Pustorino Since 1995 13 Certified Public Accountant; Professor Director of The LGL
Director Emeritus, Pace University Group, Inc. (diversified
Age: 83 manufacturing)
Werner J. Roeder, MD Since 1995 22 Medical Director of Lawrence Hospital and --
Director practicing private physician
Age: 68
Anthonie C. van Ekris Since 1995 20 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 74
16
Gabelli Capital Asset Fund
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF TIME PRINCIPAL OCCUPATION(S)
ADDRESS(1) AND AGE SERVED(2) DURING PAST FIVE YEARS
- ------------------------ -------------- ----------------------------------------------------------------------------------------
OFFICERS
Bruce N. Alpert Since 1995 Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC and an
President and Secretary officer of all of the registered investment companies in the Gabelli/GAMCO Funds
Age: 57 complex. Director and President of Teton Advisors, Inc. (formerly Gabelli Advisers,
Inc.) since 1998
Agnes Mullady Since 2006 Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered
Treasurer investment companies in the Gabelli/GAMCO Funds complex; Senior Vice President of
Age:50 U.S. Trust Company, N.A. and Treasurer and Chief Financial Officer of Excelsior Funds
from 2004 through 2005; Chief Financial Officer of AMIC Distribution Partners from 2002
through 2004
Peter D. Goldstein Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief Compliance
Chief Compliance Officer Officer of all of the registered investment companies in the Gabelli/GAMCO Funds
Age: 55 complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004
1. Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2. Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Fund's By-Laws and Articles of Incorporation. Each officer will hold office
for an indefinite term until the date he or she resigns or retires or until
his or her successor is elected and qualified.
3. "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" because of his affiliation with Gabelli
Funds, LLC which acts as the Fund's investment adviser. Mr. Ferrara is
considered an interested person because of his affiliation with The
Guardian Life Insurance Company of America, which is the parent company of
the Fund's Manager.
4. This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
Gabelli Capital Asset Fund
2008 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
For the year ended December 31, 2008, the Fund paid to shareholders
ordinary income distributions (comprised of net investment income) totaling
$0.132 per share and long-term capital gains totaling $989,652. The
distributions of long-term capital gains have been designated as capital gain
dividend by the Fund's Board of Directors. For the year ended December 31, 2008,
100% of the ordinary income distribution qualifies for the dividends received
deduction available to corporations. The Fund designates 100% of the ordinary
income distribution as qualified dividend income pursuant to the Jobs and Growth
Tax Relief Reconciliation Act of 2003. The Fund designates 0.50% of the ordinary
income distribution as qualified interest income, pursuant to the American Jobs
Creation Act of 2004.
U.S. GOVERNMENT INCOME
The percentage of the ordinary income distribution paid by the Fund during
2008 which was derived from U.S. Treasury securities was 0.25%. Such income is
exempt from state and local tax in all states. However, many states, including
New York and California, allow a tax exemption for a portion of the income
earned only if a mutual fund has invested at least 50% of its assets at the end
of each quarter of the Fund's fiscal year in U.S. Government securities. The
Gabelli Capital Asset Fund did not meet this strict requirement in 2008. Due to
the diversity in state and local tax law, it is recommended that you consult
your personal tax adviser as to the applicability of the information provided to
your specific situation.
All designations are based on financial information available as of the
date of this annual report and, accordingly, are subject to change. For each
item, it is the intention of the Fund to designate the maximum amount permitted
under the Internal Revenue Code and the regulations thereunder.
17
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$41,500 for 2007 and $41,500 for 2008.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2007 and $0 for 2008.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $4,100 for 2007 and $4,300
for 2008. Tax fees represent tax compliance services provided in
connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $69,100 for 2007 and $4,300 for 2008.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) 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.
(b) Not applicable.
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 Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) 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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) 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) Gabelli Capital Series Funds, Inc.
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 3/6/09
----------------------------------------------------------------------------
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 3/6/09
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date 3/6/09
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.