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

 

The Gabelli Asset Fund

(Exact name of registrant as specified in charter)

One Corporate Center

Rye, New York 10580-1422

(Address of principal executive offices) (Zip code)

John C. Ball

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: June 30, 2022

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

 

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

Item 1. Reports to Stockholders.

 

(a)

The Report to Shareholders is attached herewith.

 

The Gabelli Asset Fund

Semiannual Report — June 30, 2022

  

To Our Shareholders,

 

For the six months ended June 30, 2022, the net asset value (NAV) total return per class AAA Share of The Gabelli Asset Fund was (16.9)% compared with a total return of (20.0)% for the Standard & Poor’s (S&P) 500 Index. Other classes of shares are available. See page 3 for the performance information for all classes.

 

Enclosed are the financial statements, including the schedule of investments, as of June 30, 2022.

 

Investment Objective and Strategy (Unaudited)

 

The Fund primarily seeks to provide growth of capital. The Fund’s secondary goal is to provide current income.

 

The Fund’s investment strategy is to primarily invest in common and preferred stocks. The Fund focuses on companies which appear underpriced relative to their private market value (PMV). PMV is the value the Fund’s investment adviser, Gabelli Funds, LLC, believes informed investors would be willing to pay for a company. Under normal market conditions, the Fund invests at least 80% of its assets in stocks that are listed on a recognized securities exchange or similar market. The portfolio managers will invest in companies that, in the public market, are selling at a significant discount to the portfolio managers’ assessment of their PMV. The portfolio managers consider factors such as price, earnings expectations, earnings and price histories, balance sheet characteristics, and perceived management skills. The portfolio managers also consider changes in economic and political outlooks as well as individual corporate developments.

 

As permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.gabelli.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. To elect to receive all future reports on paper free of charge, please contact your financial intermediary, or, if you invest directly with the Fund, you may call 800-422-3554 or send an email request to info@gabelli.com.

 

 

Performance Discussion (Unaudited)

 

For the six months ended June 30, 2022, the Fund declined 16.85% while the S&P 500 Index declined 20%. Markets came under pressure as concerns about inflation, sparked by loose monetary and fiscal policies, supply chain issues, and oil and agricultural products shocks exacerbated by the war in Ukraine morphed into worries about an economic downturn triggered largely by central bank tightening meant to control inflation. Reflecting these higher rates, the P/E multiple on the S&P 500 compressed from 21x to 16x, though the earnings estimates underlying current multiples are likely to decline as economic weakness spreads. Energy was the strongest sector in the first half, though it too succumbed to heavy selling pressure in June. Cyclically sensitive sectors, including Technology, Consumer Discretionary, and Industrials, performed poorly while more resilient sectors such as Utilities, Staples, and Health Care were relatively strong.

 

The largest contributor to returns for the quarter was Swedish Match (2.7% of net assets as of June 30, 2022), which agreed to an acquisition by Philip Morris International (PM) for SEK 106 per share in cash. The deal marks the realization of our long-held thesis that a global cigarette firm would bolster their smokeless tobacco offerings via market leader ZYN, owned by Swedish Match. The deal is expected to close in late 2022. As would be expected, energy-oriented firms performed well. Among the Fund’s holdings were Chevron (0.6%), EOG Resources (0.5%), and ExxonMobil (0.3%). Pharmaceuticals firms, including Bristol-Myers Squibb (0.4%) and Merck & Co (0.3%), added ballast during a choppy environment.

 

After several strong years, Sony Corp. (2.2%) was the largest detractor from performance as competition in the video games arena is likely to increase after Microsoft announced a bid for game publisher Activision; Sony also faces headwinds across its consumer businesses and from semiconductor supply challenges. S&P Global (1.6%) identified a dearth of new bond issuance as causing a shortfall in expected earnings for the year. Finally, advertising-driven companies, including The Walt Disney Company (0.6%) and Warner Brothers Discovery (0.4%), were pressured while the late quarter swoon in commodities hit agricultural equipment manufacturers Deere & Co. (2.7%) and CNH Industrial (1.0%).

 

Thank you for your investment in The Gabelli Asset Fund.

 

We appreciate your confidence and trust.

 

The views expressed reflect the opinions of the Fund's portfolio managers and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

 

Comparative Results

 

 

 

The Gabelli Asset Fund

Disclosure of Fund Expenses (Unaudited)

For the Six Month Period from January 1, 2022 through June 30, 2022

Expense Table

 

 

Summary of Portfolio Holdings (Unaudited)

 

The following table presents portfolio holdings as a percent of net assets as of June 30, 2022:

 

The Gabelli Asset Fund

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-PORT. 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-PORT 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 800-SEC-0330.

 

Proxy Voting

 

The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how each 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.

 

 

The Gabelli Asset Fund

Schedule of Investments — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Schedule of Investments (Continued) — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Schedule of Investments (Continued) — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Schedule of Investments (Continued) — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Schedule of Investments (Continued) — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Schedule of Investments (Continued) — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Schedule of Investments (Continued) — June 30, 2022 (Unaudited)

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

 

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

 

Statement of Changes in Net Assets

	Six Months Ended June 30, 2022 (Unaudited)					Year Ended December 31, 2021
Operations:
Net investment income		$	2,601,148				$	4,265,930
Net realized gain on investments, and foreign currency transactions			113,486,368					208,681,342
Net change in unrealized appreciation/depreciation on investments, and foreign currency translations			(484,210,603	)				170,973,206
Net Increase/(Decrease) in Net Assets Resulting from Operations			(368,123,087	)				383,920,478
Distributions to Shareholders:
Accumulated earnings
Class AAA			—					(142,836,778	)
Class A			—					(3,996,047	)
Class C			—					(1,080,786	)
Class I			—					(56,099,797	)
Total Distributions to Shareholders			—					(204,013,408	)
Shares of Beneficial Interest Transactions:
Class AAA			(76,123,555	)				(93,863,608	)
Class A			(3,418,782	)				3,946,720
Class C			(2,214,116	)				(11,922,489	)
Class I			(6,498,657	)				75,087,668
Net Decrease in Net Assets from Shares of Beneficial Interest Transactions			(88,255,110	)				(26,751,709	)
Redemption Fees			373					395
Net Increase/(Decrease) in Net Assets			(456,377,824	)				153,155,756
Net Assets:
Beginning of year			2,242,168,158					2,089,012,402
End of period		$	1,785,790,334				$	2,242,168,158

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Financial Highlights

Selected data for a share of beneficial interest outstanding throughout each period:

 

							Income (Loss) from Investment Operations												Distributions																					Ratios to Average Net Assets/Supplemental Data
Year Ended December 31		Net Asset Value, Beginning of Year					Net Investment Income (Loss)(a)				Net Realized and Unrealized Gain (Loss) on Investments				Total from Investment Operations				Net Investment Income				Net Realized Gain on Investments				Total Distributions				Redemption Fees(a)(b)			Net Asset Value, End of Period			Total Return†			Net Assets, End of Period (in 000’s)			Net Investment Income (Loss)			Operating Expenses(c)(d)			Portfolio Turnover Rate
Class AAA
2022(e)			$	58.56			$	0.05			$	(9.92	)		$	(9.87	)		$	(0.00	)(b)		$	(0.00	)(b)		$	(0.00	)(b)		$	0.00		$	48.69		(16.85	)%		$	1,249,484		0.19	%(f)		1.34	%(f)		3	%
2021				54.05				0.08				10.15				10.23				(0.19	)			(5.53	)			(5.72	)			0.00			58.56		18.93				1,584,831		0.13			1.33			5
2020				55.02				0.13				5.99				6.12				(0.17	)			(6.92	)			(7.09	)			0.00			54.05		11.23				1,544,305		0.25			1.36			4
2019				49.44				0.22				10.88				11.10				(0.23	)			(5.29	)			(5.52	)			0.00			55.02		22.43				1,674,315		0.40			1.36			4
2018				58.97				0.19				(4.77	)			(4.58	)			(0.17	)			(4.78	)			(4.95	)			0.00			49.44		(7.69	)			1,566,040		0.32			1.35			2
2017				53.33				0.09				10.67				10.76				(0.09	)			(5.03	)			(5.12	)			0.00			58.97		20.16				1,973,845		0.15			1.35			2
Class A
2022(e)			$	57.63			$	0.05			$	(9.76	)		$	(9.71	)		$	—			$	—			$	—			$	0.00		$	47.92		(16.85	)%		$	33,159		0.19	%(f)		1.34	%(f)		3	%
2021				53.28				0.08				10.01				10.09				(0.21	)			(5.53	)			(5.74	)			0.00			57.63		18.93				43,714		0.14			1.33			5
2020				54.33				0.13				5.91				6.04				(0.17	)			(6.92	)			(7.09	)			0.00			53.28		11.23				36,656		0.25			1.36			4
2019				48.88				0.22				10.76				10.98				(0.24	)			(5.29	)			(5.53	)			0.00			54.33		22.45				38,598		0.41			1.36			4
2018				58.36				0.19				(4.72	)			(4.53	)			(0.17	)			(4.78	)			(4.95	)			0.00			48.88		(7.69	)			29,477		0.32			1.35			2
2017				52.80				0.09				10.57				10.66				(0.07	)			(5.03	)			(5.10	)			0.00			58.36		20.18				39,598		0.15			1.35			2
Class C
2022(e)			$	50.48			$	(0.13	)		$	(8.53	)		$	(8.66	)		$	—			$	—			$	—			$	0.00		$	41.82		(17.16	)%		$	6,940		(0.56	)%(f)		2.09	%(f)		3	%
2021				47.45				(0.30	)			8.86				8.56				—				(5.53	)			(5.53	)			0.00			50.48		18.04				10,721		(0.57	)		2.08			5
2020				49.30				(0.23	)			5.30				5.07				—				(6.92	)			(6.92	)			0.00			47.45		10.41				20,863		(0.50	)		2.11			4
2019				44.91				(0.19	)			9.87				9.68				—				(5.29	)			(5.29	)			0.00			49.30		21.53				32,334		(0.37	)		2.11			4
2018				54.28				(0.23	)			(4.36	)			(4.59	)			—				(4.78	)			(4.78	)			0.00			44.91		(8.38	)			40,549		(0.43	)		2.10			2
2017				49.72				(0.32	)			9.91				9.59				—				(5.03	)			(5.03	)			0.00			54.28		19.27				63,821		(0.59	)		2.10			2
Class I
2022(e)			$	58.36			$	0.12			$	(9.90	)		$	(9.78	)		$	—			$	—			$	—			$	0.00		$	48.58		(16.76	)%		$	496,207		0.44	%(f)		1.09	%(f)		3	%
2021				53.88				0.23				10.14				10.37				(0.36	)			(5.53	)			(5.89	)			0.00			58.36		19.24				602,902		0.38			1.08			5
2020				54.86				0.26				5.98				6.24				(0.30	)			(6.92	)			(7.22	)			0.00			53.88		11.50				487,188		0.51			1.11			4
2019				49.30				0.36				10.87				11.23				(0.38	)			(5.29	)			(5.67	)			0.00			54.86		22.76				514,387		0.65			1.11			4
2018				58.85				0.34				(4.78	)			(4.44	)			(0.33	)			(4.78	)			(5.11	)			0.00			49.30		(7.46	)			498,494		0.57			1.10			2
2017				53.22				0.23				10.68				10.91				(0.25	)			(5.03	)			(5.28	)			0.00			58.85		20.48				587,964		0.40			1.10			2

 

†

Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized.

(a)

Per share amounts have been calculated using the average shares outstanding method.

(b)

Amount represents less than $0.005 per share.

(c)

The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For all periods presented, there was no impact on the expense ratios.

(d)

The Fund incurred interest expense. For the year ended December 31, 2020 , if interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.35% (Class AAA and Class A), 2.10% (Class C), and 1.10% (Class I). For all remaining years, there was no impact on the expense ratios.

(e)

For the six months ended June 30, 2022, unaudited.

(f)

Annualized.

 

See accompanying notes to financial statements.

 

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited)

1. Organization. The Gabelli Asset 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’s secondary goal is to provide current income. The Fund commenced investment operations on March 3, 1986.

 

2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the preparation of its 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.

 

The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.

 

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 obligations 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 securities are valued using the closing bid price, 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. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.

 

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 American Depositary Receipt 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.

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited) (Continued)

The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy 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 Board’s determinations as to the fair value of investments).

 

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. 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 in securities by inputs used to value the Fund’s investments as of June 30, 2022 is as follows:

 

		Valuation Inputs
		Level 1 Quoted Prices				Level 2 Other Significant Observable Inputs				Total Market Value at 06/30/22
INVESTMENTS IN SECURITIES:
ASSETS (Market Value):
Common Stocks (a)		$	1,764,336,336				—			$	1,764,336,336
Closed-End Funds			1,236,793			$	10,100				1,246,893
Preferred Stocks (a)			820,905				—				820,905
Convertible Preferred Stocks (a)			777,357				—				777,357
Warrants (a)			610				—				610
U.S. Government Obligations			—				16,228,847				16,228,847
TOTAL INVESTMENTS IN SECURITIES – ASSETS		$	1,767,172,001			$	16,238,947			$	1,783,410,948

 

(a)

Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings.

 

The Fund held no Level 3 investments at June 30, 2022 or December 31, 2021.

 

Additional Information to Evaluate Qualitative Information.

 

General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

 

Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited) (Continued)

available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.

 

The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.

 

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 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 purchase 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 inability 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 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 Securities. The Fund may invest up to 10% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than 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 saleable among qualified institutional investors under special rules adopted by 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. At June 30, 2022, the Fund did not hold restricted securities.

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited) (Continued)

Investments in Other Investment Companies. The Fund may invest, from time to time, in shares of other investment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the Acquired Funds) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the six months ended June 30, 2022, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was less than one basis point.

 

Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.

 

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.

 

In calculating the 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.

 

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 GAAP. 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 for federal income tax purposes 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. Permanent differences were primarily due to utilization of tax equalization and prior year long term capital gain reversal on real estate investment trusts. These reclassifications have no impact on the NAV of the Fund.

 

The tax character of distributions paid during the year ended December 31, 2021 was as follows:

 

Distributions paid from:*
Ordinary income (inclusive of short term capital gains)		$	10,727,340
Net long term capital gains			203,458,859
Total distributions paid		$	214,186,199

 

*

Total distributions paid differs from the Statement of Changes in Net Assets due to the utilization of equalization.

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited) (Continued)

Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (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.

 

The following summarizes the tax cost of investments and the related net unrealized appreciation at June 30, 2022:

 

		Cost			Gross Unrealized Appreciation			Gross Unrealized Depreciation			Net Unrealized Appreciation
Investments		$544,983,160			$1,272,769,472			$(34,341,684)			$1,238,427,788

 

The Fund is required to evaluate 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. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended June 30, 2022, the Fund did not incur any income tax, interest, or penalties. As of June 30, 2022, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

 

3. Investment Advisory Agreement and Other Transactions. 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, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, 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 sales of securities during the six months ended June 30, 2022, other than short term securities and U.S. Government obligations, aggregated $54,437,066 and $178,916,405, respectively.

 

6. Transactions with Affiliates and Other Arrangements. During the six months ended June 30, 2022, the Fund paid $7,614 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $1,203 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited) (Continued)

During the six months ended June 30, 2022, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $14,518.

 

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. Under the sub-administration agreement with Bank of New York Mellon, the fees paid include the cost of calculating the Fund’s NAV. The Fund reimburses the Adviser for this service. During the six months ended June 30, 2022, the Fund accrued $22,500 in accounting fees in the Statement of Operations.

 

The Fund pays retainer and per meeting fees to Trustees not affiliated with the Adviser, plus specified amounts to the Lead Trustee and Audit Committee Chairman. Trustees are also reimbursed for out of pocket expenses incurred in attending meetings. Trustees who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.

 

7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on March 1, 2023 and may be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the bank for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the Overnight Federal Funds Rate plus 135 basis points or the Overnight Bank Funding Rate plus 135 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At June 30, 2022, there were no borrowings under the line of credit.

 

The average daily amount of borrowings outstanding under the line of credit during the ten days of borrowing in the six months ended June 30, 2022 was $12,571,400 with a weighted average interest rate of 1.35%. The maximum amount borrowed at any time during the six months ended June 30, 2022 was $24,271,000.

 

8. Shares of Beneficial Interest. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.

 

The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh 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 as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended June 30, 2022 and the year ended December 31, 2021, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.

 

The Gabelli Asset Fund

Notes to Financial Statements (Unaudited) (Continued)

Transactions in shares of beneficial interest were as follows:

 

		Six Months Ended June 30, 2022 (Unaudited)								Year Ended December 31, 2021
		Shares				Amount				Shares				Amount
Class AAA
Shares sold			121,168			$	6,681,089				397,517			$	23,732,270
Shares issued upon reinvestment of distributions			—				—				2,298,562				134,603,794
Shares redeemed			(1,523,871	)			(82,804,644	)			(4,204,047	)			(252,199,672	)
Net decrease			(1,402,703	)		$	(76,123,555	)			(1,507,968	)		$	(93,863,608	)
Class A
Shares sold			32,949			$	1,783,414				122,842			$	7,186,619
Shares issued upon reinvestment of distributions			—				—				64,858				3,737,763
Shares redeemed			(99,511	)			(5,202,196	)			(117,170	)			(6,977,662	)
Net increase/(decrease)			(66,562	)		$	(3,418,782	)			70,530			$	3,946,720
Class C
Shares sold			2,564			$	123,950				11,158			$	550,666
Shares issued upon reinvestment of distributions			—				—				21,184				1,069,372
Shares redeemed			(48,970	)			(2,338,066	)			(259,691	)			(13,542,527	)
Net decrease			(46,406	)		$	(2,214,116	)			(227,349	)		$	(11,922,489	)
Class I
Shares sold			548,028			$	29,786,614				1,682,941			$	100,552,940
Shares issued upon reinvestment of distributions			—				—				889,384				51,897,337
Shares redeemed			(665,954	)			(36,285,271	)			(1,282,737	)			(77,362,609	)
Net increase/(decrease)			(117,926	)		$	(6,498,657	)			1,289,588			$	75,087,668

 

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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

 

10. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.

 

The Gabelli Asset Fund

 

Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)

 

At its meeting on May 12, 2022, the 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 managers, the depth of the analyst pool available to the Adviser and the portfolio managers, 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 managers.

 

Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of March 31, 2022) of the Fund against a peer group of nine other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional multi-cap value funds, regardless of asset size or primary channel of distribution. The Independent Board Members noted that the Fund’s performance was in the second quartile for the five year period and ten year period and the third for the one year period and the three year period as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the fifth quintile for the one year period, the fourth quintile for the three year and ten year periods, and the third quintile for the five year period. The Independent Board Members noted the Fund’s better longer-term performance record relative to these peer groups.

 

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 large 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 Adviser Peer Group and a peer group of sixteen other multi-cap core funds selected by Broadridge and noted that the advisory fee includes substantially all administrative services for the Fund as well as investment advisory services of the Adviser. The Independent Board Members noted that the Fund’s expense ratios were the highest among the funds selected by Broadridge, that they were above average within the Adviser Peer Group, and that the Fund’s size was larger than, or comparable, to a majority of these peers. 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

 

The Gabelli Asset Fund

 

Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)

 

Independent Board Members were presented with but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.

 

Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable 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 acceptable 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 the continuation of the investment advisory agreement to the full Board.

 

Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.

 

 

 

THE GABELLI ASSET FUND

One Corporate Center

Rye, NY 10580-1422

 

Portfolio Management Team Biographies

 

		Mario J. Gabelli, CFA, is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.
		Christopher J. Marangi joined Gabelli in 2003 as a research analyst. Currently he is a Managing Director and Co-Chief Investment Officer for GAMCO Investors, Inc.’s Value team. In addition, he serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Fund Complex. Mr. Marangi graduated magna cum laude and Phi Beta Kappa with a BA in Political Economy from Williams College and holds an MBA degree with honors from Columbia Business School.
		Kevin V. Dreyer joined Gabelli in 2005 as a research analyst covering companies within the consumer sector. Currently he is a Managing Director and Co-Chief Investment Officer for GAMCO Investors, Inc.’s Value team. In addition, he serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Fund Complex. Mr. Dreyer received a BSE from the University of Pennsylvania and an MBA degree from Columbia Business School.
		Jeffrey J. Jonas, CFA, joined Gabelli in 2003 as a research analyst focusing on companies across the healthcare industry. In 2006, he began serving as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Fund Complex. Mr. Jonas was a Presidential Scholar at Boston College, where he received a BS in Finance and Management Information Systems.

		Brian C. Sponheimer is a portfolio manager and research analyst, responsible for coverage of automotive, trucking, and machinery stocks. In 2010, 2011, and 2016, Mr. Sponheimer was recognized by various financial publications, including the Wall Street Journal and the Financial Times, as a “Best on the Street” analyst. He began his business career in institutional equities at CIBC World Markets in New York and Boston. Mr.Sponheimer graduated cum laude from Harvard University with a BA in Government and received an MBA in Finance and Economics from Columbia Business School.
		Sarah Donnelly joined Gabelli in 1999 as a junior research analyst working with the consumer staples and media analysts. Currently she is a portfolio manager of Gabelli Funds, LLC, a Senior Vice President, and the Food, Household, and Personal Care products research analyst for Gabelli & Company. In 2013, she was named the Health & Wellness research platform leader. Ms. Donnelly received a BS in Business Administration with a concentration in Finance and minor in History from Fordham University.
		Melody Prenner Bryant joined GAMCO Investors, Inc. in September 2018 and is a portfolio manager of Gabelli Funds, LLC and manages several funds within the Fund Complex. Previously, Ms. Prenner Bryant was a managing director and chief investment officer for Trevor Stewart Burton & Jacobsen Inc., a New York based registered investment adviser. She has held senior and portfolio management positions at Neuberger Berman, LLC, John A. Levin & Co., and Kempner Asset Management. Ms. Prenner Bryant received her BA in Political Science from The State University of New York at Binghamton and attended the Leonard N. Stern School of Business, New York University.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We have separated the portfolio managers’ 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 contents of the portfolio managers’ commentary are unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.