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 811-04873
----------
The Gabelli Growth Fund
-------------------------------------------------------------
(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, 2004
------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[GRAPHIC OMITTED]
THE
GABELLI
GROWTH
FUND
ANNUAL REPORT
DECEMBER 31, 2004
THE GABELLI GROWTH FUND
ANNUAL REPORT
DECEMBER 31, 2004
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a Fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2004 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
Although clearly not as rewarding as last year's (2003) 31.4% return, the
Gabelli Growth Fund's 4.7% advance in 2004 equates to a cumulative 2-year rise
of 37.5%. Moreover, the Fund's 2004 closing NAV of $26.12 represents an increase
of 55.9% over the bear market low NAV of $16.75 on October 9, 2002. This
compares to an increase of 49.1% for the Russell 1000 Growth Index and 62.3% for
the Standard and Poor's 500 Index (with dividends reinvested).
Stocks marked time for most of the year as investors focused on higher
than expected oil prices, a series of Fed rate hikes, a falling dollar, problems
in Iraq and a too close to call Presidential race. The stock market came to life
in late October as oil prices began to fall. The rally gained momentum with the
Bush victory in early November and indications of an improving jobs market. Good
earnings news and a flurry of deals in December kept the rally intact, allowing
the market and the Fund to post positive returns for the year.
Specifically, helping the Fund's performance were investments in energy,
software, retailing, aerospace and media. Winners held for the full year
included energy stocks Occidental Petroleum (+38%), Apache (+27%), Murphy Oil
(+23%) and Schlumberger (+22%). Top software holdings were Symantec (+49%),
Electronic Arts (+29%) and Adobe Systems (+40% since 2004 purchase). Retailing
winners were Starbucks (+88%), eBay (+81%), Coach (+49%), Whole Foods Markets
(+42%), Target (+35%), Costco (+15% since 2004 purchase), Harley Davidson (+28%)
and The Home Depot (+20%). Our defense plays, L-3 Communications (+43%) and
General Dynamics (+16%) did well, as did Yahoo (+40% since 2004 purchase) and
McGraw Hill (+31%) among our media investments. Investments we made in the
transportation industry during 2004 all paid off with C.H. Robinson advancing
31% (from purchase price), Expeditors International rising 20% and UPS climbing
20%. Other notable gainers for the year were Qualcomm (+57%), UnitedHealth Group
Inc. (+51%), Dell Computer (+24%), Johnson & Johnson (+23%) and American Express
(+17%).
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI GROWTH FUND AND THE S&P 500 INDEX
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
Gabelli Growth Fund Class AAA S&P 500 Index
10000 10000
12/31/87 9510 8437
12/31/88 13234 9834
12/31/89 18542 12945
12/31/90 18173 12542
12/31/91 24410 16355
12/31/92 25506 17600
12/31/93 28378 19370
12/31/94 27414 19624
12/31/95 36383 26989
12/31/96 43449 33183
12/31/97 61971 44249
12/31/98 80426 56904
12/31/99 117623 68871
12/31/00 105191 62604
12/31/01 79840 55166
12/31/02 52862 42980
12/31/03 69450 55303
12/31/04 72679 61314
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and
graph do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2004 (a)
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (4/10/87)
------- ------ ------ ------ ------- ---------
GABELLI GROWTH FUND CLASS AAA ............ 8.74% 4.69% (3.07)% (9.17)% 10.25% 11.83%
S&P 500 Index ............................ 9.23 10.87 3.58 (2.30) 12.07 10.92
Russell 1000 Growth Index ................ 9.17 6.30 (0.18) (9.29) 9.59 N/A*
Class A .................................. 8.78 4.73 (3.06) (9.15) 10.23 11.82
2.51(b) (1.28)(b) (4.95)(b) (10.22)(b) 9.58(b) 11.45(b)
Class B .................................. 8.54 3.93 (3.30) (9.30) 10.17 11.79
3.54(c) (1.07)(c) (4.28)(c) (9.67)(c) 10.17(c) 11.79(c)
Class C .................................. 8.58 3.93 (3.30) (9.30) 10.17 11.79
7.58(c) 2.93(c) (3.30)(c) (9.30)(c) 10.17(c) 11.79(c)
<FN>
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS
REFLECT CHANGES IN SHARE PRICES AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. INVESTMENT RETURNS AND THE
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS
OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES
OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND
SHOULD BE READ CAREFULLY BEFORE INVESTING. THE CLASS AAA SHARES' NET ASSET VALUE ARE USED TO CALCULATE
PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON
DECEMBER 31, 2003. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO
THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. THE S&P 500 INDEX AND THE RUSSELL 1000 GROWTH
INDEX ARE UNMANAGED INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE REINVESTED.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF THE PERIOD.
(c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT THE END OF THE PERIOD SHOWN FOR CLASS B
AND CLASS C SHARES, RESPECTIVELY. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
* THERE IS NO DATA AVAILABLE FOR THE RUSSELL 1000 GROWTH INDEX PRIOR TO AUGUST 31, 1992.
- --------------------------------------------------------------------------------------------------------------------
</FN>
2
Detracting from yearly results were a number of pharmaceutical and
financial service issues. However, underperforming technology stocks hurt us the
most. The technology decliners were Intel (-27%), Applied Materials (-24%),
Xilinx (-23%), Veritas (-23%), KLA-Tencor (-20%), Microchip Technology (-20%),
Cisco Systems (-20%), Analog Devices (-19%), Texas Instruments (-16%), Linear
Technology (-8%), Taiwan Semiconductor (-5%) and Microsoft (-2%). Among
pharmaceutical stocks, we suffered with Pfizer (-24%) and Eli Lilly (-19%).
Several financial service holdings were uninspiring, such as State Street (-6%),
AIG (-1%), Citigroup (-1%), Schwab (+1%) and Merrill Lynch (+2%). Other holdings
that hurt performance included Tiffany (-29%), Viacom (-18%), Bed Bath and
Beyond (-8%) and 3M (-4%).
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 23, 2005
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
Under SEC rules, all funds are required to include in their annual and
semi-annual shareholder reports a presentation of portfolio holdings in a table,
chart or graph by reasonably identifiable categories. The following table which
presents portfolio holdings as a percent of total net assets is provided in
compliance with such requirement.
GABELLI GROWTH FUND
Industrial ........................................ 13.5%
Consumer Staples .................................. 11.0%
Health Care Equipment & Services .................. 11.0%
Retail ............................................ 10.5%
Financial ......................................... 10.0%
Pharmaceuticals & Biotechnology ................... 8.1%
Media ............................................. 7.3%
Energy ............................................ 7.1%
Software and Services ............................. 6.7%
Semiconductors .................................... 6.6%
Communications Equipment .......................... 2.1%
Computers & Peripheral ............................ 2.1%
Materials ......................................... 1.8%
Auto & Components ................................. 0.9%
Wireless Communications ........................... 0.7%
U.S. Government Obligations ....................... 0.3%
Telecommunications ................................ 0.2%
Other Assets and Liabilities - Net ................ 0.1%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE FIRST OF WHICH WAS
FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2004. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies and procedures are available (i) without charge,
upon request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The
Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting
the Securities and Exchange Commission's website at www.sec.gov.
3
THE GABELLI GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2004 through December 31, 2004
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case -- because the hypothetical return used is NOT
the Fund's actual return -- the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the year ended December 31, 2004.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
7/1/04 12/31/04 Ratio Period*
- --------------------------------------------------------------------------------
GABELLI GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,048.60 1.59% $ 8.19
Class A $1,000.00 $1,049.00 1.59% $ 8.19
Class B $1,000.00 $1,044.70 2.34% $12.03
Class C $1,000.00 $1,045.10 2.34% $12.03
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.14 1.59% $ 8.06
Class A $1,000.00 $1,017.14 1.59% $ 8.06
Class B $1,000.00 $1,013.37 2.34% $11.84
Class C $1,000.00 $1,013.37 2.34% $11.84
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 366.
4
THE GABELLI GROWTH FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2004
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 99.6%
CONSUMER DISCRETIONARY -- 18.7%
AUTO & COMPONENTS -- 0.9%
220,000 Harley-Davidson Inc. ............... $ 9,748,769 $ 13,365,000
-------------- --------------
MEDIA -- 7.3%
753,823 DIRECTV Group Inc.+ ................ 21,988,808 12,618,997
192,500 McGraw-Hill Companies Inc. ......... 9,241,631 17,621,450
600,000 News Corp., Cl. B .................. 11,359,896 11,520,000
2,460,000 Time Warner Inc.+ .................. 57,917,805 47,822,400
215,851 Viacom Inc., Cl. B ................. 9,255,229 7,854,818
200,000 Yahoo! Inc.+ ....................... 5,395,537 7,536,000
-------------- --------------
115,158,906 104,973,665
-------------- --------------
RETAIL -- 10.5%
430,000 Bed Bath & Beyond Inc.+ ............ 15,584,961 17,126,900
155,000 Best Buy Co. Inc. .................. 8,396,152 9,210,100
255,000 Cheesecake Factory Inc.+ ........... 6,108,224 8,279,850
310,000 Coach Inc.+ ........................ 13,744,815 17,484,000
180,000 Costco Wholesale Corp. ............. 7,597,403 8,713,800
115,000 eBay Inc.+ ......................... 4,547,001 13,372,200
230,000 Starbucks Corp.+ ................... 5,839,275 14,342,800
290,000 Target Corp. ....................... 11,618,366 15,059,700
426,577 The Home Depot Inc. ................ 12,396,938 18,231,901
953,400 Tiffany & Co. ...................... 19,252,785 30,480,198
-------------- --------------
105,085,920 152,301,449
-------------- --------------
TOTAL CONSUMER
DISCRETIONARY .................... 229,993,595 270,640,114
-------------- --------------
CONSUMER STAPLES -- 11.0%
500,000 PepsiCo Inc. ....................... 24,614,254 26,100,000
450,000 Procter & Gamble Co. ............... 24,250,244 24,786,000
555,000 Sysco Corp. ........................ 16,206,244 21,184,350
580,000 Wal-Mart Stores Inc. ............... 32,899,399 30,635,600
940,000 Walgreen Co. ....................... 31,721,493 36,067,800
210,000 Whole Foods Market Inc. ............ 11,357,864 20,023,500
-------------- --------------
TOTAL
CONSUMER STAPLES ................. 141,049,498 158,797,250
-------------- --------------
ENERGY -- 7.1%
90,000 Anadarko Petroleum Corp. ........... 5,046,951 5,832,900
266,000 Apache Corp. ....................... 8,299,156 13,451,620
120,000 BP plc, ADR ........................ 6,471,939 7,008,000
330,000 Burlington Resources Inc. .......... 9,872,101 14,355,000
80,000 Devon Energy Corp. ................. 3,282,616 3,113,600
170,000 Murphy Oil Corp. ................... 7,620,816 13,676,500
240,000 Occidental Petroleum Corp. ......... 7,892,904 14,006,400
230,000 Schlumberger Ltd. .................. 9,798,909 15,398,500
230,000 Suncor Energy Inc. ................. 6,874,476 8,142,000
190,000 Transocean Inc.+ ................... 7,244,034 8,054,100
-------------- --------------
TOTAL ENERGY ....................... 72,403,902 103,038,620
-------------- --------------
MARKET
SHARES COST VALUE
------ ---- ------
FINANCIAL -- 10.0%
225,000 American Express Co. ............... $ 9,356,847 $ 12,683,250
305,000 American International
Group Inc. ....................... 18,449,241 20,029,350
700,000 Citigroup Inc. ..................... 31,386,801 33,726,000
105,000 Goldman Sachs Group Inc. ........... 10,449,304 10,924,200
365,000 Merrill Lynch & Co. Inc. ........... 14,802,308 21,816,050
300,900 Northern Trust Corp. ............... 17,323,743 14,617,722
650,000 Schwab (Charles) Corp. ............. 7,117,153 7,774,000
488,800 State Street Corp. ................. 25,055,889 24,009,856
-------------- --------------
TOTAL FINANCIAL .................... 133,941,286 145,580,428
-------------- --------------
HEALTH CARE -- 19.1%
HEALTH CARE EQUIPMENT & SERVICES -- 11.0%
150,000 Alcon Inc. ......................... 11,831,188 12,090,000
180,000 Biomet Inc. ........................ 7,622,619 7,810,200
330,000 Caremark Rx Inc.+ .................. 11,730,786 13,011,900
230,000 Edwards Lifesciences Corp.+ ........ 8,701,436 9,489,800
70,000 Express Scripts Inc.+ .............. 5,459,075 5,350,800
50,000 Fisher Scientific
International Inc.+ .............. 3,029,346 3,119,000
100,000 Guidant Corp. ...................... 6,993,420 7,210,000
70,000 IDEXX Laboratories Inc.+ ........... 4,523,156 3,821,300
80,000 Invitrogen Corp.+ .................. 5,885,443 5,370,400
615,000 Medtronic Inc. ..................... 29,564,435 30,547,050
335,000 St. Jude Medical Inc.+ ............. 10,907,659 14,046,550
170,000 Stryker Corp. ...................... 8,306,841 8,202,500
180,000 UnitedHealth Group Inc. ............ 9,336,848 15,845,400
280,000 Zimmer Holdings Inc.+ .............. 22,247,557 22,433,600
-------------- --------------
146,139,809 158,348,500
-------------- --------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 8.1%
130,000 Affymetrix Inc.+ ................... 4,444,249 4,751,500
583,000 Amgen Inc.+ ........................ 34,289,693 37,399,450
30,000 Cephalon Inc.+ ..................... 1,621,606 1,526,400
230,000 Eli Lilly & Co. .................... 15,769,342 13,052,500
180,000 Genentech Inc.+ .................... 9,147,753 9,799,200
130,000 Genzyme Corp.+ ..................... 6,972,525 7,549,100
364,000 Johnson & Johnson .................. 19,466,297 23,084,880
762,500 Pfizer Inc. ........................ 28,435,738 20,503,625
-------------- --------------
120,147,203 117,666,655
-------------- --------------
TOTAL HEALTH CARE .................. 266,287,012 276,015,155
-------------- --------------
INDUSTRIAL -- 13.5%
375,000 3M Co. ............................. 30,234,515 30,776,250
170,000 C.H. Robinson
Worldwide Inc. ................... 7,227,094 9,438,400
245,000 Caterpillar Inc. ................... 20,139,677 23,889,950
170,000 Deere & Co. ........................ 11,254,131 12,648,000
140,000 Expeditors International of
Washington Inc. .................. 6,507,142 7,823,200
265,000 Fluor Corp. ........................ 11,076,044 14,445,150
See accompanying notes to financial statements.
5
THE GABELLI GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2004
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
INDUSTRIAL (CONTINUED)
148,500 General Dynamics Corp. ............. $ 10,328,328 $ 15,533,100
295,000 Iron Mountain Inc.+ ................ 9,236,708 8,994,550
330,000 L-3 Communications
Holdings Inc. .................... 14,785,519 24,169,200
120,000 United Parcel Service Inc.,
Cl. B ............................ 8,540,295 10,255,200
360,000 United Technologies Corp. .......... 32,178,275 37,206,000
-------------- --------------
TOTAL INDUSTRIAL ................... 161,507,728 195,179,000
-------------- --------------
INFORMATION TECHNOLOGY -- 17.5%
COMMUNICATIONS EQUIPMENT -- 2.1%
791,000 Cisco Systems Inc.+ ................ 9,959,706 15,266,300
356,000 QUALCOMM Inc. ...................... 7,180,367 15,094,400
-------------- --------------
17,140,073 30,360,700
-------------- --------------
COMPUTERS & PERIPHERAL -- 2.1%
630,000 Dell Inc.+ ......................... 16,563,691 26,548,200
40,000 Lexmark International Inc.,
Cl. A+ ........................... 3,520,915 3,400,000
-------------- --------------
20,084,606 29,948,200
-------------- --------------
SEMICONDUCTORS -- 6.6%
150,000 Altera Corp.+ ...................... 3,585,771 3,105,000
180,000 Analog Devices Inc. ................ 9,865,406 6,645,600
455,000 Applied Materials Inc.+ ............ 6,585,981 7,780,500
775,000 Intel Corp. ........................ 40,814,286 18,127,250
165,000 KLA-Tencor Corp.+ .................. 7,307,671 7,685,700
510,000 Linear Technology Corp. ............ 16,063,284 19,767,600
425,000 Microchip Technology Inc. .......... 9,758,290 11,330,500
851,632 Taiwan Semiconductor
Manufacturing Co.
Ltd., ADR ........................ 6,466,375 7,230,356
301,000 Texas Instruments Inc. ............. 10,048,284 7,410,620
240,000 Xilinx Inc. ........................ 6,515,341 7,116,000
-------------- --------------
117,010,689 96,199,126
-------------- --------------
SOFTWARE & SERVICES -- 6.7%
100,000 Adobe Systems Inc. ................. 4,491,892 6,274,000
290,000 CheckFree Corp.+ ................... 9,295,378 11,043,200
4,794 Computer Associates
International Inc. ............... 148,758 148,901
395,000 Electronic Arts Inc.+ .............. 19,187,432 24,363,600
1,200,000 Microsoft Corp. .................... 31,411,275 32,052,000
551,000 Symantec Corp.+ .................... 8,753,580 14,193,760
300,000 VERITAS Software Corp.+ ............ 9,554,025 8,565,000
-------------- --------------
82,842,340 96,640,461
-------------- --------------
TOTAL INFORMATION
TECHNOLOGY ....................... 237,077,708 253,148,487
-------------- --------------
MARKET
SHARES COST VALUE
------ ---- ------
MATERIALS -- 1.8%
270,000 Alcoa Inc. ......................... $ 9,004,691 $ 8,483,400
405,000 Newmont Mining Corp. ............... 18,282,869 17,986,050
-------------- --------------
TOTAL MATERIALS .................... 27,287,560 26,469,450
-------------- --------------
TELECOMMUNICATION SERVICES -- 0.9%
TELECOMMUNICATIONS -- 0.2%
100,000 Sprint Corp. ....................... 2,407,000 2,485,000
-------------- --------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.7%
375,000 Vodafone Group plc, ADR ............ 7,830,871 10,267,500
-------------- --------------
TOTAL TELECOMMUNICATION
SERVICES ......................... 10,237,871 12,752,500
-------------- --------------
TOTAL COMMON STOCKS ................ 1,279,786,160 1,441,621,004
-------------- --------------
WARRANTS -- 0.0%
COMMUNICATIONS EQUIPMENT -- 0.0%
145,460 Lucent Technologies Inc.,
expires 12/10/07+ ................ 241,464 229,827
-------------- --------------
PRINCIPAL
AMOUNT
- ---------
U.S. GOVERNMENT OBLIGATIONS -- 0.3%
$4,978,000 U.S. Treasury Bills,
1.776% to 2.202%++,
01/13/05 to 03/17/05 ............. 4,962,077 4,962,995
-------------- --------------
TOTAL
INVESTMENTS -- 99.9% ............. $1,284,989,701 1,446,813,826
==============
OTHER ASSETS AND LIABILITIES (NET) -- 0.1% 1,390,483
--------------
NET ASSETS -- 100.0% ............................... $1,448,204,309
==============
For Federal tax purposes:
Aggregate cost ..................................... $1,300,169,669
==============
Gross unrealized appreciation ...................... $ 232,255,418
Gross unrealized depreciation ...................... (85,611,261)
--------------
Net unrealized appreciation (depreciation) ......... $ 146,644,157
==============
- ----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
6
THE GABELLI GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2004
================================================================================
ASSETS:
Investments, at value
(cost $1,284,989,701) ................................... $ 1,446,813,826
Cash ...................................................... 1,380
Receivable for investments sold ........................... 7,185,052
Receivable for Fund shares sold ........................... 976,320
Dividends receivable ...................................... 949,066
Other assets .............................................. 52,614
---------------
TOTAL ASSETS .............................................. 1,455,978,258
---------------
LIABILITIES:
Payable for Fund shares redeemed .......................... 5,153,171
Payable for investment advisory fees ...................... 1,239,073
Payable for distribution fees ............................. 310,048
Other accrued expenses .................................... 1,071,657
---------------
TOTAL LIABILITIES ......................................... 7,773,949
---------------
NET ASSETS applicable to 55,437,310
shares outstanding ...................................... $ 1,448,204,309
===============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at
$0.01 par value ......................................... $ 554,373
Additional paid-in capital ................................ 2,464,309,929
Accumulated net realized loss on investments .............. (1,178,484,118)
Net unrealized appreciation on investments ................ 161,824,125
---------------
TOTAL NET ASSETS .......................................... $ 1,448,204,309
===============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption
price per share ($1,447,654,625 / 55,416,131
shares outstanding) ..................................... $26.12
======
CLASS A:
Net Asset Value, offering and redemption
price per share ($72,780 / 2,785.7
shares outstanding) ..................................... $26.13
======
Maximum offering price per share
(NAV / 0.9425, based on maximum sales
charge of 5.75% of the offering price) .................. $27.72
======
CLASS B:
Net Asset Value and offering price per share
($250,418 / 9,658 shares outstanding) ................... $25.93(a)
======
CLASS C:
Net Asset Value and offering price per share
($226,486 / 8,735 shares outstanding) ................... $25.93(a)
======
- ----------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $189,555) .............. $17,028,285
Interest .................................................. 148,419
-----------
TOTAL INVESTMENT INCOME ................................... 17,176,704
-----------
EXPENSES:
Investment advisory fees .................................. 16,165,788
Distribution fees -- Class AAA ............................ 4,040,721
Distribution fees -- Class A .............................. 67
Distribution fees -- Class B .............................. 1,986
Distribution fees -- Class C .............................. 652
Shareholder services fees ................................. 3,104,425
Shareholder communications expenses ....................... 782,569
Custodian fees ............................................ 222,942
Trustees' fees ............................................ 74,000
Legal and audit fees ...................................... 72,982
Registration fees ......................................... 55,245
Miscellaneous expenses .................................... 156,683
-----------
TOTAL EXPENSES ............................................ 24,678,060
-----------
NET INVESTMENT LOSS ....................................... (7,501,356)
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments .......................... 6,104,056
Net change in unrealized appreciation/
depreciation on investments ............................. 62,086,843
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS .......................................... 68,190,899
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... $60,689,543
===========
See accompanying notes to financial statements.
7
THE GABELLI GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
====================================================================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------
OPERATIONS:
Net investment loss ................................................................ $ (7,501,356) $ (10,245,651)
Net realized gain/(loss) on investments ............................................ 6,104,056 (351,352,120)
Net change in unrealized appreciation/depreciation on investments .................. 62,086,843 833,859,516
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... 60,689,543 472,261,745
-------------- --------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Class AAA .......................................................................... (494,470,178) (266,623,685)
Class A ............................................................................ 66,824 1,000
Class B ............................................................................ 242,719 1,000
Class C ............................................................................ 211,422 1,000
-------------- --------------
NET DECREASE IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST TRANSACTIONS ......... (493,949,213) (266,620,685)
-------------- --------------
REDEMPTION FEES .................................................................... 6,601 --
-------------- --------------
NET INCREASE / (DECREASE) IN NET ASSETS ............................................ (433,253,069) 205,641,060
NET ASSETS:
Beginning of period ................................................................ 1,881,457,378 1,675,816,318
-------------- --------------
End of period ...................................................................... $1,448,204,309 $1,881,457,378
============== ==============
See accompanying notes to financial statements.
THE GABELLI GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION. The Gabelli Growth Fund (the "Fund") was organized on October
24, 1986 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 capital
appreciation. The Fund commenced investment operations on April 10, 1987.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments that are not credit impaired with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board
determines such amount
8
THE GABELLI GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
does not reflect the securities' fair value, in which case these securities will
be valued at their fair value as determined by the Board. Debt instruments
having a maturity greater than 60 days for which market quotations are readily
available are valued at the latest average of the bid and asked prices. If there
were no asked prices quoted on such day, the security is valued using the
closing bid price. Futures contracts are valued at the closing settlement price
of the exchange or board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
In calculating net asset value per share of each class, investment income,
realized and unrealized gains and losses, redemption fees and expenses other
than class specific expenses, are allocated daily to each class of shares based
upon the proportion of net assets of each class at the beginning of each day.
Distribution expenses are solely borne by the class incurring the expense.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on ordinary income and long-term capital 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 held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
For the year ended December 31, 2004, reclassifications were made to increase
accumulated net investment income by $7,501,356, with an offsetting adjustment
to additional paid-in capital.
No distributions were made during the years ended December 31, 2004, and
December 31, 2003.
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the Fund's policy to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
The difference between book basis and tax basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales.
9
THE GABELLI GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
As of December 31, 2004, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Accumulated capital loss carryforward ............. $(1,163,304,151)
Net unrealized appreciation ....................... 146,644,157
---------------
Total accumulated loss ............................ $(1,016,659,994)
===============
At December 31, 2004, the Fund has net capital loss carryforwards for Federal
income tax purposes of $1,163,304,151, which are available to reduce future
required distributions of net capital gains to shareholders. $68,961,980 of the
loss carryforward is available through 2009; $743,150,002 is available through
2010; $350,050,494 is available through 2011; and $1,141,675 is available
through 2012.
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Trustees of the Fund who are its affiliates.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00% and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2004, other than short term securities, aggregated
$491,474,653 and $986,664,167, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2004, the
Fund paid brokerage commissions of $5,000 to Gabelli & Company. During the year
ended December 31, 2004, Gabelli & Company informed the Fund that it received
$261 from investors representing commissions (sales charges and underwriting
fees) on sales and redemptions of Fund shares.
The cost of calculating the Fund's net asset value per share is a Fund expense
pursuant to the Advisory Agreement between the Fund and the Adviser. During the
year ended December 31, 2004, the Fund reimbursed the Adviser $34,800 in
connection with the cost of computing the Fund's net asset value, which is
included in miscellaneous expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to
$25,000,000 from the custodian for temporary borrowing purposes. Borrowings
under this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. During the year ended December 31, 2004 there were no
borrowings from the line of credit.
8. SHARES OF BENEFICIAL INTEREST. The Fund offers four classes of shares --
Class AAA Shares, Class A Shares, Class B Shares and Class C Shares. Class AAA
Shares are offered only to investors who acquire them directly from Gabelli
&Company or through selected broker/dealers without a sales charge. Class A
Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares
are subject to a contingent deferred sales charge ("CDSC") upon redemption
within six years of purchase and automatically convert to Class A Shares after
eight years of the original purchase. The applicable CDSC is equal to a
declining percentage of the lesser of the net asset value per share at the date
of the original purchase or at the date of redemption, based on the length of
time held. Class C Shares are subject
10
THE GABELLI GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
to a 1% CDSC for one year after purchase. As of July 27, 2004, Class B Shares
are available only through exchange of Class B Shares of other Funds distributed
by Gabelli & Company.
Effective November 1, 2004, the Fund imposed a redemption fee of 2.00% on Class
AAA Shares, Class A Shares, Class B Shares and Class C Shares that are redeemed
or exchanged within 60 days of purchase. The redemption fee is deducted from the
proceeds otherwise payable to the redeeming shareholders and is retained by the
Fund. The redemption fees retained by the Fund during the period ended December
31, 2004 amounted to $6,601.
The redemption fee did not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension until March 31, 2005 to implement
such systems.
Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
CLASS AAA CLASS AAA
---------------------------- ----------------------------
Shares sold ...................................... 7,724,349 $ 191,537,714 14,775,039 $ 306,101,714
Shares redeemed .................................. (27,719,706 (686,007,892) (27,593,891) (572,725,399)
----------- ------------- ----------- -------------
Net decrease ................................. (19,995,357) $(494,470,178) (12,818,852) $(266,623,685)
=========== ============= =========== =============
CLASS A CLASS A*
---------------------------- ----------------------------
Shares sold ...................................... 2,747 $ 66,849 40 $ 1,000
Shares redeemed .................................. (1) (25) -- --
----------- ------------- ----------- -------------
Net increase ................................. 2,746 $ 66,824 40 $ 1,000
=========== ============= =========== =============
CLASS B CLASS B*
---------------------------- ----------------------------
Shares sold ...................................... 9,618 $ 242,719 40 $ 1,000
Shares redeemed .................................. -- -- -- --
----------- ------------- ----------- -------------
Net increase ................................. 9,618 $ 242,719 40 $ 1,000
=========== ============= =========== =============
CLASS C CLASS C*
---------------------------- ----------------------------
Shares sold ...................................... 8,810 $ 214,167 40 $ 1,000
Shares redeemed .................................. (115) (2,745) -- --
----------- ------------- ----------- -------------
Net increase ................................. 8,695 $ 211,422 40 $ 1,000
=========== ============= =========== =============
<FN>
- ------------
*Commencement of share offering to the public on December 31, 2003.
</FN>
9. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State ofNew York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests. TheFund does not
believe that these matters will have a material adverse effect on the Fund's
financial position or the results of its operations.
10. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications.The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
11
THE GABELLI GROWTH FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Selected data for a share of beneficial interest outstanding throughout each period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------------------------- ---------------------------
Net
Net Asset Realized and Total Net Net Asset
Period Value, Net Unrealized from Realized Value,
Ended Beginning Investment Gain/(Loss) on Investment Gain on Total Redemption End of Total
December 31 of Period Loss(c) Investments Operations Investments Distributions Fees(c) Period Return+
- ----------- --------- ---------- -------------- ---------- ----------- ------------- ---------- --------- -------
CLASS AAA
2004 $24.95 $(0.11) $ 1.28 $ 1.17 -- -- $0.00(a) $26.12 4.7%
2003 18.99 (0.14) 6.10 5.96 -- -- -- 24.95 31.4
2002 28.68 (0.17) (9.52) (9.69) -- -- -- 18.99 (33.8)
2001 37.79 (0.23) (8.88) (9.11) $(0.00)(a) $(0.00)(a) -- 28.68 (24.1)
2000 46.51 (0.24) (4.64) (4.88) (3.84) (3.84) -- 37.79 (10.6)
CLASS A (B)
2004 $24.95 $(0.02) $ 1.20 $ 1.18 -- -- $0.00(a) $26.13 4.7%
CLASS B (B)
2004 $24.95 $(0.28) $ 1.26 $ 0.98 -- -- $0.00(a) $25.93 3.9%
CLASS C (B)
2004 $24.95 $(0.21) $ 1.19 $ 0.98 -- -- $0.00(a) $25.93 3.9%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------
Net Assets
Period End of Net Portfolio
Ended Period Investment Operating Turnover
December 31 (in 000's) Income/(Loss) Expenses Rate
- ----------- ----------- ------------- --------- ---------
CLASS AAA
2004 $1,447,655 (0.46)% 1.53% 31%
2003 1,881,457 (0.60) 1.47 42
2002 1,675,816 (0.68) 1.43 30
2001 2,948,390 (0.71) 1.40 26
2000 3,833,807 (0.63) 1.38 55
CLASS A (B)
2004 $73 (0.09)% 1.60% 31%
CLASS B (B)
2004 $250 (1.12)% 2.30% 31%
CLASS C (B)
2004 $226 (0.88)% 2.37% 31%
<FN>
- ---------------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends and does not reflect applicable sales
charges. Total return for the period of less than one year is not
annualized.
(a) Amount represents less than $0.005 per share.
(b) Class A, Class B and Class C Shares were initially offered on December 31,
2003.
(c) Per share amounts have been calculated using the average shares outstanding
method.
</FN>
See accompanying notes to financial statements.
12
THE GABELLI GROWTH FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Board of Trustees and Shareholders of
The Gabelli Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Growth Fund (the
"Fund") at December 31, 2004, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 28, 2005
13
THE GABELLI GROWTH FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about The Gabelli Growth Fund Trustees and is
available, without charge, upon request, by calling 800-GABELLI (800-422-3554)
or by writing to The Gabelli Growth Fund at One Corporate Center, Rye, NY
10580-1422.
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE 4
- ----------------- ---------- ------------- ---------------------- -------------------
INTERESTED TRUSTEES 3:
- ---------------------
MARIO J. GABELLI Since 1992 24 Chairman of the Board, Chief Executive Director of Morgan Group
Trustee Officer of Gabelli Asset Management Inc. and Holdings, Inc. (holding
Age: 62 Chief Investment Officer of Gabelli Funds, company)
LLC and GAMCO Investors, Inc.; Vice
Chairman and Chief Executive Officer of
Lynch Interactive Corporation (multimedia
and services)
JOHN D. GABELLI Since 1995 10 Senior Vice President of Gabelli & Company, --
Trustee Inc. and Director of Gabelli Advisers, Inc.
Age: 60
KARL OTTO POHL Since 1992 34 Member of the Shareholder Committee of Director of Gabelli
Trustee Sal Oppenheim Jr. & Cie (private invest- Asset Management Inc.
Age: 75 ment bank); Former President of the (investment management);
Deutsche Bundesbank and Chairman of its Chairman, Incentive Capital
Central Bank Council (1980-1991) and Incentive Asset
Management (Zurich);
Director at Sal Oppenheim
Jr. & Cie, Zurich
ANTHONY TORNA, SR. Since 1987 1 Registered Representative, Maxim Group LLC --
Trustee from 2002; Investec Ernst & Company,
Age: 78 2001-2002; Herzog, Heine & Geduld, Inc.
through 2000
NON-INTERESTED TRUSTEES:
- ------------------------
ANTHONY J. COLAVITA Since 1989 36 President and Attorney at Law in the law firm --
Trustee of Anthony J. Colavita, P.C.
Age: 69
JAMES P. CONN Since 1992 13 Former Managing Director and Chief Director of LaQuinta Corp.
Trustee Investment Officer of Financial Security (hotels) and First
Age: 66 Assurance Holdings, Ltd. (1992-1998) Republic Bank
DUGALD A. FLETCHER 1989-1996 2 President, Fletcher & Company, Inc.; Director of Harris and
Trustee 2000-present Former Director and Chairman and Harris Group, Inc.
Age: 75 Chief Executive Officer of Binnings (venture capital)
Building Products, Inc. (1997)
ROBERT J. MORRISSEY Since 2001 10 Partner in the law firm of Morrissey, --
Trustee Hawkins & Lynch
Age: 65
ANTHONY R. PUSTORINO Since 1987 17 Certified Public Accountant; Professor Director of Lynch Corporation
Trustee Emeritus, Pace University (diversified manufacturing)
Age: 79
14
THE GABELLI GROWTH FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
================================================================================
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE 4
- ----------------- ---------- ------------- ---------------------- -------------------
NON-INTERESTED TRUSTEES (CONTINUED):
- ------------------------------------
ANTHONIE C. VAN EKRIS 1987-1989 20 Managing Director of BALMAC International, Director of Aurado Energy, Inc.
Trustee 1992-present Inc. (commodities) (oil and gas operations)
Age: 70
SALVATORE J. ZIZZA 1987-1996 24 Chairman, Hallmark Electrical Supplies Corp. Director of Hollis
Trustee 2000-present Eden Pharmaceuticals;
Age: 59 Director of Earl Scheib, Inc.
(automotive services)
OFFICERS:
- ---------
BRUCE N. ALPERT Since 1994 -- Executive Vice President and Chief Operating --
President and Treasurer Officer of Gabelli Funds, LLC since 1988 and
Age: 53 an officer of all mutual funds advised by
Gabelli Funds, LLC and its affiliates. Director and
President of Gabelli Advisers, Inc.
JAMES E. MCKEE Since 1995 -- Vice President, General Counsel and Secretary of --
Secretary Gabelli Asset Management Inc. since 1999 and
Age: 41 GAMCO Investors, Inc. since 1993; Secretary of all
mutual funds advised by Gabelli Advisers, Inc. and
Gabelli Funds, LLC
PETER GOLDSTEIN Since 2004 -- Director of Regulatory Affairs at Gabelli Asset Management --
Chief Compliance Officer Inc. since February 2004; Vice President of Goldman Sachs
Age: 51 Asset Management from November 2000 through January
2004; Deputy General Counsel at Gabelli Asset Management
Inc. from February 1998 through November 2000
<FN>
- ------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Trustee will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders if any, called for
the purpose of considering the election or re-election of such Trustee and until the election and qualification of his or her
successor, if any, elected at such meeting, or (ii) the date a Trustee resigns or retires, or a Trustee is removed by the Board of
Trustees or shareholders, in accordance with the Fund's By-Laws and Declaration of Trust. Each officer will hold office for an
indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified.
3 "Interested person" of the Fund as defined in the Investment Company Act of 1940. Messrs. M. Gabelli, J. Gabelli and Pohl are each
considered an "interested person" because of their affiliation with Gabelli Funds, LLC which acts as the Fund's investment
adviser. Mr. Torna is considered an interested person because he is a registered broker with a firm to which the Fund Complex (but
not the Fund) pays brokerage commissions. Mario J. Gabelli and John D. Gabelli are brothers.
4 This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e.
public companies) or other investment companies registered under the 1940 Act.
</FN>
15
THE GABELLI GROWTH FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: WWW.GABELLI.COM
E-MAIL: INFO@GABELLI.COM
Net Asset Value available daily by calling
800-GABELLI after 6:00 P.M.
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Karl Otto Pohl
CHAIRMAN AND CHIEF FORMER PRESIDENT
INVESTMENT OFFICER DEUTSCHE BUNDESBANK
GABELLI ASSET MANAGEMENT INC.
Anthony J. Colavita Anthony R. Pustorino
ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT
ANTHONY J. COLAVITA, P.C. PROFESSOR EMERITUS
PACE UNIVERSITY
James P. Conn Anthony Torna
FORMER CHIEF INVESTMENT OFFICER MAXIM GROUP LLC
FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.
Dugald A. Fletcher Anthonie C. van Ekris
PRESIDENT MANAGING DIRECTOR
FLETCHER & COMPANY, INC. BALMAC INTERNATIONAL, INC.
John D. Gabelli Salvatore J. Zizza
SENIOR VICE PRESIDENT CHAIRMAN, HALLMARK ELECTRICAL
GABELLI & COMPANY, INC. SUPPLIES CORP.
Robert J. Morrissey
ATTORNEY-AT-LAW
MORRISSEY, HAWKINS & LYNCH
OFFICERS AND PORTFOLIO MANAGER
Bruce N. Alpert Howard F. Ward, CFA
PRESIDENT ANDTREASURER PORTFOLIO MANAGER
James E. McKee Peter Goldstein
SECRETARY CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
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This report is submitted for the general information of the shareholders of The
Gabelli Growth Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB406Q404SR
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this report,
to a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code
of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Trustees has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
- ----------
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit
of the registrant's annual financial statements or services that are
normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years are $43,429 in
2004 and $34,259 in 2003.
Audit-Related Fees
- ------------------
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the
registrant's financial statements and are not reported under paragraph
(a) of this Item are $0 in 2004 and $0 in 2003.
Tax Fees
- --------
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $2,550 in 2004 and $2,450
in 2003.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
All Other Fees
- --------------
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
in 2004 and $0 in 2003.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee
("Committee") of the registrant is responsible for pre-approving (i)
all audit and permissible non-audit services to be provided by the
independent auditors to the registrant and (ii) all permissible
non-audit services to be provided by the independent auditors to the
Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC
("Gabelli") that provides services to the registrant (a "Covered
Services Provider") if the independent auditors' engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's
pre-approval responsibilities to the other persons (other than
Gabelli or the registrant's officers). Pre-approval by the Committee
of any permissible non-audit services is not required so long as: (i)
the aggregate amount of all such permissible non-audit services
provided to the registrant, Gabelli and any Covered Services Provider
constitutes not more than 5% of the total amount of revenues paid by
the registrant to its independent auditors during the fiscal year in
which the permissible non-audit services are provided; (ii) the
permissible non-audit services were not recognized by the registrant
at the time of the engagement to be non-audit services; and (iii)
such services are promptly brought to the attention of the Committee
and approved by the Committee or Chairperson prior to the completion
of the audit.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0 in 2004 and $0 in 2003.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Board of Trustees has a Nominating Committee comprised of three
"non-interested" (as such term is defined by the Investment Company Act of 1940,
as amended) Trustees, namely Anthony J. Colavita, James P. Conn and Salvatore J.
Zizza. The Nominating Committee is responsible for identifying individuals
believed to be qualified to become Board members in the event that a position is
vacated or created. The Nominating Committee will consider Trustee candidates
recommended by shareholders. In considering candidates submitted by
shareholders, the Nominating Committee will take into consideration the needs of
the Board of Trustees, the qualifications of the candidate and the interests of
shareholders. The Nominating Committee may also take into consideration the
number of shares held by the recommending shareholder and the length of time
that such shares have been held. To have a candidate considered by the
Nominating Committee, a shareholder must submit the recommendation in writing
and must include the following information:
o The name of the shareholder and evidence of the person's ownership of
shares of the Fund, including the number of shares owned and the length
of time of ownership;
o The name of the candidate, the candidate's resume or a listing of his or
her qualifications to be a Trustee of the Fund and the person's consent
to be named as a Trustee if selected by the Nominating Committee and
nominated by the Board of Trustees; and
o If requested by the Nominating Committee, a completed and signed
Trustees questionnaire.
The shareholder recommendation and information described above must be sent to
the Fund's Secretary c/o Gabelli Funds, LLC, James E. McKee, and must be
received by the Secretary no less than 120 days prior to the anniversary date of
the Fund's most recent annual meeting of shareholders or, if the meeting has
moved by more than 30 days, a reasonable amount of time before the meeting.
The Nominating Committee believes that the minimum qualifications for serving as
a Trustee of the Fund are that the individual demonstrate, by significant
accomplishment in his or her field, an ability to make a meaningful contribution
to the Board of Trustees' oversight on the business and affairs of the Fund and
have an impeccable record and reputation for honest and ethical conduct in both
his or her professional and personal activities. In addition, the Nominating
Committee examines a candidate's specific experiences and skills, time
availability in light of other commitments, potential conflicts of interest and
independence from management and the Fund. The Nominating Committee also seeks
to have the Board of Trustees represent a diversity of backgrounds and
experience.
The Fund's Nominating Committee has adopted a Nominating Committee Charter.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the "1940
Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days
of the filing date of the report that includes the disclosure required
by this paragraph, based on their evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, that is the subject of disclosure required by Item 2,
filed as exhibit (a)(1) to the Registrant's Form N-CSR, filed on
March 10, 2004 (Accession No. 0000935069-04-000467).
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Growth Fund
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By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date March 9, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
& Principal Financial Officer
Date March 9, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.