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 811-07896
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GAMCO Global Series Funds, Inc.
-------------------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
-------------------------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
-------------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
----------------
Date of fiscal year end: December 31
Date of reporting period: December 31, 2005
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
ANNUAL REPORT
DECEMBER 31, 2005
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, 2005 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
We are pleased to report that last year, your Fund not only beat its
benchmark, but also finished first out of the entire universe of 75 convertible
securities funds monitored by Lipper*. For the five and ten year periods ending
December 31, 2005, the Fund's Class AAA Shares ranked 30th and 31st out of 56
and 32 convertible securities funds monitored by Lipper, respectively. During
the twelve month period ended December 31, 2005, the Fund generated a total rate
of return of +8.0%, which includes reinvestment of its regular quarterly
distributions of three cents per share. This compares to its benchmark, the
Merrill Lynch Global 300 Convertible Index, which gained +0.2% in 2005.
In addition to outperforming its benchmark last year, the Fund
outperformed investment grade (-3.7%) and speculative grade bonds (+1.5%) and
participated in 84% of the return from global equity markets (+9.5%) with less
risk. Over this period, firmer global equity markets, and our over weight
allocations to energy and Japan assisted performance. Forced liquidations by
convertible arbitrage hedge funds, wider credit spreads, and a stronger U.S.
dollar hindered results, while the impact of equity market volatility and long
term interest rates were broadly neutral.
The Fund's top five performing investments in 2005, which were in the
portfolio as of the beginning of the year, included Arch Coal Inc. (+115%),
Heiwa Real Estate (+107%), Mitsui Fudosan Co. Ltd. (+52%), Futaba Industrial Co.
Ltd. (+36%), and Hon Hai Precision Industry Co. Ltd. (+31%). Disappointments
included General Motors Corp. (-35%), Liberty Media Corp. exchangeable into
Viacom (-24%), Elektrim Financial BV (-16%), Standard Motor Products Inc.
(-13%), and Sovereign Bancorp. Inc. (-11%).
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 13, 2006
* Lipper, a Reuters company, is a leading provider of mutual fund industry data,
classifies funds in their appropriate investment category, and monitors fund
performance.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL
CONVERTIBLE SECURITIES FUND CLASS AAA SHARES, THE LIPPER CONVERTIBLE SECURITIES
FUND AVERAGE AND THE UBS GLOBAL CONVERTIBLE INDEX
GAMCO Global Convertible UBS Global MSCI World
Securities Fund Class AAA Shares Convertible Index Free Index
2/3/94 $10,000 $10,000 $10,000
12/31/94 10,090 9,709 9,863
12/31/95 11,363 11,146 11,910
12/31/96 11,985 11,883 13,520
12/31/97 12,323 12,057 15,632
12/31/98 13,388 14,544 19,442
12/31/99 20,229 19,734 24,268
12/31/00 17,397 17,683 21,070
12/31/01 15,093 16,633 17,526
12/31/02 14,361 16,533 14,040
12/31/03 17,446 20,595 18,688
12/31/04 19,479 22,482 21,439
12/31/05 21,037 22,496 23,474
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, 2005 (A)
----------------------------------------------------
Since
Inception
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (2/3/94)
- -------------------------------------------------------------------------------------------------------------------
GAMCO GLOBAL CONVERTIBLE FUND CLASS AAA ............. 4.17% 8.00% 13.57% 3.87% 6.35% 6.44%
Merrill Lynch Global 300 Convertible Index .......... 1.39 0.18 9.43 3.97 6.00 N/A*
UBS Global Convertible Index ........................ 1.35 0.06 10.81 4.94 7.68 7.31
MSCI World Free Index ............................... 3.06 9.49 18.69 2.18 7.02 7.42
Class A ............................................. 4.16 8.16 13.60 3.89 6.36 6.45
(1.88)(b) 1.97(b) 11.38(b) 2.68(b) 5.74(b) 5.93(b)
Class B ............................................. 4.03 7.29 12.79 3.15 5.98 6.12
(0.97)(c) 2.29(c) 12.00(c) 2.79(c) 5.98(c) 6.12(c)
Class C ............................................. 3.98 7.19 12.77 3.29 6.05 6.19
2.98(c) 6.19(c) 12.77(c) 3.29(c) 6.05(c) 6.19(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. WHEN SHARES ARE
REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED.
PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT
MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS,
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. OTHER SHARE CLASSES ARE
AVAILABLE AND HAVE DIFFERENT PERFORMANCE CHARACTERISTICS. INVESTING IN
FOREIGN SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH
INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC
AND POLITICAL RISKS.
THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE
FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND
CLASS C SHARES ON MAY 2, 2001, MARCH 28, 2001 AND NOVEMBER 26, 2001,
RESPECTIVELY. 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 UBS (FORMERLY WARBURG DILLON REED) GLOBAL
CONVERTIBLE INDEX, THE MERRILL LYNCH GLOBAL 300 CONVERTIBLE INDEX AND THE
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD FREE INDEX ARE UNMANAGED
INDICATORS OF INVESTMENT PERFORMANCE.
(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 MERRILL LYNCH GLOBAL 300 CONVERTIBLE
INDEX PRIOR TO DECEMBER 31, 1994.
- --------------------------------------------------------------------------------
2
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2005 through December 31, 2005
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, 2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/05 12/31/05 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,107.80 2.15% $11.42
Class A $1,000.00 $1,107.60 2.21% $11.74
Class B $1,000.00 $1,103.80 2.92% $15.48
Class C $1,000.00 $1,104.30 2.81% $14.90
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,014.37 2.15% $10.92
Class A $1,000.00 $1,014.06 2.21% $11.22
Class B $1,000.00 $1,010.49 2.92% $14.80
Class C $1,000.00 $1,011.04 2.81% $14.24
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
3
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2005:
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Electronics ........................................ 12.5%
Financial Services ................................. 11.2%
Health Care ........................................ 8.8%
Real Estate ........................................ 8.4%
Telecommunications ................................. 7.7%
Metals and Mining .................................. 6.5%
Diversified Industrial ............................. 6.4%
Automotive: Parts and Accessories .................. 5.6%
Communications Equipment ........................... 5.2%
Energy and Utilities ............................... 4.7%
Products ........................................... 3.5%
Hotels and Gaming .................................. 3.5%
Broadcasting ....................................... 3.2%
Equipment and Supplies ............................. 2.6%
Business Services .................................. 1.4%
Transportation ..................................... 1.3%
Automotive ......................................... 1.2%
Entertainment ...................................... 1.1%
Paper and Forest Products .......................... 0.7%
Other Assets and Liabilities - (Net) ............... 4.5%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
4
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005
================================================================================
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
CONVERTIBLE CORPORATE BONDS -- 73.1%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 5.6%
$ 40,000,000(b) Futaba Industrial Co. Ltd.,
Cv., Zero Coupon, 09/30/09 ....... $ 385,017 $ 474,033
----------- -----------
125,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ................. 125,000 106,875
20,000,000(b) Suzuki Motor Corp., Cv.,
Zero Coupon, 03/31/10 ............ 216,436 214,072
----------- -----------
726,453 794,980
----------- -----------
BUSINESS SERVICES -- 1.4%
126,600(c) SR Teleperformance, Cv.,
3.250%, 01/01/08 ................. 182,676 197,052
----------- -----------
COMMUNICATIONS EQUIPMENT -- 5.2%
450,000 Agere Systems Inc., Sub. Deb. Cv.,
6.500%, 12/15/09 ................. 475,035 444,937
250,000 Cypress Semiconductor Corp.,
Sub. Deb. Cv.,
1.250%, 06/15/08 ................. 279,150 284,375
----------- -----------
754,185 729,312
----------- -----------
CONSUMER PRODUCTS -- 3.5%
170,000 Church & Dwight Co. Inc.,
Deb. Cv.,
5.250%, 08/15/33 ................. 196,418 205,488
250,000 Mens Warehouse Inc.,
Cv., 3.125%, 10/15/23 ............ 293,818 291,250
----------- -----------
490,236 496,738
----------- -----------
DIVERSIFIED INDUSTRIAL -- 5.0%
400,000 Roper Industries Inc., Cv.,
1.481%, 01/15/34 ................. 167,572 221,000
30,000,000(b) Tokai Carbon Co. Ltd.,
Cv.,Zero Coupon,
08/08/08 ......................... 285,076 294,514
65,000 Walter Industries Inc.,
Sub. Deb. Cv.,
3.750%, 05/01/24 ................. 175,587 184,762
----------- -----------
628,235 700,276
----------- -----------
ELECTRONICS -- 12.5%
250,000 Asia Optical Co., Cv.,
Zero Coupon,
10/14/08 ......................... 289,748 308,750
300,000 Edo Corp., Sub. Deb. Cv.,
4.000%, 11/15/25 ................. 297,759 305,625
40,000,000(b) Hamamatsu Photonics KK, Cv.,
Zero Coupon,
09/30/09 ......................... 430,456 521,907
300,000 Hon Hai Precision Industry
Co. Ltd., Cv., Zero
Coupon, 08/08/08 ................. 350,802 494,517
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
$ 5,000,000(b) Ibiden Co. Ltd., Cv.,
Zero Coupon,
09/30/14 ......................... $ 52,755 $ 128,746
----------- -----------
1,421,520 1,759,545
----------- -----------
ENERGY AND UTILITIES -- 1.6%
100,000 Cal Dive International Inc.,
Cv., 3.250%,
12/15/25 ......................... 126,119 135,000
100,000 Hanover Compressor Co.,
Cv., 4.750%, 03/15/08 ............ 95,971 95,500
----------- -----------
222,090 230,500
----------- -----------
ENTERTAINMENT -- 1.1%
200,000 Liberty Media Corp., Deb. Cv.,
3.250%, 03/15/31 (a) ............. 200,000 151,750
----------- -----------
EQUIPMENT AND SUPPLIES -- 2.6%
275,000 Cooper Cameron Corp., Cv.,
1.500%, 05/15/24 ................. 292,198 360,250
----------- -----------
FINANCIAL SERVICES -- 7.2%
75,000 Affiliated Managers Group Inc.,
Deb Cv., 3.890%,
02/25/33 ......................... 131,538 142,656
150,000 First Pacific Finance, Cv.,
Zero Coupon, 01/18/10 ............ 173,442 179,854
30,000,000(b) Mie Bank Ltd., Sub. Deb. Cv.,
1.800%, 09/29/06 ................. 333,286 361,216
250,000 Repcon Luxembourg SA, Cv.,
4.500%, 01/26/11 ................. 293,024 329,300
----------- -----------
931,290 1,013,026
----------- -----------
HEALTH CARE -- 6.2%
375,000 Fisher Scientific International
Inc., Sub. Deb. Cv., ............. 412,506 374,531
250,000 Manor Care Inc., Cv.,
2.625%, 04/15/23 ................. 299,358 333,750
10,000,000(b) Rohto Pharmaceutical Co., Cv.,
Zero Coupon, 09/30/08 ............ 113,258 167,041
----------- -----------
825,122 875,322
----------- -----------
HOTELS AND GAMING -- 3.5%
200,000(d) Hilton Group Finance Jersey Ltd.,
Cv., 3.375%, 10/02/10 ............ 400,391 493,058
----------- -----------
METALS AND MINING -- 3.0%
300,000 Agnico-Eagle Mines Ltd.,
Sub. Deb. Cv.,
4.500%, 02/15/12 ................. 303,657 425,250
----------- -----------
REAL ESTATE -- 8.4%
20,000,000(b) Heiwa Real Estate, Cv.,
Zero Coupon, 06/24/08 ............ 199,403 360,877
30,000,000(b) Kyoritsu Maintenance Co. Ltd.,
Cv., Zero Coupon,
09/30/09 ......................... 301,159 459,433
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
REAL ESTATE (CONTINUED)
$ 26,000,000(b) Mitsui Fudosan Co. Ltd., Cv.,
Zero Coupon, 07/30/10 ............ $ 279,135 $ 369,990
----------- -----------
779,697 1,190,300
----------- -----------
TELECOMMUNICATIONS -- 5.0%
150,000(d) Cable & Wireless plc, Cv.,
4.000%, 07/16/10 ................. 265,503 266,705
225,000 Harris Corp., Deb. Cv.,
3.500%, 08/15/22 ................. 228,552 434,250
----------- -----------
494,055 700,955
----------- -----------
TRANSPORTATION -- 1.3%
150,000 Yellow Roadway Corp., Cv.,
3.375%, 11/25/23 ................. 189,931 185,063
----------- -----------
TOTAL CONVERTIBLE
CORPORATE BONDS .................. 8,841,736 10,303,377
----------- -----------
CORPORATE BONDS -- 1.4%
DIVERSIFIED INDUSTRIAL -- 1.4%
197,518(c) Elektrim Finance BV,
2.000%, 12/15/49 ................. 199,783 199,783
----------- -----------
SHARES
------
CONVERTIBLE PREFERRED STOCKS -- 21.0%
AUTOMOTIVE -- 1.2%
11,000 General Motors Corp.,
5.250% Cv. Pfd.,
Ser. B ........................... 252,934 163,900
----------- -----------
BROADCASTING -- 3.2%
10,000 Emmis Communications Corp.,
6.250% Cv. Pfd.,
Ser. A ........................... 462,275 445,800
----------- -----------
ENERGY AND UTILITIES -- 3.1%
1,000 Arch Coal Inc.,
5.000% Cv. Pfd. .................. 57,750 194,100
5,000 Hanover Compressor Capital Trust,
7.250% Cv. Pfd. .................. 241,250 246,875
----------- -----------
299,000 440,975
----------- -----------
FINANCIAL SERVICES -- 4.0%
16,450 Central Parking Financial Trust,
5.250% Cv. Pfd. .................. 332,850 333,935
1,000 Doral Financial Corp.,
4.750% Cv. Pfd. .................. 195,000 159,000
1,500 Sovereign Bancorp Inc.,
4.375% Cv. Pfd. .................. 70,182 66,000
----------- -----------
598,032 558,935
----------- -----------
HEALTH CARE -- 2.6%
5,000 Omnicare Inc.,4.000% Cv. Pfd.,
Ser. B ........................... 254,375 371,350
----------- -----------
MARKET
SHARES COST VALUE
--------- ---- -------
METALS AND MINING -- 3.5%
420 Freeport-McMoRan
Copper & Gold Inc.,
5.500% Cv. Pfd. .................. $ 410,950 $ 493,185
----------- -----------
PAPER AND FOREST PRODUCTS -- 0.7%
2,000 Amcor Ltd.,
7.250% Cv. Pfd. .................. 94,000 105,500
----------- -----------
TELECOMMUNICATIONS -- 2.7%
10,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd.,
Ser. B ........................... 380,500 380,500
----------- -----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ................. 2,752,066 2,960,145
----------- -----------
TOTAL
INVESTMENTS -- 95.5% ............. $11,793,585 13,463,305
===========
OTHER ASSETS AND
LIABILITIES (NET) -- 4.5% ..................... 628,663
-----------
NET ASSETS -- 100.0% ............................ $14,091,968
===========
UNREALIZED
PRINCIPAL SETTLEMENT APPRECIATION/
AMOUNT DATE (DEPRECIATION)
--------- ----------- --------------
FORWARD FOREIGN EXCHANGE CONTRACTS -- 0.3%
$ (300,000)(c)Deliver Euros in
exchange for
USD 355,183 ...................... 01/06/06 $ (835)
(250,000)(c)Deliver Euros in
exchange for
USD 296,208 ...................... 01/19/06 4,422
(200,000,000)(b)Deliver Japanese Yen
in exchange for
USD 1,699,508 .................... 01/19/06 33,113
-----------
TOTAL FORWARD FOREIGN EXCHANGE CONTRACTS ........ $ 36,700
===========
- ----------------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. The security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
2005, the market value of the Rule 144A security amounted to $151,750 or
1.08% of total net assets. The security has been deemed by the Board of
Directors to be a liquid security.
(b) Principal amount denoted in Japanese Yen.
(c) Principal amount denoted in Euros.
(d) Principal amount denoted in British Pounds.
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- -------- --------
North America ........................ 57.3% $ 7,716,811
Japan ................................ 24.9 3,351,829
Europe ............................... 11.0 1,485,898
Asia/Pacific ......................... 6.8 908,767
------ -----------
100.0% $13,463,305
====== ===========
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
================================================================================
ASSETS:
Investments, at value (cost $11,793,585) .... $ 13,463,305
Foreign currency, at value (cost $154,758) .. 153,538
Cash ........................................ 37,612
Receivable for investments sold ............. 246,992
Receivable for Fund shares sold ............. 151,767
Dividends and interest receivable ........... 82,988
Unrealized appreciation on forward
foreign exchange contracts ............... 36,700
Other assets ................................ 1,774
------------
TOTAL ASSETS ................................ 14,174,676
------------
LIABILITIES:
Payable for Fund shares redeemed ............ 27,190
Payable for shareholder
communications expenses .................. 19,805
Payable for audit and legal fees ............ 14,777
Payable for investment advisory fees ........ 10,368
Payable for shareholder services fees ....... 4,657
Payable for distribution fees ............... 3,092
Other accrued expenses ...................... 2,819
------------
TOTAL LIABILITIES ........................... 82,708
------------
NET ASSETS applicable to 2,266,245
shares outstanding ........................ $ 14,091,968
============
NET ASSETS CONSIST OF:
Capital stock, each class at $0.001 par value $ 2,266
Additional paid-in capital .................. 12,435,863
Accumulated distributions in excess
of net investment income .................. (50,030)
Net unrealized appreciation on investments .. 1,669,720
Net unrealized appreciation on foreign
currency translations ..................... 34,149
------------
NET ASSETS .................................. $ 14,091,968
============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption
price per share ($13,780,609 / 2,214,702
shares outstanding; 75,000,000
shares authorized) ........................ $6.22
=====
CLASS A:
Net Asset Value and redemption price per share
($92,975 / 14,931 shares outstanding;
50,000,000 shares authorized) ............. $6.23
=====
Maximum offering price per share (NAV / 0.9425,
based on maximum sales charge
of 5.75% of the offering price) ........... $6.61
=====
CLASS B:
Net Asset Value and offering price per share
($72,888 / 12,335 shares outstanding;
25,000,000 shares authorized) ............. $5.91(a)
=====
CLASS C:
Net Asset Value and offering price per share
($145,496 / 24,277 shares outstanding;
25,000,000 shares authorized) ............. $5.99(a)
=====
- ----------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,558) ......... $ 211,757
Interest ........................................... 237,350
-----------
TOTAL INVESTMENT INCOME ............................ 449,107
-----------
EXPENSES:
Investment advisory fees ........................... 168,523
Distribution fees - Class AAA ...................... 40,487
Distribution fees - Class A ........................ 1,028
Distribution fees - Class B ........................ 935
Distribution fees - Class C ........................ 1,529
Shareholder communications expenses ................ 39,042
Legal and audit fees ............................... 30,211
Registration fees .................................. 23,885
Shareholder services fees .......................... 20,146
Custodian fees ..................................... 11,645
Interest expense ................................... 5,018
Directors' fees .................................... 2,024
Miscellaneous expenses ............................. 12,310
-----------
TOTAL EXPENSES ..................................... 356,783
Less:
Expense reimbursement (see Note 3) ................. (11,992)
Custodian fees credits ............................. (879)
-----------
NET EXPENSES ....................................... 343,912
-----------
NET INVESTMENT INCOME .............................. 105,195
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ................... 1,310,722
Net realized gain on foreign
currency transactions ............................ 226,015
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations .................... (906,265)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ................ 630,472
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 735,667
===========
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
OPERATIONS:
Net investment income ............................................... $ 105,195 $ 194,040
Net realized gain on investments and
foreign currency transactions ..................................... 1,536,737 1,239,372
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations ............................................. (906,265) 628,898
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ 735,667 2,062,310
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ......................................................... (558,053) (329,698)
Class A ........................................................... (15,235) (4,835)
Class B ........................................................... (3,509) (2,170)
Class C ........................................................... (3,372) (1,316)
------------ ------------
(580,169) (338,019)
------------ ------------
Net realized gains
Class AAA ......................................................... (1,034,911) (1,071,095)
Class A ........................................................... (28,253) (15,708)
Class B ........................................................... (6,508) (7,049)
Class C ........................................................... (6,254) (4,276)
------------ ------------
(1,075,926) (1,098,128)
------------ ------------
Return of Capital
Class AAA ......................................................... -- (1,990,268)
Class A ........................................................... -- (29,187)
Class B ........................................................... -- (13,098)
Class C ........................................................... -- (7,945)
------------ ------------
-- (2,040,498)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................. (1,656,095) (3,476,645)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ......................................................... (5,708,864) 4,461,404
Class A ........................................................... (469,690) 516,340
Class B ........................................................... (52,160) 75,271
Class C ........................................................... 42,083 59,788
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (6,188,631) 5,112,803
------------ ------------
REDEMPTION FEES ..................................................... 25,134 3,506
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ............................... (7,083,925) 3,701,974
NET ASSETS:
Beginning of period ................................................. 21,175,893 17,473,919
------------ ------------
End of period (including undistributed net investment
income of $0 and $0, respectively) ................................ $ 14,091,968 $ 21,175,893
============ ============
See accompanying notes to financial statements.
8
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION. The GAMCO Global Convertible Securities Fund (the "Fund"),
formerly, The Gabelli Global Convertible Securities Fund, a series of GAMCO
Global Series Funds, Inc. (the "Corporation"), formerly, Gabelli Global Series
Funds, Inc., was organized on July 16, 1993 as a Maryland corporation. The Fund
is a non-diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and one of four
separately managed portfolios (collectively, the "Portfolios") of the
Corporation. The Fund's primary objective is to obtain a high level of total
return through a combination of income and capital appreciation. The Fund
commenced investment operations on February 3, 1994.
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 Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on 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 with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be 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 average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily available are
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.
9
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December
31, 2005, there were no open repurchase agreements.
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At December 31, 2005, there were no
open futures contracts.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. Forward foreign exchange contracts at December 31, 2005, are
reflected in the Schedule of Investments.
10
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments, and other
assets and liabilities are translated into U.S. dollars at the current exchange
rates. Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable, based upon its current
interpretation of tax rules and regulations that exist in the markets in which
it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Premiums and discounts on debt securities
are amortized using the yield to maturity method. Dividend income is recorded on
the ex-dividend date except for certain dividends which are recorded as soon as
the Fund is informed of the dividend.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
In calculating the net asset value ("NAV") per share of each class, investment
income, realized and unrealized gains and losses, redemption fees, and expenses
other than class specific expenses, are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day. Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset shown as
"custodian fee credits".
11
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. Distributions made in excess of current
earnings and profits on a tax basis are treated as a non-taxable return of
capital. These book/tax differences are either temporary or permanent in nature.
To the extent these differences are permanent, adjustments are made to the
appropriate equity accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund and the calculation of
net investment income per share in the Financial Highlights excludes these
adjustments. For the year ended December 31, 2005, reclassifications were made
to decrease accumulated distributions in excess of net investment income by
$428,553 and to increase accumulated net realized gain on investments and
foreign currency transactions by $56,132, with an offsetting adjustment to
additional paid-in capital.
The tax character of distributions paid during the fiscal year ended December
31, 2005 and December 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income (inclusive of
short-term capital gains) ........ $1,232,664 $1,436,147
Long-term gains .................... 423,431 --
Non taxable return of capital ...... -- 2,040,498
---------- ----------
Total distributions paid ........... $1,656,095 $3,476,645
========== ==========
The Fund has a fixed distribution policy. Under the policy, the Fund declares
and pays distributions quarterly and identifies that portion of the distribution
from net investment income, capital gains, and paid-in-capital. The actual
source of the distribution is determined after the end of the year. Pursuant to
this policy, distributions during the year were made in excess of required
distributions. Such distributions were made from current earnings and profits
and were considered ordinary income. The Fund continues to evaluate its
distribution policy in light of ongoing economic and market conditions and may
change the amount of the quarterly distributions in the future. For the period
from January 2000 through April 2005, the Fund paid $0.10 per share on a monthly
basis. On May 20, 2005, the Board announced a change in the distribution policy.
The Fund currently intends to pay $0.03 per share on a quarterly basis in March,
June, September, and December.
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.
12
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
As of December 31, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Net unrealized appreciation on investments,
foreign receivables and payables ........... $1,669,720
Other temporary differences .................... (15,881)
----------
Total accumulated gain ......................... $1,653,839
==========
For the year ended December 31, 2005, the Fund utilized net capital loss
carryforwards of $502,405.
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at December 31, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ...... $11,793,585 $1,977,878 $(308,158) $1,669,720
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
The Adviser has voluntarily agreed to reimburse expenses of the Fund to the
extent necessary to maintain the annualized total net operating expenses
(exclusive of interest expense) of 2.00%, 2.00%, 2.75%, and 2.75% of average
daily net assets for Class AAA, Class A, Class B, and Class C, respectively. For
the year ended December 31, 2005, the Adviser reimbursed the Fund in the amount
of $11,992. Such amount is not recoverable in future fiscal years.
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, 2005, other than short-term securities, aggregated
$9,668,051 and $17,743,881, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the
Fund paid brokerage commissions of $125 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $1,951 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
13
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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. At December 31, 2005, there were no borrowing outstanding
from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the year ended December 31, 2005 was $124,418 with a weighted average
interest rate of 3.83%. The maximum amount borrowed at any time during the year
ended December 31, 2005 was $1,920,000.
8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares
- -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class
AAA Shares are offered only to investors who acquire them directly from Gabelli
& Company or through selected broker/dealers without a sales charge. Class A
Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares
are subject to a contingent deferred sales charge ("CDSC") upon redemption
within six years of purchase and automatically convert to Class A Shares
approximately eight years after the original purchase. The applicable CDSC is
equal to a declining percentage of the lesser of the NAV per share at the date
of the original purchase or at the date of redemption, based on the length of
time held. Class C Shares are subject to a 1% CDSC for one year after purchase.
Class B Shares are available only through exchange of Class B Shares of other
funds distributed by Gabelli & Company. The Board has approved Class I Shares
which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged within the sixtieth day after the date of a purchase.) The redemption
fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the years ended December 31, 2005 and December 31, 2004 amounted to
$25,134 and $3,506, respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
14
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 1,258,482 $ 7,437,867 1,621,450 $10,337,026
Shares issued upon reinvestment of dividends ....... 232,662 1,356,751 482,014 3,037,994
Shares redeemed .................................... (2,527,933) (14,503,482) (1,404,805) (8,913,616)
---------- ------------ ---------- -----------
Net increase (decrease) .......................... (1,036,789) $ (5,708,864) 698,659 $ 4,461,404
========== ============ ========== ===========
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 14,762 $ 84,309 87,249 $ 546,490
Shares issued upon reinvestment of dividends ....... 2,003 11,680 3,755 23,269
Shares redeemed .................................... (97,283) (565,679) (8,221) (53,419)
---------- ------------ ---------- -----------
Net increase (decrease) .......................... (80,518) $ (469,690) 82,783 $ 516,340
========== ============ ========== ===========
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ........................................ -- -- 10,388 $ 66,681
Shares issued upon reinvestment of dividends ....... 636 $ 3,542 1,567 9,539
Shares redeemed .................................... (10,395) (55,702) (159) (949)
---------- ------------ ---------- -----------
Net increase (decrease) .......................... (9,759) $ (52,160) 11,796 $ 75,271
========== ============ ========== ===========
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 23,314 $ 125,405 9,896 $ 61,575
Shares issued upon reinvestment of dividends ....... 1,090 6,137 1,486 9,073
Shares redeemed .................................... (15,698) (89,459) (1,689) (10,860)
---------- ------------ ---------- -----------
Net increase ..................................... 8,706 $ 42,083 9,693 $ 59,788
========== ============ ========== ===========
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the Securities and Exchange
Commission (the "SEC") requesting information on mutual fund trading practices
involving certain funds managed by the Adviser. GAMCO Investors, Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. On a separate matter, in September 2005, the Adviser was informed by
the staff of the SEC that the staff may recommend to the Commission that an
administrative remedy and a monetary penalty be sought from the Adviser in
connection with the actions of two of seven closed-end funds managed by the
Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These
provisions require registered investment companies to provide written statements
to shareholders when a dividend is made from a source other than net investment
income. While the two closed-end funds sent annual statements and provided other
materials containing this information, the funds did not send written statements
to shareholders with each distribution in 2002 and 2003. The Adviser believes
that all of the funds are now in compliance. The Adviser believes that these
matters would have no effect on the Fund or any material adverse effect on the
Adviser or its ability to manage the Fund.
15
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------- -----------------------------------------------
Net
Net Asset Net Realized and Total Net
Period Value, Investment Unrealized from Net Realized Return
Ended Beginning Income Gain (Loss) on Investment Investment Gain on of Total
December 31, of Period (Loss)(g) Investments Operations Income Investments Capital Distributions
- ------------ --------- -------- ----------- ---------- ------ ----------- ------- -------------
CLASS AAA
2005 $ 6.26 $ 0.04 $ 0.40 $ 0.44 $(0.17) $(0.32) -- $(0.49)
2004 6.77 0.07 0.62 0.69 (0.12) (0.38) $(0.70) (1.20)
2003 6.66 0.07 1.24 1.31 (0.11) -- (1.09) (1.20)
2002 8.29 0.07 (0.50) (0.43) (0.04) -- (1.16) (1.20)
2001 10.86 (0.09) (1.28) (1.37) -- (0.00)(d) (1.20) (1.20)
CLASS A
2005 $ 6.26 $ 0.04 $ 0.41 $ 0.45 $(0.17) $(0.32) -- $(0.49)
2004 6.77 0.09 0.60 0.69 (0.11) (0.36) $(0.73) (1.20)
2003 6.66 0.07 1.24 1.31 (0.11) -- (1.09) (1.20)
2002 8.28 0.07 (0.49) (0.42) (0.04) -- (1.16) (1.20)
2001(b) 10.27 (0.09) (1.10) (1.19) -- (0.00)(d) (0.80) (0.80)
CLASS B
2005 $ 6.01 $(0.01) $ 0.39 $ 0.38 $(0.17) $(0.32) -- $(0.49)
2004 6.59 0.03 0.59 0.62 (0.10) (0.34) $(0.76) (1.20)
2003 6.55 0.03 1.21 1.24 (0.07) -- (1.13) (1.20)
2002 8.23 0.02 (0.50) (0.48) (0.04) -- (1.16) (1.20)
2001(a) 10.04 (0.16) (0.75) (0.91) -- (0.00)(d) (0.90) (0.90)
CLASS C
2005 $ 6.09 $ 0.00(d) $ 0.38 $ 0.38 $(0.17) $(0.32) -- $(0.49)
2004 6.66 0.03 0.60 0.63 (0.10) (0.34) $(0.76) (1.20)
2003 6.61 0.03 1.22 1.25 (0.07) -- (1.13) (1.20)
2002 8.27 0.02 (0.48) (0.46) (0.04) -- (1.16) (1.20)
2001(c) 8.58 (0.14) 0.03 (0.11) -- (0.00)(d) (0.20) (0.20)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------
Net Asset Net Assets Net Operating Operating
Period Value, End of Investment Expenses Expenses Portfolio
Ended Redemption End of Total Period Income Before Net of Turnover
December 31, Fees(g) Period Return+ (in 000's) (Loss) Reimbursement Reimbursement(e) Rate
- ------------ ------- ------- ------- ---------- ------ ------------- ---------------- --------
CLASS AAA
2005 $0.01 $6.22 8.0% $13,781 0.63% 2.11% 2.03%(h) 58%
2004 0.00(d) 6.26 11.7 20,350 1.06 2.06 2.01 60
2003 0.00(d) 6.77 21.5 17,281 1.12 2.07 2.01 54
2002 -- 6.66 (4.9) 9,316 0.97 2.83 2.83 33
2001 -- 8.29 (13.2) 8,288 (0.93) 2.69 2.69 49
CLASS A
2005 $0.01 $6.23 8.2% $ 93 0.68% 2.06% 2.04%(h) 58%
2004 0.00(d) 6.26 11.6 598 1.41 2.06 2.01 60
2003 0.00(d) 6.77 21.5 86 1.12 2.07 2.01 54
2002 -- 6.66 (4.7) 2 0.97 2.83 2.83 33
2001(b) -- 8.28 (13.3) 9 (0.93)(f) 2.69(f) 2.69(f) 49
CLASS B
2005 $0.01 $5.91 7.3% $ 73 (0.13)% 2.84% 2.78%(h) 58%
2004 0.00(d) 6.01 10.8 133 0.45 2.81 2.76 60
2003 0.00(d) 6.59 20.7 68 0.37 2.82 2.76 54
2002 -- 6.55 (5.6) 24 0.22 3.58 3.58 33
2001(a) -- 8.23 (13.8) 6 (1.68)(f) 3.44(f) 3.44(f) 49
CLASS C
2005 $0.01 $5.99 7.2% $ 145 (0.01)% 2.91% 2.78%(h) 58%
2004 0.00(d) 6.09 10.9 95 0.44 2.81 2.76 60
2003 0.00(d) 6.66 20.7 39 0.37 2.82 2.76 54
2002 -- 6.61 (5.3) 13 0.22 3.58 3.58 33
2001(c) -- 8.27 (13.5) 0 (1.68)(f) 3.44(f) 3.44(f) 49
- --------------------
+ 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 the applicable
sales charges. Total return for the period of less than one year is not
annualized.
(a) From March 28, 2001, the date Class B Shares were continuously outstanding.
(b) From May 2, 2001, the date shares were continuously outstanding. Class A
Shares were outstanding for the period March 13, 2000 through November 30,
2000.
(c) From November 26, 2001, the date Class C Shares were continuously
outstanding.
(d) Amount represents less than $0.005 per share.
(e) The Fund incurred interest expense during the years ended December 31, 2005,
2004, 2003, 2002, and 2001. If interest expense had not been incurred, the
ratios of operating expenses to average net assets would have been 2.00%,
2.00%, 2.00%, 2.82%, and 2.67% (Class AAA), 2.00%, 2.00%, 2.00%, 2.82%, and
2.67% (Class A), 2.75%, 2.75%, 2.75%, 3.57%, and 3.42% (Class B) and 2.75%,
2.75%, 2.75%, 3.57%, and 3.42% (Class C), respectively.
(f) Annualized.
(g) Per share amounts have been calculated using the average shares outstanding
method.
(h) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian fee
credits, the expense ratios for the year ended December 31, 2005 would have
been 2.03% (Class AAA), 2.03% (Class A), 2.78% (Class B), and 2.78% (Class
C).
See accompanying notes to financial statements.
16
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Directors of
GAMCO Global Series Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The GAMCO Global Convertible Securities Fund
(the "Fund") (formerly The Gabelli Global Convertible Securities Fund), a series
of GAMCO Global Series Funds, Inc., (formerly Gabelli Global Series Funds, Inc.)
as of December 31, 2005, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the three years
in the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights for each of the two years in the period
ended December 31, 2002 were audited by other auditors whose report dated
January 31, 2003, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the Fund's
custodian. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
GAMCO Global Convertible Securities Fund, a series of GAMCO Global Series Funds,
Inc., at December 31, 2005, 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 three years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 14, 2006
17
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2005, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors 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 directors noted the experience, length of service, and
reputation of the portfolio managers.
INVESTMENT PERFORMANCE. The independent directors reviewed the short and
medium-term performance of the Fund against a peer group of convertible
securities funds, noting that the Fund's performance was in or near the top
third for the one and three year periods and in the bottom quartile for the five
year period.
PROFITABILITY. The independent directors reviewed summary data regarding the
lack of profitability of the Fund to the Adviser both with an administrative
overhead charge and without such a charge. The directors also noted that an
affiliated broker of the Adviser received distribution fees and minor amounts of
sales commissions.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale and reviewed rudimentary data suggesting that 20% growth in
the Fund would not produce meaningful economies of scale that the shareholders
would not participate in.
SHARING OF ECONOMIES OF SCALE. The independent directors noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale that may develop.
SERVICE AND COST COMPARISONS. The independent directors compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of convertible securities funds
and noted that the Adviser's advisory fee includes substantially all
administrative services of the Fund as well as investment advisory services. The
directors noted that the Fund's expense ratios after voluntary expense
reimbursements were significantly higher, and the Fund's size was significantly
lower, than average within this group. The directors also noted that all but one
of the peer group were domestic convertible funds, thereby limiting the
usefulness of peer group comparisons. The directors also noted that the advisory
fee structure was the same as that in effect for most of the Gabelli funds. The
directors did not compare the advisory fee to the fee for other types of
accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and a mixed
performance record. The independent directors also concluded that the Fund's
expense ratios were reasonable, particularly in light of the lack of
profitability to the Adviser of managing the Fund, and that economies of scale
were not a significant factor in their thinking at this time. The directors 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 directors determined to recommend
continuation of the investment advisory agreement to the full Board of
Directors.
18
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
The business and affairs of the Company are managed under the direction of the
Company's Board of Directors. Information pertaining to the Directors and
officers of the Company is set forth below. The Fund's Statement of Additional
Information includes additional information about The GAMCO Global Convertible
Securities Fund's Directors and is available, without charge, upon request, by
calling 800-GABELLI (800-422-3554) or by writing to The GAMCO Global Convertible
Securities 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 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4
- ---------------- -------- ---------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
- ----------------------
MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of GAMCO Investors, Inc. Holdings, Inc.
Chief Investment Officer and Chief Investment Officer - Value (holding company)
Age: 63 Portfolios of Gabelli Funds, LLC and
GAMCO Asset Management Inc.; Chairman
and Chief Executive Officer of Lynch
Interactive Corporation (multimedia
and services)
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of GAMCO
Director Company, Inc. Investors, Inc.
Age: 61
NON-INTERESTED DIRECTORS:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch Corporation
Director Consultants, Inc.; Adviser, Iona College (diversified
Age: 66 School of Business manufacturing)
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 70
ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director/Trustee of
Director Executive Officer of The Guardian Life 25 mutual funds within the
Age: 75 Insurance Company of America from January Guardian Fund Complex
1993 to December 1995; President, Chief
Executive Officer and a Director
prior thereto
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence --
Director Hospital and practicing private physician
Age: 65
ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. --
Director and futures trading)
Age: 71
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Director of Hollis-Eden
Director Supplies Corp. Pharmaceuticals
Age: 60 (biotechnology);
Director of Earl
Scheib, Inc.
(automotive services)
19
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
================================================================================
TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF
ADDRESS 1 TIME PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DURING PAST FIVE YEARS
- ---------------- -------- ----------------------
OFFICERS:
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating
President and Treasurer Officer of Gabelli Funds, LLC since 1988 and
Age: 54 an officer of all of the registered investment
companies in the Gabelli Funds complex.
Director and President of Gabelli Advisers, Inc.
since 1998.
JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of
Secretary GAMCO Investors, Inc. since 1999 and GAMCO
Age: 42 Asset Management Inc. since 1993; Secretary of
all of the registered investment companies in
the Gabelli Funds complex.
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc.
Chief Compliance Officer since 2004; Chief Compliance Officer of all of the
Age: 52 registered investment companies in the Gabelli Funds
complex; Vice President of Goldman Sachs Asset
Management from 2000 through 2004.
- ---------------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Company's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified. Effective November 16,
2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves
as Director Emeritus.
3 "Interested person" of the Company as defined in the Investment Company Act
of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested
person" because of their affiliation with Gabelli Funds, LLC which acts as
the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are
brothers.
4 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or
other investment companies registered under the 1940 Act.
- --------------------------------------------------------------------------------
2005 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2005, the Fund paid to shareholders an
ordinary income dividend (comprised of net investment income and short-term
capital gains) totaling $0.36, $0.36, $0.36, and $0.36 and a long-term capital
gain distribution totaling $0.13, $0.13, $0.13, and $0.13 per share for Class
AAA, Class A, Class B, and Class C Shares, respectively. The Fund designates a
maximum of $943,591 of long-term capital as a capital gain dividend for tax
reporting purposes. For the fiscal year ended December 31, 2005, 21.40% of the
ordinary income dividend qualifies for the dividend received deduction
available to corporations, and 15.46% of the ordinary income distribution was
qualified dividend income.
U.S. GOVERNMENT INCOME
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2005 which was derived from U.S. Treasury securities was 0.41%. Such
income is exempt from state and local tax in all states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government
securities. The GAMCO Global Convertible Securities Fund did not meet this
strict requirement in 2005. Due to the diversity in state and local tax law,
it is recommended that you consult your personal tax advisor as to the
applicability of the information provided to your specific situation.
- --------------------------------------------------------------------------------
20
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO Funds are investment companies registered with the
Securities and Exchange Commission under the Investment Company Act of
1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc.,
which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a
publicly held company that has subsidiaries that provide investment
advisory or brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include
your name, address, telephone number, social security number, bank
account number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR
AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE
SERVICES TO YOU. This would include information about the shares that
you buy or redeem, and the deposits and withdrawals that you make. If we
hire someone else to provide services--like a transfer agent--we will
also have information about the transactions that you conduct through
them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information, and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
- --------------------------------------------------------------------------------
GABELLI FAMILY OF FUNDS
VALUE ________________________________________
GABELLI ASSET FUND
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND
Seeks long term growth of capital through investment primarily in the common
stocks of established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well-seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE ______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE ____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $1 billion) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $2.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) TEAM MANAGED
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations less than $1.5 billion) believed to be undervalued with
shareholder oriented management teams that are employing strategies to grow the
company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
GAMCO GROWTH FUND
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GAMCO INTERNATIONAL GROWTH FUND
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH _________________________
GAMCO GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing on
the globalization and interactivity of the world's marketplace. The Fund invests
in companies at the forefront of accelerated growth. The Fund's primary
objective is capital appreciation. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
WESTWOOD MIGHTY MITES(SM) FUND
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD BALANCED FUND
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
WESTWOOD INCOME FUND
Seeks to provide a high level of current income as well as long-term capital
appreciation by investing in income producing equity and fixed income
securities. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
SPECIALTY EQUITY ____________________________
GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is total return through a combination of current income and capital
appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in revenues
and earnings and potential for above average capital appreciation or are
undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
SECTOR ______________________________________
GAMCO GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world - targeting
undervalued companies with strong earnings and cash flow dynamics. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GOLD FUND
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of world-wide economic, financial, and political factors. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE _____________________
GABELLI ABC FUND
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss.
(NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
CONTRARIAN_________________________________
GAMCO MATHERS FUND
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of the debt instrument. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
FIXED INCOME ________________________________
WESTWOOD INTERMEDIATE BOND FUND
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET __________
GABELLI U.S. TREASURY MONEY MARKET FUND
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC, AND POLITICAL RISKS.
TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER
THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE FUND CAREFULLY
BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION
ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
GAMCO Global Series Funds, Inc.
THE GAMCO GLOBAL CONVERTIBLE SECURITIES 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 DIRECTORS
Mario J. Gabelli, CFA John D. Gabelli
CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT
EXECUTIVE OFFICER GABELLI & COMPANY, INC.
GAMCO INVESTORS, INC.
E. Val Cerutti Werner J. Roeder, MD
CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR
CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL
Anthony J. Colavita Anthonie C. van Ekris
ATTORNEY-AT-LAW MANAGING DIRECTOR
ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC.
Arthur V. Ferrara Salvatore J. Zizza
FORMER CHAIRMAN AND CHAIRMAN
CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL
GUARDIAN LIFE INSURANCE SUPPLIES CORP.
COMPANY OF AMERICA
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
GAMCO Global Convertible Securities Fund. It is not authorized for distribution
to prospective investors unless preceded or accompanied by an effective
prospectus.
- --------------------------------------------------------------------------------
GAB441Q405SR
GAMCO
THE
GAMCO
GLOBAL
CONVERTIBLE
SECURITIES
FUND
ANNUAL REPORT
DECEMBER 31, 2005
THE GAMCO GLOBAL GROWTH FUND
ANNUAL REPORT
DECEMBER 31, 2005
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, 2005 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
Our focus is on picking stocks, not currencies or countries. We construct
portfolios to be well diversified by country, sector, and issue. While we may
make occasional investments in emerging markets, we invest primarily in
developed markets. We invest for the long term and have below average portfolio
turnover. This was a successful formula for 2005, as the Fund returned 13.7% for
the year, compared to 11.4% for the MSCI AC World Free Index.
Good news on profits and economic growth continued to overwhelm concerns
about energy prices, inflation, and geopolitical tensions as most stock markets
finished the year on a positive note. While the energy and utility sectors
suffered from year end profit taking in the fourth quarter, all other sectors
posted gains, with the exception of telecom services, which claims some
distinction as the only sector with a negative return for the year (based on the
MSCI AC World Free Index data). The dollar gained a bit on the major currencies
eating into returns for dollar-based investors active in those stock markets.
Emerging markets were higher in the aggregate but results varied greatly by
market.
For the year, Canada gets the gold medal, showing a rise (in U.S. dollars)
of 28.3%. Japan takes the silver, rising 25.5%, Austria takes the bronze
(+24.6%), followed by Denmark (+24.5%), and Norway (+24.3%). Bringing up the
rear were Ireland (-2.3%), Portugal (-1.9%), New Zealand (+1.7%), Italy (+1.9%),
and Spain (+4.4%).
In 2005, energy stocks rode the trend of rising oil prices, advancing
31.2%. Materials stocks were also popular, given rising prices for metals and
other commodities, with the materials sector advancing 20.5%. Low bond yields
contributed to the rising demand for income stocks, and utilities rose 14.1%.
Other sectors with double digit gains were industrials (+12.5%), and financials
(+12.3%). In addition to telecom services (-5.6%), the other laggards were
consumer discretionary (+2.3%), information technology (+6.8%), consumer staples
(+7.0%), and health care (+9.4%).
Fund performance during the past twelve months was enhanced by our
generally overweight commitment to energy and metals and mining, the two best
performing sectors. Our lack of exposure to utilities, the third best performing
sector, was a negative. However, our growth bias in stock selection generally
keeps utilities off our radar screen. We had strong performing stocks across a
number of different industries. Our top stock was Vallourec SA, a French
industrial company, which rose 330% (in local currency). This was followed by
Peabody Energy Corp. (+104%), Koninklijke BAM Groep NV (+93%), Suncor Energy
Inc. (+78%), Nikko Cordial Corp. (+72%), and Genentech Inc. (+70%). Other
exceptional performers included Google Inc. (+67% since purchased), Transocean
Inc. (+64%), Whole Foods Markets Inc. (+62%), Richemont AG (+53%), and Samsung
Electronics Co. Ltd. (+47%).
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 15, 2006
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2005:
THE GAMCO GLOBAL GROWTH FUND
Financial Services ................................. 15.8%
Health Care ........................................ 13.5%
Energy and Utilities ............................... 8.5%
Computer Software and Services ..................... 7.3%
Food and Beverage .................................. 7.2%
Diversified Industrial ............................. 5.6%
Metals and Mining .................................. 5.6%
Retail ............................................. 5.4%
Consumer Products .................................. 4.8%
Electronics ........................................ 4.4%
Building and Construction .......................... 2.8%
Entertainment ...................................... 2.8%
Equipment and Supplies ............................. 2.0%
Telecommunications ................................. 2.0%
Business Services .................................. 1.9%
Machinery .......................................... 1.8%
Aerospace .......................................... 1.7%
Wireless Communications ............................ 1.7%
U.S. Government Obligations ........................ 1.3%
Broadcasting ....................................... 1.2%
Hotels and Gaming .................................. 0.8%
Chemicals and Allied Products ...................... 0.8%
Consumer Services .................................. 0.8%
Cable and Satellite ................................ 0.5%
Other Assets and Liabilities - (Net) ............... (0.2)%
------
100.0%
=======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
2
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
GAMCO GLOBAL GROWTH FUND CLASS AAA SHARES, THE LIPPER GLOBAL FUND AVERAGE
AND THE MSCI AC WORLD FREE INDEX
Gabelli Global Lipper Global Multi-Cap MSCI AC
Growth Fund Class AAA Shares Growth Fund Average World Free Index
2/7/94 $10,000 $10,000 $10,000
12/31/94 10,250 9,835 9,849
12/31/95 12,083 11,214 11,766
12/31/96 13,594 13,042 13,319
12/31/97 19,263 14,742 15,315
12/31/98 24,836 16,856 18,680
12/31/99 53,645 22,938 23,690
12/31/00 33,534 20,582 20,387
12/31/01 25,435 17,007 17,144
12/31/02 19,130 13,686 13,890
12/31/03 27,048 18,078 18,700
12/31/04 29,598 20,717 21,645
12/31/05 33,659 23,118 24,106
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, 2005 (A)
----------------------------------------------------
Since
Inception
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (2/7/94)
- -------------------------------------------------------------------------------------------------------------------
GAMCO GLOBAL GROWTH FUND CLASS AAA .............. 3.64% 13.72% 20.73% 0.08% 10.79% 10.73%
MSCI AC World Free Index ........................ 3.43 11.37 20.18 3.41 7.44 7.66
Lipper Global Multi-Cap Growth Fund Average ..... 3.81 11.60 20.42 2.90 9.93 9.13
Class A ......................................... 3.59 13.66 20.74 0.10 10.80 10.74
(2.39)(b) 7.12(b) 18.38(b) (1.08)(b) 10.15(b) 10.19(b)
Class B ......................................... 3.48 12.87 19.83 (0.65) 10.35 10.37
(1.52)(c) 7.87(c) 19.13(c) (1.05)(c) 10.35(c) 10.37(c)
Class C ......................................... 3.43 12.85 19.83 (0.66) 10.32 10.34
2.43(c) 11.85(c) 19.83(c) (0.66)(c) 10.32(c) 10.34(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF 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. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED.
PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT
MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS,
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 VALUES ARE USED TO CALCULATE PERFORMANCE
FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND
CLASS C SHARES ON MARCH 2, 2000, MAY 5, 2000 AND MARCH 12, 2000,
RESPECTIVELY. 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. INVESTING IN FOREIGN SECURITIES INVOLVES RISKS NOT
ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING
CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE MSCI AC WORLD FREE
INDEX IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE, WHILE THE
LIPPER AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF MUTUAL FUNDS CLASSIFIED
IN THIS PARTICULAR CATEGORY.
(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.
- --------------------------------------------------------------------------------
3
THE GAMCO GLOBAL GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2005 through December 31, 2005
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, 2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/05 12/31/05 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,136.60 1.73% $ 9.32
Class A $1,000.00 $1,136.60 1.74% $ 9.37
Class B $1,000.00 $1,132.60 2.48% $13.33
Class C $1,000.00 $1,132.40 2.49% $13.38
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,016.48 1.73% $ 8.79
Class A $1,000.00 $1,016.43 1.74% $ 8.84
Class B $1,000.00 $1,012.70 2.48% $12.58
Class C $1,000.00 $1,012.65 2.49% $12.63
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
4
THE GAMCO GLOBAL GROWTH FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
--------- ---- -------
COMMON STOCKS -- 98.9%
AEROSPACE -- 1.7%
8,358 Northrop Grumman Corp. ............... $ 431,525 $ 502,399
25,000 United Technologies Corp. ............ 1,221,038 1,397,750
------------ ------------
1,652,563 1,900,149
------------ ------------
BROADCASTING -- 1.2%
7,000 Lagardere SCA ........................ 399,739 538,672
5,200 Nippon Television Network Corp. ...... 771,307 799,389
------------ ------------
1,171,046 1,338,061
------------ ------------
BUILDING AND CONSTRUCTION -- 2.8%
20,000 CRH plc .............................. 482,219 588,396
15,000 Fomento de Construcciones
y Contratas SA ..................... 402,698 850,628
5,000 Koninklijke BAM Groep NV ............. 139,129 419,691
50,000 Sekisui House Ltd. ................... 522,442 629,160
10,000 Technip SA ........................... 312,581 601,418
------------ ------------
1,859,069 3,089,293
------------ ------------
BUSINESS SERVICES -- 1.9%
6,500 Getty Images Inc.+ ................... 469,625 580,255
2,800 Hakuhodo Dy Holdings Inc. ............ 191,989 197,295
10,000 SAP AG, ADR .......................... 452,250 450,700
16,000 Secom Co. Ltd. ....................... 620,342 837,071
------------ ------------
1,734,206 2,065,321
------------ ------------
CABLE AND SATELLITE -- 0.5%
12,250 Rogers Communications
Inc., Cl. B ........................ 84,714 518,474
------------ ------------
CHEMICALS AND ALLIED PRODUCTS -- 0.8%
13,000 Shin-Etsu Chemical Co. Ltd. .......... 458,472 691,144
50,000 Tokai Carbon Co. Ltd. ................ 205,108 232,331
------------ ------------
663,580 923,475
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 7.3%
20,000 Adobe Systems Inc. ................... 603,573 739,200
35,000 Cisco Systems Inc.+ .................. 692,075 599,200
20,000 Dell Inc.+ ........................... 838,976 599,800
9,000 Electronic Arts Inc.+ ................ 467,980 470,790
40,000 EMC Corp.+ ........................... 524,899 544,800
3,200 Google Inc., Cl. A+ .................. 794,052 1,327,552
75,000 Microsoft Corp. ...................... 2,015,860 1,961,250
13,000 NAVTEQ Corp.+ ........................ 523,311 570,310
30,000 Yahoo! Inc.+ ......................... 1,104,800 1,175,400
------------ ------------
7,565,526 7,988,302
------------ ------------
CONSUMER PRODUCTS -- 4.8%
9,924 Altadis SA ........................... 166,300 450,220
7,000 Christian Dior SA .................... 438,852 622,373
15,314 Compagnie Financiere
Richemont AG, Cl. A ................ 443,000 666,612
MARKET
SHARES COST VALUE
--------- ---- -------
17,247 Gallaher Group plc ................... $ 173,860 $ 260,383
6,000 Harman International
Industries Inc. .................... 529,406 587,100
27,000 Luxottica Group SpA .................. 477,982 685,013
25,000 Procter & Gamble Co. ................. 1,382,601 1,447,000
4,000 Swatch Group AG, Cl. B ............... 464,406 593,585
------------ ------------
4,076,407 5,312,286
------------ ------------
CONSUMER SERVICES -- 0.8%
20,000 eBay Inc.+ ........................... 696,529 865,000
------------ ------------
DIVERSIFIED INDUSTRIAL -- 5.6%
10,000 3M Co. ............................... 807,181 775,000
25,000 Bouygues SA .......................... 905,762 1,222,371
75,000 General Electric Co. ................. 2,728,135 2,628,750
9,000 ITT Industries Inc. .................. 786,992 925,380
10,000 Rockwell Automation Inc. ............. 611,683 591,600
------------ ------------
5,839,753 6,143,101
------------ ------------
ELECTRONICS -- 4.4%
15,000 Broadcom Corp., Cl. A+ ............... 492,170 707,250
25,000 Intel Corp. .......................... 565,750 624,000
30,000 Linear Technology Corp. .............. 1,168,726 1,082,100
20,000 Microchip Technology Inc. ............ 572,524 643,000
1,070 Samsung Electronics Co. Ltd. ......... 175,381 697,561
20,000 Texas Instruments Inc. ............... 405,221 641,400
8,000 Tokyo Electron Ltd. .................. 436,931 502,650
------------ ------------
3,816,703 4,897,961
------------ ------------
ENERGY AND UTILITIES -- 8.5%
10,000 Baker Hughes Inc. .................... 451,875 607,800
8,000 BP plc, ADR .......................... 466,366 513,760
12,000 Canadian Natural Resources Ltd. ...... 501,440 595,440
20,000 Chesapeake Energy Corp. .............. 635,060 634,600
4,266 ConocoPhillips ....................... 104,053 248,196
11,172 Devon Energy Corp. ................... 350,560 698,697
12,000 EnCana Corp. ......................... 576,522 541,920
10,000 Murphy Oil Corp. ..................... 458,214 539,900
6,000 Occidental Petroleum Corp. ........... 417,900 479,280
10,288 Pioneer Natural Resources Co. ........ 334,556 527,466
15,000 Repsol YPF SA ........................ 476,045 438,100
8,500 Schlumberger Ltd. .................... 538,841 825,775
10,000 Suncor Energy Inc. ................... 340,290 631,300
2,063 Total SA ............................. 356,308 518,271
4,000 Total SA, ADR ........................ 428,556 505,600
9,000 Transocean Inc.+ ..................... 366,974 627,210
9,000 Valero Energy Corp. .................. 438,558 464,400
------------ ------------
7,242,118 9,397,715
------------ ------------
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
--------- ---- -------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT -- 2.8%
90,000 Publishing & Broadcasting Ltd. ....... $ 502,272 $ 1,087,334
60,239 Time Warner Inc. ..................... 831,264 1,050,568
30,180 Vivendi Universal SA ................. 747,074 945,414
------------ ------------
2,080,610 3,083,316
------------ ------------
EQUIPMENT AND SUPPLIES -- 2.0%
20,000 Ingersoll-Rand Co. Ltd., Cl. A ....... 803,357 807,400
2,600 Keyence Corp. ........................ 544,556 739,645
1,150 Vallourec SA ......................... 107,619 633,087
------------ ------------
1,455,532 2,180,132
------------ ------------
FINANCIAL SERVICES -- 15.8%
27,000 77 Bank Ltd. ......................... 197,165 205,130
5,500 Allianz AG ........................... 704,835 833,071
10,000 American Express Co. ................. 491,340 514,600
60,000 Anglo Irish Bank Corp. plc ........... 141,074 910,651
30,000 Australia & New Zealand
Banking Group Ltd. ................. 505,275 526,732
30,000 Aviva plc ............................ 320,646 363,883
29,039 Bank of Ireland, Ireland ............. 280,065 457,586
10,000 Bank of Ireland, London .............. 159,392 157,458
36,000 Citigroup Inc. ....................... 1,693,228 1,747,080
20,000 Credit Suisse Group, ADR ............. 942,161 1,019,000
10,000 Goldman Sachs Group Inc. ............. 1,049,500 1,277,100
15,000 HSBC Holdings plc, ADR ............... 1,289,686 1,207,050
11,914 Irish Life & Permanent plc ........... 129,749 243,451
5,000 Legg Mason Inc. ...................... 588,271 598,450
19,895 Merrill Lynch & Co. Inc. ............. 1,042,319 1,347,488
50 Mitsubishi UFJ Financial
Group Inc. ......................... 552,547 678,340
79,500 Nikko Cordial Corp. .................. 817,370 1,259,219
35,000 Standard Chartered plc ............... 677,808 779,812
15,000 State Street Corp. ................... 712,853 831,600
15,000 UBS AG, New York ..................... 1,226,314 1,427,250
2,000 UBS AG, Switzerland .................. 136,647 190,404
33,000 Westpac Banking Corp. ................ 502,533 550,375
16,000 Yamaguchi Bank Ltd. .................. 202,431 229,957
------------ ------------
14,363,209 17,355,687
------------ ------------
FOOD AND BEVERAGE -- 7.2%
53,000 Ajinomoto Co. Inc. ................... 602,454 542,426
60,000 Cadbury Schweppes plc ................ 592,403 567,245
18,996 Coca-Cola Hellenic
Bottling Co. SA .................... 385,338 559,533
100,000 Davide Campari-Milano SpA ............ 467,325 739,934
77,000 Diageo plc ........................... 971,581 1,116,124
6,000 Diageo plc, ADR ...................... 326,867 349,800
12,000 General Mills Inc. ................... 542,811 591,840
3,000 Nestle SA ............................ 850,228 897,226
MARKET
SHARES COST VALUE
--------- ---- -------
20,000 PepsiCo Inc. ......................... $ 1,020,471 $ 1,181,600
3,763 Pernod-Ricard SA ..................... 401,489 656,666
15,000 Starbucks Corp.+ ..................... 413,438 450,150
5,000 Wrigley (Wm.) Jr. Co. ................ 353,869 332,450
------------ ------------
6,928,274 7,984,994
------------ ------------
HEALTH CARE -- 13.5%
17,000 Amgen Inc.+ .......................... 1,056,128 1,340,620
10,000 Caremark Rx Inc.+ .................... 381,225 517,900
10,000 Eli Lilly & Co. ...................... 543,034 565,900
10,000 Genentech Inc.+ ...................... 506,391 925,000
10,000 Genzyme Corp.+ ....................... 578,740 707,800
40,000 GlaxoSmithKline plc .................. 846,223 1,010,959
15,000 Hisamitsu Pharmaceutical
Co. Inc. ........................... 252,777 377,751
20,000 Medtronic Inc. ....................... 947,550 1,151,400
20,000 Novartis AG .......................... 792,163 1,050,949
6,200 Roche Holding AG ..................... 495,746 930,908
10,530 Sanofi-Aventis ....................... 741,849 922,514
40,000 Smith & Nephew plc ................... 391,880 368,529
10,000 St. Jude Medical Inc.+ ............... 436,070 502,000
2,400 Straumann Holding AG ................. 504,079 556,143
20,000 Stryker Corp. ........................ 912,862 888,600
4,800 Synthes Inc. ......................... 398,130 539,158
13,000 Takeda Pharmaceutical Co. Ltd. ....... 553,551 703,269
15,000 Varian Medical Systems Inc.+ ......... 576,797 755,100
15,000 Zimmer Holdings Inc.+ ................ 1,213,549 1,011,600
------------ ------------
12,128,744 14,826,100
------------ ------------
HOTELS AND GAMING -- 0.8%
8,550 Greek Organization of
Football Prognostics SA ............ 101,078 294,559
102,011 Hilton Group plc ..................... 427,567 637,974
------------ ------------
528,645 932,533
------------ ------------
MACHINERY -- 1.8%
10,000 Caterpillar Inc. ..................... 459,402 577,700
10,000 Deere & Co. .......................... 724,210 681,100
5,000 SMC Corp. ............................ 530,944 714,377
------------ ------------
1,714,556 1,973,177
------------ ------------
METALS AND MINING -- 5.6%
20,000 BHP Billiton plc ..................... 317,858 326,721
25,404 Freeport-McMoRan Copper &
Gold Inc., Cl. B ................... 854,573 1,366,735
61,026 Gold Fields Ltd., ADR ................ 528,792 1,075,888
23,473 Newmont Mining Corp. ................. 832,462 1,253,458
13,614 Peabody Energy Corp. ................. 337,506 1,122,066
16,000 Rio Tinto plc ........................ 587,296 730,864
11,000 Xstrata plc .......................... 288,341 257,385
------------ ------------
3,746,828 6,133,117
------------ ------------
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
--------- ---- -------
COMMON STOCKS (CONTINUED)
RETAIL -- 5.4%
15,000 Bed Bath & Beyond Inc.+ .............. $ 613,399 $ 542,250
15,000 Best Buy Co. Inc. .................... 573,945 652,200
20,000 Coach Inc.+ .......................... 509,323 666,800
25,000 Matsumotokiyoshi Co. Ltd. ............ 663,268 790,690
24,000 Seven & I Holdings Co. Ltd.+ ......... 813,032 1,027,685
18,000 Tiffany & Co. ........................ 580,736 689,220
10,000 Wal-Mart Stores Inc. ................. 535,178 468,000
19,000 Walgreen Co. ......................... 737,867 840,940
3,400 Whole Foods Market Inc. .............. 156,629 263,126
------------ ------------
5,183,377 5,940,911
------------ ------------
TELECOMMUNICATIONS -- 2.0%
115 KDDI Corp. ........................... 590,072 663,077
25,000 TDC A/S .............................. 931,760 1,497,541
------------ ------------
1,521,832 2,160,618
------------ ------------
WIRELESS COMMUNICATIONS -- 1.7%
350,000 O2 plc ............................... 410,107 1,190,794
15,000 QUALCOMM Inc. ........................ 621,961 646,200
------------ ------------
1,032,068 1,836,994
------------ ------------
TOTAL COMMON STOCKS .................. 87,085,889 108,846,717
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 1.3%
$1,398,000 U.S. Treasury Bills,
3.891% to 4.004%++,
02/02/06 to 03/30/06 ............... $ 1,389,477 $ 1,389,398
------------ ------------
TOTAL INVESTMENTS -- 100.2% .......... $ 88,475,366 110,236,115
============
OTHER ASSETS AND
LIABILITIES (NET) -- (0.2)% ...................... (214,832)
------------
NET ASSETS -- 100.0% ............................... $110,021,283
============
- ----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- -------- --------
North America ........................ 52.5% $ 57,921,798
Europe ............................... 31.9 35,121,211
Japan ................................ 10.7 11,820,605
Asia/Pacific ......................... 2.6 2,862,003
Latin America ........................ 1.3 1,434,610
South Africa ......................... 1.0 1,075,888
------ ------------
100.0% $110,236,115
====== ============
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
================================================================================
ASSETS:
Investments, at value (cost $88,475,366) ................... $ 110,236,115
Cash ....................................................... 605
Dividends and interest receivable .......................... 128,922
Receivable for Fund shares sold ............................ 64,930
Other assets ............................................... 4,808
-------------
TOTAL ASSETS ............................................... 110,435,380
-------------
LIABILITIES:
Payable for Fund shares redeemed ........................... 144,230
Payable for investment advisory fees ....................... 94,472
Payable for shareholder communications expenses ............ 52,412
Payable for shareholder services fees ...................... 42,351
Payable for legal and audit fees ........................... 37,200
Payable for distribution fees .............................. 23,883
Other accrued expenses ..................................... 19,549
-------------
TOTAL LIABILITIES .......................................... 414,097
-------------
NET ASSETS applicable to 5,386,367 shares outstanding ...... $ 110,021,283
=============
NET ASSETS CONSIST OF:
Capital stock, each class at $0.001 par value .............. $ 5,386
Additional paid-in capital ................................. 156,564,422
Accumulated net investment income .......................... 374
Accumulated net realized loss on investments
and foreign currency transactions ........................ (68,308,116)
Net unrealized appreciation on investments ................. 21,760,749
Net unrealized depreciation on foreign currency translations (1,532)
-------------
NET ASSETS ................................................. $ 110,021,283
=============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption
price per share ($108,433,143 /
5,307,744 shares outstanding;
75,000,000 shares authorized) ............................ $20.43
======
CLASS A:
Net Asset Value and redemption price per share
($1,149,928 / 56,277 shares outstanding;
50,000,000 shares authorized) ............................. $20.43
======
Maximum offering price per share
(NAV / 0.9425, based on maximum sales
charge of 5.75% of the offering price) ................... $21.68
======
CLASS B:
Net Asset Value and offering price per share
($201,636 / 10,263 shares outstanding;
25,000,000 shares authorized) ............................ $19.65(a)
======
CLASS C:
Net Asset Value and offering price per share
($236,576 / 12,083 shares outstanding;
25,000,000 shares authorized) ............................ $19.58(a)
======
- -----------------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $112,568) ....... $ 1,962,150
Interest ........................................... 71,652
------------
TOTAL INVESTMENT INCOME ............................ 2,033,802
------------
EXPENSES:
Investment advisory fees ........................... 1,074,091
Distribution fees - Class AAA ...................... 266,305
Distribution fees - Class A ........................ 1,543
Distribution fees - Class B ........................ 1,779
Distribution fees - Class C ........................ 918
Shareholder services fees .......................... 190,093
Shareholder communications expenses ................ 116,460
Legal and audit fees ............................... 83,401
Custodian fees ..................................... 52,702
Registration fees .................................. 34,470
Directors' fees .................................... 11,350
Miscellaneous expenses ............................. 91,373
------------
TOTAL EXPENSES ..................................... 1,924,485
Less: Custodian fee credits ........................ (865)
------------
NET EXPENSES ....................................... 1,923,620
------------
NET INVESTMENT INCOME .............................. 110,182
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ................... 9,247,834
Net realized loss on foreign currency transactions . (14,936)
Net change in unrealized appreciation / depreciation
on investments and foreign currency translations . 4,268,855
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY .............. 13,501,753
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........................ $ 13,611,935
============
See accompanying notes to financial statements.
8
THE GAMCO GLOBAL GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
---------------- -----------------
OPERATIONS:
Net investment income (loss) ..................................... $ 110,182 $ (352,482)
Net realized gain on investments and foreign currency transactions 9,232,898 14,399,556
Net change in unrealized appreciation/depreciation on
investments and foreign currency translations ................. 4,268,855 (4,360,074)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. 13,611,935 9,687,000
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ...................................................... (92,625) --
Class A ........................................................ (2,247) --
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .............................. (94,872) --
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ...................................................... (18,980,399) (28,502,375)
Class A ........................................................ 576,999 19,605
Class B ........................................................ (3,817) (43,097)
Class C ........................................................ 171,726 (163,342)
------------- -------------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ....... (18,235,491) (28,689,209)
------------- -------------
REDEMPTION FEES .................................................. 873 11,158
------------- -------------
NET DECREASE IN NET ASSETS ....................................... (4,717,555) (18,991,051)
NET ASSETS:
Beginning of period .............................................. 114,738,838 133,729,889
------------- -------------
End of period (including undistributed net investment
income of $374 and $0, respectively) ......................... $ 110,021,283 $ 114,738,838
============= =============
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION. The GAMCO Global Growth Fund (the "Fund"), formerly, The
Gabelli Global Growth Fund, a series of GAMCO Global Series Funds, Inc. (the
"Corporation"), formerly, Gabelli Global Series Funds, Inc., was organized on
July 16, 1993 as a Maryland corporation. The Fund is a non-diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and one of four separately managed portfolios
(collectively, the "Portfolios") of the Corporation. The Fund's primary
objective is capital appreciation. The Fund commenced investment operations on
February 7, 1994. Prior to January 13, 2000, the Fund's name was The Gabelli
Global Interactive Couch Potato(R) Fund.
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 Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
9
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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 with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be 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 average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily available are
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.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December
31, 2005, there were no open repurchase agreements.
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
10
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At December 31, 2005, there were no
open futures contracts.
SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund
does not own. The proceeds received for short sales are recorded as liabilities
and the Fund records an unrealized gain or loss to the extent of the difference
between the proceeds received and the value of the open short position on the
day of determination. The Fund records a realized gain or loss when the short
position is closed out. By entering into a short sale, the Fund bears the market
risk of an unfavorable change in the price of the security sold short. Dividends
on short sales are recorded as an expense by the Fund on the ex-dividend date
and interest expense is recorded on the accrual basis. The Fund did not hold any
short positions as of December 31, 2005.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. At December 31, 2005, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments, and other
assets and liabilities are translated into U.S. dollars at the current exchange
rates. Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
11
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable, based upon its current
interpretation of tax rules and regulations that exist in the markets in which
it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
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 net asset value ("NAV") per share of each class, investment
income, realized and unrealized gains and losses, redemption fees, and expenses
other than class specific expenses, are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day. Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset shown as
"custodian fee credits".
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate equity accounts in the period that the
differences arise. These reclassifications have no impact on the NAV of the Fund
and the calculation of net investment income per share in the Financial
Highlights excludes these adjustments. For the year ended December 31, 2005,
reclassifications were made to decrease accumulated net investment income by
$14,936 and to decrease accumulated net realized loss on investments and foreign
currency transactions by $14,936.
The tax character of distributions paid during the year ended December 31, 2005
was $94,872 of ordinary income. No distributions were made in 2004.
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.
12
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
As of December 31, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed ordinary income ............. $ 374
Capital loss carryforward ................. (68,172,627)
Net unrealized appreciation on investments,
currency and foreign receivables and
payables ................................ 21,623,728
------------
Total accumulated loss .................... $(46,548,525)
============
At December 31, 2005, the Fund has net capital loss carryforwards for Federal
income tax purposes of $68,172,627, which are available to reduce future
required distributions of net capital gains to shareholders. $26,923,440 is
available through 2010; $39,969,419 is available through 2011; and $1,279,768 is
available through 2012. For the year ended December 31, 2005, the Fund utilized
capital loss carryforwards of $9,035,254.
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at December 31, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ..... $88,610,855 $23,113,451 $(1,488,191) $21,625,260
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2005, other than short-term securities, aggregated
$35,281,286 and $52,384,851, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the
Fund paid brokerage commissions of $1,350 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $3,397 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the the year
ended December 31, 2005, the Fund reimbursed the Adviser $45,000 in connection
with the cost of computing the Fund's NAV, which is included in miscellaneous
expenses in the Statement of Operations.
13
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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. At December 31, 2005, there were no borrowings outstanding
from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the year ended December 31, 2005, was $7,167 with a weighted average
interest rate of 3.30%. The maximum amount borrowed at any time during the year
ended December 31, 2005 was $707,000.
8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares
- -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class
AAA Shares are offered only to investors who acquire them directly from Gabelli
& Company or through selected broker/dealers without a sales charge. Class A
Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares
are subject to a contingent deferred sales charge ("CDSC") upon redemption
within six years of purchase and automatically convert to Class A Shares
approximately eight years after the original purchase. The applicable CDSC is
equal to a declining percentage of the lesser of the NAV per share at the date
of the original purchase or at the date of redemption, based on the length of
time held. Class C Shares are subject to a 1% CDSC for one year after purchase.
Class B Shares are available only through exchange of Class B Shares of other
funds distributed by Gabelli & Company. The Board has approved Class I Shares
which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged within the sixtieth day after the date of a purchase.) The redemption
fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the years ended December 31, 2005 and December 31, 2004 amounted to
$873 and $11,158, respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
14
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
---------------------------- ----------------------------
Shares sold ........................................ 351,247 $ 6,634,577 303,833 $ 4,973,892
Shares issued upon reinvestment of dividends ....... 4,351 89,324 -- --
Shares redeemed .................................... (1,387,756) (25,704,300) (2,053,668) (33,476,267)
---------- ------------ ---------- ------------
Net decrease ..................................... (1,032,158) $(18,980,399) (1,749,835) $(28,502,375)
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ----------------------------
Shares sold ........................................ 36,708 $ 724,402 18,166 $ 291,654
Shares issued upon reinvestment of dividends ....... 97 1,998 -- --
Shares redeemed .................................... (7,903) (149,401) (16,659) (272,049)
---------- ------------ ---------- ------------
Net increase ..................................... 28,902 $ 576,999 1,507 $ 19,605
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ----------------------------
Shares sold ........................................ 1,074 $ 18,953 207 $ 3,080
Shares redeemed .................................... (1,326) (22,770) (2,868) (46,177)
---------- ------------ ---------- ------------
Net decrease ..................................... (252) $ (3,817) (2,661) $ (43,097)
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ----------------------------
Shares sold ........................................ 9,486 $ 178,993 4,553 $ 69,965
Shares redeemed .................................... (394) (7,267) (14,548) (233,307)
---------- ------------ ---------- ------------
Net increase/(decrease) .......................... 9,092 $ 171,726 (9,995) $ (163,342)
========== ============ ========== ============
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the Securities and Exchange
Commission (the "SEC") requesting information on mutual fund trading practices
involving certain funds managed by the Adviser. GAMCO Investors, Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. On a separate matter, in September 2005, the Adviser was informed by
the staff of the SEC that the staff may recommend to the Commission that an
administrative remedy and a monetary penalty be sought from the Adviser in
connection with the actions of two of seven closed-end funds managed by the
Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These
provisions require registered investment companies to provide written statements
to shareholders when a dividend is made from a source other than net investment
income. While the two closed-end funds sent annual statements and provided other
materials containing this information, the funds did not send written statements
to shareholders with each distribution in 2002 and 2003. The Adviser believes
that all of the funds are now in compliance. The Adviser believes that these
matters would have no effect on the Fund or any material adverse effect on the
Adviser or its ability to manage the Fund.
15
THE GAMCO GLOBAL GROWTH FUND
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------- --------------------------
Net
Net Asset Net Realized and Total
Period Value, Investment Unrealized from Net
Ended Beginning Income Gain (Loss) on Investment Investments Total Redemption
December 31, of Period (Loss)(c) Investments Operations Income Distributions Fees(c)
- ------------ --------- -------- ----------- ---------- ------ ------------- -------
CLASS AAA
2005 $17.98 $ 0.02 $ 2.45 $ 2.47 $(0.02) $(0.02) $0.00(a)
2004 16.43 (0.05) 1.60 1.55 -- -- 0.00(a)
2003 11.62 (0.06) 4.86 4.80 -- -- 0.01
2002 15.45 (0.08) (3.75) (3.83) -- -- --
2001 20.37 (0.16) (4.76) (4.92) -- -- --
CLASS A
2005 $18.01 $ 0.01 $ 2.45 $ 2.46 $(0.04) $(0.04) $0.00(a)
2004 16.45 (0.05) 1.61 1.56 -- -- 0.00(a)
2003 11.63 (0.06) 4.87 4.81 -- -- 0.01
2002 15.47 (0.08) (3.76) (3.84) -- -- --
2001 20.37 (0.16) (4.74) (4.90) -- -- --
CLASS B
2005 $17.41 $(0.12) $ 2.36 $ 2.24 -- -- $0.00(a)
2004 16.02 (0.17) 1.56 1.39 -- -- 0.00(a)
2003 11.42 (0.16) 4.75 4.59 -- -- 0.01
2002 15.30 (0.17) (3.71) (3.88) -- -- --
2001 20.30 (0.29) (4.71) (5.00) -- -- --
CLASS C
2005 $17.35 $(0.16) $ 2.39 $ 2.23 -- -- $0.00(a)
2004 15.97 (0.19) 1.57 1.38 -- -- 0.00(a)
2003 11.38 (0.16) 4.74 4.58 -- -- 0.01
2002 15.26 (0.17) (3.71) (3.88) -- -- --
2001 20.24 (0.28) (4.70) (4.98) -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------
Net Asset Net Assets Net
Period Value, End of Investment Portfolio
Ended End of Total Period Income Operating Turnover
December 31, Period Return+ (in 000's) (Loss) Expenses (b) Rate
- ------------ ------- ------- ---------- ------ ------------- --------
CLASS AAA
2005 $20.43 13.7% $108,433 0.11% 1.79%(d) 33%
2004 17.98 9.4 114,011 (0.30) 1.82 100
2003 16.43 41.4 132,886 (0.45) 1.71 63
2002 11.62 (24.8) 105,034 (0.58) 1.75 82
2001 15.45 (24.2) 178,575 (0.91) 1.75 102
CLASS A
2005 $20.43 13.7% $ 1,150 0.03% 1.79%(d) 33%
2004 18.01 9.5 493 (0.29) 1.82 100
2003 16.45 41.4 426 (0.45) 1.71 63
2002 11.63 (24.8) 176 (0.58) 1.75 82
2001 15.47 (24.1) 163 (0.91) 1.75 102
CLASS B
2005 $19.65 12.9% $ 202 (0.67)% 2.54%(d) 33%
2004 17.41 8.7 183 (1.05) 2.57 100
2003 16.02 40.3 211 (1.20) 2.46 63
2002 11.42 (25.4) 86 (1.33) 2.50 82
2001 15.30 (24.6) 57 (1.66) 2.50 102
CLASS C
2005 $19.58 12.9% $ 236 (0.90)% 2.52%(d) 33%
2004 17.35 8.6 52 (1.17) 2.57 100
2003 15.97 40.3 207 (1.20) 2.46 63
2002 11.38 (25.4) 101 (1.33) 2.50 82
2001 15.26 (24.6) 55 (1.66) 2.50 102
- -------------
+ 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.
(a) Amount represents less than $0.005 per share.
(b) The Fund incurred interest expense during the years ended December 31, 2004,
2002, and 2001. If interest expense had not been incurred, the ratios of
operating expenses to average net assets would have been 1.81%, 1.70%, and
1.59% (Class AAA), 1.81%, 1.70%, and 1.59%, (Class A), 2.56%, 2.45%, and
2.34% (Class B), and 2.56%, 2.45%, and 2.34% (Class C), respectively.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian fee
credits, the expense ratios for the year ended December 31, 2005 would have
been 1.79%, 1.79%, 2.53%, and 2.52% for Class AAA, Class A, Class B, and
Class C, respectively.
See accompanying notes to financial statements.
16
THE GAMCO GLOBAL GROWTH FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Directors of
GAMCO Global Series Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The GAMCO Global Growth Fund (the "Fund")
(formerly The Gabelli Global Growth Fund), a series of GAMCO Global Series
Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of December 31,
2005, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the two years in the period ended
December 31, 2002 were audited by other auditors whose report dated January 31,
2003, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the Fund's
custodian. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
GAMCO Global Growth Fund, a series of GAMCO Global Series Funds, Inc., at
December 31, 2005, 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 three years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young
Philadelphia, Pennsylvania
February 14, 2006
17
THE GAMCO GLOBAL GROWTH FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2005, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors 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 directors noted the experience, length of service, and
reputation of the portfolio managers.
INVESTMENT PERFORMANCE. The independent directors reviewed the short, medium,
and long-term performance of the Fund against a peer group of global multi-cap
core and global multi-cap growth funds, noting its top third performance for the
one and three year periods and bottom quartile performance for the five year
period.
PROFITABILITY. The independent directors reviewed summary data regarding the
profitability of the Fund to the Adviser both with a pro rata administrative
overhead charge and with a standalone administrative charge. The directors also
noted an affiliated broker of the Adviser received distribution fees and minor
amounts of sales commissions.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale and reviewed rudimentary data suggesting that 20% growth in
the Fund would not produce meaningful economies of scale that the shareholders
would not participate in.
SHARING OF ECONOMIES OF SCALE. The independent directors noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale that may develop.
SERVICE AND COST COMPARISONS. The independent directors compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of global multi-cap core and
multi-cap growth funds and noted that the Adviser's advisory fee includes
substantially all administrative services of the Fund as well as investment
advisory services. The directors noted that the Fund's expense ratios were
significantly higher, and the Fund's size was lower, than average within this
group. The directors also noted that the advisory fee structure was the same as
that in effect for most of the Gabelli/GAMCO funds. The directors were presented
with, but did not compare, the advisory fee to the fee for other types of
accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and a mixed
performance record. The independent directors also concluded that the Fund's
expense ratios and the profitability to the Adviser of managing the Fund were
reasonable, and that economies of scale were not a significant factor in their
thinking at this time. The directors 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 directors determined to recommend continuation of the investment
advisory agreement to the full Board of Directors.
18
THE GAMCO GLOBAL GROWTH FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
The business and affairs of the Company are managed under the direction of the
Company's Board of Directors. Information pertaining to the Directors and
officers of the Company is set forth below. The Fund's Statement of Additional
Information includes additional information about The GAMCO Global Growth Fund's
Directors and is available, without charge, upon request, by calling 800-GABELLI
(800-422-3554) or by writing to The GAMCO Global 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 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4
- ---------------- -------- ---------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
- ----------------------
MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of GAMCO Investors, Inc. Holdings, Inc.
Chief Investment Officer and Chief Investment Officer - Value (holding company)
Age: 63 Portfolios of Gabelli Funds, LLC and
GAMCO Asset Management Inc.; Chairman and
Chief Executive Officer of Lynch
Interactive Corporation (multimedia and
services)
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Company, Director of GAMCO
Director Inc. Investors, Inc.
Age: 61
NON-INTERESTED DIRECTORS:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch Corporation
Director Consultants, Inc.; Adviser, (diversified manufacturing)
Age: 66 Iona College School of Business
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 70
ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director/Trustee of
Director Executive Officer of The Guardian Life 25 mutual funds within the
Age: 75 Insurance Company of America from January Guardian Fund Complex
1993 to December 1995; President, Chief
Executive Officer and a Director prior thereto
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence --
Director Hospital and practicing private physician
Age: 65
ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 71
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Director of Hollis-Eden
Director Supplies Corp. Pharmaceuticals (biotechnology);
Age: 60 Director of Earl Scheib, Inc.
(automotive services)
19
THE GAMCO GLOBAL GROWTH FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
================================================================================
TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF
ADDRESS 1 TIME PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DURING PAST FIVE YEARS
- ---------------- -------- ----------------------
OFFICERS:
- --------
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating
President Officer of Gabelli Funds, LLC since 1988 and
and Treasurer an officer of all of the registered investment
Age: 54 companies in the Gabelli Funds complex.
Director and President of Gabelli Advisers, Inc.
since 1998.
JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of
Secretary GAMCO Investors, Inc. since 1999 and GAMCO
Age: 42 Asset Management Inc. since 1993; Secretary
of all of the registered investment companies
in the Gabelli Funds complex.
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc.
Chief Compliance Officer since 2004; Chief Compliance Officer of all of the
Age: 52 registered investment companies in the Gabelli Funds
complex; Vice President of Goldman Sachs Asset Management
from 2000 through 2004.
- --------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Company's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified. Effective November 16,
2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves
as Director Emeritus.
3 "Interested person" of the Company as defined in the Investment Company Act
of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested
person" because of their affiliation with Gabelli Funds, LLC which acts as
the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are
brothers.
4 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or
other investment companies registered under the 1940 Act.
- --------------------------------------------------------------------------------
2005 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2005, the Fund paid to shareholders
ordinary income dividends (comprised of net investment income) totaling
$0.0174 and $0.0400 per share for Class AAA and Class A, respectively. For
the year ended December 31, 2005, 100% of the distribution qualifies for the
dividend received deduction available to corporations, and 100% of the
ordinary income distribution was qualified dividend income.
- --------------------------------------------------------------------------------
20
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli Funds are investment companies registered with the Securities
and Exchange Commission under the Investment Company Act of 1940. We are
managed by Gabelli Funds, LLC and Gabelli Advisers, Inc., which are
affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly
held company that has subsidiaries that provide investment advisory or
brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include
your name, address, telephone number, social security number, bank
account number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR
AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE
SERVICES TO YOU. This would include information about the shares that
you buy or redeem, and the deposits and withdrawals that you make. If we
hire someone else to provide services--like a transfer agent--we will
also have information about the transactions that you conduct through
them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone other than our affiliates our service
providers who need to know such information, and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
- --------------------------------------------------------------------------------
GABELLI FAMILY OF FUNDS
VALUE ________________________________________
GABELLI ASSET FUND
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND
Seeks long term growth of capital through investment primarily in the common
stocks of established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well-seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE ______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE ____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $1 billion) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $2.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) TEAM MANAGED
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations less than $1.5 billion) believed to be undervalued with
shareholder oriented management teams that are employing strategies to grow the
company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
GAMCO GROWTH FUND
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GAMCO INTERNATIONAL GROWTH FUND
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH _________________________
GAMCO GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing on
the globalization and interactivity of the world's marketplace. The Fund invests
in companies at the forefront of accelerated growth. The Fund's primary
objective is capital appreciation. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
WESTWOOD MIGHTY MITES(SM) FUND
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD BALANCED FUND
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
WESTWOOD INCOME FUND
Seeks to provide a high level of current income as well as long-term capital
appreciation by investing in income producing equity and fixed income
securities. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
SPECIALTY EQUITY ____________________________
GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is total return through a combination of current income and capital
appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in revenues
and earnings and potential for above average capital appreciation or are
undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
SECTOR ______________________________________
GAMCO GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world - targeting
undervalued companies with strong earnings and cash flow dynamics. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GOLD FUND
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of world-wide economic, financial, and political factors. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE _____________________
GABELLI ABC FUND
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss.
(NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
CONTRARIAN_________________________________
GAMCO MATHERS FUND
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of the debt instrument. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
FIXED INCOME ________________________________
WESTWOOD INTERMEDIATE BOND FUND
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET __________
GABELLI U.S. TREASURY MONEY MARKET FUND
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC, AND POLITICAL RISKS.
TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER
THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE FUND CAREFULLY
BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION
ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
GAMCO Global Series Funds, Inc.
THE GAMCO GLOBAL 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 DIRECTORS
Mario J. Gabelli, CFA John D. Gabelli
CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT
EXECUTIVE OFFICER GABELLI & COMPANY, INC.
GAMCO INVESTORS, INC.
E. Val Cerutti Werner J. Roeder, MD
CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR
CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL
Anthony J. Colavita Anthonie C. van Ekris
ATTORNEY-AT-LAW MANAGING DIRECTOR
ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC.
Arthur V. Ferrara Salvatore J. Zizza
FORMER CHAIRMAN AND CHAIRMAN
CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL
GUARDIAN LIFE INSURANCE SUPPLIES CORP.
COMPANY OF AMERICA
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
GAMCO Global Growth Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB442Q405SR
GAMCO
THE
GAMCO
GLOBAL
GROWTH
FUND
ANNUAL REPORT
DECEMBER 31, 2005
THE GAMCO GLOBAL OPPORTUNITY FUND
ANNUAL REPORT
DECEMBER 31, 2005
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, 2005 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
For 2005, The GAMCO Global Opportunity Fund returned 15.12% compared with
a rise of 11.37% for the MSCI AC World Free Index and 11.60% for the average
Global Multi Cap Growth Fund monitored by Lipper.
The Japanese equity market was rerated in 2005. This was driven by
institutional foreign investors who purchased (Y)10 trillion of stock in 2005
and also by individual investors who bought (Y)2 trillion of stock in the past
three months. Japan was the top performer among leading non-U.S. equity markets.
Again smaller companies outperformed with the TOPIX second section index
rallying 41.9% in 2005.
The U.S. economy continues to perform well despite the presence of some
stiff headwinds. These include higher energy prices following the devastating
gulf coast hurricanes and the tightening of monetary policy. The dollar
benefited during the past year from strong inflows from overseas investors,
which had a negative impact on the dollar denominated return of the Fund.
Clearly, the European story does not revolve around growth. Rather it is
based on corporate self help. Corporate managers are acutely aware of the need
to create shareholder value, as Europe has become the center of global merger
and acquisition activity in 2005.
Mining holdings and gold miners in particular had an outstanding 2005 with
Antofagasta plc up 67.2%, followed by Harmony Gold Mining Co. Ltd. (+65.8%),
Gold Fields Ltd. (+41.2%), and Newmont Mining Corp. (+20.2%). Another top
performing sector in our portfolio during the last year was energy and
utilities. Among the best performing energy and utility companies in 2005 were
Petrobras Brasiliero (+79.16%), Suncor Energy Inc. (+78.33%), Transocean Inc.
(+64.40%), Schlumberger Ltd. (+45.11%), and Kanto Natural Gas Development Co.
Ltd. (+35.5%). Telecommunications and entertainment holdings disappointed in
2005 with Telephone & Data Systems Inc. down by over 50%, Verizon Communications
Inc. declining by 25.7% and Time Warner Inc. (-10.3)%. The Fund's performance in
2005 was helped by its exposure to Japan and Europe while most of its domestic
holdings disappointed in the past twelve months.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 15, 2006
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL
OPPORTUNITY FUND CLASS AAA SHARES, THE LIPPER GLOBAL MULTI-CAP GROWTH FUND
AVERAGE AND THE MSCI AC WORLD FREE INDEX
GAMCO Global
Opportunity Fund Lipper Global Multi-Cap MSCI AC World
Class AAA Shares Growth Fund Average Free Index
5/11/98 $10,000 $10,000 $10,000
12/31/98 11,010 9,922 10,613
12/31/99 19,731 13,502 13,459
12/31/00 17,069 12,115 11,583
12/31/01 12,131 10,011 9,740
12/31/02 10,738 8,056 7,892
12/31/03 14,756 10,641 10,624
12/31/04 16,823 12,194 12,298
12/31/05 19,367 13,608 13,696
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, 2005 (A)
----------------------------------------------------
Since
Inception
QUARTER 1 YEAR 3 YEAR 5 YEAR (5/11/98)
- --------------------------------------------------------------------------------------------------------------------
GAMCO GLOBAL OPPORTUNITY FUND CLASS AAA ............ 4.68% 15.12% 21.72% 2.56% 9.02%
MSCI AC World Free Index ........................... 3.43 11.37 20.18 3.41 4.19
Lipper Global Multi-Cap Growth Fund Average ........ 3.81 11.60 20.42 2.90 6.65
Class A ............................................ 4.64 15.18 21.74 2.60 9.06
(1.39)(b) 8.57(b) 19.36(b) 1.39(b) 8.22(b)
Class B ............................................ 4.45 14.23 20.82 1.83 8.50
(0.55)(c) 9.23(c) 20.13(c) 1.45(c) 8.50(c)
Class C ............................................ 4.44 14.47 21.69 2.64 9.08
3.44(c) 13.47(c) 21.69(c) 2.64(c) 9.08(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS AND ARE NET OF EXPENSES.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA PRESENTED. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE
YEAR ARE NOT ANNUALIZED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION
AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, 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. INVESTING IN FOREIGN
SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN
DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC, AND POLITICAL
RISKS.
THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE
FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND
CLASS C SHARES ON MARCH 12, 2000, AUGUST 16, 2000 AND NOVEMBER 23, 2001,
RESPECTIVELY. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C
SHARES WOULD HAVE BEEN LOWER FOR THE PERIODS STARTING PRIOR TO AUGUST 16,
2000 AND NOVEMBER 23, 2001, RESPECTIVELY, DUE TO THE ADDITIONAL EXPENSES
ASSOCIATED WITH THESE CLASSES OF SHARES. RETURNS WOULD HAVE BEEN LOWER HAD
THE ADVISER NOT REIMBURSED CERTAIN EXPENSES OF THE FUND. THE MSCI AC WORLD
FREE INDEX IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE, WHILE THE
LIPPER AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF MUTUAL FUNDS CLASSIFIED
IN THIS PARTICULAR CATEGORY.
(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.
- --------------------------------------------------------------------------------
2
THE GAMCO GLOBAL OPPORTUNITY FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2005 through December 31, 2005
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, 2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/05 12/31/05 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL OPPORTUNITY FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,153.70 2.00% $10.86
Class A $1,000.00 $1,153.40 2.00% $10.86
Class B $1,000.00 $1,149.10 2.75% $14.90
Class C $1,000.00 $1,148.70 2.75% $14.89
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,015.12 2.00% $10.16
Class A $1,000.00 $1,015.12 2.00% $10.16
Class B $1,000.00 $1,011.34 2.75% $13.94
Class C $1,000.00 $1,011.34 2.75% $13.94
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
3
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2005:
THE GAMCO GLOBAL OPPORTUNITY FUND
Metals and Mining .................................. 12.8%
Health Care ........................................ 12.4%
Energy and Utilities ............................... 11.7%
Financial Services ................................. 9.8%
Consumer Products .................................. 9.1%
Entertainment ...................................... 5.3%
Telecommunications ................................. 5.0%
Retail ............................................. 4.6%
Building and Construction .......................... 4.1%
Food and Beverage .................................. 4.0%
Computer Software and Services ..................... 3.6%
Diversified Industrial ............................. 3.1%
Aerospace .......................................... 2.6%
Cable and Satellite ................................ 2.5%
Broadcasting ....................................... 1.9%
Aviation: Parts and Services ....................... 1.8%
Hotels and Gaming .................................. 1.6%
Wireless Communications ............................ 1.0%
Business Services .................................. 0.9%
Electronics ........................................ 0.7%
Publishing ......................................... 0.6%
U.S. Treasury Bills ................................ 0.4%
Other Assets and Liabilities - (Net) ............... 0.5%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
4
THE GAMCO GLOBAL OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
--------- ---- -------
COMMON STOCKS -- 99.1%
AEROSPACE -- 2.6%
3,000 L-3 Communications Holdings Inc. ..... $ 127,720 $ 223,050
5,500 Lockheed Martin Corp. ................ 135,166 349,965
----------- -----------
262,886 573,015
----------- -----------
AVIATION: PARTS AND SERVICES -- 1.8%
7,400 Precision Castparts Corp. ............ 109,705 383,394
----------- -----------
BROADCASTING -- 1.9%
20,000 Mediaset SpA ......................... 195,380 211,917
5,000 Modern Times Group, Cl. B+ ........... 185,468 208,635
----------- -----------
380,848 420,552
----------- -----------
BUILDING AND CONSTRUCTION -- 4.1%
22,000 Aica Kogyo Co. Ltd. .................. 210,378 301,827
20,125 CRH plc .............................. 270,443 592,073
----------- -----------
480,821 893,900
----------- -----------
BUSINESS SERVICES -- 0.9%
12,000 Sohgo Security Services Co. Ltd. ..... 150,253 183,660
----------- -----------
CABLE AND SATELLITE -- 2.5%
7,000 Cablevision Systems Corp., Cl. A+ .... 137,535 164,290
9,000 Rogers Communications Inc., Cl. B .... 151,574 380,340
----------- -----------
289,109 544,630
----------- -----------
COMPUTER SOFTWARE AND SERVICES -- 3.6%
700 Google Inc., Cl. A+ .................. 220,948 290,402
11,500 Microsoft Corp. ...................... 301,125 300,725
5,000 Yahoo! Inc.+ ......................... 169,373 195,900
----------- -----------
691,446 787,027
----------- -----------
CONSUMER PRODUCTS -- 9.1%
7,000 Altadis SA ........................... 214,528 317,568
6,800 Christian Dior SA .................... 323,455 604,591
12,700 Compagnie Financiere
Richemont AG, Cl. A ................ 254,839 552,825
8,500 Escada AG+ ........................... 207,341 272,710
4,000 Procter & Gamble Co. ................. 221,128 231,520
----------- -----------
1,221,291 1,979,214
----------- -----------
DIVERSIFIED INDUSTRIAL -- 3.1%
7,000 Bouygues SA .......................... 252,231 342,264
9,500 General Electric Co. ................. 320,183 332,975
----------- -----------
572,414 675,239
----------- -----------
ELECTRONICS -- 0.7%
4,400 Linear Technology Corp. .............. 165,609 158,708
----------- -----------
MARKET
SHARES COST VALUE
--------- ---- -------
ENERGY AND UTILITIES -- 11.7%
2,200 Imperial Oil Ltd. .................... $ 222,619 $ 218,420
40,000 Kanto Natural Gas
Development Co. Ltd. ............... 205,212 282,868
6,000 Murphy Oil Corp. ..................... 240,211 323,940
7,000 Petroleo Brasileiro SA, ADR .......... 211,615 498,890
3,600 Schlumberger Ltd. .................... 238,374 349,740
6,000 Suncor Energy Inc. ................... 201,704 378,780
45,000 Tokai Carbon Co. Ltd. ................ 196,346 209,098
4,000 Transocean Inc.+ ..................... 164,064 278,760
----------- -----------
1,680,145 2,540,496
----------- -----------
ENTERTAINMENT -- 5.3%
14,000 Discovery Holding Co., Cl. A+ ........ 201,048 212,100
4,500 Oriental Land Co. Ltd. ............... 261,721 245,347
35,000 Publishing & Broadcasting Ltd. ....... 176,587 422,852
15,000 Time Warner Inc. ..................... 225,367 261,600
----------- -----------
864,723 1,141,899
----------- -----------
FINANCIAL SERVICES -- 9.8%
15,000 Bank of Ireland ...................... 92,773 236,187
5,000 Canaccord Capital Inc. ............... 63,107 64,046
7,000 Citigroup Inc. ....................... 270,158 339,710
4,375 Julius Baer Holding Ltd. AG .......... 295,394 309,967
22,000 Nikko Cordial Corp. .................. 233,390 348,463
25,000 Shizuoka Bank Ltd. ................... 253,840 250,562
5,000 TSX Group Inc. ....................... 198,762 201,428
4,000 UBS AG ............................... 336,926 380,600
----------- -----------
1,744,350 2,130,963
----------- -----------
FOOD AND BEVERAGE -- 4.0%
5,000 ARIAKE JAPAN Co. Ltd. ................ 121,202 123,161
5,000 General Mills Inc. ................... 248,004 246,600
5,000 PepsiCo Inc. ......................... 261,500 295,400
2,700 Whole Foods Market Inc. .............. 136,042 208,953
----------- -----------
766,748 874,114
----------- -----------
HEALTH CARE -- 12.4%
8,208 GlaxoSmithKline plc .................. 245,935 207,449
7,000 Novartis AG .......................... 268,348 367,832
4,000 Roche Holding AG ..................... 353,538 600,586
6,691 Sanofi-Aventis, ADR .................. 231,241 293,735
1,200 Straumann Holding AG ................. 254,333 278,072
2,000 Synthes Inc. ......................... 189,898 224,649
6,000 Takeda Pharmaceutical Co. Ltd. ....... 376,833 324,585
2,000 UnitedHealth Group Inc. .............. 112,260 124,280
5,000 William Demant Holding A/S+ .......... 235,806 276,499
----------- -----------
2,268,192 2,697,687
----------- -----------
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
--------- ---- -------
COMMON STOCKS (CONTINUED)
HOTELS AND GAMING -- 1.6%
10,000 Greek Organization of
Football Prognostics SA ........... $ 168,339 $ 344,513
----------- -----------
METALS AND MINING -- 12.8%
17,726 Andsberg Ltd.+ (a) ................... 8,277 15,776
14,726 Antofagasta plc ...................... 88,100 473,529
59,000 Gold Fields Ltd., ADR ................ 256,194 1,040,170
10,000 Harmony Gold Mining Co. Ltd.+ ........ 56,555 134,176
24,000 Harmony Gold Mining Co. Ltd., ADR+ ... 130,306 313,200
15,000 Newmont Mining Corp. ................. 349,500 801,000
----------- -----------
888,932 2,777,851
----------- -----------
PUBLISHING -- 0.6%
40,000 Independent News & Media plc ......... 98,736 120,284
----------- -----------
RETAIL -- 4.6%
12,000 Matsumotokiyoshi Co. Ltd. ............ 309,058 379,531
8,000 Seven & I Holdings Co. Ltd.+ ......... 275,092 342,562
6,000 Walgreen Co. ......................... 233,238 265,560
----------- -----------
817,388 987,653
----------- -----------
TELECOMMUNICATIONS -- 5.0%
3,000 ALLTEL Corp. ......................... 156,153 189,300
40 KDDI Corp. ........................... 281,155 230,635
15,675 Sprint Nextel Corp. .................. 280,989 366,168
2,300 Telephone & Data Systems Inc. ........ 45,066 82,869
2,300 Telephone & Data Systems Inc., Special 41,599 79,603
4,500 Verizon Communications Inc. .......... 273,319 135,540
----------- -----------
1,078,281 1,084,115
----------- -----------
WIRELESS COMMUNICATIONS -- 1.0%
4,500 United States Cellular Corp.+ ........ 254,809 222,300
----------- -----------
TOTAL COMMON STOCKS .................. 14,955,025 21,521,214
----------- -----------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 0.4%
$ 95,000 U.S. Treasury Bill,
3.790%++, 01/19/06 ................. $ 94,842 $ 94,835
----------- -----------
TOTAL INVESTMENTS -- 99.5% ........... $15,049,867 21,616,049
===========
OTHER ASSETS AND LIABILITIES (NET) -- 0.5% ........ 104,711
-----------
NET ASSETS -- 100.0% .............................. $21,720,760
===========
- ----------------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing valuation of comparable
securities and other factors on a regular basis. At December 31, 2005, the
market value of the fair valued security amounted to $15,776 or 0.07% of
total net assets.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- -------- --------
North America ........................ 37.6% $ 8,123,700
Europe ............................... 35.1 7,582,001
Japan ................................ 14.9 3,222,300
South Africa ......................... 6.9 1,487,546
Latin America ........................ 3.6 777,650
Asia/Pacific ......................... 1.9 422,852
------ -----------
100.0% $21,616,049
====== ===========
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
================================================================================
ASSETS:
Investments, at value (cost $15,049,867) ................... $ 21,616,049
Foreign currency, at value ($63,107) ....................... 63,186
Cash ....................................................... 965
Receivable for Fund shares sold ............................ 137,845
Dividends receivable ....................................... 29,626
Other assets ............................................... 2,048
------------
TOTAL ASSETS ............................................... 21,849,719
------------
LIABILITIES:
Payable for investments purchased .......................... 63,186
Payable for shareholder communications expenses ............ 18,743
Payable for legal and audit fees ........................... 13,998
Payable for investment advisory fees ....................... 13,525
Payable for shareholder services fees ...................... 5,066
Payable for distribution fees .............................. 4,830
Payable for Fund shares redeemed ........................... 2,684
Other accrued expenses ..................................... 6,927
------------
TOTAL LIABILITIES .......................................... 128,959
------------
NET ASSETS applicable to 1,365,472
shares outstanding ....................................... $ 21,720,760
============
NET ASSETS CONSIST OF:
Capital stock, each class at $0.001 par value .............. $ 1,365
Additional paid-in capital ................................. 22,376,559
Accumulated distributions in excess of
net investment income .................................... (39,588)
Accumulated net realized loss on investments
and foreign currency transactions ........................ (7,183,096)
Net unrealized appreciation on investments ................. 6,566,182
Net unrealized depreciation on foreign currency translations (662)
------------
NET ASSETS ................................................. $ 21,720,760
============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($21,424,756 / 1,346,753 shares outstanding;
75,000,000 shares authorized) ............................ $15.91
======
CLASS A:
Net Asset Value and redemption price per share
($244,038 / 15,375 shares outstanding;
50,000,000 shares authorized) ............................ $15.87
======
Maximum offering price per share (NAV / 0.9425,
based on maximum sales charge of
5.75% of the offering price) ............................. $16.84
======
CLASS B:
Net Asset Value and offering price per share
($48,376 / 3,123 shares outstanding;
25,000,000 shares authorized) ............................ $15.49(a)
======
CLASS C:
Net Asset Value and offering price per share
($3,590 / 221.3 shares outstanding;
25,000,000 shares authorized) ............................ $16.22(a)
======
- ------------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $21,566) ...... $ 384,542
Interest ......................................... 17,699
-----------
TOTAL INVESTMENT INCOME .......................... 402,241
-----------
EXPENSES:
Investment advisory fees ......................... 207,305
Distribution fees - Class AAA .................... 51,314
Distribution fees - Class A ...................... 387
Distribution fees - Class B ...................... 476
Distribution fees - Class C ...................... 25
Shareholder communications expenses .............. 40,925
Legal and audit fees ............................. 29,153
Registration fees ................................ 23,922
Securities pricing expense ....................... 23,506
Shareholder services fees ........................ 18,915
Custodian fees ................................... 15,034
Directors' fees .................................. 2,320
Interest expense ................................. 1,499
Miscellaneous expenses ........................... 8,758
-----------
TOTAL EXPENSES ................................... 423,539
Less:
Expense reimbursement (see Note 3) ............... (40,432)
Custodian fee credits ............................ (284)
-----------
NET EXPENSES ..................................... 382,823
-----------
NET INVESTMENT INCOME ............................ 19,418
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ................. 863,144
Net realized loss on foreign currency transactions (6,620)
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations 2,088,178
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ............ 2,944,702
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 2,964,120
===========
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
OPERATIONS:
Net investment income .................................... $ 19,418 $ 49,315
Net realized gain (loss) on investments and
foreign currency transactions .......................... 856,524 (1,229,955)
Net change in unrealized appreciation/depreciation on
investments and foreign currency translations .......... 2,088,178 3,736,389
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..... 2,964,120 2,555,749
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA .............................................. (30,715) (70,537)
Class A ................................................ (552) (397)
Class B ................................................ -- (97)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................... (31,267) (71,031)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class AAA .............................................. (2,510,492) (744,951)
Class A ................................................ 112,811 27,787
Class B ................................................ (9,204) 35,901
Class C ................................................ 3,000 --
------------ ------------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (2,403,885) (681,263)
------------ ------------
REDEMPTION FEES .......................................... 970 3,073
------------ ------------
NET INCREASE IN NET ASSETS ............................... 529,938 1,806,528
NET ASSETS:
Beginning of period ...................................... 21,190,822 19,384,294
------------ ------------
End of period (including undistributed net investment
income of $0 and $0, respectively) ..................... $ 21,720,760 $ 21,190,822
============ ============
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION. The GAMCO Global Opportunity Fund (the "Fund"), formerly, The
Gabelli Global Opportunity Fund, a series of GAMCO Global Series Funds, Inc.
(the "Corporation"), formerly, Gabelli Global Series Funds, Inc., was organized
on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), and one of four separately managed
portfolios (collectively, the "Portfolios") of the Corporation. The Fund's
primary objective is capital appreciation. The Fund commenced investment
operations on May 11, 1998.
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
8
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
or asked prices are quoted on such day, the security is valued at the most
recently available price or, if the Board of Directors (the "Board") so
determines, by such other method as the Board shall determine in good faith, to
reflect its fair market value. Portfolio securities traded on more than one
national securities exchange or market are valued according to the broadest and
most representative market, as determined by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of 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 with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be 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 average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily available are
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.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December
31, 2005, there were no open repurchase agreements.
SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund
does not own. The proceeds received for short sales are recorded as liabilities
and the Fund records an unrealized gain or loss to the extent of the difference
between the proceeds received and the value of the open short position on the
day of determination. The Fund records a realized gain or loss when the short
position is closed out. By entering into a short sale, the Fund bears the market
risk of an unfavorable change in the price of the security sold short. Dividends
on short sales are recorded as an expense by the Fund on the ex-dividend date
and interest expense is recorded on the accrual basis. The Fund did not hold any
short positions as of December 31, 2005.
9
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. At December 31, 2005, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments, and other
assets and liabilities are translated into U.S. dollars at the current exchange
rates. Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable, based upon its current
interpretation of tax rules and regulations that exist in the markets in which
it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
10
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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 net asset value ("NAV") per share of each class, investment
income, realized and unrealized gains and losses, redemption fees, and expenses
other than class specific expenses, are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day. Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset shown as
"custodian fee credits".
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate equity accounts in the period when the
differences arise. These reclassifications have no impact on the NAV of the Fund
and the calculation of net investment income per share in the Financial
Highlights excludes these adjustments. For the year ended December 31, 2005,
reclassifications were made to increase accumulated distributions in excess of
net investment income by $6,620 and to decrease accumulated net realized loss on
investments and foreign currency transactions by $6,620.
The tax character of distributions paid during the fiscal years ended December
31, 2005 and December 31, 2004 was $31,267 and $71,031, respectively, of
ordinary income.
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.
11
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
As of December 31, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed ordinary income.. $ 3,912
Capital loss carryforward ..... (7,183,070)
Net unrealized appreciation ... 6,565,493
Other temporary differences ... (43,499)
-----------
Total accumulated loss ........ $ (657,164)
===========
At December 31, 2005, the Fund has net capital loss carryforwards for Federal
income tax purposes of $7,183,070, which are available to reduce future required
distributions of net capital gains to shareholders. $2,301,024 of the loss
carryforward is available through 2009; $1,904,804 is available through 2010;
$1,776,091 is available through 2011; and $1,201,151 is available through 2012.
For the year ended December 31, 2005, the Fund utilized net tax capital loss
carryforwards of $833,769.
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at December 31, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ... $15,049,894 $6,910,287 $(344,132) $6,566,155
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
Effective May 1, 2005, the Adviser has agreed to reimburse expenses of the Fund
to the extent necessary to maintain the annualized total operating expenses of
the Fund (exclusive of interest expense) at 2.00%, 2.00%, 2.75%, and 2.75%
(1.50%, 1.50%, 2.25%, and 2.25% prior to May 1, 2005) of the value of the Fund's
average daily net assets for Class AAA, Class A, Class B, and Class C,
respectively. For the year ended December 31, 2005, the Adviser reimbursed the
Fund in the amount of $40,432. Beginning January 1, 2004, the Fund is obliged to
repay the Adviser for a period of two fiscal years following the fiscal year in
which the Adviser reimbursed the Fund only to the extent that the operating
expenses of the Fund fall below the applicable expense limitations. The
cumulative amount which the Fund may repay the Adviser is $138,048.
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, 2005, other than short-term securities, aggregated
$5,217,258 and $7,631,248, respectively.
12
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the
Fund paid brokerage commissions of $150 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $984 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
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. At December 31, 2005, there were no borrowings outstanding
from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the year ended December 31, 2005 was $59,800 with a related weighted
average interest rate of 4.24%. The maximum amount borrowed at any time during
the year ended December 31, 2005 was $2,007,000.
8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares
- -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class
AAA Shares are offered only to investors who acquire them directly from Gabelli
& Company or through selected broker/dealers without a sales charge. Class A
Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares
are subject to a contingent deferred sales charge ("CDSC") upon redemption
within six years of purchase and automatically convert to Class A Shares
approximately eight years after the original purchase. The applicable CDSC is
equal to a declining percentage of the lesser of the NAV per share at the date
of original purchase or at the date of redemption, based on the length of time
held. Class C Shares are subject to a 1% CDSC for one year after purchase. Class
B Shares are available only through exchange of Class B Shares of other funds
distributed by Gabelli & Company. The Board has approved Class I Shares which
have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged within the sixtieth day after the date of a purchase.) The redemption
fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the years ended December 31, 2005 and December 31, 2004 amounted to
$970 and $3,073, respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
13
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
CLASS AAA CLASS AAA
-------------------------- -------------------------
Shares sold .......................................... 343,785 $ 5,002,957 224,553 $ 2,803,469
Shares issued upon reinvestment of dividends ......... 1,830 29,087 4,847 66,793
Shares redeemed ...................................... (518,825) (7,542,536) (294,740) (3,615,213)
-------- ----------- -------- -----------
Net decrease ....................................... (173,210) $(2,510,492) (65,340) $ (744,951)
======== =========== ======== ===========
CLASS A CLASS A
-------------------------- -------------------------
Shares sold .......................................... 10,880 $ 157,398 2,611 $ 33,417
Shares issued upon reinvestment of dividends ......... 35 547 29 399
Shares redeemed ...................................... (3,190) (45,134) (494) (6,029)
-------- ----------- -------- -----------
Net increase ....................................... 7,725 $ 112,811 2,146 $ 27,787
======== =========== ======== ===========
CLASS B CLASS B
-------------------------- -------------------------
Shares sold .......................................... 36 $ 500 2,776 $ 35,814
Shares issued upon reinvestment of dividends ......... -- -- 7 97
Shares redeemed ...................................... (727) (9,704) (1) (10)
-------- ----------- -------- -----------
Net increase (decrease) ............................ (691) $ (9,204) 2,782 $ 35,901
======== =========== ======== ===========
CLASS C CLASS C
-------------------------- -------------------------
Shares sold .......................................... 211 $ 3,000 -- --
Shares issued upon reinvestment of dividends ......... -- -- -- --
Shares redeemed ...................................... -- -- -- --
-------- ----------- -------- -----------
Net increase ....................................... 211 $ 3,000 -- --
======== =========== ======== ===========
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the Securities and Exchange
Commission (the "SEC") requesting information on mutual fund trading practices
involving certain funds managed by the Adviser. GAMCO Investors, Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. On a separate matter, in September 2005, the Adviser was informed by
the staff of the SEC that the staff may recommend to the Commission that an
administrative remedy and a monetary penalty be sought from the Adviser in
connection with the actions of two of seven closed-end funds managed by the
Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These
provisions require registered investment companies to provide written statements
to shareholders when a dividend is made from a source other than net investment
income. While the two closed-end funds sent annual statements and provided other
materials containing this information, the funds did not send written statements
to shareholders with each distribution in 2002 and 2003. The Adviser believes
that all of the funds are now in compliance. The Adviser believes that these
matters would have no effect on the Fund or any material adverse effect on the
Adviser or its ability to manage the Fund.
14
THE GAMCO GLOBAL OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------- --------------------------
Net
Net Asset Net Realized and Total
Period Value, Investment Unrealized from Net
Ended Beginning Income Gain (Loss) on Investment Investment Total Redemption
December 31, of Period (Loss)(h) Investments Operations Income Distributions Fees(h)
- ------------ --------- -------- ----------- ---------- ------ ------------- -------
CLASS AAA
2005 $13.84 $ 0.01 $2.08 $2.09 $(0.02) $(0.02) $0.00(g)
2004 12.18 0.03 1.68 1.71 (0.05) (0.05) 0.00(g)
2003 8.87 0.00(g) 3.29 3.29 (0.01) (0.01) 0.03
2002 10.02 0.00(g) (1.15) (1.15) -- -- --
2001 14.24 0.13 (4.25) (4.12) (0.10) (0.10) --
CLASS A
2005 $13.81 $ 0.01 $2.09 $2.10 $(0.04) $(0.04) $0.00(g)
2004 12.16 0.03 1.67 1.70 (0.05) (0.05) 0.00(g)
2003 8.86 0.00(g) 3.28 3.28 (0.01) (0.01) 0.03
2002 9.99 0.00(g) (1.13) (1.13) -- -- --
2001 14.21 0.13 (4.24) (4.11) (0.11) (0.11) --
CLASS B
2005 $13.56 $(0.08) $2.01 $1.93 -- -- $0.00(g)
2004 12.00 (0.07) 1.66 1.59 $(0.03) $(0.03) 0.00(g)
2003 8.80 (0.07) 3.24 3.17 -- -- 0.03
2002 10.00 (0.07) (1.13) (1.20) -- -- --
2001 14.22 0.07 (4.26) (4.19) (0.03) (0.03) --
CLASS C(E)
2005 $14.17 $(0.10) $2.15 $2.05 -- -- $0.00(g)
2004 12.39 0.07 1.71 1.78 -- -- 0.00(g)
2003 9.00 (0.07) 3.43 3.36 -- -- 0.03
2002 10.11 (0.07) (1.04) (1.11) -- -- --
2001(f) 10.15 0.07 (0.11) (0.04) -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------
Net Asset Net Assets Net Operating Operating
Period Value, End of Investment Expenses Expenses Portfolio
Ended End of Total Period Income Before Net of Turnover
December 31, Period Return+ (in 000's) (Loss) Reimbursements(b) Reimbursement(c)(d) Rate
- ------------ ------- ------- ---------- ------ ----------------- ------------------ ---------
CLASS AAA
2005 $15.91 15.1% $21,425 0.10% 2.04% 1.85%(i) 26%
2004 13.84 14.0 21,033 0.25 2.00 1.50 35
2003 12.18 37.4 19,305 0.04 1.83 1.52 13
2002 8.87 (11.5) 15,000 (0.05) 2.39 1.59 0
2001 10.02 (28.9) 18,422 1.11 2.00 1.59 31
CLASS A
2005 $15.87 15.2% $ 244 0.05% 2.06% 1.87%(i) 26%
2004 13.81 14.0 106 0.26 2.00 1.50 35
2003 12.16 37.4 67 0.04 1.83 1.52 13
2002 8.86 (11.3) 36 (0.05) 2.39 1.59 0
2001 9.99 (29.0) 45 1.11 2.00 1.59 31
CLASS B
2005 $15.49 14.2% $ 48 (0.60)% 2.79% 2.58%(i) 26%
2004 13.56 13.2 52 (0.53) 2.75 2.25 35
2003 12.00 36.4 12 (0.71) 2.58 2.27 13
2002 8.80 (12.0) 9 (0.80) 3.14 2.34 0
2001 10.00 (29.5) 10 0.36 2.75 2.34 31
CLASS C(E)
2005 $16.22 14.5% $ 4 (0.66)% 2.79% 2.68%(i) 26%
2004 14.17 14.4 0.1 0.58 2.75 2.25 35
2003 12.39 37.7 0.1 (0.71) 2.58 2.27 13
2002 9.00 (11.0) 0.1 (0.80) 3.14 2.34 0
2001(f) 10.11 (29.0) 0.1 0.36(a) 2.75(a) 2.34(a) 31
- ------------
+ 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) Annualized.
(b) During the years ended December 31, 2005, 2004, 2003, 2002, and 2001, the
Adviser voluntarily reimbursed certain expenses. If such expense
reimbursements had not occurred, the ratio of operating expenses to average
net assets would have been as shown.
(c) The Fund incurred interest expense during the years ended December 31, 2004,
2003, 2002, and 2001. If interest expense had not been incurred, the ratios
of operating expenses to average net assets would have been 1.50%, 1.50%,
2.25%, and 2.25% for Class AAA, Class A, Class B, and Class C, respectively
for each year.
(d) The Fund incurred interest expense during the year ended December 31, 2005.
If interest expense had not been incurred, the ratios of operating expenses
to average net assets would have been 1.84%, 1.86%, 2.57%, and 2.68% for
Class AAA, Class A, Class B, and Class C, respectively.
(e) Class C Shares were outstanding for the period October 27, 2000 through
December 12, 2000 and for the period April 24, 2001 through May 10, 2001.
Financial Highlights are not presented for Class C Shares as the information
for this period is not considered meaningful.
(f) From November 23, 2001, the date shares were continuously outstanding.
(g) Amount represents less than $0.005 per share.
(h) Per share data is calculated using the average shares outstanding method.
(i) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian fee
credits, the expense ratios for the year ended December 31, 2005 would have
been 1.84%, 1.87%, 2.58%, and 2.68% for Class AAA, Class A, Class B, and
Class C, respectively.
See accompanying notes to financial statements.
15
THE GAMCO GLOBAL OPPORTUNITY FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Directors of
GAMCO Global Series Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The GAMCO Global Opportunity Fund (the "Fund")
(formerly The Gabelli Global Opportunity Fund), a series of GAMCO Global Series
Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of December 31,
2005, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the two years in the period ended
December 31, 2002 were audited by other auditors whose report dated January 31,
2003, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the Fund's
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
GAMCO Global Opportunity Fund, a series of GAMCO Global Series Funds, Inc., at
December 31, 2005, 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 three years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 14, 2006
16
THE GAMCO GLOBAL OPPORTUNITY FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2005, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors 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 directors noted the experience, length of service, and
reputation of the portfolio managers.
INVESTMENT PERFORMANCE. The independent directors reviewed the short and
medium-term performance of the Fund against a peer group of global multi-cap
core and multi-cap growth funds, noting the Fund's top half performance for the
one year period, top quartile for the three year period, and bottom quartile
performance for the five year period.
PROFITABILITY. The independent directors reviewed summary data regarding the
lack of profitability of the Fund to the Adviser both with a pro rata
administrative charge and with a standalone administrative charge. The directors
also noted that an affiliated broker of the Adviser received distribution fees
and minor amounts of sales commissions.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale and reviewed rudimentary data suggesting that 20% growth in
the Fund would not produce meaningful economies of scale that the shareholders
would not participate in.
SHARING OF ECONOMIES OF SCALE. The independent directors 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 directors compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of global multi-cap core and
multi-cap growth funds, and noted that the Adviser's advisory fee includes
substantially all administrative services of the Fund as well as investment
advisory services. The directors noted that the Fund's expense ratios after
waivers were moderately higher, and the Fund's size was significantly lower,
than average within this group and that the Adviser had been waiving substantial
portions of its fees in order to make the Fund a more attractive investment. The
directors also noted that the advisory fee structure before waivers was the same
as that in effect for most of the Gabelli funds. The directors were presented
with, but did not compare, the advisory fee to the fee for other types of
accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and a mixed
performance record. The independent directors also concluded that the Fund's
expense ratios were reasonable, particularly in light of the lack of
profitability to the Adviser of managing the Fund, and that economies of scale
were not a factor in their thinking at this time. The directors 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 directors determined to recommend continuation of
the investment advisory agreement to the full Board of Directors.
17
THE GAMCO GLOBAL OPPORTUNITY FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
The business and affairs of the Company are managed under the direction of the
Company's Board of Directors. Information pertaining to the Directors and
officers of the Company is set forth below. The Fund's Statement of Additional
Information includes additional information about The GAMCO Global Opportunity
Fund's Directors and is available, without charge, upon request, by calling
800-GABELLI (800-422-3554) or by writing to The GAMCO Global Opportunity 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 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4
- ---------------- -------- ---------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
- ----------------------
MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of GAMCO Investors, Inc. Holdings, Inc.
Chief Investment Officer and Chief Investment Officer - Value (holding company)
Age: 63 Portfolios of Gabelli Funds, LLC and
GAMCO Asset Management Inc.;
Chairman and Chief Executive Officer of
Lynch Interactive Corporation
(multimedia and services)
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of
Director Company, Inc. GAMCO Investors, Inc.
Age: 61
NON-INTERESTED DIRECTORS:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch
Director Consultants, Inc.; former President Corporation (diversified
Age: 66 and Chief Operating Officer of manufacturing)
Stella D'oro Biscuit Company
(through 1992); Adviser, Iona
College School of Business
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 70
ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director/Trustee of
Director Executive Officer of The Guardian Life 25 mutual funds within the
Age: 75 Insurance Company of America from January Guardian Fund Complex
1993 to December 1995; President, Chief
Executive Officer and a Director prior thereto
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence Hospital --
Director and practicing private physician
Age: 65
ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 71
SALVATORE J. ZIZZA Since 2004 25 Chairman, Hallmark Electrical Supplies Corp. Director of Hollis-Eden
Director Pharmaceuticals
Age: 60 (biotechnology);
Director of Earl Scheib,
Inc. (automotive services)
18
THE GAMCO GLOBAL OPPORTUNITY FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
================================================================================
TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF
ADDRESS 1 TIME PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DURING PAST FIVE YEARS
- ---------------- -------- ----------------------
OFFICERS:
- --------
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating and
President and Treasurer Officer of Gabelli Funds, LLC since 1988 and
Age: 54 an officer of all of the registered investment companies
in the Gabelli Funds complex. Director and President of
Gabelli Advisers, Inc. since 1998.
JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of
Secretary GAMCO Investors, Inc. since 1999 and GAMCO
Age: 42 Asset Management Inc. since 1993; Secretary of all of
the registered investment companies in the Gabelli
Funds complex.
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc.
Chief Compliance Officer since 2004; Chief Compliance Officer of all of the registered
Age: 52 investment companies in the Gabelli Funds complex; Vice
President of Goldman Sachs Asset Management from 2000
through 2004.
- ----------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Company's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified. Effective November 16,
2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves
as Director Emeritus.
3 "Interested person" of the Company as defined in the Investment Company Act
of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested
person" because of their affiliation with Gabelli Funds, LLC which acts as
the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are
brothers.
4 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or
other investment companies registered under the 1940 Act.
19
THE GAMCO GLOBAL OPPORTUNITY FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
================================================================================
- --------------------------------------------------------------------------------
2005 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended December 31, 2005, the Fund paid to shareholders, an
ordinary income dividend (comprised of net investment income) totaling $0.023
and $0.036 per share for Class AAA and Class A, respectively. For the year
ended December 31, 2005, 53.24% of the distribution qualifies for the dividend
received deduction available to corporations, and 100% of the ordinary income
distribution was qualified dividend income. Also for the year ended December
31, 2005, the Fund passed through foreign tax credits of $0.0210 per share to
Class AAA and Class A shareholders. The foreign source income and tax credits
by country are presented in the table below. Visit www.gabelli.com for more
information about 2005 foreign source income and foreign taxes paid.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2005 which was derived from U.S. Treasury securities was 4.39%. Such
income is exempt from state and local tax in all states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government
securities. The GAMCO Global Opportunity Fund did not meet this strict
requirement in 2005. Due to the diversity in state and local tax law, it is
recommended that you consult your personal tax advisor as to the applicability
of the information provided to your specific situation.
- --------------------------------------------------------------------------------
FOREIGN SOURCE INCOME AND TAX CREDITS BY COUNTRY FOR 2005 (UNAUDITED)
THE GAMCO GLOBAL OPPORTUNITY FUND
---------------------------------
Foreign Source Foreign Qualified
Income % Income % Foreign Tax %
-------- -------- -------------
Australia 4.94 6.02 0.00
Austria 0.00 0.00 0.00
Brazil 2.34 2.86 4.03
Canada 1.41 1.72 3.20
Denmark 0.00 0.00 0.00
Finland 0.00 0.00 0.00
France 17.56 21.39 26.55
Germany 1.58 1.92 6.02
Hong Kong 0.00 0.00 0.00
Ireland 9.09 11.08 0.00
Italy 7.21 8.79 14.66
Japan 9.01 10.98 9.10
Luxembourg 1.52 1.85 3.26
Malaysia 0.00 0.00 0.00
Netherlands 0.75 0.91 0.00
Spain 3.89 4.74 8.64
Singapore 0.00 0.00 0.00
South Africa 1.81 2.20 0.00
Sweden 0.21 0.26 0.46
Switzerland 11.04 13.45 24.09
United Kingdom 5.40 6.64 0.00
20
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO Funds are investment companies registered with the
Securities and Exchange Commission under the Investment Company Act of
1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc.,
which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a
publicly held company that has subsidiaries that provide investment
advisory or brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include
your name, address, telephone number, social security number, bank
account number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR
AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE
SERVICES TO YOU. This would include information about the shares that
you buy or redeem, and the deposits and withdrawals that you make. If we
hire someone else to provide services--like a transfer agent--we will
also have information about the transactions that you conduct through
them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information, and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
- --------------------------------------------------------------------------------
GABELLI FAMILY OF FUNDS
VALUE ________________________________________
GABELLI ASSET FUND
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND
Seeks long term growth of capital through investment primarily in the common
stocks of established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well-seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE ______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE ____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $1 billion) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $2.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) TEAM MANAGED
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations less than $1.5 billion) believed to be undervalued with
shareholder oriented management teams that are employing strategies to grow the
company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
GAMCO GROWTH FUND
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GAMCO INTERNATIONAL GROWTH FUND
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH _________________________
GAMCO GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing on
the globalization and interactivity of the world's marketplace. The Fund invests
in companies at the forefront of accelerated growth. The Fund's primary
objective is capital appreciation. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
WESTWOOD MIGHTY MITES(SM) FUND
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD BALANCED FUND
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
WESTWOOD INCOME FUND
Seeks to provide a high level of current income as well as long-term capital
appreciation by investing in income producing equity and fixed income
securities. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
SPECIALTY EQUITY ____________________________
GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is total return through a combination of current income and capital
appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in revenues
and earnings and potential for above average capital appreciation or are
undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
SECTOR ______________________________________
GAMCO GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world - targeting
undervalued companies with strong earnings and cash flow dynamics. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GOLD FUND
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of world-wide economic, financial, and political factors. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE _____________________
GABELLI ABC FUND
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss.
(NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
CONTRARIAN_________________________________
GAMCO MATHERS FUND
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of the debt instrument. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
FIXED INCOME ________________________________
WESTWOOD INTERMEDIATE BOND FUND
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET __________
GABELLI U.S. TREASURY MONEY MARKET FUND
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC, AND POLITICAL RISKS.
TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER
THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE FUND CAREFULLY
BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION
ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
GAMCO Global Series Funds, Inc.
THE GAMCO GLOBAL OPPORTUNITY 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 DIRECTORS
Mario J. Gabelli, CFA John D. Gabelli
CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT
EXECUTIVE OFFICER GABELLI & COMPANY, INC.
GAMCO INVESTORS, INC.
E. Val Cerutti Werner J. Roeder, MD
CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR
CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL
Anthony J. Colavita Anthonie C. van Ekris
ATTORNEY-AT-LAW MANAGING DIRECTOR
ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC.
Arthur V. Ferrara Salvatore J. Zizza
FORMER CHAIRMAN AND CHAIRMAN
CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL
GUARDIAN LIFE INSURANCE SUPPLIES CORP.
COMPANY OF AMERICA
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
GAMCO Global Opportunity Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB403Q405SR
GAMCO
THE
GAMCO
GLOBAL
OPPORTUNITY
FUND
ANNUAL REPORT
DECEMBER 31, 2005
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ANNUAL REPORT
DECEMBER 31, 2005
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, 2005 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
The GAMCO Global Telecommunications Fund gained 2.84% in 2005, a
significant outperformance of the S&P/Citigroup Global Telecommunications Broad
Market Index that declined by 0.89% for the year. The two primary sources for
the superior performance versus the index were the contributions from wireless
operators, and exposure to non-U.S. holdings. Among top Fund holdings, Rogers
Communications Inc., America Movil SA de CV, Telus Corp., and O2 plc (acquired
by Telefonica) realized substantial share price outperformance.
Other holdings that contributed to returns in 2005 were telecommunications
companies in emerging markets. The best performing emerging market telecom
stocks in our portfolio were China Mobile (Hong Kong) Ltd. (+40%), Philippine
Long Distance Telephone Co. (+34%), Telefonos De Mexico Sa de CV (+28.8%),
Vimpel Communications (+22.4%), and Telecom Argentina SA(+17.6%). Communication
equipment makers need to be noted as they rebounded in the past twelve months.
Significant Fund holdings in this sector that contributed to returns included
Furukawa Electric Co. Ltd. (+64.3%), Motorola Inc. (+31.3%), Scientific Atlanta
Inc. (+30.5%) which was acquired by Cisco in 2005, and Nokia Corp. (+16.8%).
Laggards in the past year included a number of holdings in the regional
and national telecommunications sectors. Among the regional and national telecom
companies that hurt the Fund's return in 2005 were Telephone & Data Systems Inc.
(-53.2%), Commonwealth Telephone Enterprises Inc. (-32.0%), Deutsche Telekom AG
(-26.7%), Verizon Communications Inc. (-25.7%), France Telecom SA (-24.9%), and
Swisscom AG (-20.3%). Cable and satellite holdings Echostar Communications Corp.
(-18.3%), DIRECTV Group Inc. (-15.7%), and Cablevision Systems Corp. (-5.7%)
also underperformed.
In general, 2005 was a difficult year for the telecommunications industry.
Despite the continuation of industry consolidation, which saw the acquisitions
of the major U.S. long distance carriers, AT&T Inc. and MCI Inc., sentiment for
the group remained generally negative. There is a general market perception that
growth prospects and margins for integrated and wireless operators and cable
companies may have peaked. Pricing pressures are coming not only from
intensifying competition, but equally or more so from technological change. 2005
marked the first year in which the shift to VoIP (Voice over Internet Protocol)
became a significant issue. In its essence, the change heralds the era when
calling will no longer be charged on a per-minute basis, or according to
distance. As voice revenue declines at an accelerating pace, the question is
whether operating costs can move in parallel, particularly for operators that
have already undertaken years of efficiency and productivity measures.
Not all the news flow during 2005 was bad. The uptake of broadband
services in developed markets continues apace, with ever-increasing transmission
speeds being offered by telecom companies, cable operators and new competitive
entrants. This trend is also accompanied by the uptake of `Triple Play'
offerings of video/entertainment services, high-speed Internet connectivity and
traditional voice telephony delivered by a single provider. The aggressive moves
of U.S. Regional Bell Operating Companies and, more recently, European incumbent
operators into video services via either DSL networks or increasingly
fiber-to-the-home (IPTV) offers the potential to create new revenue streams to
supplant the decline of voice. While stepping up capital spending levels to
enable these new technologies, overall debt levels in the industry continued to
decline, leaving balance sheet flexibility that allowed dividends to grow, share
buybacks, and acquisitive growth/consolidation to boost top line performance.
Developing markets saw continued dramatic growth in wireless subscriber numbers
in 2005, aided by low priced handsets. Finally, after many false starts, 2005
marked the beginnings of 3rd generation (3G) wireless networks beginning to gain
traction.
Weak fundamentals in the telecommunications drove investors away from the
sector during 2005, and left industry valuations at, or near, all-time lows.
Nevertheless, the GAMCO Global Telecommunications Fund was able to deliver a
positive return through stock selection, non-index weightings and focusing on a
number of special situations.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 13, 2006
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2005:
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
Wireless Communications ....................... 25.3%
Telecommunications: National .................. 24.4%
Telecommunications: Regional .................. 16.9%
Cable ......................................... 9.3%
Entertainment ................................. 6.0%
Telecommunications: Long Distance ............. 5.7%
Communications Equipment ...................... 3.2%
Satellite ..................................... 2.7%
Diversified Industrial ........................ 2.0%
Business Services ............................. 1.6%
Computer Software and Services ................ 0.9%
Publishing .................................... 0.6%
Broadcasting .................................. 0.5%
Energy and Utilities .......................... 0.5%
Telecommunications: Broadband ................. 0.3%
Electronics ................................... 0.2%
Equipment and Supplies ........................ 0.2%
Other Assets and Liabilities - (Net) .......... (0.3)%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
2
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO
GLOBAL TELECOMMUNICATIONS FUND CLASS AAA SHARES, THE S&P/CITIGROUP GLOBAL
TELECOMMUNICATIONS INDEX AND THE MSCI AC WORLD FREE INDEX
GAMCO Global
Telecommunications Fund S&P/Citigroup Global MSCI AC World
Class AAA Shares Telecommunications Index Free Index
11/1/93 $10,000 $10,000 $10,000
12/31/93 10,300 10,045 9,993
12/31/94 9,921 9,555 10,496
12/31/95 11,524 10,794 12,538
12/31/96 12,560 12,307 14,193
12/31/97 16,563 15,011 16,321
12/31/98 22,319 21,612 19,907
12/31/99 40,234 37,987 25,246
12/31/00 30,546 21,208 21,727
12/31/01 24,214 14,937 18,270
12/31/02 17,051 10,720 14,803
12/31/03 24,337 15,030 19,929
12/31/04 30,025 18,599 23,067
12/31/05 30,878 18,434 25,690
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, 2005 (A)
----------------------------------------------------
Since
Inception
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (11/1/93)
- --------------------------------------------------------------------------------------------------------------------
GAMCO GLOBAL TELECOMMUNICATIONS FUND
CLASS AAA ................................ (0.95)% 2.84% 21.89% 0.22% 10.36% 9.70%
S&P/Citigroup Global
Telecommunications Broad Market Index .... (3.16) (0.89) 19.22 (2.70) N/A* N/A*
MSCI AC World Free Index ..................... 3.43 11.37 20.18 3.41 7.44 8.06
Class A ...................................... (0.97) 2.82 21.86 0.22 10.36 9.71
(6.66)(b) (3.09)(b) 19.48(b) (0.95)(b) 9.71(b) 9.17(b)
Class B ...................................... (1.16) 2.03 20.95 (0.53) 9.91 9.34
(6.10)(c) (2.97)(c) 20.26(c) (0.93)(c) 9.91(c) 9.34(c)
Class C ...................................... (1.22) 1.97 20.95 (0.54) 9.90 9.33
(2.21)(c) 0.97(c) 20.95(c) (0.54)(c) 9.90(c) 9.33(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS AND ARE NET OF EXPENSES.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
PRESENTED. WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR IS
NOT ANNUALIZED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE
MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES,
RISKS, 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
VALUES ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE
ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON MARCH 12,
2000, MARCH 13, 2000 AND JUNE 2, 2000, RESPECTIVELY. 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. INVESTING IN
FOREIGN SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH
INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC
AND POLITICAL RISKS. THE S&P/CITIGROUP GLOBAL TELECOMMUNICATIONS INDEX AND
THE MSCI AC WORLD FREE INDEX ARE UNMANAGED INDICATORS OF GLOBAL STOCK
MARKET PERFORMANCE.
(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.
* INFORMATION FOR THE S&P CITIGROUP GLOBAL TELECOMMUNICATIONS BROAD MARKET
INDEX IS NOT AVAILABLE PRIOR TO JANUARY 1, 2000.
- --------------------------------------------------------------------------------
3
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2005 through December 31, 2005
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, 2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/05 12/31/05 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,052.20 1.58% $ 8.17
Class A $1,000.00 $1,052.70 1.58% $ 8.17
Class B $1,000.00 $1,048.40 2.33% $12.03
Class C $1,000.00 $1,048.00 2.32% $11.98
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.24 1.58% $ 8.03
Class A $1,000.00 $1,017.24 1.58% $ 8.03
Class B $1,000.00 $1,013.46 2.33% $11.82
Class C $1,000.00 $1,013.51 2.32% $11.77
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
4
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 100.3%
BROADCASTING -- 0.5%
23,566 CanWest Global
Communications Corp.+ ............ $ 322,321 $ 194,420
35,434 CanWest Global Communications
Corp., Cl. A+ .................... 407,389 292,629
1,400 Claxson Interactive Group Inc.+ .... 2,240 5,950
10,000 Cogeco Inc. ........................ 195,069 206,460
7,000 Fisher Communications Inc.+ ........ 353,932 290,010
35,000 Paxson Communications Corp.+ ....... 134,000 31,500
------------ ------------
1,414,951 1,020,969
------------ ------------
BUSINESS SERVICES -- 1.6%
75,000 AFK Sistema, GDR (a) ............... 1,275,000 1,781,250
9,000 BB Holdings Ltd. ................... 42,460 60,930
3,600 Carlisle Group Ltd.+ ............... 5,790 6,999
25,693 Contax Participacoes SA, ADR ....... 11,050 30,914
4,000 Convergys Corp.+ ................... 53,716 63,400
6,000 Donnelley (R.H.) Corp.+ ............ 80,412 369,720
59,500 Group 4 Securicor plc .............. 0 164,814
15,000 TNT NV, ADR ........................ 198,278 469,200
------------ ------------
1,666,706 2,947,227
------------ ------------
CABLE -- 9.3%
80,000 Adelphia Communications
Corp., Cl. A+ .................... 74,756 3,200
19,065 Austar United
Communications Ltd.+ ............. 41,202 16,562
80,000 Cablevision Systems Corp.,
Cl. A+ ........................... 1,808,961 1,877,600
20,000 Charter Communications Inc.,
Cl. A+ ........................... 58,692 24,400
6,000 Comcast Corp., Cl. A+ .............. 185,040 155,760
22,000 Comcast Corp., Cl. A, Special+ ..... 175,463 565,180
60,732 Liberty Global Inc., Cl. A+ ........ 1,330,262 1,366,470
59,000 Liberty Global Inc., Cl. C+ ........ 1,268,497 1,250,800
18,000 Mediacom Communications Corp.,
Cl. A+ ........................... 165,595 98,820
284,765 Rogers Communications Inc.,
Cl. B, New York .................. 2,946,497 12,034,169
235 Rogers Communications Inc.,
Cl. B, Toronto ................... 11,540 9,946
------------ ------------
8,066,505 17,402,907
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMUNICATIONS EQUIPMENT -- 3.2%
10,000 Agere Systems Inc.+ ................ $ 166,400 $ 129,000
3,000 Andrew Corp.+ ...................... 8,535 32,190
500 Avaya Inc.+ ........................ 4,138 5,335
100,000 Champion Technology Holdings Ltd. .. 87,982 15,477
25,000 Communications Systems Inc. ........ 237,711 307,000
3,200 Ericsson (L.M.) Telephone Co.,
Cl. B, ADR ....................... 40,907 110,080
75,000 Furukawa Electric Co. Ltd.+ ........ 381,079 586,340
100,000 GN Store Nord A/S .................. 541,433 1,309,108
10,000 JDS Uniphase Corp.+ ................ 45,488 23,600
1,000 L-3 Communications Holdings Inc. ... 11,000 74,350
100,000 Lucent Technologies Inc.+ .......... 390,922 266,000
67,000 Motorola Inc. ...................... 549,845 1,513,530
28,000 Nokia Corp., ADR ................... 67,091 512,400
45,000 Nortel Networks Corp.+ ............. 196,650 137,700
22,000 Scientific-Atlanta Inc. ............ 179,954 947,540
750 Siemens AG, ADR .................... 23,625 64,192
300,000 Time Engineering Berhad+ ........... 316,448 21,828
816 Tut Systems Inc.+ .................. 13,135 2,440
------------ ------------
3,262,343 6,058,110
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.9%
2,000 America Online Latin America Inc.,
Cl. A+ ........................... 840 50
6,000 Covad Communications Group Inc.+ ... 11,761 5,880
3,230 EarthLink Inc.+ .................... 45,250 35,885
1,000 Geoworks Corp.+ .................... 1,375 32
10 Korea Thrunet Co. Ltd. (c) ......... 5,250 1
18,000 Net2Phone Inc.+ .................... 55,561 36,720
20,000 NorthPoint Communications
Group Inc.+ ...................... 11,250 12
5,852 Telecom Italia Media SpA+ .......... 4,669 3,097
1,000 Via Net.Works Inc.+ ................ 2,625 32
40,000 Yahoo! Inc.+ ....................... 1,356,975 1,567,200
------------ ------------
1,495,556 1,648,909
------------ ------------
DIVERSIFIED INDUSTRIAL -- 2.0%
65,000 Bouygues SA ........................ 1,809,898 3,178,164
50,000 Hutchison Whampoa Ltd. ............. 487,171 476,228
------------ ------------
2,297,069 3,654,392
------------ ------------
ELECTRONICS -- 0.2%
32,000 California Micro Devices Corp.+ .... 203,882 208,320
8,000 Freescale Semiconductor Inc.,
Cl. B+ ........................... 68,379 201,360
2,000 TiVo Inc.+ ......................... 11,105 10,240
1,000 Vishay Intertechnology Inc.+ ....... 22,909 13,760
------------ ------------
306,275 433,680
------------ ------------
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES -- 0.5%
3,000 E.ON AG ............................ $ 126,255 $ 310,382
11,000 SCANA Corp. ........................ 290,109 433,180
2,500 SJW Corp. .......................... 78,585 113,750
------------ ------------
494,949 857,312
------------ ------------
ENTERTAINMENT -- 6.0%
40,000 Discovery Holding Co., Cl. A+ ...... 222,452 606,000
440,000 Gemstar-TV Guide
International Inc.+ .............. 2,121,732 1,148,400
375,000 Liberty Media Corp., Cl. A+ ........ 1,308,068 2,951,250
15,000 Metromedia International
Group Inc.+ ...................... 59,576 22,650
195,000 Time Warner Inc. ................... 3,365,101 3,400,800
100,000 Vivendi Universal SA, ADR .......... 2,087,247 3,143,000
------------ ------------
9,164,176 11,272,100
------------ ------------
EQUIPMENT AND SUPPLIES -- 0.2%
1,000 Amphenol Corp., Cl. A .............. 8,184 44,260
15,000 ThyssenKrupp AG .................... 275,840 312,903
------------ ------------
284,024 357,163
------------ ------------
PUBLISHING -- 0.6%
600 Media General Inc., Cl. A .......... 34,079 30,420
35,000 News Corp., Cl. A .................. 519,579 544,250
2,000 News Corp., Cl. B .................. 21,050 33,220
15,428 Seat Pagine Gialle SpA+ ............ 30,783 7,205
25,000 Telegraaf Media Groep NV ........... 541,844 540,152
------------ ------------
1,147,335 1,155,247
------------ ------------
SATELLITE -- 2.7%
1,500 Asia Satellite Telecommunications
Holdings Ltd., ADR ............... 22,103 25,425
1,500 British Sky Broadcasting
Group plc, ADR ................... 36,400 52,020
137,000 DIRECTV Group Inc.+ ................ 2,767,667 1,934,440
100,000 EchoStar Communications
Corp., Cl. A+ .................... 1,863,471 2,717,000
1,000 Lockheed Martin Corp. .............. 22,787 63,630
2,524 Orbital Sciences Corp.+ ............ 16,208 32,408
5,000 Pegasus Communications Corp.,
Cl. A+ ........................... 33,138 19,750
8,000 PT Indosat Tbk, ADR ................ 78,653 232,720
------------ ------------
4,840,427 5,077,393
------------ ------------
TELECOMMUNICATIONS: BROADBAND -- 0.3%
6,720 Colt Telecom Group plc, ADR+ ....... 39,630 25,133
10,000 E.Spire Communications Inc.+ ....... 50,000 5
MARKET
SHARES COST VALUE
------ ---- ------
18,000 Golden Telecom Inc. ................ $ 188,378 $ 467,280
22,422 McLeodUSA Inc., Cl. A+ ............. 78,431 247
6,000 Time Warner Telecom Inc., Cl. A+ ... 4,800 59,100
------------ ------------
361,239 551,765
------------ ------------
TELECOMMUNICATIONS: LONG DISTANCE -- 5.7%
90,000 AT&T Inc. .......................... 3,229,896 2,204,100
320,000 Cable & Wireless plc ............... 608,019 656,538
5,200 Embratel Participacoes SA, ADR+ .... 505,937 76,700
80,000 General Communication Inc.,
Cl. A+ ........................... 376,995 826,400
37,000 IDT Corp.+ ......................... 328,471 427,720
35,000 IDT Corp., Cl. B+ .................. 248,267 409,500
600 KDDI Corp. ......................... 3,016,474 3,459,533
5,000 MCI Inc. ........................... 128,650 98,650
75,416 Philippine Long Distance
Telephone Co., ADR ............... 1,482,822 2,529,456
------------ ------------
9,925,531 10,688,597
------------ ------------
TELECOMMUNICATIONS: NATIONAL -- 24.4%
44,214 Brasil Telecom SA, Pfd. ............ 474 190
42,000 BT Group plc, ADR .................. 1,633,962 1,611,960
17,415,054 Cable & Wireless Jamaica Ltd.+ ..... 406,745 399,818
75,000 China Unicom Ltd., ADR ............. 628,818 613,500
145,000 Compania de Telecomunicaciones
de Chile SA, ADR ................. 2,027,580 1,276,000
285,000 Deutsche Telekom AG, ADR ........... 3,105,835 4,739,550
180,000 Elisa Oyj, Cl. A ................... 2,286,461 3,335,030
40,000 France Telecom SA, ADR ............. 1,091,954 993,600
5,507 Hellenic Telecommunications
Organization SA+ ................. 86,065 117,355
36,000 Hellenic Telecommunications
Organization SA, ADR+ ............ 218,769 377,280
18,000 Hungarian Telephone &
Cable Corp.+ ..................... 139,278 279,900
57,000 KPN NV, ADR ........................ 472,195 572,280
10,000 KT Corp., ADR ...................... 183,666 215,500
500 Magyar Telekom, ADR ................ 9,650 11,015
5,000 Manitoba Telecom Services Inc. ..... 168,270 173,771
2,000 Maroc Telecom ...................... 18,299 21,263
237 Nippon Telegraph &
Telephone Corp. .................. 1,207,105 1,077,136
22,000 Nippon Telegraph &
Telephone Corp., ADR ............. 622,716 501,820
2,000 Pakistan Telecommunications
Co. Ltd., GDR (a) ................ 155,766 218,766
100,000 PCCW Ltd. .......................... 81,405 61,584
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS: NATIONAL (CONTINUED)
68,000 Portugal Telecom SGPS SA, ADR ...... $ 277,645 $ 684,760
18,360 PT Telekomunikasi Indonesia, ADR ... 165,504 438,070
10,000 Rostelecom, ADR .................... 79,578 136,500
928,580 Singapore
Telecommunications Ltd. .......... 806,749 1,457,669
102,000 Swisscom AG, ADR ................... 2,681,536 3,214,020
60,000 TDC A/S, ADR ....................... 1,061,291 1,792,800
25,000 Telecom Corp. of New
Zealand Ltd., ADR ................ 515,375 817,000
2,210,000 Telecom Italia SpA ................. 4,212,814 6,436,360
27,000 Telecom Italia SpA, ADR ............ 621,934 788,670
57,700 Telefonica de Argentina SA, ADR+ ... 376,367 595,464
100,000 Telefonica SA, ADR ................. 2,634,654 4,502,000
6,361 Telefonica SA, BDR ................. 108,406 96,572
100,000 Telefonos de Mexico SA de CV,
Cl. L, ADR ....................... 719,898 2,468,000
46,604 Telekom Austria AG ................. 347,582 1,048,310
339,000 Telekom Malaysia Berhad ............ 1,520,064 856,581
3,355 Telemar Norte Leste SA ............. 148,531 91,110
666,336 TeliaSonera AB ..................... 2,961,330 3,581,414
2,400 Telstra Corp. Ltd., ADR ............ 47,304 34,392
8,075 Thai Telephone &
Telecom, GDR+ (a)(b) ............. 100,542 1,696
------------ ------------
33,932,117 45,638,706
------------ ------------
TELECOMMUNICATIONS: REGIONAL -- 16.9%
78,000 Aliant Inc. ........................ 1,345,457 2,073,379
13,300 Atlantic Tele-Network Inc. ......... 112,178 557,270
148,000 BCE Inc. ........................... 3,411,732 3,544,600
65,000 BellSouth Corp. .................... 1,899,994 1,761,500
12,000 Brasil Telecom
Participacoes SA, ADR ............ 595,898 448,200
952 Brasil Telecom SA .................. 3 7
40,000 CenturyTel Inc. .................... 1,103,188 1,326,400
255,000 Cincinnati Bell Inc.+ .............. 1,853,126 895,050
120,000 Citizens Communications Co. ........ 1,223,332 1,467,600
49,000 Commonwealth Telephone
Enterprises Inc. ................. 1,479,530 1,654,730
50,060 D&E Communications Inc. ............ 624,913 417,000
170,000 First Pacific Co. Ltd. ............. 92,079 65,775
20,000 First Pacific Co. Ltd., ADR ........ 30,144 38,692
450,000 Qwest Communications
International Inc.+ .............. 1,840,303 2,542,500
11,000 Shenandoah Telecommunications Co. .. 138,825 438,240
25,693 Tele Norte Leste Participacoes
SA, ADR .......................... 357,296 460,419
MARKET
SHARES COST VALUE
------ ---- ------
215,000 Telecom Argentina SA, Cl. B, ADR+ .. $ 1,013,186 $ 2,771,350
70,000 Telephone & Data Systems Inc. ...... 1,520,586 2,522,100
65,000 Telephone & Data Systems Inc.,
Special .......................... 1,306,850 2,249,650
13,421 TELUS Corp. ........................ 274,410 552,565
36,579 TELUS Corp., ADR ................... 654,075 1,498,670
50,000 TELUS Corp., Non-Voting ............ 1,252,423 2,007,398
1,000,000 True Corp. plc+ .................... 687,194 243,754
70,000 Verizon Communications Inc. ........ 2,749,746 2,108,400
------------ ------------
25,566,468 31,645,249
------------ ------------
WIRELESS COMMUNICATIONS -- 25.3%
38,000 ABC Communications Holdings Ltd. ... 19,234 3,039
42,500 ALLTEL Corp. ....................... 1,749,052 2,681,750
245,000 America Movil SA de CV,
Cl. L, ADR ....................... 1,196,828 7,168,700
5 Celular CRT Participacoes
SA, Pfd. ......................... 205 128
35,000 Centennial Communications Corp.+ ... 315,665 543,200
80,000 China Mobile (Hong Kong)
Ltd., ADR ........................ 1,165,904 1,923,200
70,000 CP Pokphand Co. Ltd., ADR+ ......... 58,725 95,921
40,000 Dobson Communications
Corp., Cl. A+ .................... 129,100 300,000
10,000 EasyCall International Ltd.+ ....... 9,532 469
240,000 Europolitan Vodafone AB+ (c) ....... 220,305 1,419,850
17,500 Grupo Iusacell SA de CV+ ........... 29,040 42,637
26,000 Himachal Futuristic
Communications Ltd.+ (a)(c) ...... 141,200 49,660
666 Hutchison Telecommunications
International Ltd.+ .............. 519 962
2,000 Millicom International
Cellular SA+ ..................... 17,000 53,680
800 Mobile TeleSystems, ADR ............ 29,612 28,000
65,000 Nextel Partners Inc., Cl. A+ ....... 666,568 1,816,100
1,500 NTT DoCoMo Inc. .................... 4,313,046 2,289,397
1,550,000 O2 plc ............................. 1,627,628 5,273,514
92,000 Price Communications Corp.+ ........ 1,354,830 1,368,040
42,000 Rural Cellular Corp., Cl. A+ ....... 432,519 613,620
90,000 SK Telecom Co. Ltd., ADR ........... 1,068,189 1,826,100
460,000 Sprint Nextel Corp. ................ 6,805,241 10,745,600
6,000 SunCom Wireless
Holdings Inc., Cl. A+ ............ 20,520 16,620
3,413 Tele Centro Oeste Celular
Participacoes SA, ADR ............ 9,894 38,294
264 Tele Leste Celular
Participacoes SA, ADR+ ........... 6,975 3,736
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
460 Tele Norte Celular
Participacoes SA, ADR+ ........... $ 7,079 $ 3,427
3,918 Tele Sudeste Celular
Participacoes SA, Pfd. ........... 118,808 46,916
1,150 Telemig Celular
Participacoes SA, ADR ............ 30,497 45,322
3,020 Telesp Celular Participacoes SA+ ... 6,747 10,965
12,425 Telesp Celular
Participacoes SA, ADR ............ 299,286 46,966
107 Telesp Celular Participacoes
SA, Pfd.+ ........................ 40,643 405
4,430 Tim Participacoes SA, ADR .......... 54,016 111,990
110,000 United States Cellular Corp.+ ...... 4,971,685 5,434,000
59,000 Vimpel-Communications, ADR+ ........ 447,656 2,609,570
33,000 Vodafone Group plc, ADR ............ 669,669 708,510
------------ ------------
28,033,417 47,320,288
------------ ------------
TOTAL COMMON STOCKS ................ 132,259,088 187,730,014
------------ ------------
RIGHTS -- 0.0%
TELECOMMUNICATIONS -- 0.0%
315,789 True Corp. plc Rights+(c) .......... 0 15,272
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
WARRANTS -- 0.0%
COMMUNICATIONS EQUIPMENT -- 0.0%
19,375 Champion Technology Holdings Ltd.,
expire 02/16/06+ (c) ............. $ 0 $ 45
20,000 Champion Technology Holdings Ltd.,
expire 02/27/07+ (c) ............. 0 0
1,473 Lucent Technologies Inc.,
expire 12/10/07+ ................. 2,445 832
------------ ------------
TOTAL WARRANTS ..................... 2,445 877
------------ ------------
TOTAL INVESTMENTS -- 100.3% ........ $132,261,533 187,746,163
============
OTHER ASSETS AND
LIABILITIES (NET) -- (0.3)% .................... (521,410)
------------
NET ASSETS -- 100.0% ............................. $187,224,753
============
- ----------------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At December
31, 2005, the market value of Rule 144A securities amounted to $2,051,372
or 1.10% of total net assets. Except as noted in (b), these securities are
liquid.
(b) At December 31, 2005, the Fund held an investment in a restricted and
illiquid security amounting to $1,696 or 0.00% of net assets, which was
valued under methods approved by the Board, as follows:
12/31/05
CARRYING
ACQUISITION ACQUISITION ACQUISITION VALUE
SHARES ISSUER DATE COST PER UNIT
------ ------ ----------- ----------- --------
8,075 Thai Telephone & Telecom, GDR ..... 03/31/94 $100,542 $0.2100
(c) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing valuation of comparable
securities and other factors on a regular basis. At December 31, 2005, the
market value of fair valued securities amounted to $1,484,828 or 0.79% of
total net assets.
+ Non-income producing security.
ADR American Depository Receipt
BDR Brazilian Depository Receipt
GDR Global Depository Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- -------- --------
North America ........................ 50.2% $ 94,184,835
Europe ............................... 30.5 57,214,102
Latin America ........................ 8.6 16,250,018
Asia/Pacific ......................... 6.5 12,182,983
Japan ................................ 4.2 7,914,225
------ ------------
100.0% $187,746,163
====== ============
See accompanying notes to financial statements.
8
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
================================================================================
ASSETS:
Investments at value (cost $132,261,533) ................... $ 187,746,163
Dividends and interest receivable .......................... 512,317
Receivable for investments sold ............................ 210,244
Receivable for Fund shares sold ............................ 103,036
Other assets ............................................... 7,365
-------------
TOTAL ASSETS ............................................... 188,579,125
-------------
LIABILITIES:
Payable to custodian ....................................... 776,038
Payable for Fund shares redeemed ........................... 214,246
Payable for investment advisory fees ....................... 160,791
Payable for shareholder communications expenses ............ 62,185
Payable for shareholder services fees ...................... 57,314
Payable for distribution fees .............................. 40,619
Other accrued expenses ..................................... 43,179
-------------
TOTAL LIABILITIES .......................................... 1,354,372
-------------
NET ASSETS applicable to 10,684,132 shares outstanding ..... $ 187,224,753
=============
NET ASSETS CONSIST OF:
Capital stock, each class at $0.001 par value .............. $ 10,684
Additional paid-in capital ................................. 193,252,725
Accumulated distributions in excess of net investment income (240,918)
Accumulated net realized loss on investments
and foreign currency transactions ......................... (61,281,481)
Net unrealized appreciation on investments ................. 55,484,630
Net unrealized depreciation on foreign currency translations (887)
-------------
NET ASSETS ................................................. $ 187,224,753
=============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price per share
($185,870,434 / 10,605,897 shares outstanding;
75,000,000 shares authorized) ............................ $17.53
======
CLASS A:
Net Asset Value and redemption price per share
($735,215 / 41,995 shares outstanding;
50,000,000 shares authorized) ............................ $17.51
======
Maximum offering price per share (NAV / 0.9425,
based on maximum sales charge
of 5.75% of the offering price) .......................... $18.58
======
CLASS B:
Net Asset Value and offering price per share
($424,617 / 24,821 shares outstanding;
25,000,000 shares authorized) ............................ $17.11(a)
======
CLASS C:
Net Asset Value and offering price per share
($194,487 / 11,419 shares outstanding;
25,000,000 shares authorized) ............................ $17.03(a)
======
- ---------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $410,517) ..... $ 4,876,260
Interest ......................................... 33,781
-----------
TOTAL INVESTMENT INCOME .......................... 4,910,041
-----------
EXPENSES:
Investment advisory fees ......................... 1,960,781
Distribution fees - Class AAA .................... 486,304
Distribution fees - Class A ...................... 1,693
Distribution fees - Class B ...................... 6,108
Distribution fees - Class C ...................... 2,684
Shareholder services fees ........................ 258,550
Shareholder communications expenses .............. 148,207
Custodian fees ................................... 64,468
Legal and audit fees ............................. 51,813
Registration fees ................................ 33,975
Directors' fees .................................. 20,658
Interest expense ................................. 5,118
Miscellaneous expenses ........................... 78,654
-----------
TOTAL EXPENSES ................................... 3,119,013
Less: Custodian fee credits ...................... (338)
-----------
NET EXPENSES ..................................... 3,118,675
-----------
NET INVESTMENT INCOME ............................ 1,791,366
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ................. 5,150,759
Net realized loss on foreign currency transactions (20,876)
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations (2,147,155)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ............ 2,982,728
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $ 4,774,094
===========
See accompanying notes to financial statements.
9
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
OPERATIONS:
Net investment income ................................................... $ 1,791,366 $ 941,134
Net realized gain (loss) on investments and foreign currency transactions 5,129,883 (1,842,073)
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations ..................................... (2,147,155) 40,701,406
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................... 4,774,094 39,800,467
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ............................................................. (2,003,135) (962,965)
Class A ............................................................... (8,156) (2,741)
Class B ............................................................... -- --
Class C ............................................................... (117) (743)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (2,011,408) (966,449)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ............................................................. (25,916,855) (15,265,831)
Class A ............................................................... 124,167 86,356
Class B ............................................................... (435,480) (125,404)
Class C ............................................................... (62,137) 132,412
------------- -------------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS .............. (26,290,305) (15,172,467)
------------- -------------
REDEMPTION FEES ......................................................... 7,745 31,714
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ................................... (23,519,874) 23,693,265
NET ASSETS:
Beginning of period ..................................................... 210,744,627 187,051,362
------------- -------------
End of period (including undistributed net investment
income of $0 and $0, respectively) .................................... $ 187,224,753 $ 210,744,627
============= =============
See accompanying notes to financial statements.
10
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION. The GAMCO Global Telecommunications Fund (the "Fund"),
formerly, The Gabelli Global Telecommunications Fund, a series of GAMCO Global
Series Funds, Inc. (the "Corporation"), formerly, Gabelli Global Series Funds,
Inc., was organized on July 16, 1993 as a Maryland corporation. The Fund is a
non-diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and one of four
separately managed portfolios (collectively, the "Portfolios") of the
Corporation. The Fund's primary objective is capital appreciation. The Fund
commenced investment operations on November 1, 1993.
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 Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on 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 with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be 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 average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily available are
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.
11
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December
31, 2005, there were no open repurchase agreements.
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At December 31, 2005, there were no
open futures contracts.
SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund
does not own. The proceeds received for short sales are recorded as liabilities
and the Fund records an unrealized gain or loss to the extent of the difference
between the proceeds received and the value of the open short position on the
day of determination. The Fund records a realized gain or loss when the short
position is closed out. By entering into a short sale, the Fund bears the market
risk of an unfavorable change in the price of the security sold short. Dividends
on short sales are recorded as an expense by the Fund on the ex-dividend date
and interest expense is recorded on the accrual basis. The Fund did not hold any
short positions as of December 31, 2005.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
12
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. At December 31, 2005, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments, and other
assets and liabilities are translated into U.S. dollars at the current exchange
rates. Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable, based upon its current
interpretation of tax rules and regulations that exist in the markets in which
it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its net
assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely salable among qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission (the "SEC") may be treated as liquid if they satisfy
liquidity standards established by the Board. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and
accordingly the Board will monitor their liquidity.
13
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
CONCENTRATION RISK. The Fund may invest a high percentage of its assets in
specific sectors of the market in order to achieve a potentially greater
investment return. As a result, the Fund may be more susceptible to economic,
political, and regulatory developments in a particular sector of the market,
positive or negative, and may experience increased volatility to the Fund's net
asset value ("NAV") and a magnified effect in its total return.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
In calculating NAV per share of each class, investment income, realized and
unrealized gains and losses, redemption fees, and expenses other than class
specific expenses, are allocated daily to each class of shares based upon the
proportion of net assets of each class at the beginning of each day.
Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset shown as
"custodian fee credits".
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate equity accounts in the period when the
differences arise. These reclassifications have no impact on the NAV of the Fund
and the calculation of net investment income per share in the Financial
Highlights excludes these adjustments. For the year ended December 31, 2005,
reclassifications were made to increase accumulated distributions in excess of
net investment income by $20,876 and to decrease accumulated net realized loss
on investments and foreign currency transactions by $20,876.
The tax character of distributions paid during the fiscal years ended December
31, 2005 and December 31, 2004 was $2,011,408 and $966,449 of ordinary income.
14
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (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.
As of December 31, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Capital loss carryforward ................ $(54,058,602)
Net unrealized appreciation on securities,
foreign receivables and payables ....... 48,007,197
Undistributed ordinary income ............ 12,749
------------
Total accumulated loss ................... $ (6,038,656)
============
At December 31, 2005, the Fund has net capital loss carryforwards for Federal
income tax purposes of $54,058,602, which are available to reduce future
required distributions of net capital gains to shareholders. $8,565,109 of the
loss carryforward is available through 2009; $30,268,699 is available through
2010; $11,910,139 is available through 2011; and $3,314,655 is available through
2012. For the year ended December 31, 2005, the Fund utilized net capital loss
carryforwards of $4,405,318.
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at December 31, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ...... $139,739,386 $67,443,772 $(19,436,995) $48,006,777
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2005, other than short-term securities, aggregated
$7,197,223 and $27,682,812, respectively.
15
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the
Fund paid brokerage commissions of $38,223 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $13,514 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the year ended
December 31, 2005, the Fund reimbursed the Adviser $45,000 in connection with
the cost of computing the Fund's NAV, which is included in miscellaneous
expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to
$25,000,000 from the custodian for temporary borrowing purposes. Borrowings
under this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. At December 31, 2005, there was a balance of $777,000
outstanding from the line of credit.
The average daily amount of borrowings from the line of credit within the year
ended December 31, 2005 was $143,323 with a weighted average interest rate of
3.98%. The maximum amount borrowed at any time during the year ended December
31, 2005 was $4,271,000.
8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares
- -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class
AAA Shares are offered only to investors who acquire them directly from Gabelli
& Company or through selected broker/dealers without a sales charge. Class A
Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares
are subject to a contingent deferred sales charge ("CDSC") upon redemption
within six years of purchase and automatically convert to Class A Shares
approximately eight years after the original purchase. The applicable CDSC is
equal to a declining percentage of the lesser of the NAV per share at the date
of the original purchase or at the date of redemption, based on the length of
time held. Class C Shares are subject to a 1% CDSC for one year after purchase.
Class B Shares are available only through exchange of Class B Shares of other
funds distributed by Gabelli & Company. The Board has approved Class I Shares
which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged within the sixtieth day after the date of a purchase.) The redemption
fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the years ended December 31, 2005 and December 31, 2004 amounted to
$7,745 and $31,714, respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
16
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 947,426 $ 16,136,166 2,349,410 $ 35,596,632
Shares issued upon reinvestment of dividends ....... 108,341 1,901,378 53,559 917,462
Shares redeemed .................................... (2,579,717) (43,954,399) (3,507,385) (51,779,925)
---------- ------------ ---------- ------------
Net decrease ................................... (1,523,950) $(25,916,855) (1,104,416) $(15,265,831)
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 22,621 $ 384,773 24,016 $ 370,807
Shares issued upon reinvestment of dividends ....... 386 6,767 155 2,655
Shares redeemed .................................... (15,718) (267,373) (19,465) (287,106)
---------- ------------ ---------- ------------
Net increase ................................... 7,289 $ 124,167 4,706 $ 86,356
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ........................................ -- -- 4,815 $ 69,837
Shares redeemed .................................... (26,153) $ (435,480) (13,535) (195,241)
---------- ------------ ---------- ------------
Net decrease ................................... (26,153) $ (435,480) (8,720) $ (125,404)
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 6,357 $ 101,796 15,392 $ 235,791
Shares issued upon reinvestment of dividends ....... 7 118 45 743
Shares redeemed .................................... (9,842) (164,051) (7,412) (104,122)
---------- ------------ ---------- ------------
Net increase/(decrease) ........................ (3,478) $ (62,137) 8,025 $ 132,412
========== ============ ========== ============
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the SEC requesting information
on mutual fund trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc., the Adviser's parent company, is responding to these
requests for documents and testimony. On a separate matter, in September 2005,
the Adviser was informed by the staff of the SEC that the staff may recommend to
the Commission that an administrative remedy and a monetary penalty be sought
from the Adviser in connection with the actions of two of seven closed-end funds
managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act.
These provisions require registered investment companies to provide written
statements to shareholders when a dividend is made from a source other than net
investment income. While the two closed-end funds sent annual statements and
provided other materials containing this information, the funds did not send
written statements to shareholders with each distribution in 2002 and 2003. The
Adviser believes that all of the funds are now in compliance. The Adviser
believes that these matters would have no effect on the Fund or any material
adverse effect on the Adviser or its ability to manage the Fund.
17
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------- --------------------------
Net
Net Asset Net Realized and Total Net
Period Value, Investment Unrealized from Net Realized
Ended Beginning Income Gain (Loss) on Investment Investment Gain on Total
December 31, of Period (Loss)(c) Investments Operations Income Investments Distributions
- ------------ --------- -------- ----------- ---------- ------ ----------- -------------
CLASS AAA
2005 $17.23 $ 0.16 $ 0.33 $ 0.49 $(0.19) -- $(0.19)
2004 14.03 0.07 3.21 3.28 (0.08) -- (0.08)
2003 9.83 (0.04) 4.24 4.20 -- -- --
2002 13.96 (0.01) (4.12) (4.13) -- -- --
2001 17.63 (0.07) (3.58) (3.65) -- $(0.02) (0.02)
CLASS A
2005 $17.22 $ 0.14 $ 0.35 $ 0.49 $(0.20) -- $(0.20)
2004 14.03 0.08 3.19 3.27 (0.08) -- (0.08)
2003 9.83 (0.04) 4.24 4.20 -- -- --
2002 13.95 (0.00)(a) (4.12) (4.12) -- -- --
2001 17.61 (0.06) (3.58) (3.64) -- $(0.02) (0.02)
CLASS B
2005 $16.77 $ 0.01 $ 0.33 $ 0.34 -- -- --
2004 13.69 (0.04) 3.12 3.08 -- -- --
2003 9.67 (0.13) 4.15 4.02 -- -- --
2002 13.83 (0.08) (4.08) (4.16) -- -- --
2001 17.59 (0.17) (3.57) (3.74) -- $(0.02) $(0.02)
CLASS C
2005 $16.71 $ 0.04 $ 0.29 $ 0.33 $(0.01) -- $(0.01)
2004 13.68 (0.06) 3.14 3.08 (0.05) -- (0.05)
2003 9.66 (0.16) 4.18 4.02 -- -- --
2002 13.82 (0.08) (4.08) (4.16) -- -- --
2001 17.58 (0.17) (3.57) (3.74) -- $(0.02) (0.02)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------
Net Asset Net Assets Net
Period Value, End of Investment Portfolio
Ended Redemption End of Total Period Income Operating Turnover
December 31, Fees(c) Period Return+ (in 000's) (Loss) Expenses(b) Rate
- ------------ ------- ------- ------- ---------- ------ ------------- --------
CLASS AAA
2005 $0.00(a) $17.53 2.8% $185,870 0.92% 1.59% 4%
2004 0.00(a) 17.23 23.4 209,043 0.49 1.62 15
2003 0.00(a) 14.03 42.7 185,719 (0.38) 1.62 11
2002 -- 9.83 (29.6) 139,455 (0.05) 1.66 8
2001 -- 13.96 (20.7) 233,887 (0.45) 1.52 15
CLASS A
2005 $0.00(a) $17.51 2.8% $ 735 0.83% 1.59% 4%
2004 0.00(a) 17.22 23.3 598 0.52 1.62 15
2003 0.00(a) 14.03 42.7 421 (0.38) 1.62 11
2002 -- 9.83 (29.5) 372 (0.05) 1.66 8
2001 -- 13.95 (20.7) 219 (0.45) 1.52 15
CLASS B
2005 $0.00(a) $17.11 2.0% $ 425 0.09% 2.33% 4%
2004 0.00(a) 16.77 22.5 855 (0.25) 2.37 15
2003 0.00(a) 13.69 41.6 817 (1.13) 2.37 11
2002 -- 9.67 (30.1) 610 (0.80) 2.41 8
2001 -- 13.83 (21.3) 640 (1.20) 2.27 15
CLASS C
2005 $0.00(a) $17.03 2.0% $ 195 0.26% 2.34% 4%
2004 0.00(a) 16.71 22.5 249 (0.44) 2.37 15
2003 0.00(a) 13.68 41.6 94 (1.13) 2.37 11
2002 -- 9.66 (30.1) 252 (0.80) 2.41 8
2001 -- 13.82 (21.3) 196 (1.20) 2.27 15
- ---------------
+ 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.
(a) Amount represents less than $0.005 per share.
(b) The Fund incurred interest expense during the years ended December 31, 2005,
2004, 2003, and 2002. If interest expense had not been incurred, the ratio
of operating expenses to average net assets would have been 1.58%, 1.61%,
1.61%, and 1.64% (Class AAA), 1.59%, 1.61%, 1.61%, and 1.64% (Class A),
2.33%, 2.36%, 2.36%, and 2.39% (Class B), and 2.34%, 2.36%, 2.36%, and 2.39%
(Class C), respectively.
(c) Per share amounts have been calculated using the average shares outstanding
method.
See accompanying notes to financial statements.
18
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Directors of
GAMCO Global Series Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The GAMCO Global Telecommunications Fund (the
"Fund") (formerly The Gabelli Global Telecommunications Fund), a series of GAMCO
Global Series Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of
December 31, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the two years in the period ended
December 31, 2002 were audited by other auditors whose report dated January 31,
2003, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the Fund's
custodian. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
GAMCO Global Telecommunications Fund, a series of GAMCO Global Series Funds,
Inc., at December 31, 2005, 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 three years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 14, 2006
19
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2005, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors 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 directors noted the experience, length of service, and
reputation of the portfolio managers.
INVESTMENT PERFORMANCE. The independent directors reviewed the short, medium,
and long-term performance of the Fund against a peer group of all
telecommunications funds, noting that the Fund's performance was in the top half
of its peer group for the one and three year periods and in the top third for
the five year period.
PROFITABILITY. The independent directors reviewed summary data regarding the
profitability of the Fund to the Adviser both with a pro rata administrative
charge and with a standalone administrative charge. The directors also noted
that a substantial portion of the Fund's portfolio transactions were executed by
an affiliated broker of the Adviser and that the affiliated broker received
distribution fees and minor amounts of sales commissions.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale and reviewed rudimentary data suggesting that 20% growth in
the Fund would not produce meaningful economies of scale that the shareholders
would not participate in.
SHARING OF ECONOMIES OF SCALE. The independent directors noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale that may develop.
SERVICE AND COST COMPARISONS. The independent directors compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of telecommunication funds and
noted that the Adviser's advisory fee includes substantially all administrative
services of the Fund as well as investment advisory services. The directors
noted that the Fund's expense ratios were moderately higher, and the Fund's size
was moderately lower, than average within this group. The directors also noted
that the advisory fee structure was the same as that in effect for most of the
Gabelli/GAMCO funds. The directors were presented with, but did not compare, the
advisory fee to the fee for other types of accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and a
moderately above average performance record. The independent directors also
concluded that the Fund's expense ratios and the profitability to the Adviser of
managing the Fund were reasonable, and that economies of scale were not a
significant factor in their thinking at this time. The directors 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 directors determined to recommend
continuation of the investment advisory agreement to the full Board of
Directors.
20
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
The business and affairs of the Company are managed under the direction of the
Company's Board of Directors. Information pertaining to the Directors and
officers of the Company is set forth below. The Fund's Statement of Additional
Information includes additional information about GAMCO Global Series Funds,
Inc. Directors and is available, without charge, upon request, by calling
800-GABELLI (800-422-3554) or by writing to GAMCO Global Series Funds, Inc. 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 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4
- ---------------- -------- ---------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
- ----------------------
MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of GAMCO Investors, Inc. Holdings, Inc.
Chief Investment Officer and Chief Investment Officer - Value (holding company)
Age: 63 Portfolios of Gabelli Funds, LLC and
GAMCO Asset Management Inc.;
Chairman and Chief Executive Officer
of Lynch Interactive Corporation
(multimedia and services)
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of
Director Company, Inc. GAMCO Investors, Inc.
Age: 61
NON-INTERESTED DIRECTORS:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch
Director Consultants, Inc.; Adviser, Iona College Corporation (diversified
Age: 66 School of Business manufacturing)
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 70
ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director of The Guardian Life
Director Executive Officer of The Guardian Life Insurance Company of America;
Age: 75 Insurance Company of America from January Director of The Guardian
1993 to December 1995; President, Chief Insurance and Annuity
Executive Officer and a Director Company, Inc., Guardian
prior thereto Investor Services LLC,
and 25 mutual funds within
the Guardian Fund Complex
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence Hospital --
Director and practicing private physician
Age: 65
ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 71
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Director of Hollis-Eden
Director Supplies Corp. Pharmaceuticals (biotechnology);
Age: 60 Director of Earl Scheib, Inc.
(automotive services)
21
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
================================================================================
TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF
ADDRESS 1 TIME PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DURING PAST FIVE YEARS
- ---------------- -------- ----------------------
OFFICERS:
- --------
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating and Treasurer
President and Treasurer Officer of Gabelli Funds, LLC since 1988 and an
Age: 54 officer of all of the registered investment companies
in the Gabelli Funds complex. Director and President of
Gabelli Advisers, Inc. since 1998.
JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of GAMCO
Secretary Investors, Inc. since 1999 and GAMCO Asset
Age: 42 Management Inc. since 1993; Secretary of all of the
registered investment companies in the Gabelli Funds complex.
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc.
Chief Compliance Officer since 2004; Chief Compliance Officer of all of the
Age: 52 registered investment companies in the Gabelli Funds complex;
Vice President of Goldman Sachs Asset Management from
2000 through 2004.
- ---------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Company's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified. Effective November 16,
2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves
as Director Emeritus.
3 "Interested person" of the Company as defined in the Investment Company Act
of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested
person" because of their affiliation with Gabelli Funds, LLC which acts as
the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are
brothers.
4 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or
other investment companies registered under the 1940 Act.
22
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
================================================================================
- --------------------------------------------------------------------------------
2005 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended December 31, 2005, the Fund paid to shareholders ordinary
income dividends (comprised of net investment income) totaling $0.190,
$0.196, and $0.010 per share for Class AAA, Class A, and Class C,
respectively. For the year ended December 31, 2005, 86.01% of the ordinary
income dividend qualifies for the dividend received deduction available to
corporations and 100% of the ordinary income distribution was qualified
dividend income. Also for the year ended December 31, 2005, the Fund passed
through foreign tax credits of $0.0425 per share to Class AAA, Class A, and
Class C shareholders. The foreign source income and tax credits by country
are presented in the table below. Visit www.gabelli.com for more information
about 2005 foreign source income and foreign taxes paid.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2005 which was derived from U.S. Treasury securities was 0.92%. Such
income is exempt from state and local tax in all states. However, many
states, including New York and California, allow a tax exemption for a
portion of the income earned only if a mutual fund has invested at least 50%
of its assets at the end of each quarter of the Fund's fiscal year in U.S.
Government securities. The GAMCO Global Telecommunications Fund did not meet
this strict requirement in 2005. Due to the diversity in state and local tax
law, it is recommended that you consult your personal tax advisor as to the
applicability of the information provided to your specific situation.
- --------------------------------------------------------------------------------
FOREIGN SOURCE INCOME AND TAX CREDITS BY COUNTRY FOR 2005 (UNAUDITED)
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
----------------------------------------
Foreign Source Foreign Qualifying
Income % Income % Foreign Tax %
-------- -------- -------------
Australia 0.07 0.10 0.00
Austria 0.26 0.39 0.45
Bermuda 0.01 0.02 0.00
Brazil 2.03 2.96 2.99
Canada 6.90 10.07 11.40
Chile 1.86 2.72 5.97
Denmark 1.10 1.61 4.35
Finland 3.70 5.40 6.41
France 11.29 16.48 12.79
Germany 3.95 5.76 11.54
Hong Kong 1.35 1.97 0.00
Hungary 0.01 0.02 0.04
Indonesia 0.28 0.41 0.56
Italy 8.93 13.04 15.66
Jamaica 0.32 0.47 0.00
Japan 1.86 2.71 1.50
Malaysia 0.51 0.75 0.00
Mexico 4.49 6.56 0.00
Morroco 0.01 0.01 0.00
Netherlands 0.77 1.12 2.53
New Zealand 1.32 1.92 2.66
Pakistan 0.11 0.17 0.16
Philippines 1.56 2.28 3.16
Portugal 0.49 0.71 0.80
Russia 0.34 0.49 0.18
Singapore 1.12 1.63 0.00
South Africa 0.00 0.00 0.00
South Korea 2.02 2.94 6.01
Spain 3.34 4.88 2.97
Sweden 2.19 3.20 3.77
Switzerland 1.55 2.26 4.10
United Kingdom 4.74 6.92 0.00
23
GAMCO Global Series Funds, Inc.
THE GAMCO GLOBAL TELECOMMUNICATIONS 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 DIRECTORS
Mario J. Gabelli, CFA John D. Gabelli
CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT
EXECUTIVE OFFICER GABELLI & COMPANY, INC.
GAMCO INVESTORS, INC.
E. Val Cerutti Werner J. Roeder, MD
CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR
CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL
Anthony J. Colavita Anthonie C. van Ekris
ATTORNEY-AT-LAW MANAGING DIRECTOR
ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC.
Arthur V. Ferrara Salvatore J.Zizza
FORMER CHAIRMAN AND CHAIRMAN
CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL
GUARDIAN LIFE INSURANCE SUPPLIES CORP.
COMPANY OF AMERICA
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
GAMCO Global Telecommunications Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB401Q405SR
[GRAPHIC OMITTED]
TRIANGLE ART
THE
GAMCO
GLOBAL
TELECOMMUNICATIONS
FUND
ANNUAL REPORT
DECEMBER 31, 2005
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that Salvatore J. Zizza 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
$119,700 in 2005 and $105,600 in 2004.
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 2005 and $0 in 2004.
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 $14,400 in 2005 and
$13,600 in 2004.
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 2005 and $0 in 2004.
(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 $79,400 in 2005 and $78,600 in 2004.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) GAMCO Global Series Funds, Inc.
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date March 8, 2006
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer &
Principal Financial Officer
Date March 8, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.