UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04873
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The GAMCO Growth Fund
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2006
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GAMCO GROWTH FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
TO OUR SHAREHOLDERS,
During the second quarter of 2006, The GAMCO Growth Fund (the "Fund")
declined 4.0%, while the Russell 1000 Growth Index and the Standard & Poor's
("S&P") 500 Index were down 3.9% and 1.4%, respectively. For the six month
period ended June 30, 2006, the Fund declined 0.5% versus a loss of 0.9% for the
Russell 1000 Growth Index and a gain of 2.7% for the S&P 500 Index.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2006.
COMPARATIVE RESULTS
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AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2006 (A)
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Since
Year to Inception
Quarter Date 1 Year 3 Year 5 Year 10 Year 15 Year (4/10/87)
------- ---- ------ ------ ------ ------- ------- ---------
GAMCO GROWTH FUND CLASS AAA .... (3.95)% (0.49)% 10.02% 10.69% (1.66)% 7.16% 9.62% 11.40%
S&P 500 Index .................. (1.44) 2.71 8.62 11.21 2.49 8.32 10.73 10.32
Russell 1000 Growth Index ...... (3.90) (0.93) 6.12 8.35 (0.76) 5.42 N/A* N/A*
Class A ........................ (3.98) (0.49) 10.01 10.70 (1.65) 7.17 9.62 11.41
(9.50)(b) (6.21)(b) 3.69(b) 8.54(b) (2.81)(b) 6.53(b) 9.19(b) 11.07(b)
Class B ........................ (4.16) (0.85) 9.20 10.00 (2.03) 6.96 9.48 11.30
(8.95)(c) (5.80)(c) 4.20(c) 9.17(c) (2.42)(c) 6.96(c) 9.48(c) 11.30(c)
Class C ........................ (4.12) (0.85) 9.20 10.00 (2.03) 6.96 9.48 11.30
(5.08)(c) (1.84)(c) 8.20(c) 10.00(c) (2.03)(c) 6.96(c) 9.48(c) 11.30(c)
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(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DISTRIBUTIONS AND ARE NET OF EXPENSES. INVESTMENT RETURNS
AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE
REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST
RECENT MONTH END. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE
PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD
BE READ CAREFULLY BEFORE INVESTING.
THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE FOR
THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES, AND
CLASS C SHARES ON DECEMBER 31, 2003. THE ACTUAL PERFORMANCE FOR THE CLASS B
SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL
EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. THE S&P 500 INDEX AND THE
RUSSELL 1000 GROWTH INDEX ARE UNMANAGED INDICATORS OF STOCK MARKET
PERFORMANCE. DIVIDENDS ARE REINVESTED.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT
THE END OF THE PERIOD SHOWN FOR CLASS B AND CLASS C SHARES, RESPECTIVELY.
CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
* THERE IS NO DATA AVAILABLE FOR THE RUSSELL 1000 GROWTH INDEX PRIOR TO AUGUST
31, 1992.
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The
financial statements and investment portfolio are mailed separately from the
commentary. Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com/funds.
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THE GAMCO GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2006 through June 30, 2006
EXPENSE TABLE
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We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case - because the hypothetical return used is NOT the
Fund's actual return - the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the six months ended June 30, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/06 06/30/06 Ratio Period*
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THE GAMCO GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $ 995.10 1.49% $ 7.37
Class A $1,000.00 $ 995.10 1.49% $ 7.37
Class B $1,000.00 $ 991.50 2.24% $11.06
Class C $1,000.00 $ 991.50 2.24% $11.06
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.41 1.49% $ 7.45
Class A $1,000.00 $1,017.41 1.49% $ 7.45
Class B $1,000.00 $1,013.69 2.24% $11.18
Class C $1,000.00 $1,013.69 2.24% $11.18
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of June 30, 2006:
THE GAMCO GROWTH FUND
Financial ......................................... 14.4%
Industrial ........................................ 14.1%
Energy ............................................ 13.1%
Software & Services ............................... 13.1%
Consumer Staples .................................. 12.2%
Health Care Equipment & Services .................. 7.2%
Pharmaceuticals & Biotechnology ................... 5.3%
Retail ............................................ 5.0%
Materials ......................................... 2.9%
Semiconductors .................................... 2.9%
Media ............................................. 2.2%
Communications Equipment .......................... 2.0%
U.S. Treasury Bills ............................... 1.8%
Hotels and Gaming ................................. 1.8%
Computers & Peripheral ............................ 1.4%
Auto & Components ................................. 0.6%
Telecommunications ................................ 0.3%
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 ENDING MARCH 31, 2006. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
3
THE GAMCO GROWTH FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 98.5%
CONSUMER DISCRETIONARY -- 9.6%
AUTO & COMPONENTS -- 0.6%
65,000 Harley-Davidson Inc. ................. $ 3,103,572 $ 3,567,850
35,000 PACCAR Inc. .......................... 2,688,047 2,883,300
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5,791,619 6,451,150
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HOTELS AND GAMING -- 1.8%
140,000 Boyd Gaming Corp. .................... 6,809,155 5,650,400
50,000 Hilton Hotels Corp. .................. 1,435,487 1,414,000
65,000 Las Vegas Sands Corp.+ ............... 3,138,604 5,060,900
50,000 Marriott International Inc., Cl. A ... 1,850,822 1,906,000
10,000 MGM Mirage+ .......................... 461,368 408,000
20,000 Starwood Hotels & Resorts Worldwide Inc. 1,245,751 1,206,800
30,000 Station Casinos Inc. ................. 2,334,008 2,042,400
------------ --------------
17,275,195 17,688,500
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MEDIA -- 2.2%
150,000 McGraw-Hill Companies Inc. ........... 3,798,929 7,534,500
210,000 News Corp., Cl. B .................... 4,077,630 4,237,800
590,000 Time Warner Inc. ..................... 8,983,471 10,207,000
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16,860,030 21,979,300
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RETAIL -- 5.0%
60,000 Bed Bath & Beyond Inc.+ .............. 2,495,780 1,990,200
45,000 Best Buy Co. Inc. .................... 1,740,507 2,467,800
215,000 Cheesecake Factory Inc.+ ............. 5,475,834 5,794,250
120,000 Chico's FAS Inc.+ .................... 4,862,592 3,237,600
90,000 Coach Inc.+ .......................... 2,173,159 2,691,000
50,000 Costco Wholesale Corp. ............... 2,306,609 2,856,500
65,000 Kohl's Corp.+ ........................ 3,619,108 3,842,800
20,000 Staples Inc. ......................... 535,024 486,400
80,000 Starbucks Corp.+ ..................... 1,803,156 3,020,800
155,000 Target Corp. ......................... 6,785,649 7,574,850
206,577 The Home Depot Inc. .................. 5,685,167 7,393,391
213,400 Tiffany & Co. ........................ 5,707,333 7,046,468
150,000 Urban Outfitters Inc.+ ............... 4,576,941 2,623,500
------------ --------------
47,766,859 51,025,559
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TOTAL CONSUMER DISCRETIONARY ......... 87,693,703 97,144,509
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CONSUMER STAPLES -- 12.2%
30,000 Cadbury Schweppes plc, ADR ........... 1,225,209 1,164,600
230,000 Groupe Danone, ADR ................... 5,162,291 6,134,100
60,000 Nestle SA, ADR ....................... 4,446,450 4,702,038
450,000 PepsiCo Inc. ......................... 22,100,648 27,018,000
485,000 Procter & Gamble Co. ................. 26,316,250 26,966,000
190,000 The Hershey Co. ...................... 10,419,937 10,463,300
280,000 Wal-Mart Stores Inc. ................. 14,757,160 13,487,600
MARKET
SHARES COST VALUE
------ ---- ------
530,000 Walgreen Co. ......................... $ 16,456,457 $ 23,765,200
20,000 Whole Foods Market Inc. .............. 813,800 1,292,800
170,000 Wm. Wrigley Jr. Co. .................. 9,007,043 7,711,200
26,250 Wm. Wrigley Jr. Co., Cl. B ........... 1,574,598 1,189,125
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TOTAL CONSUMER STAPLES ............... 112,279,843 123,893,963
------------ --------------
ENERGY -- 13.1%
90,000 Anadarko Petroleum Corp. ............. 4,501,909 4,292,100
61,000 Apache Corp. ......................... 1,970,404 4,163,250
50,000 Baker Hughes Inc. .................... 2,616,718 4,092,500
20,000 BJ Services Co. ...................... 832,807 745,200
70,000 Canadian Natural Resources Ltd. ...... 3,271,408 3,876,600
175,000 Chesapeake Energy Corp. .............. 5,510,383 5,293,750
12,463 ConocoPhillips ....................... 573,368 816,700
85,000 Devon Energy Corp. ................... 3,965,184 5,134,850
40,000 EnCana Corp. ......................... 2,000,275 2,105,600
75,000 EOG Resources Inc. ................... 5,968,368 5,200,500
110,000 Halliburton Co. ...................... 8,120,821 8,163,100
135,000 Hess Corp. ........................... 6,180,309 7,134,750
110,000 Kerr-McGee Corp. ..................... 5,592,359 7,628,500
125,000 McDermott International Inc.+ ........ 4,840,905 5,683,750
55,000 Murphy Oil Corp. ..................... 2,242,801 3,072,300
90,000 National-Oilwell Varco Inc.+ ......... 5,380,325 5,698,800
70,000 Occidental Petroleum Corp. ........... 6,770,263 7,178,500
195,000 Peabody Energy Corp. ................. 7,540,805 10,871,250
123,000 Pioneer Natural Resources Co. ........ 5,957,898 5,708,430
50,000 Sasol Ltd., ADR ...................... 2,070,546 1,932,000
158,000 Schlumberger Ltd. .................... 5,142,155 10,287,380
100,000 Southwestern Energy Co.+ ............. 2,990,550 3,116,000
44,000 Suncor Energy Inc. ................... 1,541,174 3,564,440
60,000 Transocean Inc.+ ..................... 2,410,948 4,819,200
95,000 Valero Energy Corp. .................. 4,660,313 6,319,400
130,000 XTO Energy Inc. ...................... 5,524,477 5,755,100
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TOTAL ENERGY ......................... 108,177,473 132,653,950
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FINANCIAL -- 14.4%
80,000 Affiliated Managers Group Inc.+ ...... 7,835,936 6,951,200
315,000 American Express Co. ................. 13,426,012 16,764,300
80,000 American International Group Inc. .... 5,266,518 4,724,000
53,100 China Life Insurance Co. Ltd., ADR ... 3,297,347 3,361,230
560,000 Citigroup Inc. ....................... 25,839,355 27,014,400
125,000 Commerce Bancorp Inc. ................ 4,438,042 4,458,750
250,000 Credit Suisse Group, ADR ............. 13,747,905 13,997,500
60,000 Goldman Sachs Group Inc. ............. 8,269,505 9,025,800
See accompanying notes to financial statements.
4
THE GAMCO GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2006 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
FINANCIAL (CONTINUED)
30,000 HSBC Holdings plc, ADR ............... $ 2,706,890 $ 2,650,500
75,000 Legg Mason Inc. ...................... 8,598,925 7,464,000
145,000 Merrill Lynch & Co. Inc. ............. 6,330,411 10,086,200
30,000 Moody's Corp. ........................ 1,640,558 1,633,800
195,900 Northern Trust Corp. ................. 11,288,088 10,833,270
188,800 State Street Corp. ................... 9,069,793 10,967,392
50,000 T. Rowe Price Group Inc. ............. 2,040,354 1,890,500
125,000 UBS AG ............................... 10,834,255 13,712,500
------------ --------------
TOTAL FINANCIAL ...................... 134,629,894 145,535,342
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HEALTH CARE -- 12.5%
HEALTH CARE EQUIPMENT & SERVICES -- 7.2%
90,000 Alcon Inc. ........................... 8,545,175 8,869,500
150,000 Biomet Inc. .......................... 6,321,694 4,693,500
110,000 Edwards Lifesciences Corp.+ .......... 4,543,567 4,997,300
35,000 IDEXX Laboratories Inc.+ ............. 2,225,465 2,629,550
70,000 Lincare Holdings Inc.+ ............... 3,008,947 2,648,800
135,000 Medtronic Inc. ....................... 6,189,982 6,334,200
60,000 Quest Diagnostics Inc. ............... 3,496,844 3,595,200
280,000 St. Jude Medical Inc.+ ............... 9,446,144 9,077,600
220,000 Stryker Corp. ........................ 10,945,256 9,264,200
100,000 UnitedHealth Group Inc. .............. 3,812,352 4,478,000
120,000 Varian Medical Systems Inc.+ ......... 4,796,238 5,682,000
195,000 Zimmer Holdings Inc.+ ................ 14,311,699 11,060,400
------------ --------------
77,643,363 73,330,250
------------ --------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 5.3%
218,000 Amgen Inc.+ .......................... 14,589,356 14,220,140
105,000 Eli Lilly & Co. ...................... 6,089,099 5,803,350
165,000 Genentech Inc.+ ...................... 11,078,269 13,497,000
100,000 Genzyme Corp.+ ....................... 5,739,755 6,105,000
70,000 Gilead Sciences Inc.+ ................ 4,481,872 4,141,200
164,000 Johnson & Johnson .................... 8,665,669 9,826,880
------------ --------------
50,644,020 53,593,570
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TOTAL HEALTH CARE .................... 128,287,383 126,923,820
------------ --------------
INDUSTRIAL -- 14.1%
90,000 3M Co. ............................... 7,378,186 7,269,300
55,000 C.H. Robinson Worldwide Inc. ......... 1,257,189 2,931,500
75,000 Caterpillar Inc. ..................... 3,331,977 5,586,000
130,000 Emerson Electric Co. ................. 10,996,470 10,895,300
50,000 Expeditors International of
Washington Inc. .................... 1,228,395 2,800,500
45,000 FedEx Corp. .......................... 5,257,016 5,258,700
35,000 Fluor Corp. .......................... 1,629,609 3,252,550
162,000 General Dynamics Corp. ............... 5,670,262 10,604,520
1,295,000 General Electric Co. ................. 45,058,905 42,683,200
90,000 Ingersoll-Rand Co. Ltd., Cl. A ....... 3,668,937 3,850,200
MARKET
SHARES COST VALUE
------ ---- ------
300,000 ITT Industries Inc. .................. $ 13,764,080 $ 14,850,000
95,000 L-3 Communications Holdings Inc. ..... 4,346,496 7,164,900
95,000 Rockwell Automation Inc. ............. 5,919,823 6,840,950
60,000 United Parcel Service Inc., Cl. B .... 4,378,495 4,939,800
215,000 United Technologies Corp. ............ 10,259,579 13,635,300
------------ --------------
TOTAL INDUSTRIAL ..................... 124,145,419 142,562,720
------------ --------------
INFORMATION TECHNOLOGY -- 19.7%
COMMUNICATIONS EQUIPMENT -- 2.0%
556,000 Cisco Systems Inc.+ .................. 8,830,648 10,858,680
40,000 Harman International Industries Inc. 3,337,982 3,414,800
161,000 QUALCOMM Inc. ........................ 5,532,862 6,451,270
------------ --------------
17,701,492 20,724,750
------------ --------------
COMPUTERS & PERIPHERAL -- 1.4%
175,000 Apple Computer Inc.+ ................. 12,172,946 9,996,000
180,000 Dell Inc.+ ........................... 5,907,724 4,393,800
------------ --------------
18,080,670 14,389,800
------------ --------------
SEMICONDUCTORS -- 2.9%
95,000 Broadcom Corp., Cl. A+ ............... 3,116,131 2,854,750
430,000 Intel Corp. .......................... 18,400,340 8,148,500
260,000 Linear Technology Corp. .............. 9,615,113 8,707,400
160,000 Microchip Technology Inc. ............ 4,322,022 5,368,000
146,000 Texas Instruments Inc. ............... 3,922,716 4,422,340
------------ --------------
39,376,322 29,500,990
------------ --------------
SOFTWARE & SERVICES -- 13.1%
205,000 Adobe Systems Inc.+ .................. 6,260,089 6,223,800
65,000 CheckFree Corp.+ ..................... 2,323,579 3,221,400
420,000 eBay Inc.+ ........................... 16,591,931 12,301,800
55,000 Electronic Arts Inc.+ ................ 2,671,361 2,367,200
50,000 FactSet Research Systems Inc. ........ 2,174,561 2,365,000
100,000 Getty Images Inc.+ ................... 7,573,822 6,351,000
73,900 Google Inc., Cl. A+ .................. 20,936,952 30,988,487
100,000 International Game Technology ........ 3,077,224 3,794,000
1,560,000 Microsoft Corp. ...................... 40,626,884 36,348,000
105,000 NAVTEQ Corp.+ ........................ 4,632,396 4,691,400
70,000 SEI Investments Co. .................. 3,150,029 3,421,600
60,000 Trimble Navigation Ltd.+ ............. 2,740,072 2,678,400
535,000 Yahoo! Inc.+ ......................... 18,844,248 17,655,000
------------ --------------
131,603,148 132,407,087
------------ --------------
TELECOMMUNICATIONS -- 0.3%
89,900 NeuStar Inc., Cl. A+ ................. 3,114,186 3,034,125
------------ --------------
TOTAL INFORMATION TECHNOLOGY ......... 209,875,818 200,056,752
------------ --------------
See accompanying notes to financial statements.
5
THE GAMCO GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
MATERIALS -- 2.9%
60,000 Allegheny Technologies Inc. .......... $ 1,531,200 $ 4,154,400
95,000 BHP Billiton Ltd., ADR ............... 4,045,820 4,091,650
183,000 Commercial Metals Co. ................ 3,185,986 4,703,100
55,000 Freeport-McMoRan Copper &
Gold Inc., Cl. B .................. 2,295,054 3,047,550
65,000 Newmont Mining Corp. ................. 3,215,192 3,440,450
60,000 Phelps Dodge Corp. ................... 5,145,272 4,929,600
25,000 Rio Tinto plc, ADR ................... 4,301,022 5,242,750
------------ --------------
TOTAL MATERIALS ...................... 23,719,546 29,609,500
------------ --------------
TOTAL COMMON STOCKS .................. 928,809,079 998,380,556
------------ --------------
PRINCIPAL
AMOUNT
-------
U.S. GOVERNMENT OBLIGATIONS -- 1.8%
$17,922,000 U.S. Treasury Bills,
4.502% to 4.923%++,
07/06/06 to 10/12/06 ............... 17,807,674 17,810,571
------------ --------------
TOTAL
INVESTMENTS -- 100.3% .............. $946,616,753 1,016,191,127
============
OTHER ASSETS AND LIABILITIES (NET) -- (0.3)% ...... (3,207,910)
--------------
NET ASSETS -- 100.0% .............................. $1,012,983,217
==============
- ----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
See accompanying notes to financial statements.
6
THE GAMCO GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $946,616,753) ................. $1,016,191,127
Cash ...................................................... 1,140
Receivable for investments sold ........................... 10,510,728
Dividends receivable ...................................... 765,432
Receivable for Fund shares sold ........................... 295,750
Other assets .............................................. 19,956
--------------
TOTAL ASSETS .............................................. 1,027,784,133
--------------
LIABILITIES:
Payable for investments purchased ......................... 10,812,000
Payable for Fund shares redeemed .......................... 1,679,826
Payable for shareholder services fees ..................... 851,543
Payable for investment advisory fees ...................... 827,436
Payable for shareholder
communications expenses ................................. 335,165
Payable for distribution fees ............................. 207,287
Payable for Trustees' fees ................................ 1,666
Other accrued expenses .................................... 85,993
--------------
TOTAL LIABILITIES ......................................... 14,800,916
--------------
NET ASSETS applicable to 35,336,715
shares outstanding ...................................... $1,012,983,217
==============
NET ASSETS CONSIST OF:
Shares of beneficial interest, each class at
$0.01 par value ......................................... $ 353,367
Additional paid-in capital ................................ 1,908,605,260
Accumulated net investment loss ........................... (699,007)
Accumulated net realized loss on investments .............. (964,850,777)
Net unrealized appreciation on investments ................ 69,574,374
--------------
NET ASSETS ................................................ $1,012,983,217
==============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($1,011,999,539 / 35,301,941
shares outstanding; unlimited number
of shares authorized) ................................... $28.67
======
CLASS A:
Net Asset Value and redemption price per share
($280,407 / 9,778 shares outstanding;
unlimited number of shares authorized) .................. $28.68
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) .................................. $30.43
======
CLASS B:
Net Asset Value and offering price per share
($271,725 / 9,657.6 shares outstanding;
unlimited number of shares authorized) .................. $28.14(a)
======
CLASS C:
Net Asset Value and offering price per share
($431,546 / 15,338 shares outstanding;
unlimited number of shares authorized) .................. $28.14(a)
======
- --------------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $193,759) .............. $ 7,166,596
Interest .................................................. 306,148
------------
TOTAL INVESTMENT INCOME ................................... 7,472,744
------------
EXPENSES:
Investment advisory fees .................................. 5,494,136
Distribution fees - Class AAA ............................. 1,372,326
Distribution fees - Class A ............................... 355
Distribution fees - Class B ............................... 1,385
Distribution fees - Class C ............................... 2,300
Shareholder services fees ................................. 792,837
Shareholder communications expenses ....................... 264,202
Custodian fees ............................................ 75,508
Legal and audit fees ...................................... 39,289
Trustees' fees ............................................ 34,166
Registration expenses ..................................... 21,635
Interest expense .......................................... 249
Miscellaneous expenses .................................... 74,550
------------
TOTAL EXPENSES ............................................ 8,172,938
Less: Custodian fee credits ............................... (1,187)
------------
TOTAL NET EXPENSES ........................................ 8,171,751
------------
NET INVESTMENT LOSS ....................................... (699,007)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments .......................... 96,572,469
Net change in unrealized appreciation/
depreciation on investments ............................. (98,020,271)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS .......................................... (1,447,802)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... $ (2,146,809)
============
See accompanying notes to financial statements.
7
THE GAMCO GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
-------------- -----------------
OPERATIONS:
Net investment loss ........................................................ $ (699,007) $ (6,096,798)
Net realized gain on investments ........................................... 96,572,469 117,060,872
Net change in unrealized appreciation/depreciation on investments .......... (98,020,271) 5,770,520
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............ (2,146,809) 116,734,594
-------------- --------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Class AAA .................................................................. (125,502,379) (424,688,588)
Class A .................................................................... 8,263 192,347
Class C .................................................................... (121,969) 272,594
-------------- --------------
NET DECREASE IN NET ASSETS FROM SHARES OF
BENEFICIAL INTEREST TRANSACTIONS ......................................... (125,616,085) (424,223,647)
-------------- --------------
REDEMPTION FEES ............................................................ 4,905 25,950
-------------- --------------
NET DECREASE IN NET ASSETS ................................................. (127,757,989) (307,463,103)
NET ASSETS:
Beginning of period ........................................................ 1,140,741,206 1,448,204,309
-------------- --------------
End of period (including undistributed net investment income
of $0 and $0, respectively) .............................................. $1,012,983,217 $1,140,741,206
============== ==============
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION. The GAMCO Growth Fund (the "Fund"), formerly The Gabelli Growth
Fund, was organized on October 24, 1986 as a Massachusetts business trust. The
Fund is a diversified open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
primary objective is capital appreciation. The Fund commenced investment
operations on April 10, 1987.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
8
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
Portfolio securities primarily traded on a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, unless the Board determines such amount
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value ADR securities at the
close of the U.S. exchange; and evaluation of any other information that could
be indicative of the value of the security.
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.
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.
9
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset, if any, shown
as "custodian fee credits".
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under U.S. generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2005, reclassifications were made to decrease accumulated net
investment loss by $6,096,798, with an offsetting adjustment to additional
paid-in capital.
No distributions were made in the fiscal year ended December 31, 2005.
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
At December 31, 2005, the difference between book basis and tax basis unrealized
appreciation was primarily due to deferral of losses from wash sales for tax
purposes.
As of December 31, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Accumulated capital loss carryforward ................ $(1,052,343,474)
Net unrealized appreciation .......................... 158,514,873
---------------
Total ................................................ $ (893,828,601)
===============
At December 31, 2005, the Fund had net capital loss carryforwards for Federal
income tax purposes of $1,052,343,474, which are available to reduce future
required distributions of net capital gains to shareholders. $701,151,305 is
available through 2010; $350,050,494 is available through 2011; and $1,141,675
is available through 2012. For the year ended December 31, 2005, the Fund
utilized capital loss carryforwards of $110,960,677.
The following summarizes the tax cost of investments and the related unrealized
appreciation/depreciation at June 30, 2006:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ............... $952,440,028 $120,844,173 $(57,093,074) $63,751,099
10
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Trustees of the Fund who are affiliated persons of the Adviser.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended June 30, 2006, other than short-term securities, aggregated
$258,470,990 and $388,835,385, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2006, the
Fund paid brokerage commissions of $19,561 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $407 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the six months
ended June 30, 2006, the Fund paid or accrued $22,500 to the Adviser in
connection with the cost of computing the Fund's NAV, which is included in
miscellaneous expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to
$25,000,000 from the custodian for temporary borrowing purposes. Borrowings
under this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. During the six months ended June 30, 2006, there were no
borrowings from the line of credit.
8. SHARES OF BENEFICIAL INTEREST. The Fund currently offers four classes of
shares -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares.
Class AAA Shares are offered only to investors who acquire them directly from
Gabelli & Company, or through selected broker/dealers, or the transfer agent
without a sales charge. Class A Shares are subject to a maximum front-end sales
charge of 5.75%. Class B Shares are subject to a contingent deferred sales
charge ("CDSC") upon redemption within six years of purchase and automatically
convert to Class A Shares approximately eight years after the original purchase.
The applicable CDSC is equal to a declining percentage of the lesser of the NAV
per share at the date of the original purchase or at the date of redemption,
based on the length of time held. Class C Shares are subject to a 1% CDSC for
one year after purchase. Class B Shares are available only through exchange of
Class B Shares of other funds distributed by Gabelli & Company. The Board has
approved Class I Shares which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged on or before the sixtieth day after the date of a purchase.) The
redemption fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the six months ended June 30, 2006 and the fiscal year ended
December 31, 2005 amounted to $4,905 and $25,950, respectively.
11
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------- ----------------------------
CLASS AAA CLASS AAA
--------------------------- ----------------------------
Shares sold ...................................... 1,354,934 $ 39,969,021 4,243,927 $ 113,064,508
Shares redeemed .................................. (5,616,270) (165,471,400) (20,096,781) (537,753,096)
---------- ------------- ----------- -------------
Net decrease ................................... (4,261,336) $(125,502,379) (15,852,854) $(424,688,588)
========== ============- =========== =============
CLASS A CLASS A
--------------------------- ----------------------------
Shares sold ...................................... 1,145 $ 33,273 7,311 $ 208,331
Shares redeemed .................................. (870) (25,010) (594) (15,984)
---------- ------------- ----------- -------------
Net increase ................................... 275 $ 8,263 6,717 $ 192,347
========== ============- =========== =============
CLASS C CLASS C
--------------------------- ----------------------------
Shares sold ...................................... 1,916 $ 54,400 14,494 $ 373,629
Shares redeemed .................................. (6,057) (176,369) (3,750) (101,035)
---------- ------------- ----------- -------------
Net increase (decrease) ........................ (4,141) $ (121,969) 10,744 $ 272,594
========== ============- =========== =============
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the SEC requesting information
on mutual fund trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company, is responding to
these requests for documents and testimony. In June 2006, GAMCO began
discussions with the SEC regarding a possible resolution of their inquiry. Since
these discussions are ongoing, it cannot be determined at this time whether they
will ultimately result in a settlement of this matter. On a separate matter, in
September 2005, the Adviser was informed by the staff of the SEC that the staff
may recommend to the Commission that an administrative remedy and a monetary
penalty be sought from the Adviser in connection with the actions of two of
seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule
19a-1 of the 1940 Act. These provisions require registered investment companies
to provide written statements to shareholders when a dividend is made from a
source other than net investment income. While the two closed-end funds sent
annual statements and provided other materials containing this information, the
funds did not send written statements to shareholders with each distribution in
2002 and 2003. The Adviser believes that all of the funds are now in compliance.
The Adviser believes that these matters would have no effect on the Fund or any
material adverse effect on the Adviser or its ability to manage the Fund.
12
THE GAMCO GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------------- --------------------------
Net
Net Asset Realized and Total Net
Period Value, Net Unrealized from Realized
Ended Beginning Investment Gain/(Loss) on Investment Gain on Total
December 31 of Period Loss(a) Investments Operations Investments Distributions
----------- --------- ------- ----------- ---------- ----------- -------------
CLASS AAA
2006(b) $28.81 $(0.02) $(0.12) $(0.14) -- --
2005 26.12 (0.13) 2.82 2.69 -- --
2004 24.95 (0.11) 1.28 1.17 -- --
2003 18.99 (0.14) 6.10 5.96 -- --
2002 28.68 (0.17) (9.52) (9.69) -- --
2001 37.79 (0.23) (8.88) (9.11) $(0.00)(c) $(0.00)(c)
CLASS A
2006(b) $28.82 $(0.02) $(0.12) $(0.14) -- --
2005 26.13 (0.12) 2.81 2.69 -- --
2004(e) 24.95 (0.02) 1.20 1.18 -- --
CLASS B
2006(b) $28.38 $(0.13) $(0.11) $(0.24) -- --
2005 25.93 (0.32) 2.77 2.45 -- --
2004(e) 24.95 (0.28) 1.26 0.98 -- --
CLASS C
2006(b) $28.38 $(0.13) $(0.11) $(0.24) -- --
2005 25.93 (0.32) 2.77 2.45 -- --
2004(e) 24.95 (0.21) 1.19 0.98 -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------
Net Asset Net Assets
Period Value, End of Net Portfolio
Ended Redemption End of Total Period Investment Operating Turnover
December 31 Fees(a) Period Return+ (in 000's) Loss Expenses Rate
----------- ------- ------ ------- ---------- ---- -------- ----
CLASS AAA
2006(b) $0.00(c) $28.67 (0.5)% $1,012,000 (0.13)%(d) 1.49%(d) 24%
2005 0.00(c) 28.81 10.3 1,139,640 (0.48) 1.49 39
2004 0.00(c) 26.12 4.7 1,447,655 (0.46) 1.53 31
2003 -- 24.95 31.4 1,881,457 (0.60) 1.47 42
2002 -- 18.99 (33.8) 1,675,816 (0.68) 1.43 30
2001 -- 28.68 (24.1) 2,948,390 (0.71) 1.40 26
CLASS A
2006(b) $0.00(c) $28.68 (0.5)% $ 280 (0.12)%(d) 1.49%(d) 24%
2005 0.00(c) 28.82 10.3 274 (0.43) 1.47 39
2004(e) 0.00(c) 26.13 4.7 73 (0.09) 1.60 31
CLASS B
2006(b) $0.00(c) $28.14 (0.9)% $ 272 (0.87)%(d) 2.24%(d) 24%
2005 0.00(c) 28.38 9.5 274 (1.22) 2.24 39
2004(e) 0.00(c) 25.93 3.9 250 (1.12) 2.30 31
CLASS C
2006(b) $0.00(c) $28.14 (0.9)% $ 431 (0.90)%(d) 2.24%(d) 24%
2005 0.00(c) 28.38 9.5 553 (1.21) 2.23 39
2004(e) 0.00(c) 25.93 3.9 226 (0.88) 2.37 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 distributions and does not reflect applicable
sales charges. Total return for the period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) For the six months ended June 30, 2006, unaudited.
(c) Amount represents less than $0.005 per share.
(d) Annualized.
(e) Class A, Class B, and Class C Shares were initially offered on December 31,
2003.
See accompanying notes to financial statements.
13
THE GAMCO GROWTH FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
At its meeting on February 15, 2006, the Board of Trustees ("Board") of the Fund
approved the continuation of the investment advisory agreement with the Adviser
for the Fund on the basis of the recommendation by the trustees who are not
"interested persons" of the Fund (the "independent board members"). The
following paragraphs summarize the material information and factors considered
by the independent board members as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent board members considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder, and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The independent
board members noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The independent board members reviewed the short,
medium, and long-term performance of the Fund against a peer group of large-cap
growth funds chosen by Lipper as being comparable. The independent board members
noted that the Fund's performance was near the top 25% of the funds in its
category for the one and ten year periods and the top 50% for the prior three
year period, but was in or near the lowest 25% of the funds in its category for
the five year period. The independent board members also discussed at length the
performance for the five year period and changes made to the Fund's portfolio to
seek to prevent a recurrence of the Fund's performance in 2002.
PROFITABILITY. The independent board members reviewed summary data regarding the
profitability of the Fund to the Adviser both with an administrative overhead
charge and without such a charge. The independent board members also noted that
the Adviser's affiliated broker received distribution fees and minor amounts of
sales commissions.
ECONOMIES OF SCALE. The independent board members discussed the major elements
of the Adviser's cost structure and the relationship of those elements to
potential economies of scale.
SHARING OF ECONOMIES OF SCALE. The independent board members noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale that may develop or any losses or diminished
profitability to the Adviser in prior years.
SERVICE AND COST COMPARISONS. The independent board members compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of large-cap growth funds and
noted that the advisory fee includes substantially all administrative services
of the Fund as well as investment advisory services of the Adviser. The
independent board members noted that the Fund's expense ratios were above and
the Fund's size was above average within this group. The independent board
members also noted that the advisory fee structure was the same as that in
effect for most of the Gabelli funds. The independent board members were
presented with, but did not consider to be material to their decision, various
information comparing the advisory fee to the fee for other types of accounts
managed by affiliates of the Adviser.
CONCLUSIONS. The independent board members concluded that the Fund enjoyed
highly experienced portfolio management services and good ancillary services but
that the five year performance record was poor and that the expense ratios were
significantly higher than those of the peer group. The independent board members
also noted that the longer and shorter-term performance was excellent or very
good and that steps had been taken to seek to avoid the problems that led to the
poor five year performance. They concluded that the positive trend and long-term
record of the portfolio manager were sufficient in relation to the performance
factor to warrant renewal of the investment advisory agreement at this time. The
independent board members concluded that the profitability to the Adviser of
managing the Fund was reasonable and that economies of scale were not a
significant factor in their thinking at this time. The independent board members
did not view the potential profitability of ancillary services as material to
their decision. On the basis of the foregoing and without assigning particular
weight to any single conclusion, the independent board members determined to
recommend continuation of the investment advisory agreement to the full Board.
14
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) TEAM MANAGED
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 debt instruments. (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 FUNDS MAY 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 CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND
BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION
ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
THE GAMCO GROWTH FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: WWW.GABELLI.COM
E-MAIL: INFO@GABELLI.COM
Net Asset Value available daily by calling
800-GABELLI after 6:00 P.M.
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Robert J. Morrissey
CHAIRMAN AND CHIEF ATTORNEY-AT-LAW
EXECUTIVE OFFICER MORRISSEY, HAWKINS & LYNCH
GAMCO INVESTORS, INC.
Anthony J. Colavita Anthony R. Pustorino
ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT,
ANTHONY J. COLAVITA, P.C. PROFESSOR EMERITUS
PACE UNIVERSITY
James P. Conn Anthony Torna
FORMER CHIEF INVESTMENT OFFICER MAXIM GROUP LLC
FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.
Dugald A. Fletcher Anthonie C. van Ekris
PRESIDENT CHAIRMAN
FLETCHER & COMPANY, INC. BALMAC INTERNATIONAL, INC.
John D. Gabelli Salvatore J. Zizza
SENIOR VICE PRESIDENT CHAIRMAN, HALLMARK ELECTRICAL
GABELLI & COMPANY, INC. SUPPLIES CORP.
OFFICERS AND PORTFOLIO MANAGER
Bruce N. Alpert Howard F. Ward, CFA
PRESIDENT PORTFOLIO MANAGER
James E. McKee Peter D. Goldstein
SECRETARY CHIEF COMPLIANCE OFFICER
Agnes Mullady
TREASURER
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 Growth Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB406Q206SR
GAMCO
THE
GAMCO
GROWTH
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The GAMCO Growth Fund
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date September 1, 2006
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date September 1, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady, Principal Financial Officer
& Treasurer
Date September 1, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.