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
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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: December 31, 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 GLOBAL CONVERTIBLE SECURITIES FUND
ANNUAL REPORT
DECEMBER 31, 2006
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, 2006 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION (UNAUDITED)
During the twelve month period ended December 31, 2006, the Fund (Class
AAA) generated a total rate of return of 8.39%, which includes reinvestment of
its regular quarterly distributions of three cents per share. The Merrill Lynch
Global 300 Convertible Index, rose 16.02% in 2006.
For the year, the MSCI World Free Index rose 20.07%. The Fund participated
in 62% of the return from global equity markets with less risk. The
investment-grade Merrill Lynch Global Bond Index rose 2.6%, while the Global
High Yield Index rose 11.8%. Our overweight position in the Japanese market
earlier in the year hindered results somewhat.
For the full year, our top five performers were Scottish Power's 4% bond
(Scottish Power generates and supplies electricity in the U.K., and was the
subject of a takeover bid by Iberdrola S.A. of Spain in November); Sanyo
Chemical, a Japanese resin producer which benefited from a rally in the Japanese
market earlier in the year, with its 0% convertible bond; Cincinnati Bell 6 3/4%
convertible preferred (+22%), which rose thanks to better operating results from
CBB's wireless and data divisions; Ashland Inc. (+19%), a crude oil and
petrochemical company which performed well as oil prices rose; and Hon Hai
Precision Instrument Co., the world's largest contract electronics manufacturer,
whose 0% convertible bond rose. Hon Hai will be manufacturing Apple's new
iPhone.
Convertibles which did not perform up to expectations and were sold
included Futaba 0%. Futaba manufactures automotive parts, a sector which has
weakened along with U.S. automotive weakness. Tokai Carbon's (which makes carbon
black for rubber) 0% bond was also weak. Omnicare's 4% convertible preferred
fell 28%, as fears over its ability to maintain its pricing in a more volatile
healthcare environment took their toll.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
January 22, 2007
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL
CONVERTIBLE SECURITIES FUND CLASS AAA SHARES, THE MSCI WORLD FREE INDEX,
THE LIPPER CONVERTIBLE SECURITIES FUND AVERAGE,
AND THE UBS GLOBAL CONVERTIBLE INDEX
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
GAMCO Global
Convertible Lipper Convertible
Securities Fund Securities UBS Global MSCI World
(Class AAA) Fund Average Convertible Index Free Index
2/3/94 $10,000 $10,000 $10,000 $10,000
12/31/94 10,090 9,277 9,709 9,863
12/31/95 11,363 11,316 11,146 11,910
12/31/96 11,985 13,084 11,883 13,520
12/31/97 12,323 15,511 12,057 15,632
12/31/98 13,388 16,204 14,544 19,442
12/31/99 20,229 20,889 19,734 24,268
12/31/00 17,397 21,026 17,683 21,070
12/31/01 15,093 19,542 16,633 17,526
12/31/02 14,361 17,994 16,533 14,040
12/31/03 17,446 22,817 20,595 18,688
12/31/04 19,479 24,795 22,482 21,439
12/31/05 21,037 25,524 22,496 23,474
12/31/06 22,802 28,301 26,532 28,185
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, 2006 (A)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (2/3/94)
------- ------ ------ ------ ------- --------
GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
CLASS AAA ....................................... 3.87% 8.39% 9.33% 8.60% 6.64% 6.59%
Merrill Lynch Global 300 Convertible Index ........ 6.32 16.02 7.85 9.20 7.31 N/A*
UBS Global Convertible Index ...................... 6.74 17.94 8.82 9.81 8.77 8.10
MSCI World Free Index ............................. 8.37 20.07 14.68 9.97 7.62 8.35
Class A ........................................... 4.06 8.42 9.38 8.65 6.66 6.61
(1.92)(b) 2.18(b) 7.25(b) 7.38(b) 6.04(b) 6.13(b)
Class B ........................................... 3.77 7.64 8.57 7.84 6.19 6.25
(1.23)(c) 2.64(c) 7.72(c) 7.55(c) 6.19(c) 6.25(c)
Class C ........................................... 3.92 7.75 8.59 7.92 6.28 6.31
2.92(d) 6.75(d) 8.59 7.92 6.28 6.31
(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 DISTRIBUTIONS 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 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. 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. YOU CANNOT INVEST DIRECTLY IN AN
INDEX.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR, FIVE
YEAR, TEN YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%, 3%, 2%, 0%, AND 0%,
RESPECTIVELY, OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER
IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER AND ONE YEAR PERIODS OF 1%
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
* 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, 2006 through December 31, 2006
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, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/06 12/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,051.80 2.18% $11.27
Class A $1,000.00 $1,052.10 2.15% $11.12
Class B $1,000.00 $1,048.10 2.89% $14.92
Class C $1,000.00 $1,049.40 2.88% $14.88
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,014.22 2.18% $11.07
Class A $1,000.00 $1,014.37 2.15% $10.92
Class B $1,000.00 $1,010.64 2.89% $14.65
Class C $1,000.00 $1,010.69 2.88% $14.60
* 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, 2006:
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Financial Services ................................ 15.0%
Health Care ....................................... 13.3%
Energy and Utilities .............................. 10.6%
Computer Software and Services .................... 7.7%
Electronics ....................................... 6.6%
Consumer Products ................................. 6.5%
Telecommunications ................................ 6.0%
Retail ............................................ 5.9%
U.S. Government Obligations ....................... 4.1%
Business Services ................................. 4.0%
Food and Beverage ................................. 3.8%
Equipment and Supplies ............................ 3.3%
Automotive: Parts and Accessories ................. 3.0%
Communications Equipment .......................... 2.8%
Metals and Mining ................................. 2.6%
Broadcasting ...................................... 2.3%
Aerospace ......................................... 2.2%
Other Assets and Liabilities (Net) ................ 0.3%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER
30, 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
SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF
THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
4
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
CONVERTIBLE CORPORATE BONDS -- 77.5%
AEROSPACE -- 2.2%
$ 180,000 Lockheed Martin Corp., Cv.,
5.124%, 08/15/33 (d) ........ $ 199,696 $ 239,762
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.0%
15,000,000(b) Suzuki Motor Corp., Cv.,
Zero Coupon, 03/29/13 ....... 145,914 155,035
20,000,000(b) Taiho Kogyo Co. Ltd., Cv.,
Zero Coupon, 03/31/11 ....... 189,464 175,623
------------ ------------
335,378 330,658
------------ ------------
BUSINESS SERVICES -- 4.0%
100,000(c) Fugro NV, Cv.,
2.375%, 04/27/10 ............ 165,320 200,970
520,000(c) Publicis Group SA, Cv.,
0.750%, 07/17/08 ............ 319,736 235,058
------------ ------------
485,056 436,028
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 7.7%
25,000,000(b) CSK Holdings Corp., Cv.,
0.250%, 09/30/13 ............ 229,814 224,518
500,000 Midway Games Inc., Cv.,
6.000%, 09/30/25 ............ 483,863 428,750
20,000,000(b) Nomura Research Institute Ltd.,
Cv., Zero Coupon, 03/31/14 181,577 182,681
------------ ------------
895,254 835,949
------------ ------------
CONSUMER PRODUCTS -- 6.5%
200,000 Church & Dwight Co. Inc.,
Deb. Cv.,
5.250%, 08/15/33 ............ 227,253 289,000
400,000 Eastman Kodak Co., Cv.,
3.375%, 10/15/33 ............ 415,291 424,500
------------ ------------
642,544 713,500
------------ ------------
ELECTRONICS -- 6.6%
400,000 Edo Corp., Sub. Deb. Cv.,
4.000%, 11/15/25 ............ 399,930 387,000
411,000 Solectron Corp., Cv., Ser. B,
0.500%, 02/15/34 ............ 338,661 338,561
------------ ------------
738,591 725,561
------------ ------------
ENERGY AND UTILITIES -- 10.6%
200,000(c) RWE AG, Cv.,
Zero Coupon, 06/22/07 ....... 286,713 281,828
200,000 Scottish Power Finance Ltd.,
Sub. Deb. Cv.,
4.000%, 07/29/49 (d) ........ 259,872 409,000
400,000 Transocean Inc., Deb. Cv.,
1.500%, 05/15/21 ............ 433,991 469,500
------------ ------------
980,576 1,160,328
------------ ------------
EQUIPMENT AND SUPPLIES -- 3.3%
200,000(c) Linde Finance BV, Cv.,
1.250%, 05/05/09 ............ 309,929 364,865
------------ ------------
FINANCIAL SERVICES -- 10.1%
200,000 CompuCredit Corp., Cv.,
5.875%, 11/30/35 ............ 197,018 204,250
200,000 CompuCredit Corp., Cv.,
3.625%, 05/30/25 ............ 216,134 227,750
150,000 First Pacific Finance, Cv.,
Zero Coupon, 01/18/10 ....... 179,299 266,052
400,000 SLM Corp., Cv.,
5.327%, 07/25/35 (d) ........ 402,487 401,160
------------ ------------
994,938 1,099,212
------------ ------------
FOOD AND BEVERAGE -- 3.8%
400,000 Wild Oats Markets Inc.,
Cv. (STEP),
3.250%, 05/15/34 ............ 434,740 417,500
------------ ------------
HEALTH CARE -- 10.7%
300,000 Allergan Inc., Cv.,
1.500%, 04/01/26 (a) ........ 293,456 328,500
400,000 Edwards Lifesciences Corp., Cv.,
3.875%, 05/15/33 ............ 405,865 410,000
400,000 Medtronic Inc., Cv.,
1.625%, 04/15/13 (a) ........ 397,005 428,500
------------ ------------
1,096,326 1,167,000
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
RETAIL -- 5.9%
$ 300,000 Kellwood Co., Deb. Cv. (STEP),
3.500%, 06/15/34 ............ $ 270,910 $ 282,750
400,000 Pier 1 Imports Inc., Cv. (STEP),
6.375%, 02/15/36 ............ 387,562 367,000
------------ ------------
658,472 649,750
------------ ------------
TELECOMMUNICATIONS -- 3.1%
400,000 XM Satellite Radio Holdings
Inc., Cv.,
1.750%, 12/01/09 ............ 335,101 341,500
------------ ------------
TOTAL CONVERTIBLE
CORPORATE BONDS ............. 8,106,601 8,481,613
------------ ------------
SHARES
-------
CONVERTIBLE PREFERRED STOCKS -- 18.1%
BROADCASTING -- 2.3%
6,000 Emmis Communications Corp.,
6.250% Cv. Pfd., Ser. A ..... 276,300 253,470
------------ ------------
COMMUNICATIONS EQUIPMENT -- 2.8%
300 Lucent Technologies Capital
Trust I,
7.750% Cv. Pfd. ............. 308,130 305,250
------------ ------------
FINANCIAL SERVICES -- 4.9%
5,000 New York Community Capital
Trust V,
6.000% Cv. Pfd. ............. 235,428 233,000
6,000 Sovereign Bancorp Inc.,
4.375% Cv. Pfd. ............. 273,000 297,000
------------ ------------
508,428 530,000
------------ ------------
HEALTH CARE -- 2.6%
5,000 Schering-Plough Corp.,
6.000% Cv. Pfd. ............. 258,438 284,450
------------ ------------
METALS AND MINING -- 2.6%
220 Freeport-McMoRan
Copper & Gold Inc.,
5.500% Cv. Pfd. ............. 221,450 287,457
------------ ------------
TELECOMMUNICATIONS -- 2.9%
7,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ..... 280,315 322,000
------------ ------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ............ 1,853,061 1,982,627
------------ ------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT OBLIGATIONS -- 4.1%
$454,000 U.S. Treasury Bill,
4.900%++, 03/08/07 .......... 450,123 450,094
------------ ------------
TOTAL
INVESTMENTS -- 99.7% ........ $ 10,409,785 10,914,334
============
OTHER ASSETS AND LIABILITIES (NET) -- 0.3% 31,378
------------
NET ASSETS -- 100.0% ....................... $ 10,945,712
============
- ----------------
++ Represents annualized yield at date of purchase.
(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, 2006, the market value of the Rule 144A securities amounted to $757,000
or 6.92% of total net assets. These securities have been deemed by the
Board of Directors to be liquid.
(b) Principal amount denoted in Japanese Yen.
(c) Principal amount denoted in Euros.
(d) Floating rate security. The rate disclosed is that in effect at December
31, 2006.
STEP Step coupon bond. The rate disclosed is that in effect at December 31,
2006.
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- ----- -----
North America ......................... 76.6% $ 8,358,204
Europe ................................ 12.3 1,348,772
Japan ................................. 6.8 737,858
Latin America ......................... 4.3 469,500
------ -----------
100.0% $10,914,334
====== ===========
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $10,409,785) ............... $10,914,334
Receivable for investments sold ........................ 307,404
Dividends and interest receivable ...................... 66,687
Receivable for Fund shares sold ........................ 21,024
Prepaid expense ........................................ 1,914
-----------
TOTAL ASSETS ........................................... 11,311,363
-----------
LIABILITIES:
Payable for investments purchased ...................... 212,885
Payable to custodian ................................... 84,530
Payable for legal and audit fees ....................... 22,252
Payable for shareholder ................................
communications expenses .............................. 19,645
Payable for Fund shares redeemed ....................... 8,284
Payable for investment advisory fees ................... 7,510
Payable for distribution fees .......................... 2,482
Other accrued expenses ................................. 8,063
-----------
TOTAL LIABILITIES ...................................... 365,651
-----------
NET ASSETS applicable to 1,998,809
shares outstanding ................................... $10,945,712
===========
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ........ $10,556,982
Accumulated distributions in excess of net
investment income .................................... (115,922)
Accumulated distributions in excess of net
realized gain on investments and foreign
currency transactions ................................ (44)
Net unrealized appreciation on investments ............. 504,549
Net unrealized appreciation on foreign
currency translations ................................ 147
-----------
NET ASSETS ............................................. $10,945,712
===========
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($10,690,844 / 1,950,049 shares
outstanding; 75,000,000 shares authorized) ........... $5.48
=====
CLASS A:
Net Asset Value and redemption price per share
($48,838 / 8,900 shares outstanding;
50,000,000 shares authorized) ........................ $5.49
=====
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ............................... $5.82
=====
CLASS B:
Net Asset Value and offering price per share
($41,637 / 8,165 shares outstanding;
25,000,000 shares authorized) ........................ $5.10(a)
=====
CLASS C:
Net Asset Value and offering price per share
($164,393 / 31,695 shares outstanding;
25,000,000 shares authorized) ........................ $5.19(a)
=====
- -------------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,491) ............. $ 259,292
Interest ............................................... 264,002
-----------
TOTAL INVESTMENT INCOME ................................ 523,294
-----------
EXPENSES:
Investment advisory fees ............................... 161,989
Distribution fees - Class AAA .......................... 39,835
Distribution fees - Class A ............................ 173
Distribution fees - Class B ............................ 584
Distribution fees - Class C ............................ 1,375
Shareholder communications expenses .................... 37,502
Legal and audit fees ................................... 28,196
Registration expenses .................................. 25,725
Custodian fees ......................................... 25,511
Shareholder services fees .............................. 17,161
Interest expense ....................................... 3,152
Directors' fees ........................................ 1,799
Miscellaneous expenses ................................. 4,924
-----------
TOTAL EXPENSES ......................................... 347,926
Less:
Expense reimbursement (see Note 3) ................... (18,221)
Custodian fees credits ............................... (1,106)
-----------
NET EXPENSES ........................................... 328,599
-----------
NET INVESTMENT INCOME .................................. 194,695
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ....................... 2,119,192
Net realized loss on foreign currency
transactions ......................................... (57,851)
-----------
Net realized gain on investments and
foreign currency transactions ........................ 2,061,341
-----------
Net change in unrealized appreciation/
depreciation on investments .......................... (1,165,171)
Net change in unrealized appreciation/
depreciation on foreign currency
translations ......................................... (34,002)
-----------
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations ........................ (1,199,173)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY .................. 862,168
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ 1,056,863
===========
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
OPERATIONS:
Net investment income ................................................. $ 194,695 $ 105,195
Net realized gain on investments and foreign currency transactions .... 2,061,341 1,536,737
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations ....................................... (1,199,173) (906,265)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. 1,056,863 735,667
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ........................................................... (253,454) (558,053)
Class A ............................................................. (1,031) (15,235)
Class B ............................................................. (967) (3,509)
Class C ............................................................. (2,302) (3,372)
----------- -----------
(257,754) (580,169)
----------- -----------
Net realized gains
Class AAA ........................................................... (1,907,313) (1,034,911)
Class A ............................................................. (8,497) (28,253)
Class B ............................................................. (7,690) (6,508)
Class C ............................................................. (29,949) (6,254)
----------- -----------
(1,953,449) (1,075,926)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................... (2,211,203) (1,656,095)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class AAA ........................................................... (1,967,425) (5,708,864)
Class A ............................................................. (39,957) (469,690)
Class B ............................................................. (26,216) (52,160)
Class C ............................................................. 41,588 42,083
----------- -----------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ............ (1,992,010) (6,188,631)
----------- -----------
REDEMPTION FEES ....................................................... 94 25,134
----------- -----------
NET DECREASE IN NET ASSETS ............................................ (3,146,256) (7,083,925)
NET ASSETS:
Beginning of period ................................................... 14,091,968 21,175,893
----------- -----------
End of period (including undistributed net investment of $0
and $0, respectively) ............................................... $10,945,712 $14,091,968
=========== ===========
See accompanying notes to financial statements.
7
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 United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, unless the Board determines such amount
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value American Depository
Receipt ("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.
8
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2006, 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 fluctuations in the
value of the contract, which are included in unrealized
appreciation/(depreciation) on investments and futures contracts. 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, 2006, 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.
9
THE GAMCO GLOBAL CONVERTIBLE SECURITIES 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, 2006, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
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.
10
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are maintained in
the custody account, the Fund receives credits which are used to offset
custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under U.S. generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities and foreign
currency transactions held by the Fund, timing differences, and differing
characterizations of distributions made by the Fund. Distributions from net
investment income include net realized gains on foreign currency transactions.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2006, reclassifications were made to increase distributions
in excess of net investment income by $2,833 and to decrease accumulated
distributions in excess of net realized gain on investments and foreign currency
transactions by $107,936, with an offsetting adjustment to paid-in capital.
The tax character of distributions paid during the fiscal years ended December
31, 2006 and December 31, 2005 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income (inclusive of short-term
capital gains) ............................... $ 599,473 $1,232,664
Long-term capital gains ........................ 1,685,799 423,431
---------- ----------
Total distributions paid ....................... $2,285,272 $1,656,095
========== ==========
The Fund has a fixed distribution policy. Under the policy, the Fund declares
and pays distributions quarterly in the amount of $0.03 per share and identifies
that portion of the distribution which is from net investment income, capital
gains, and paid-in capital. The actual source of the distribution is determined
after the end of the fiscal year. 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. 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.
11
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
At December 31, 2006, the difference between book basis and tax basis unrealized
appreciation was primarily due to tax adjustments for convertible bond premium
and income accruals on hybrid securities.
As of December 31, 2006, the components of accumulated earnings on a tax basis
were as follows:
Net unrealized appreciation on investments, foreign
receivables and payables ............................. $388,730
========
The following summarizes the tax cost of investments and related unrealized
appreciation/(depreciation) at December 31, 2006:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ ---------------
Investments ............... $10,525,751 $747,148 $(358,565) $388,583
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for a calendar-year open-end fund no later than its June 29, 2007
NAV, and is to be applied to all open tax years as of the date of effectiveness.
Management has begun to evaluate the application of the Interpretation to the
Fund, and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser. The Adviser has voluntarily agreed to waive the
investment advisory fee of the Fund to the extent necessary to maintain the
annualized total net operating expenses (exclusive of brokerage, interest,
taxes, and extraordinary expenses) at no more than 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 fiscal year ended December 31, 2006, the Adviser
reimbursed the Fund in the amount of $18,221. Such amount is not recoverable in
future fiscal years.
If total net assets of the Corporation are in excess of $100 million, the
Corporation pays each Director not considered to be an affiliated person an
annual retainer of $3,000 plus $500 for each Board meeting attended and they are
reimbursed for any out of pocket expenses incurred in attending meetings. If
total net assets of the Corporation are below $100 million, the Corporation pays
each Independent Director an annual retainer of $1,500 plus $250 for each Board
meeting attended and they are reimbursed for any out of pocket expenses incurred
in attending meetings. All Board committee members receive $500 per meeting
attended. Directors who are directors or employees of the Adviser or an
affiliated company receive no compensation or expense reimbursement from the
Fund.
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,
12
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 fiscal year ended December 31, 2006, other than short-term and U.S.
Government securities, aggregated $19,269,019 and $23,262,365, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the fiscal year ended December 31, 2006,
the Fund paid brokerage commissions of $1,008 to Gabelli & Company.
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. This amount, if any, would be shown as "interest expense"
in the Statement of Operations. At December 31, 2006, there were no borrowing
outstanding from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the fiscal year ended December 31, 2006 was $48,312 with a weighted
average interest rate of 6.03%. The maximum amount borrowed at any time during
the fiscal year ended December 31, 2006 was $1,636,000.
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, 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 1.00% 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.
The Fund imposes 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 fiscal
years ended December 31, 2006 and December 31, 2005 amounted to $94 and $25,134,
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 CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 1,878,922 $ 12,070,875 1,258,482 $ 7,437,867
Shares issued upon reinvestment of distributions ... 353,287 1,969,894 232,662 1,356,751
Shares redeemed .................................... (2,496,862) (16,008,194) (2,527,933) (14,503,482)
---------- ------------ ---------- ------------
Net decrease ..................................... (264,653) $ (1,967,425) (1,036,789) $ (5,708,864)
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 1,429 $ 8,999 14,762 $ 84,309
Shares issued upon reinvestment of distributions ... 1,606 8,860 2,003 11,680
Shares redeemed .................................... (9,066) (57,816) (97,283) (565,679)
---------- ------------ ---------- ------------
Net decrease ..................................... (6,031) $ (39,957) (80,518) $ (469,690)
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ---------------------------
Shares issued upon reinvestment of distributions ... 1,588 $ 8,177 636 $ 3,542
Shares redeemed .................................... (5,758) (34,393) (10,395) (55,702)
---------- ------------ ---------- ------------
Net decrease ..................................... (4,170) $ (26,216) (9,759) $ (52,160)
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 7,874 $ 50,000 23,314 $ 125,405
Shares issued upon reinvestment of distributions ... 6,086 31,842 1,090 6,137
Shares redeemed .................................... (6,542) (40,254) (15,698) (89,459)
---------- ------------ ---------- ------------
Net increase ..................................... 7,418 $ 41,588 8,706 $ 42,083
========== ============ ========== ============
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 received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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 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)(a) Investments Operations Income Investments Capital Distributions
- ------------ --------- --------- ----------- ---------- ---------- ----------- ------- -------------
CLASS AAA
2006 $6.22 $ 0.08 $ 0.44 $ 0.52 $(0.10) $(1.16) -- $(1.26)
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)
CLASS A
2006 $6.23 $ 0.08 $ 0.44 $ 0.52 $(0.10) $(1.16) -- $(1.26)
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)
CLASS B
2006 $5.91 $ 0.03 $ 0.42 $ 0.45 $(0.10) $(1.16) -- $(1.26)
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)
CLASS C
2006 $5.99 $ 0.04 $ 0.42 $ 0.46 $(0.10) $(1.16) -- $(1.26)
2005 6.09 0.00(c) 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)
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(a) Period Return+ (in 000's) (Loss) Reimbursement Reimbursement(b) Rate
- ------------ --------- -------- ------- ---------- --------- ------------- ---------------- --------
CLASS AAA
2006 $0.00(c) $5.48 8.4% $10,691 1.21% 2.14% 2.03%(d) 130%
2005 0.01 6.22 8.0 13,781 0.63 2.11 2.03(d) 58
2004 0.00(c) 6.26 11.7 20,350 1.06 2.06 2.01 60
2003 0.00(c) 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
CLASS A
2006 $0.00(c) $5.49 8.4% $ 49 1.24% 2.14% 2.03%(d) 130%
2005 0.01 6.23 8.2 93 0.68 2.06 2.04(d) 58
2004 0.00(c) 6.26 11.6 598 1.41 2.06 2.01 60
2003 0.00(c) 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
CLASS B
2006 $0.00(c) $5.10 7.6% $ 42 0.47% 2.89% 2.78%(d) 130%
2005 0.01 5.91 7.3 73 (0.13) 2.84 2.78(d) 58
2004 0.00(c) 6.01 10.8 133 0.45 2.81 2.76 60
2003 0.00(c) 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
CLASS C
2006 $0.00(c) $5.19 7.8% $ 164 0.57% 2.90% 2.78%(d) 130%
2005 0.01 5.99 7.2 145 (0.01) 2.91 2.78(d) 58
2004 0.00(c) 6.09 10.9 95 0.44 2.81 2.76 60
2003 0.00(c) 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
- --------------
+ 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 the applicable
sales charges.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The Fund incurred interest expense during the fiscal years ended December
31, 2006, 2005, 2004, 2003, and 2002. 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%, 2.00%, and 2.82% (Class AAA), 2.00%, 2.00%, 2.00%,
2.00%, and 2.82% (Class A), 2.75%, 2.75%, 2.75%, 2.75%, and 3.57% (Class B)
and 2.75%, 2.75%, 2.75%, 2.75%, and 3.57% (Class C), respectively.
(c) Amount represents less than $0.005 per share.
(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 fiscal years ended December 31, 2006 and
December 31, 2005 would have been 2.02% and 2.03% (Class AAA), 2.02% and
2.03% (Class A), 2.77% and 2.78% (Class B), and 2.77% and 2.78% (Class C),
respectively.
See accompanying notes to financial statements.
15
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, 2006, 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 four 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 the year 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, 2006, 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 Convertible Securities Fund, a series of GAMCO Global Series Funds,
Inc., at December 31, 2006, 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 four years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 16, 2007
16
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2006, 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 Board Members") who are not "interested persons" of the Fund.
The following paragraphs summarize the material information and factors
considered by the Independent Board Members as well as their conclusions
relative to such factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The Independent Board Members considered
information regarding the portfolio managers, the depth of the analyst pool
available to the Adviser and the Fund's portfolio managers, the scope of
supervisory, 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 Fund's portfolio managers.
INVESTMENT PERFORMANCE. The Independent Board Members 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
quartile for the one year and bottom quartile for three year periods and in the
middle of the peer group for the five year period.
PROFITABILITY. The Independent Board Members 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 Independent Board Members also
noted that an affiliated broker of the Adviser 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 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 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.
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 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
Independent Board Members noted that the Fund's expense ratios, after voluntary
expense reimbursements, were significantly higher than, and the Fund's size was
significantly lower than, average within this group. The Independent Board
Members also noted that all but one of the peer group were domestic convertible
funds, thereby limiting the usefulness of peer group comparisons. The
Independent Board Members also noted that the advisory fee structure was the
same as that in effect for most of the Gabelli/GAMCO funds. The Independent
Board Members did not compare the advisory fee to the fee for other types of
accounts managed by the Adviser.
CONCLUSIONS. The Independent Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
mixed performance record that was understandable in relation to the disclosure
in the Fund's prospectus and periodic shareholder reports as to its purpose and
the outlook of the portfolio managers. The Independent Board Members 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 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 of Directors.
17
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The business and affairs of the Corporation are managed under the direction of
the Corporation's Board of Directors. Information pertaining to the Directors
and officers of the Corporation is set forth below. The Fund's Statement of
Additional Information includes additional information about the 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 OFFICE NUMBER OF
NAME, POSITION(S) AND LENGTH OF FUNDS IN FUND
ADDRESS 1 TIME COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 BY 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. and Holdings, Inc. (transportation
Chief Investment Officer Chief Investment Officer - Value Portfolios services); Chairman of the
Age: 64 of Gabelli Funds, LLC and GAMCO Asset Board of Lynch Interactive
Management Inc.; Director/Trustee or Chief Corporation (multimedia and
Investment Officer of other registered communication services
investment companies in the Gabelli Funds company)
complex; Chairman and Chief Executive
Officer of GGCP, Inc.
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of GAMCO
Director Company, Inc. Investors, Inc.
Age: 62
INDEPENDENT DIRECTORS 5:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of The LGL Group,
Director Consultants, Inc.; Adviser to Iona Inc. (diversified
Age: 67 College Hagan School of Business manufacturing)
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 71
ARTHUR V. FERRARA Since 2001 7 Former Chairman of the Board and Chief Director of the Guardian
Director Executive Officer of The Guardian Life sponsored mutual funds
Age: 76 Insurance Company of America
(1993 - 1995)
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence --
Director Hospital and practicing private physician
Age: 66
ANTHONIE C. VAN EKRIS Since 1993 17 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 72
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Supplies Director of Hollis-Eden
Director Corp. (distribution of electrical Pharmaceuticals
Age: 61 supplies) (biotechnology); Director
of Earl Scheib, Inc.
(automotive services)
18
THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
TERM OF OFFICE
NAME, POSITION(S) AND 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 Officer of Gabelli Funds, LLC
President since 1988 and an officer of all of the registered investment companies
Age: 55 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 Investors, Inc.
Secretary since 1999 and GAMCO Asset Management Inc. since 1993; Secretary
Age: 43 of all of the registered investment companies in the Gabelli Funds complex
AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds
Treasurer complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer
Age: 48 and Chief Financial Officer of Excelsior Funds from 2004 through 2005;
Chief Financial Officer of AMIC Distribution Partners from 2002 through 2004;
Controller of Reserve Management Corporation and Reserve Partners, Inc. and
Treasurer of Reserve Funds from 2000 through 2002
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief
Chief Compliance Officer Compliance Officer of all of the registered investment companies in the
Age: 53 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
Corporation's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified.
3 "Interested person" of the Corporation as defined in the 1940 Act. Messrs.
Gabelli are each considered an "interested person" because of their
affiliation with Gabelli Funds, LLC which acts as the Corporation'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, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
5 Directors who are not interested persons are considered "Independent"
Directors.
- --------------------------------------------------------------------------------
2006 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2006, the Fund paid to shareholders an
ordinary income dividend (comprised of net investment income and short-term
capital gains) totaling $0.25, $0.25, $0.25, and $0.25 and a long-term capital
gain distribution totaling $1.01, $1.01, $1.01, and $1.01 per share for Class
AAA, Class A, Class B, and Class C Shares, respectively. The Fund designates a
maximum of $1,685,799 of long-term capital gains as a capital gain dividend
for tax reporting purposes. For the fiscal year ended December 31, 2006,
56.69% of the ordinary income dividend qualifies for the dividend received
deduction available to corporations, and 50.73% 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 2006 which was derived from U.S. Treasury securities was 3.40%. 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 2006. 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.
- --------------------------------------------------------------------------------
19
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 per share 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 CHAIRMAN
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 SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER 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.
- --------------------------------------------------------------------------------
GAB441Q406SR
GAMCO
THE
GAMCO
GLOBAL
CONVERTIBLE
SECURITIES
FUND
ANNUAL REPORT
DECEMBER 31, 2006
THE GAMCO GLOBAL GROWTH FUND
ANNUAL REPORT
DECEMBER 31, 2006
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, 2006 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION (UNAUDITED)
During 2006 The GAMCO Global Growth Fund (Class AAA) returned 12.54%
underperforming the MSCI AC World Free Index and the average global multi cap
core fund tracked by Lipper which were up 21.53% and 17.92% respectively.
The year 2006 was a year of two market environments. Equity markets were
volatile during the first half of the year, as investors grappled with
geopolitical tensions, rising interest rates and soaring energy and commodity
prices. After rising rapidly in the first quarter, the emerging markets tumbled
in the second quarter as investors moved to reduce risk levels. The investment
landscape improved markedly during the summer months, as oil and most other
commodity prices staged a retreat, the Fed paused (after 17 consecutive rate
hikes) and the threatening rhetoric from Iran and North Korea quieted down. The
result was a smart advance in share prices, which included a rebound in the
emerging markets.
It was another difficult year for funds with a growth and larger cap bias,
which includes the Fund. Investors expressed a strong preference for higher
yielding stocks (such as telecoms and utilities) as well as hard assets
(commodity and real estate based securities), as the leading MSCI industry
performers were Utilities,
Telecommunication Services, Materials and Financials. The Fund was helped by its
overweight in Materials but hurt by underweighting Utilities, Telecoms and
Financials. Moreover, the Fund's overweights in Health Care and Information
Technology hurt performance as these were the two worst industry sectors.
Additionally, the lack of any material emerging market exposure in the first
quarter of the year opened a performance gap that proved too great to close over
the balance of the year, relative to the MSCI AC World Free Index, although we
did establish a meaningful position in the emerging markets during the second
quarter pullback. In summary, the lack of emerging market exposure in the first
quarter, coupled with underweighting Utilities, Telecoms and Financials and
overweighting Technology and Health Care, led to the Fund underperforming the
Index.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
January 22, 2007
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2006:
THE GAMCO GLOBAL GROWTH FUND
Financial Services ................................ 18.7%
Health Care ....................................... 9.6%
Energy and Utilities .............................. 9.2%
Food and Beverage ................................. 7.8%
Computer Software and Services .................... 7.3%
Exchange Traded Funds ............................. 6.3%
Metals and Mining ................................. 5.8%
Retail ............................................ 5.8%
Diversified Industrial ............................ 4.4%
Consumer Products ................................. 3.5%
Aerospace ......................................... 3.2%
Hotels and Gaming ................................. 3.2%
Entertainment ..................................... 2.9%
Business Services ................................. 2.7%
Building and Construction ......................... 2.1%
Telecommunications ................................ 1.8%
Broadcasting ...................................... 1.3%
Electronics ....................................... 1.1%
Equipment and Supplies ............................ 0.9%
U.S. Government Obligations ....................... 0.9%
Cable and Satellite ............................... 0.5%
Chemicals and Allied Products ..................... 0.3%
Wireless Communications ........................... 0.3%
Communications Equipment .......................... 0.3%
Other Assets and Liabilities (Net) ................ 0.1%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER
30, 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
SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF
THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL
GROWTH FUND CLASS AAA SHARES, THE LIPPER GLOBAL MULTI-CAP CORE FUND
AVERAGE, AND THE MSCI AC WORLD FREE INDEX
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
Gabelli Global Lipper Global Multi- MSCI AC World
Growth Fund (Class AAA) Shares Cap Core Fund Average Free Index
2/7/94 $10,000 $10,000 $10,000
12/31/94 10,250 9,482 9,849
12/31/95 12,083 11,160 11,766
12/31/96 13,594 12,875 13,319
12/31/97 19,263 15,250 15,315
12/31/98 24,836 17,281 18,680
12/31/99 53,645 22,505 23,690
12/31/00 33,534 21,495 20,387
12/31/01 25,435 18,883 17,144
12/31/02 19,130 16,421 13,890
12/31/03 27,048 21,561 18,700
12/31/04 29,598 24,484 21,645
12/31/05 33,659 26,952 24,106
12/31/06 37,880 31,782 29,296
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, 2006 (A)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (2/7/94)
- --------------------------------------------------------------------------------------------------------------------
GAMCO GLOBAL GROWTH FUND CLASS AAA (b)........... 8.86% 12.54% 11.88% 8.29% 10.79% 10.88%
MSCI AC World Free Index ....................... 9.16 21.53 16.14 11.31 8.20 8.68
Lipper Global Multi-Cap Core Fund Average ....... 7.69 17.92 13.90 10.85 8.17 8.89
Class A ......................................... 8.87 12.54 11.88 8.29 10.81 10.89
2.61(c) 6.07(c) 9.69(c) 7.02(c) 10.15(c) 10.38(c)
Class B ......................................... 8.67 11.65 11.05 7.48 10.27 10.48
3.67(d) 6.65(d) 10.23(d) 7.17(d) 10.27(d) 10.48(d)
Class C ......................................... 8.70 11.70 11.05 7.46 10.24 10.45
7.70(e) 10.70(e) 11.05 7.46 10.24 10.45
(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. 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 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 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 MORGAN STANLEY
CAPITAL INTERNATIONAL ALL COUNTRY WORLD FREE INDEX (THE "MSCI AC WORLD FREE
INDEX") IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE, WHILE THE
LIPPER GLOBAL MULTI-CAP CORE FUND AVERAGE REFLECTS THE AVERAGE PERFORMANCE
OF MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR CATEGORY. DIVIDENDS ARE
CONSIDERED REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(b) EFFECTIVE FEBRUARY 15, 2007, CLASS AAA SHARES ARE ONLY OFFERED TO INVESTORS
WHO ARE SHAREHOLDERS IN ONE OR MORE OF THE REGISTERED FUNDS DISTRIBUTED BY
GABELLI & COMPANY, INC. PRIOR TO FEBRUARY 15, 2007.
(c) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR,
FIVE YEAR, TEN YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%, 3%, 2%, 0%, AND
0%, RESPECTIVELY OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE,
WHICHEVER IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(e) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER AND ONE YEAR PERIODS OF 1%
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
- --------------------------------------------------------------------------------
3
THE GAMCO GLOBAL GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2006 through December 31, 2006
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, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/06 12/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,087.10 1.77% $ 9.31
Class A $1,000.00 $1,086.60 1.78% $ 9.36
Class B $1,000.00 $1,082.40 2.52% $13.23
Class C $1,000.00 $1,083.20 2.52% $13.23
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,016.28 1.77% $ 9.00
Class A $1,000.00 $1,016.23 1.78% $ 9.05
Class B $1,000.00 $1,012.50 2.52% $12.78
Class C $1,000.00 $1,012.50 2.52% $12.78
* 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, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS -- 92.7%
AEROSPACE -- 3.2%
5,000 General Dynamics Corp. ........ $ 345,708 $ 371,750
6,000 L-3 Communications
Holdings Inc. ............... 463,245 490,680
5,000 Lockheed Martin Corp. ......... 372,928 460,350
9,000 Rockwell Collins Inc. ......... 516,913 569,610
90,000 Rolls-Royce Group plc+ ........ 751,338 789,018
1,174,400 Rolls-Royce Group plc, Cl. B .. 2,235 2,334
10,000 United Technologies Corp. ..... 491,188 625,200
------------ ------------
2,943,555 3,308,942
------------ ------------
BROADCASTING -- 1.3%
7,000 Lagardere SCA ................. 399,739 563,659
5,200 Nippon Television
Network Corp. ............... 771,307 771,665
------------ ------------
1,171,046 1,335,324
------------ ------------
BUILDING AND CONSTRUCTION -- 2.1%
5,000 CRH plc, Dublin ............... 120,555 208,171
15,000 CRH plc, London ............... 361,664 625,305
8,000 Fomento de Construcciones
y Contratas SA .............. 234,716 815,260
8,000 Technip SA .................... 266,839 549,139
------------ ------------
983,774 2,197,875
------------ ------------
BUSINESS SERVICES -- 2.7%
5,000 FedEx Corp. ................... 563,470 543,100
7,000 McDermott
International Inc.+ ......... 323,763 356,020
11,000 SAP AG, ADR ................... 518,887 584,100
16,000 Secom Co. Ltd. ................ 620,342 829,545
8,000 SEI Investments Co. ........... 352,228 476,480
------------ ------------
2,378,690 2,789,245
------------ ------------
CABLE AND SATELLITE -- 0.5%
12,500 Comcast Corp., Cl. A+ ......... 488,626 529,125
------------ ------------
CHEMICALS AND ALLIED PRODUCTS -- 0.3%
50,000 Tokai Carbon Co. Ltd. ......... 205,108 355,447
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.3%
14,000 Motorola Inc. ................. 355,660 287,840
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 7.3%
13,000 Adobe Systems Inc.+ ........... 393,518 534,560
6,000 Apple Computer Inc.+ .......... 448,011 509,040
9,000 Autodesk Inc.+ ................ 332,146 364,140
22,000 Cisco Systems Inc.+ ........... 447,460 601,260
15,000 eBay Inc.+ .................... 535,997 451,050
5,200 Google Inc., Cl. A+ ........... 1,543,104 2,394,496
44,000 Microsoft Corp. ............... 1,191,220 1,313,840
8,000 NAVTEQ Corp.+ ................. 325,060 279,760
40,000 Yahoo! Inc.+ .................. 1,438,100 1,021,600
------------ ------------
6,654,616 7,469,746
------------ ------------
MARKET
SHARES COST VALUE
-------- ---- -------
CONSUMER PRODUCTS -- 3.5%
7,000 Christian Dior SA ............. $ 438,852 $ 746,155
15,314 Compagnie Financiere
Richemont AG, Cl. A ......... 443,000 892,322
3,000 Harman International
Industries Inc. ............. 261,892 299,730
12,500 Procter & Gamble Co. .......... 698,207 803,375
4,000 Swatch Group AG ............... 464,406 883,874
------------ ------------
2,306,357 3,625,456
------------ ------------
DIVERSIFIED INDUSTRIAL -- 4.4%
24,000 Amano Corp. ................... 422,744 301,298
10,000 Bouygues SA ................... 343,461 641,938
16,000 Emerson Electric Co. .......... 677,600 705,440
57,000 General Electric Co. .......... 2,064,759 2,120,970
13,000 ITT Corp. ..................... 570,141 738,660
------------ ------------
4,078,705 4,508,306
------------ ------------
ELECTRONICS -- 1.1%
25,000 Intel Corp. ................... 558,120 506,250
10,000 Microchip Technology Inc. ..... 287,500 327,000
10,000 Texas Instruments Inc. ........ 193,981 288,000
------------ ------------
1,039,601 1,121,250
------------ ------------
ENERGY AND UTILITIES -- 9.2%
7,000 Apache Corp. .................. 466,957 465,570
6,000 BP plc, ADR ................... 349,775 402,600
7,000 Canadian Natural
Resources Ltd. .............. 308,416 372,610
5,672 Devon Energy Corp. ............ 278,827 380,477
5,000 EOG Resources Inc. ............ 345,118 312,250
10,000 Halliburton Co. ............... 362,269 310,500
19,000 Hess Corp. .................... 906,737 941,830
6,900 Imperial Oil Ltd. ............. 253,504 254,013
4,500 National-Oilwell Varco Inc.+ .. 311,678 275,310
9,000 Noble Corp. ................... 652,726 685,350
15,000 Norsk Hydro ASA, ADR .......... 415,709 460,050
10,000 Occidental Petroleum Corp. .... 375,302 488,300
7,000 Petroleo Brasileiro SA, ADR ... 618,845 720,930
10,000 Saipem SpA .................... 240,421 260,577
5,200 Sasol Ltd. .................... 238,251 191,881
2,000 Sasol Ltd., ADR ............... 76,260 73,800
9,000 Schlumberger Ltd. ............. 286,097 568,440
15,000 Statoil ASA, ADR .............. 445,603 394,800
8,252 Total SA ...................... 338,493 595,303
7,000 Transocean Inc.+ .............. 361,090 566,230
6,000 Weatherford
International Ltd.+ ......... 269,562 250,740
10,000 XTO Energy Inc. ............... 457,244 470,500
------------ ------------
8,358,884 9,442,061
------------ ------------
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS (Continued)
ENTERTAINMENT -- 2.9%
69,500 Publishing &
Broadcasting Ltd. ........... $ 375,524 $ 1,171,253
15,000 Time Warner Inc. .............. 313,950 326,700
16,300 Viacom Inc., Cl. B+ ........... 632,090 668,789
20,180 Vivendi ....................... 436,833 788,766
------------ ------------
1,758,397 2,955,508
------------ ------------
EQUIPMENT AND SUPPLIES -- 0.9%
3,900 Keyence Corp. ................. 791,419 966,438
------------ ------------
FINANCIAL SERVICES -- 18.7%
5,000 Affiliated Managers
Group Inc.+ ................. 483,000 525,650
5,500 Allianz SE .................... 704,835 1,123,596
18,500 American Express Co. .......... 962,816 1,122,395
16,000 American International
Group Inc. .................. 1,107,196 1,146,560
50,000 Anglo Irish Bank Corp. plc .... 117,562 1,036,895
30,000 Australia & New Zealand
Banking Group Ltd. .......... 505,275 668,024
30,000 Aviva plc ..................... 320,646 482,838
29,039 Bank of Ireland, Ireland ...... 280,065 670,824
10,000 Bank of Ireland, London ....... 159,392 231,008
50,000 Barclays plc .................. 655,833 714,663
16,533 China Life Insurance
Co. Ltd., ADR ............... 379,083 835,099
18,000 Citigroup Inc. ................ 869,737 1,002,600
12,000 Credit Suisse Group, ADR ...... 616,065 838,200
2,500 Goldman Sachs Group Inc. ...... 262,375 498,375
3,700 Julius Baer Holding Ltd. AG ... 353,875 407,501
4,000 Legg Mason Inc. ............... 471,533 380,200
6,895 Merrill Lynch & Co. Inc. ...... 391,748 641,924
40 Mitsubishi UFJ Financial
Group Inc. .................. 486,680 494,097
45,500 Nikko Cordial Corp. ........... 494,198 521,890
8,200 Royal Bank of Canada .......... 351,545 390,259
42,700 Standard Chartered plc ........ 878,245 1,247,399
10,000 State Street Corp. ............ 479,051 674,400
10,000 T. Rowe Price Group Inc. ...... 408,771 437,700
27,000 The 77 Bank Ltd. .............. 197,165 171,295
6,250 Toronto-Dominion Bank ......... 353,908 373,665
13,000 UBS AG, New York .............. 534,928 784,290
4,000 UBS AG, Switzerland ........... 136,647 243,086
14,000 Wells Fargo & Co. ............. 506,174 497,840
44,500 Westpac Banking Corp. ......... 703,450 851,453
16,000 Yamaguchi Financial
Group Inc. .................. 202,431 164,027
------------ ------------
14,374,229 19,177,753
------------ ------------
MARKET
SHARES COST VALUE
-------- ---- -------
FOOD AND BEVERAGE -- 7.8%
53,000 Ajinomoto Co. Inc. ............ $ 602,454 $ 700,551
12,000 ARIAKE JAPAN Co. Ltd. ......... 336,640 234,444
60,000 Cadbury Schweppes plc ......... 592,403 642,022
16,996 Coca-Cola Hellenic
Bottling Co. SA ............. 358,399 664,090
90,000 Davide Campari-Milano SpA ..... 418,375 892,218
70,000 Diageo plc .................... 891,438 1,374,014
6,000 Groupe Danone ................. 669,806 909,247
3,000 Nestle SA ..................... 850,228 1,066,065
7,000 PepsiCo Inc. .................. 360,029 437,850
3,763 Pernod-Ricard SA .............. 401,489 864,315
5,000 Starbucks Corp.+ .............. 145,420 177,100
------------ ------------
5,626,681 7,961,916
------------ ------------
HEALTH CARE -- 9.6%
4,400 Alcon Inc. .................... 497,570 491,788
6,700 Genentech Inc.+ ............... 374,910 543,571
6,500 Genzyme Corp.+ ................ 381,592 400,270
4,900 Gilead Sciences Inc.+ ......... 316,355 318,157
20,000 GlaxoSmithKline plc ........... 423,287 526,306
23,500 Hisamitsu
Pharmaceutical Co. Inc. ..... 458,023 744,464
15,000 Novartis AG ................... 615,192 864,793
10,000 Novo Nordisk A/S, ADR ......... 797,927 836,300
4,300 Roche Holding AG .............. 343,824 771,071
7,130 Sanofi-Aventis ................ 503,662 658,364
10,000 St. Jude Medical Inc.+ ........ 424,057 365,600
2,400 Straumann Holding AG .......... 504,079 581,042
9,000 Stryker Corp. ................. 424,681 495,990
4,800 Synthes Inc. .................. 398,130 572,376
10,000 Takeda
Pharmaceutical Co. Ltd. ..... 445,295 686,526
11,000 Varian Medical Systems Inc.+ .. 426,121 523,270
6,500 Zimmer Holdings Inc.+ ......... 536,295 509,470
------------ ------------
7,871,000 9,889,358
------------ ------------
HOTELS AND GAMING -- 3.2%
8,550 Greek Organization of Football
Prognostics SA .............. 101,079 330,465
19,000 Hilton Hotels Corp. ........... 493,147 663,100
37,000 InterContinental Hotels
Group plc ................... 759,700 914,260
63,303 Ladbrokes plc ................. 647,704 518,405
7,000 Marriott International Inc.,
Cl. A ....................... 266,140 334,040
8,000 Starwood Hotels & Resorts
Worldwide Inc. .............. 480,970 500,000
------------ ------------
2,748,740 3,260,270
------------ ------------
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS (Continued)
METALS AND MINING -- 5.8%
6,000 Allegheny Technologies Inc. ... $ 384,745 $ 544,080
15,000 Anglo American plc ............ 546,531 731,600
20,000 BHP Billiton plc .............. 317,858 365,947
10,500 Commercial Metals Co. ......... 235,905 270,900
8,404 Freeport-McMoRan Copper
& Gold Inc., Cl. B .......... 351,453 468,355
25,026 Gold Fields Ltd., ADR ......... 307,575 472,491
9,000 Lonmin plc .................... 545,871 530,417
5,228 Peabody Energy Corp. .......... 66,790 211,264
3,000 Phelps Dodge Corp. ............ 247,290 359,160
16,000 Rio Tinto plc ................. 587,295 851,487
14,000 Titanium Metals Corp.+ ........ 434,402 413,140
14,666 Xstrata plc ................... 376,296 732,252
------------ ------------
4,402,011 5,951,093
------------ ------------
RETAIL -- 5.8%
12,000 Coach Inc.+ ................... 335,245 515,520
7,000 Costco Wholesale Corp. ........ 370,362 370,090
12,150 Hennes & Mauritz AB, Cl. B .... 512,220 614,071
9,000 Kohl's Corp.+ ................. 575,984 615,870
28,000 Matsumotokiyoshi Co. Ltd. ..... 750,942 622,327
15,000 Next plc ...................... 507,851 528,655
24,000 Seven & I Holdings Co. Ltd. ... 813,032 746,187
9,000 Tiffany & Co. ................. 290,462 353,160
10,000 Walgreen Co. .................. 410,655 458,900
8,000 Whole Foods Market Inc. ....... 399,510 375,440
39,100 Woolworths Ltd. ............... 607,675 737,637
------------ ------------
5,573,938 5,937,857
------------ ------------
TELECOMMUNICATIONS -- 1.8%
10,000 Corning Inc.+ ................. 247,731 187,100
85 KDDI Corp. .................... 432,573 576,404
28,000 Verizon Communications Inc. ... 935,541 1,042,720
------------ ------------
1,615,845 1,806,224
------------ ------------
WIRELESS COMMUNICATIONS -- 0.3%
8,000 QUALCOMM Inc. ................. 321,360 302,320
------------ ------------
TOTAL COMMON STOCKS ........... 76,048,242 95,179,354
------------ ------------
EXCHANGE TRADED FUNDS -- 6.3%
35,500 iShares MSCI Emerging
Markets Index ............... 3,429,238 4,053,035
31,000 Vanguard Emerging
Markets VIPERS .............. 2,324,490 2,399,090
------------ ------------
TOTAL EXCHANGE
TRADED FUNDS ................ 5,753,728 6,452,125
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 0.9%
$961,000 U.S. Treasury Bills,
4.882% to 4.983%++,
01/04/07 to 03/22/07 ........ $ 952,206 $ 952,194
------------ ------------
TOTAL
INVESTMENTS -- 99.9% ........ $ 82,754,176 102,583,673
============
Other Assets and Liabilities (Net) -- 0.1% 93,122
------------
NET ASSETS -- 100.0% ....................... $102,676,795
============
- ----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
VIPERS Vanguard Index Participation Equity Receipts
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- -------- --------
North America ......................... 49.0% $ 50,304,855
Europe ................................ 34.4 35,242,865
Japan ................................. 8.7 8,886,606
Asia/Pacific .......................... 4.1 4,263,465
Latin America ......................... 3.1 3,147,710
South Africa .......................... 0.7 738,172
----- ------------
100.0% $102,583,673
===== ============
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $82,754,176) ............... $102,583,673
Foreign currency, at value (cost $297,155) ............. 301,344
Cash ................................................... 1,224
Dividends and interest receivable ...................... 150,374
Receivable for Fund shares sold ........................ 6,422
Prepaid expense ........................................ 5,289
------------
TOTAL ASSETS ........................................... 103,048,326
------------
LIABILITIES:
Payable for Fund shares redeemed ....................... 111,579
Payable for investment advisory fees ................... 87,747
Payable for shareholder
communications expenses .............................. 47,700
Payable for legal and audit fees ....................... 45,117
Payable for shareholder services fees .................. 35,825
Payable for distribution fees .......................... 22,248
Payable for accounting fees ............................ 7,501
Other accrued expenses ................................. 13,814
------------
TOTAL LIABILITIES ...................................... 371,531
------------
NET ASSETS applicable to 4,478,874
shares outstanding ................................. $102,676,795
============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ........ $137,074,169
Accumulated net investment income ...................... 2,669
Accumulated net realized loss on investments
and foreign currency transactions .................... (54,238,459)
Net unrealized appreciation on investments ............. 19,829,497
Net unrealized appreciation on foreign
currency translations ................................ 8,919
------------
NET ASSETS ............................................. $102,676,795
============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($100,882,316 / 4,399,604 shares
outstanding; 75,000,000 shares authorized) ........... $22.93
======
CLASS A:
Net Asset Value and redemption price
per share ($1,294,266 / 56,433 shares
outstanding; 50,000,000 shares authorized) ........... $22.93
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ............................... $24.33
======
CLASS B:
Net Asset Value and offering price per share
($225,165 / 10,261 shares outstanding;
25,000,000 shares authorized) ........................ $21.94(a)
======
CLASS C:
Net Asset Value and offering price per share
($275,048 / 12,576 shares outstanding;
25,000,000 shares authorized) ........................ $21.87(a)
======
- --------------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $58,054) ............ $ 2,128,609
Interest ............................................... 53,025
-----------
TOTAL INVESTMENT INCOME ................................ 2,181,634
-----------
EXPENSES:
Investment advisory fees ............................... 1,067,264
Distribution fees - Class AAA .......................... 262,328
Distribution fees - Class A ............................ 3,313
Distribution fees - Class B ............................ 2,109
Distribution fees - Class C ............................ 2,589
Shareholder services fees .............................. 184,290
Legal and audit fees ................................... 96,386
Shareholder communications expenses .................... 95,538
Custodian fees ......................................... 46,330
Accounting fees ........................................ 45,000
Registration expenses .................................. 39,614
Directors' fees ........................................ 11,839
Interest expense ....................................... 2,005
Miscellaneous expenses ................................. 45,309
-----------
TOTAL EXPENSES ......................................... 1,903,914
-----------
NET INVESTMENT INCOME .................................. 277,720
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ....................... 14,069,656
Net realized gain on foreign
currency transactions ................................ 883
-----------
Net realized gain on investments and foreign
currency transactions ................................ 14,070,539
-----------
Net change in unrealized appreciation/
depreciation on investments .......................... (1,931,252)
Net change in unrealized appreciation/
depreciation on foreign currency
translations ......................................... 10,451
-----------
Net change in unrealized appreciation/
depreciation on investments
and foreign currency translations .................... (1,920,801)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY .................... 12,149,738
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ $12,427,458
===========
See accompanying notes to financial statements.
8
THE GAMCO GLOBAL GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
OPERATIONS:
Net investment income ....................................................... $ 277,720 $ 110,182
Net realized gain on investments and foreign currency transactions .......... 14,070,539 9,232,898
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations ............................................. (1,920,801) 4,268,855
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ 12,427,458 13,611,935
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class AAA ................................................................. (272,763) (92,625)
Class A ................................................................... (3,545) (2,247)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ......................................... (276,308) (94,872)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ................................................................. (19,507,826) (18,980,399)
Class A ................................................................... (2,805) 576,999
Class B ................................................................... (60) (3,817)
Class C ................................................................... 14,905 171,726
------------ ------------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS .................. (19,495,786) (18,235,491)
------------ ------------
REDEMPTION FEES ............................................................. 148 873
------------ ------------
NET DECREASE IN NET ASSETS .................................................. (7,344,488) (4,717,555)
NET ASSETS:
Beginning of period ......................................................... 110,021,283 114,738,838
------------ ------------
End of period (including undistributed net investment income of
$2,669 and $374, respectively) ............................................ $102,676,795 $110,021,283
============ ============
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 United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
9
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2006, 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 fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.
10
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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, 2006, there were no
open futures contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions. Short
selling involves selling securities that may or may not be owned and, at times,
borrowing the same securities for delivery to the purchaser, with an obligation
to replace such borrowed securities at a later date. The proceeds received from
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 an 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,
2006.
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, 2006, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
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 AND INTEREST EXPENSE. When cash balances are maintained in
the custody account, the Fund receives credits which are used to offset
custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under U.S. generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities and foreign
currency transactions held by the Fund, timing differences, and differing
characterizations of distributions made by the Fund. Distributions from net
investment income include net realized gains on foreign currency transactions.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2006, reclassifications were made to increase accumulated net
investment income by $883, to increase accumulated net realized loss on
investments and foreign currency transactions by $882, with an offsetting
adjustment to paid-in capital.
The tax character of distributions paid during the fiscal years ended December
31, 2006 and December 31, 2005 was $276,308 and $94,872, 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.
12
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
As of December 31, 2006, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed ordinary income ....................... $ 2,669
Capital loss carryforwards .......................... (54,218,953)
Net unrealized appreciation on investments, foreign
currency, and foreign receivables and payables .... 19,818,910
------------
Total accumulated loss .............................. $(34,397,374)
============
At December 31, 2006, the Fund has net capital loss carryforwards for Federal
income tax purposes of $54,218,953, which are available to reduce future
required distributions of net capital gains to shareholders. $12,969,766 is
available through 2009; $39,969,419 is available through 2010; and $1,279,768 is
available through 2011. For the fiscal year ended December 31, 2006, the Fund
utilized capital loss carryforwards of $13,953,674.
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at December 31, 2006:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ ------------
Investments ....................... $82,773,682 $21,701,299 $(1,891,308) $19,809,991
At December 31, 2006, the difference between book basis and tax basis unrealized
appreciation was primarily due to deferral of losses from wash sales for tax
purposes.
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for a calendar-year open-end Fund no later than its June 29, 2007
NAV, and is to be applied to all open tax years as of the date of effectiveness.
Management has begun to evaluate the application of the Interpretation to the
Fund, and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser.
If total net assets of the Corporation are in excess of $100 million, the
Corporation pays each Director that is not considered to be an affiliated person
an annual retainer of $3,000 plus $500 for each Board meeting attended and they
are reimbursed for any out of pocket expenses incurred in attending meetings. If
total net assets of the Corporation are below $100 million, the Corporation pays
each Independent Director an annual retainer of $1,500 plus $250 for each Board
meeting attended and they are reimbursed for any out of pocket expenses incurred
in attending meetings. All Board committee members receive $500 per meeting
attended. Directors who are directors or employees of the Adviser or an
affiliated company receive no compensation or expense reimbursement from the
Fund.
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,
13
THE GAMCO GLOBAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 fiscal year ended December 31, 2006, other than short-term and U.S.
Government Securities, aggregated $48,188,611 and $67,695,657, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the fiscal year ended December 31, 2006,
the Fund paid brokerage commissions of $18,576 to Gabelli & Company.
Additionally, Gabelli & Company informed the Fund that it received $1,216 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 fiscal year
ended December 31, 2006, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
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. This amount, if any, would be shown as "interest expense"
in the Statement of Operations. At December 31, 2006, there were no borrowings
outstanding from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the fiscal year ended December 31, 2006, was $3,534 with a weighted
average interest rate of 5.87%. The maximum amount borrowed at any time during
the fiscal year ended December 31, 2006 was $197,000.
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.
Effective February 15, 2007, Class AAA Shares are offered only to investors who
are shareholders prior to that date in one or more of the registered funds
distributed by Gabelli & Company. Class AAA Shares are offered to these
investors only 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 1.00% 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.
The Fund imposes 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 fiscal
years ended December 31, 2006 and December 31, 2005 amounted to $148 and $873,
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, 2006 DECEMBER 31, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 263,640 $ 5,632,563 351,247 $ 6,634,577
Shares issued upon reinvestment of distributions ... 11,428 262,618 4,351 89,324
Shares redeemed .................................... (1,183,208) (25,403,007) (1,387,756) (25,704,300)
---------- ------------ ---------- ------------
Net decrease ..................................... (908,140) $(19,507,826) (1,032,158) $(18,980,399)
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 8,807 $ 187,766 36,708 $ 724,402
Shares issued upon reinvestment of distributions ... 126 2,895 97 1,998
Shares redeemed .................................... (8,777) (193,466) (7,903) (149,401)
---------- ------------ ---------- ------------
Net increase (decrease) .......................... 156 $ (2,805) 28,902 $ 576,999
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ........................................ -- $ -- 1,074 $ 18,953
Shares redeemed .................................... (2) (60) (1,326) (22,770)
---------- ------------ ---------- ------------
Net decrease ..................................... (2) $ (60) (252) $ (3,817)
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 9,832 $ 202,102 9,486 $ 178,993
Shares redeemed .................................... (9,339) (187,197) (394) (7,267)
---------- ------------ ---------- ------------
Net increase ..................................... 493 $ 14,905 9,092 $ 171,726
========== ============ ========== ============
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 received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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
December 31 of Period (Loss)(a) Investments Operations Income Distributions
- ----------- --------- --------- ----------- ------------ ---------- -------------
CLASS AAA
2006 $20.43 $ 0.06 $ 2.50 $ 2.56 $(0.06) $(0.06)
2005 17.98 0.02 2.45 2.47 (0.02) (0.02)
2004 16.43 (0.05) 1.60 1.55 -- --
2003 11.62 (0.06) 4.86 4.80 -- --
2002 15.45 (0.08) (3.75) (3.83) -- --
CLASS A
2006 $20.43 $ 0.06 $ 2.50 $ 2.56 $(0.06) $(0.06)
2005 18.01 0.01 2.45 2.46 (0.04) (0.04)
2004 16.45 (0.05) 1.61 1.56 -- --
2003 11.63 (0.06) 4.87 4.81 -- --
2002 15.47 (0.08) (3.76) (3.84) -- --
CLASS B
2006 $19.65 $(0.10) $ 2.39 $ 2.29 -- --
2005 17.41 (0.12) 2.36 2.24 -- --
2004 16.02 (0.17) 1.56 1.39 -- --
2003 11.42 (0.16) 4.75 4.59 -- --
2002 15.30 (0.17) (3.71) (3.88) -- --
CLASS C
2006 $19.58 $(0.09) $ 2.38 $ 2.29 -- --
2005 17.35 (0.16) 2.39 2.23 -- --
2004 15.97 (0.19) 1.57 1.38 -- --
2003 11.38 (0.16) 4.74 4.58 -- --
2002 15.26 (0.17) (3.71) (3.88) -- --
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(a) Period Return+ (in 000's) (Loss) Expenses (b) Rate
- ----------- ---------- -------- ------- ---------- --------- ------------ -------
CLASS AAA
2006 $0.00(c) $22.93 12.5% $100,883 0.26% 1.78% 46%
2005 0.00(c) 20.43 13.7 108,433 0.11 1.79(d) 33
2004 0.00(c) 17.98 9.4 114,011 (0.30) 1.82 100
2003 0.01 16.43 41.4 132,886 (0.45) 1.71 63
2002 -- 11.62 (24.8) 105,034 (0.58) 1.75 82
CLASS A
2006 $0.00(c) $22.93 12.5% $ 1,294 0.28% 1.78% 46%
2005 0.00(c) 20.43 13.7 1,150 0.03 1.79(d) 33
2004 0.00(c) 18.01 9.5 493 (0.29) 1.82 100
2003 0.01 16.45 41.4 426 (0.45) 1.71 63
2002 -- 11.63 (24.8) 176 (0.58) 1.75 82
CLASS B
2006 $0.00(c) $21.94 11.7% $ 225 (0.49)% 2.53% 46%
2005 0.00(c) 19.65 12.9 202 (0.67) 2.54(d) 33
2004 0.00(c) 17.41 8.7 183 (1.05) 2.57 100
2003 0.01 16.02 40.3 211 (1.20) 2.46 63
2002 -- 11.42 (25.4) 86 (1.33) 2.50 82
CLASS C
2006 $0.00(c) $21.87 11.7% $ 275 (0.42)% 2.53% 46%
2005 0.00(c) 19.58 12.9 236 (0.90) 2.52(d) 33
2004 0.00(c) 17.35 8.6 52 (1.17) 2.57 100
2003 0.01 15.97 40.3 207 (1.20) 2.46 63
2002 -- 11.38 (25.4) 101 (1.33) 2.50 82
- -------------
+ 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.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The Fund incurred interest expense during the years ended December 31, 2004
and 2002. If interest expense had not been incurred, the ratios of operating
expenses to average net assets would have been 1.81% and 1.70% (Class AAA),
1.81% and 1.70% (Class A), 2.56% and 2.45% (Class B), and 2.56% and 2.45%
(Class C), respectively. Interest expense in 2006 was immaterial.
(c) Amount represents less than $0.005 per share.
(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,
2006, 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 four 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 the year 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, 2006, 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, 2006, 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 four years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 16, 2007
17
THE GAMCO GLOBAL GROWTH FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2006, 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 Board Members") who are not "interested persons" of the Fund.
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 Fund's portfolio managers, the depth of the analyst
pool available to the Adviser and the portfolio managers, the scope of
supervisory, 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 Fund's portfolio managers.
INVESTMENT PERFORMANCE. The Independent Board Members 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 bottom quartile performance
for the one and three year periods and top third performance for the five year
period.
PROFITABILITY. The Independent Board Members 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 Independent
Board Members also noted an affiliated broker of the Adviser 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 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 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.
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 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 Independent Board Members noted that the Fund's expense
ratios were significantly higher than, and the Fund's size was lower than,
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/GAMCO funds. The Independent Board Members 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 Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
mixed performance record that was understandable in relation to the disclosure
in the Fund's prospectus and periodic shareholder reports as to its purpose and
the outlook of the portfolio managers. The Independent Board Members 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 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 management agreement to the full Board
of Directors.
18
THE GAMCO GLOBAL GROWTH FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The business and affairs of the Corporation are managed under the direction of
the Corporation's Board of Directors. Information pertaining to the Directors
and officers of the Corporation is set forth below. The Fund's Statement of
Additional Information includes additional information about the 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 OFFICE NUMBER OF
NAME, POSITION(S) AND LENGTH OF FUNDS IN FUND
ADDRESS 1 TIME COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 BY 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
Director and Officer of GAMCO Investors, Inc. and Group Holdings, Inc.
Chief Investment Officer Chief Investment Officer - Value Portfolios (transportation
Age: 64 of Gabelli Funds, LLC and GAMCO Asset services); Chairman of
Management Inc.; Director/Trustee or Chief the Board of Lynch
Investment Officer of other registered Interactive Corporation
investment companies in the Gabelli Funds (multimedia and
complex; Chairman and Chief Executive communication services
Officer of GGCP, Inc. company)
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of GAMCO
Director Company, Inc. Investors, Inc.
Age: 62
INDEPENDENT DIRECTORS 5:
- -----------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of The LGL Group,
Director Consultants, Inc.; Adviser to Iona Inc. (diversified
Age: 67 College Hagan School of Business manufacturing)
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 71
ARTHUR V. FERRARA Since 2001 7 Former Chairman of the Board and Chief Director of the Guardian
Director Executive Officer of The Guardian Life sponsored mutual funds
Age: 76 Insurance Company of America
(1993-1995)
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence --
Director Hospital and practicing private physician
Age: 66
ANTHONIE C. VAN EKRIS Since 1993 17 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 72
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Supplies Director of Hollis-Eden
Director Corp. (distribution of electrical Pharmaceuticals (biotechnology);
Age: 61 supplies) Director of Earl Scheib, Inc.
(automotive services)
19
THE GAMCO GLOBAL GROWTH FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
TERM OF OFFICE
NAME, POSITION(S) AND 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 Officer of Gabelli Funds, LLC
President since 1988 and an officer of all of the registered investment companies
Age: 55 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 Investors, Inc.
Secretary since 1999 and GAMCO Asset Management Inc. since 1993; Secretary
Age: 43 of all of the registered investment companies in the Gabelli Funds complex
AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds
Treasurer complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer
Age: 48 and Chief Financial Officer of Excelsior Funds from 2004 through 2005;
Chief Financial Officer of AMIC Distribution Partners from 2002 through 2004;
Controller of Reserve Management Corporation and Reserve Partners, Inc. and
Treasurer of Reserve Funds from 2000 through 2002
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief
Chief Compliance Officer Compliance Officer of all of the registered investment companies in the
Age: 53 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
Corporation's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified.
3 "Interested person" of the Corporation as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"). Messrs. Gabelli are each considered
an "interested person" because of their affiliation with Gabelli Funds, LLC
which acts as the Corporation'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, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
5 Directors who are not interested persons are considered "Independent"
Directors.
- --------------------------------------------------------------------------------
2006 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2006, the Fund paid to shareholders
ordinary income dividends (comprised of net investment income) totaling
$0.062 and $0.063 per share for Class AAA and Class A, respectively. For the
fiscal year ended December 31, 2006, 43.03% 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/GAMCO and Westwood 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
SHAREHOLDER?
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. 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 at the time of investment of $2 billion or less) 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 generally less than $3.0 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. (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.
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 per share 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 CHAIRMAN
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 SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER 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.
- --------------------------------------------------------------------------------
GAB442Q406SR
GAMCO
THE
GAMCO
GLOBAL
GROWTH
FUND
ANNUAL REPORT
DECEMBER 31, 2006
THE GAMCO GLOBAL OPPORTUNITY FUND
ANNUAL REPORT
DECEMBER 31, 2006
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, 2006 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION (UNAUDITED)
For the twelve months ending December 31, 2006 the net asset value of the
Fund (Class AAA) appreciated by 14.54% which compares with 18.15% for the
average Global Multi-Cap Growth Fund monitored by Lipper and 21.23% for the MSCI
AC World Free Index.
Global equity markets performed well in 2006. Merger and acquisition
activity has been feverish and helped global markets' performance. Europe
surpassed the U.S. (which itself had the fourth largest deal volume ever) in
2006 with deal volume of $1.43 trillion, a rise of 39% from 2005. Gains made in
equity investments outside the United States were further augmented by the
weakness of the U.S. dollar relative to most foreign currencies. Contributors to
performance were made by both domestic and international holdings. Domestic
investments that appreciated by more than 40% for the year included Precision
Castparts Corp., Telephone & Data Systems Inc., Lockheed Martin Corp., and
United States Cellular Corp. The top performing international holdings were
Petrobras (+44.5%), Saipem (+42.6%), and Antofagasta Holdings (+35.8%).
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 23, 2007
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
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
GAMCO Global
Opportunity Fund Lipper Global Multi Cap MSCI AC
(Class AAA Shares) Growth Fund Average World 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
12/31/06 22,183 16,077 16,645
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, 2006 (A)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year (5/11/98)
- --------------------------------------------------------------------------------------------------------------------
GAMCO GLOBAL OPPORTUNITY FUND CLASS AAA ............ 8.92% 14.54% 14.56% 12.83% 9.66%
MSCI AC World Free Index ........................... 9.16 21.53 16.14 11.31 6.06
Lipper Global Multi-Cap Growth Fund Average ........ 8.99 18.15 14.77 9.52 6.97
Class A ............................................ 8.92 14.54 14.57 12.88 9.66
2.65(b) 7.96(b) 12.33(b) 11.55(b) 8.92(b)
Class B ............................................ 8.70 13.69 13.71 12.03 9.09
3.70(c) 8.69(c) 12.93(c) 11.77(c) 9.09(c)
Class C ............................................ 8.72 13.75 14.19 12.78 9.62
7.72(d) 12.75(d) 14.19 12.78 9.62
(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. 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 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. 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. DIVIDENDS ARE CONSIDERED REINVESTED. YOU
CANNOT INVEST DIRECTLY IN AN INDEX.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR,
FIVE YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%, 3%, 2%, AND 0%,
RESPECTIVELY, OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER
IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER AND ONE YEAR PERIODS OF 1%
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
- --------------------------------------------------------------------------------
2
THE GAMCO GLOBAL OPPORTUNITY FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2006 through December 31, 2006
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, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/06 12/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL OPPORTUNITY FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,072.60 2.00% $10.45
Class A $1,000.00 $1,071.80 2.00% $10.44
Class B $1,000.00 $1,067.90 2.73% $14.23
Class C $1,000.00 $1,068.30 2.74% $14.28
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 $1,011.44 2.73% $13.84
Class C $1,000.00 $1,011.39 2.74% $13.89
* 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, 2006:
THE GAMCO GLOBAL OPPORTUNITY FUND
Health Care ....................................... 13.1%
Metals and Mining ................................. 12.7%
Financial Services ................................ 12.1%
Energy and Utilities .............................. 10.8%
Consumer Products ................................. 9.8%
Computer Software and Services .................... 4.2%
Food and Beverage ................................. 3.9%
Diversified Industrial ............................ 3.4%
Retail ............................................ 3.4%
Aerospace ......................................... 3.2%
Telecommunications ................................ 3.0%
Building and Construction ......................... 3.0%
Entertainment ..................................... 3.0%
Hotels and Gaming ................................. 2.7%
Aviation: Parts and Services ...................... 2.4%
Broadcasting ...................................... 2.4%
U.S. Government Obligations ....................... 1.9%
Wireless Communications ........................... 1.3%
Agriculture ....................................... 1.3%
Cable and Satellite ............................... 0.8%
Publishing ........................................ 0.7%
Electronics ....................................... 0.6%
Machinery ......................................... 0.5%
Closed-End Funds .................................. 0.4%
Transportation .................................... 0.0%
Other Assets and Liabilities (Net) ................ (0.6)%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER
30, 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
SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF
THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
4
THE GAMCO GLOBAL OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS -- 98.7%
AEROSPACE -- 3.2%
3,000 L-3 Communications
Holdings Inc. ............... $ 127,720 $ 245,340
5,500 Lockheed Martin Corp. ......... 135,166 506,385
------------ ------------
262,886 751,725
------------ ------------
AGRICULTURE -- 1.3%
30,000 Agricore United ............... 206,693 309,994
------------ ------------
AVIATION: PARTS AND SERVICES -- 2.4%
7,400 Precision Castparts Corp. ..... 109,705 579,272
------------ ------------
BROADCASTING -- 2.4%
20,000 Mediaset SpA .................. 195,380 237,344
5,000 Modern Times Group AB, Cl. B+ 176,195 328,662
------------ ------------
371,575 566,006
------------ ------------
BUILDING AND CONSTRUCTION -- 3.0%
4,125 CRH plc, Dublin ............... 47,794 171,741
13,000 CRH plc, London ............... 172,929 541,931
------------ ------------
220,723 713,672
------------ ------------
CABLE AND SATELLITE -- 0.8%
7,000 Cablevision Systems Corp.,
Cl. A+ ...................... 67,535 199,360
------------ ------------
UNITS
-----
CLOSED-END FUNDS -- 0.4%
6,000 Mullen Group Income Fund ...... 194,420 96,163
------------ ------------
SHARES
------
COMPUTER SOFTWARE AND SERVICES -- 4.2%
700 Google Inc., Cl. A+ ........... 220,948 322,336
11,500 Microsoft Corp. ............... 301,125 343,390
100 NIWS Co. HQ Ltd. .............. 113,403 60,081
5,000 Square Enix Co. Ltd. .......... 121,466 131,087
5,000 Yahoo! Inc.+ .................. 169,373 127,700
------------ ------------
926,315 984,594
------------ ------------
CONSUMER PRODUCTS -- 9.8%
5,000 Altadis SA .................... 153,235 261,699
10,000 Assa Abloy AB, Cl. B .......... 189,995 217,647
4,000 Christian Dior SA ............. 227,736 426,375
11,000 Compagnie Financiere
Richemont AG, Cl. A ......... 231,884 640,952
8,500 Escada AG+ .................... 207,340 335,489
4,000 Procter & Gamble Co. .......... 221,128 257,080
3,200 UST Inc. ...................... 142,645 186,240
------------ ------------
1,373,963 2,325,482
------------ ------------
DIVERSIFIED INDUSTRIAL -- 3.4%
7,000 Bouygues SA ................... 252,231 449,356
9,500 General Electric Co. .......... 320,183 353,495
------------ ------------
572,414 802,851
------------ ------------
ELECTRONICS -- 0.6%
4,400 Linear Technology Corp. ....... 165,609 133,408
------------ ------------
MARKET
SHARES COST VALUE
-------- ---- -------
ENERGY AND UTILITIES -- 10.8%
5,000 Connecticut Water Service Inc. $ 110,239 $ 113,750
6,600 Imperial Oil Ltd. ............. 222,619 242,968
30,000 Kanto Natural Gas
Development Co. Ltd. ........ 153,608 197,891
8,000 Mueller Water Products Inc.,
Cl. A ....................... 126,070 118,960
3,500 Petroleo Brasileiro SA, ADR ... 105,807 360,465
10,000 Saipem SpA .................... 210,831 260,577
7,200 Schlumberger Ltd. ............. 238,374 454,752
3,000 Suncor Energy Inc. ............ 101,766 236,730
35,000 Tokai Carbon Co. Ltd. ......... 152,714 248,813
4,000 Transocean Inc.+ .............. 164,064 323,560
------------ ------------
1,586,092 2,558,466
------------ ------------
ENTERTAINMENT -- 3.0%
35,000 Publishing &
Broadcasting Ltd. ........... 176,587 589,840
5,000 Time Warner Inc. .............. 85,437 108,900
------------ ------------
262,024 698,740
------------ ------------
FINANCIAL SERVICES -- 12.1%
15,000 Bank of Ireland ............... 92,773 346,511
7,000 Citigroup Inc. ................ 270,158 389,900
5,375 Julius Baer Holding Ltd. AG ... 380,982 591,978
1,600 Legg Mason Inc. ............... 141,880 152,080
10,000 Mediobanca SpA ................ 201,520 236,156
17,000 Nikko Cordial Corp. ........... 180,347 194,992
20,000 The Shizuoka Bank Ltd. ........ 203,072 198,479
7,000 TSX Group Inc. ................ 287,164 279,784
8,000 UBS AG ........................ 336,926 482,640
------------ ------------
2,094,822 2,872,520
------------ ------------
FOOD AND BEVERAGE -- 3.9%
8,000 ARIAKE JAPAN Co. Ltd. ......... 188,030 156,296
15,000 Cadbury Schweppes plc ......... 141,899 160,505
5,000 General Mills Inc. ............ 248,004 288,000
5,000 PepsiCo Inc. .................. 261,500 312,750
------------ ------------
839,433 917,551
------------ ------------
HEALTH CARE -- 13.1%
6,000 Cochlear Ltd. ................. 246,988 274,693
4,208 GlaxoSmithKline plc ........... 126,084 110,735
6,000 Novartis AG ................... 232,122 345,917
3,500 Roche Holding AG .............. 305,337 627,616
4,691 Sanofi-Aventis, ADR ........... 162,121 216,583
5,000 St. Jude Medical Inc.+ ........ 192,663 182,800
1,200 Straumann Holding AG .......... 254,333 290,521
3,000 Synthes Inc. .................. 302,959 357,735
4,200 Takeda Pharmaceutical
Co. Ltd. .................... 263,783 288,341
5,000 William Demant Holding A/S+ ... 235,806 405,396
------------ ------------
2,322,196 3,100,337
------------ ------------
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS (Continued)
HOTELS AND GAMING -- 2.7%
7,000 Greek Organization of Football
Prognostics SA .............. $ 117,837 $ 270,557
10,000 InterContinental Hotels
Group plc ................... 207,348 247,097
15,000 Ladbrokes plc ................. 121,994 122,839
------------ ------------
447,179 640,493
------------ ------------
MACHINERY -- 0.5%
4,500 CNH Global NV ................. 129,912 122,850
------------ ------------
METALS AND MINING -- 12.7%
17,726 Andsberg Ltd.+ (a) ............ 8,277 15,740
73,630 Antofagasta plc ............... 88,099 733,806
48,000 Gold Fields Ltd., ADR ......... 208,304 906,240
10,000 Harmony Gold
Mining Co. Ltd.+ ............ 56,555 158,557
24,000 Harmony Gold
Mining Co. Ltd., ADR+ ....... 130,306 378,000
15,000 Newmont Mining Corp. .......... 349,500 677,250
3,500 Peabody Energy Corp. .......... 179,978 141,435
------------ ------------
1,021,019 3,011,028
------------ ------------
PUBLISHING -- 0.7%
40,000 Independent News &
Media plc ................... 98,736 158,933
------------ ------------
RETAIL -- 3.4%
9,000 Matsumotokiyoshi Co. Ltd. ..... 232,030 200,034
6,300 Seven & I Holdings Co. Ltd. ... 218,236 195,874
6,000 Walgreen Co. .................. 233,238 275,340
2,700 Whole Foods Market Inc. ....... 136,041 126,711
------------ ------------
819,545 797,959
------------ ------------
TELECOMMUNICATIONS -- 3.0%
3,000 Alltel Corp. .................. 128,045 181,440
15,675 Sprint Nextel Corp. ........... 255,701 296,101
2,300 Telephone & Data
Systems Inc. ................ 45,066 124,959
2,300 Telephone & Data
Systems Inc., Special ....... 41,599 114,080
------------ ------------
470,411 716,580
------------ ------------
TRANSPORTATION -- 0.0%
2,941 Horizon North Logistics Inc.+ 10,722 8,978
------------ ------------
WIRELESS COMMUNICATIONS -- 1.3%
4,500 United States Cellular Corp.+ 254,809 313,155
------------ ------------
TOTAL COMMON STOCKS ........... 14,828,738 23,380,117
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 1.9%
$451,000 U.S. Treasury Bill,
4.968%++, 03/08/07 .......... $ 447,119 $ 447,120
------------ ------------
TOTAL
INVESTMENTS -- 100.6% ....... $ 15,275,857 23,827,237
============
Other Assets and Liabilities (Net) -- (0.6)% (151,841)
------------
NET ASSETS -- 100.0% ....................... $ 23,675,396
============
- ----------------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing valuation of comparable
securities and other factors on a regular basis. At December 31, 2006, the
market value of the fair valued security amounted to $15,740 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 ...................... 38.9% $ 9,273,939
Europe ............................. 38.8 9,235,304
Japan .............................. 7.9 1,871,888
South Africa ....................... 6.0 1,442,797
Latin America ...................... 4.8 1,138,777
Asia/Pacific ....................... 3.6 864,532
----- -----------
100.0% $23,827,237
===== ===========
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $15,275,857) ............... $23,827,237
Dividends receivable ................................... 31,005
Receivable for Fund shares sold ........................ 8,606
Prepaid expense ........................................ 2,355
-----------
TOTAL ASSETS ........................................... 23,869,203
-----------
LIABILITIES:
Payable to custodian ................................... 85,305
Payable for Fund shares redeemed ....................... 27,161
Payable for investment advisory fees ................... 23,875
Payable for legal and audit fees ....................... 21,434
Payable for shareholder
communications expenses .............................. 18,295
Payable for distribution fees .......................... 5,060
Other accrued expenses ................................. 12,677
-----------
TOTAL LIABILITIES ...................................... 193,807
-----------
NET ASSETS applicable to 1,299,227
shares outstanding ................................... $23,675,396
===========
NET ASSETS CONSIST OF:
Paid-in capital, each class at
$0.001 par value ..................................... $21,190,123
Accumulated distributions in excess of net
investment income .................................... (65,260)
Accumulated net realized loss on investments
and foreign currency transactions .................... (6,001,471)
Net unrealized appreciation on investments ............. 8,551,380
Net unrealized appreciation on foreign
currency translations ................................ 624
-----------
NET ASSETS ............................................. $23,675,396
===========
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($23,426,328 / 1,285,482 shares
outstanding; 75,000,000 shares authorized) ........... $18.22
======
CLASS A:
Net Asset Value and redemption price per share
($219,947 / 12,102 shares outstanding;
50,000,000 shares authorized) ........................ $18.17
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ............................... $19.28
======
CLASS B:
Net Asset Value and offering price per share
($25,039 / 1,422 shares outstanding;
25,000,000 shares authorized) ........................ $17.61(a)
======
CLASS C:
Net Asset Value and offering price per share
($4,082 / 221.3 shares outstanding;
25,000,000 shares authorized) ........................ $18.45(a)
======
- --------------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $16,951) ............ $ 352,762
Interest ............................................... 10,854
----------
TOTAL INVESTMENT INCOME ................................ 363,616
----------
EXPENSES:
Investment advisory fees ............................... 230,631
Distribution fees - Class AAA .......................... 56,951
Distribution fees - Class A ............................ 605
Distribution fees - Class B ............................ 367
Distribution fees - Class C ............................ 39
Shareholder communications expenses .................... 31,463
Legal and audit fees ................................... 27,461
Registration expenses .................................. 27,176
Shareholder services fees .............................. 22,030
Custodian fees ......................................... 16,173
Recovery of reimbursed expenses
(see Note 3) ......................................... 14,200
Interest expense ....................................... 4,831
Directors' fees ........................................ 2,518
Miscellaneous expenses ................................. 31,211
----------
TOTAL EXPENSES ......................................... 465,656
Less: Custodian fee credits ............................ (268)
----------
NET EXPENSES ........................................... 465,388
----------
NET INVESTMENT LOSS .................................... (101,772)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ....................... 1,181,626
Net realized loss on foreign currency
transactions ......................................... (755)
----------
Net realized gain on investments and
foreign currency transactions ........................ 1,180,871
----------
Net change in unrealized appreciation/
depreciation on investments .......................... 1,985,198
Net change in unrealized appreciation/
depreciation on foreign currency
translations ......................................... 1,286
----------
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations ................................ 1,986,484
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY .................. 3,167,355
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $3,065,583
==========
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
OPERATIONS:
Net investment income (loss) ................................................. $ (101,772) $ 19,418
Net realized gain on investments and foreign currency transactions ........... 1,180,871 856,524
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations .............................................. 1,986,484 2,088,178
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................... 3,065,583 2,964,120
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA .................................................................. (3,855) (30,715)
Class A .................................................................... (124) (552)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .......................................... (3,979) (31,267)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class AAA .................................................................. (1,022,036) (2,510,492)
Class A .................................................................... (57,936) 112,811
Class B .................................................................... (27,495) (9,204)
Class C .................................................................... -- 3,000
----------- -----------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ................... (1,107,467) (2,403,885)
----------- -----------
REDEMPTION FEES .............................................................. 499 970
----------- -----------
NET INCREASE IN NET ASSETS ................................................... 1,954,636 529,938
NET ASSETS:
Beginning of period .......................................................... 21,720,760 21,190,822
----------- -----------
End of period (including undistributed net investment income of
$0 and $0, respectively) ................................................... $23,675,396 $21,720,760
=========== ===========
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 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
8
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
of Directors (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, unless the Board determines such amount
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value American Depository
Receipt ("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.
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2006, there were no open repurchase agreements.
9
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions. Short
selling involves selling securities that may or may not be owned and, at times,
borrowing the same securities for delivery to the purchaser, with an obligation
to replace such borrowed securities at a later date. The proceeds received from
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 an 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,
2006.
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, 2006, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
10
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 AND INTEREST EXPENSE. When cash balances are maintained in
the custody account, the Fund receives credits which are used to offset
custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under U.S. generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities and foreign
currency transactions held by the Fund, timing differences, and differing
characterizations of distributions made by the Fund. Distributions from net
investment income include net realized gains on foreign currency transactions.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2006, reclassifications were made to decrease accumulated
distributions in excess of net investment income by $80,079, to decrease
accumulated net realized loss on investments and foreign currency transactions
by $754, with an offsetting adjustment to paid-in capital.
The tax character of distributions paid during the fiscal years ended December
31, 2006 and December 31, 2005 was $3,979 and $31,267, 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)
- --------------------------------------------------------------------------------
At December 31, 2006, 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, 2006, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Net unrealized appreciation ........................ $ 8,551,976
Capital loss carryforwards ......................... (6,001,443)
Other temporary differences .............. ......... (65,260)
-----------
Total accumulated earnings ......................... $ 2,485,273
===========
At December 31, 2006, the Fund has net capital loss carryforwards for Federal
income tax purposes of $6,001,443, which are available to reduce future required
distributions of net capital gains to shareholders. $1,119,397 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 fiscal year ended December 31, 2006, the Fund utilized net tax capital
loss carryforwards of $1,181,627.
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at December 31, 2006:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ ------------
Investments ...................... $15,275,885 $8,963,899 $(412,547) $8,551,352
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for a calendar year open-end fund no later than its June 29, 2007
NAV, and is to be applied to all open tax years as of the date of effectiveness.
Management has begun to evaluate the application of the Interpretation to the
Fund, and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser. Effective May 1, 2005, the Adviser has agreed to waive
its investment advisory fee and/or to reimburse expenses of the Fund to the
extent necessary to maintain the annualized total operating expenses of the Fund
(exclusive of brokerage, interest, taxes, and extraordinary expenses) at no more
than 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. Beginning January 1, 2005, 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 $26,232. For the
fiscal year ended December 31, 2006, the Fund repaid the Adviser $14,200.
If total net assets of the Corporation are in excess of $100 million, the
Corporation pays each Director that is not considered to be an affiliated person
an annual retainer of $3,000 plus $500 for each Board meeting attended and they
are reimbursed for any out of pocket expenses incurred in attending meetings. If
total net assets of the
12
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Corporation are below $100 million, the Corporation pays each Independent
Director an annual retainer of $1,500 plus $250 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $500 per meeting attended.
Directors who are directors or employees of the Adviser or an affiliated company
receive no compensation or expense reimbursement from the Fund.
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 fiscal year ended December 31, 2006, other than short-term securities,
aggregated $3,524,316 and $4,759,873, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the fiscal year ended December 31, 2006,
the Fund paid brokerage commissions of $180 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $330 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. This amount, if any, would be shown as "interest expense"
in the Statement of Operations. At December 31, 2006, there were no borrowings
outstanding from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the fiscal year ended December 31, 2006 was $42,323 with a related
weighted average interest rate of 6.04%. The maximum amount borrowed at any time
during the fiscal year ended December 31, 2006 was $1,315,000.
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, 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 1.00% 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.
The Fund imposes 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 fiscal
years ended December 31, 2006 and December 31, 2005 amounted to $499 and $970,
respectively.
13
THE GAMCO GLOBAL OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ....................................... 283,265 $ 4,840,122 343,785 $ 5,002,957
Shares issued upon reinvestment of distributions .. 206 3,759 1,830 29,087
Shares redeemed ................................... (344,742) (5,865,917) (518,825) (7,542,536)
---------- ------------ ---------- ------------
Net decrease .................................... (61,271) $ (1,022,036) (173,210) $ (2,510,492)
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ....................................... 3,963 $ 67,574 10,880 $ 157,398
Shares issued upon reinvestment of distributions .. 5 97 35 547
Shares redeemed ................................... (7,241) (125,607) (3,190) (45,134)
---------- ------------ ---------- ------------
Net increase (decrease) ......................... (3,273) $ (57,936) 7,725 $ 112,811
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ....................................... -- -- 36 $ 500
Shares issued upon reinvestment of distributions .. -- -- -- --
Shares redeemed ................................... (1,701) $ (27,495) (727) (9,704)
---------- ------------ ---------- ------------
Net decrease .................................... (1,701) $ (27,495) (691) $ (9,204)
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ....................................... -- -- 211 $ 3,000
Shares issued upon reinvestment of distributions .. -- -- -- --
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 received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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
December 31 of Period (Loss)(a) Investments Operations Income Distributions
- ----------- --------- ------- ------------- ---------- --------- -------------
CLASS AAA
2006 $15.91 $(0.08) $ 2.39 $ 2.31 $(0.00)(d) $(0.00)(d)
2005 13.84 0.01 2.08 2.09 (0.02) (0.02)
2004 12.18 0.03 1.68 1.71 (0.05) (0.05)
2003 8.87 0.00(d) 3.29 3.29 (0.01) (0.01)
2002 10.02 0.00(d) (1.15) (1.15) -- --
CLASS A
2006 $15.87 $(0.08) $ 2.39 $ 2.31 $(0.01) $(0.01)
2005 13.81 0.01 2.09 2.10 (0.04) (0.04)
2004 12.16 0.03 1.67 1.70 (0.05) (0.05)
2003 8.86 0.00(d) 3.28 3.28 (0.01) (0.01)
2002 9.99 0.00(d) (1.13) (1.13) -- --
CLASS B
2006 $15.49 $(0.19) $ 2.31 $ 2.12 -- --
2005 13.56 (0.08) 2.01 1.93 -- --
2004 12.00 (0.07) 1.66 1.59 $(0.03) $(0.03)
2003 8.80 (0.07) 3.24 3.17 -- --
2002 10.00 (0.07) (1.13) (1.20) -- --
CLASS C
2006 $16.22 $(0.21) $ 2.44 $ 2.23 -- --
2005 14.17 (0.10) 2.15 2.05 -- --
2004 12.39 0.07 1.71 1.78 -- --
2003 9.00 (0.07) 3.43 3.36 -- --
2002 10.11 (0.07) (1.04) (1.11) -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------------
Net Asset Net Assets Net Operating Operating
Period Value, End of Investment Expenses Expenses Net Portfolio
Ended Redemption End of Total Period Income Before of Reimburse- Turnover
December 31 Fees(a) Period Return+ (in 000's) (Loss) Reimbursement ment(b)(c) Rate
- ----------- ---------- -------- ------- ---------- ------- -------------- ------------ --------
CLASS AAA
2006 $0.00(d) $18.22 14.5% $23,426 (0.44)% 2.02%(e) 2.02%(f) 15%
2005 0.00(d) 15.91 15.1 21,425 0.10 2.04 1.85(f) 26
2004 0.00(d) 13.84 14.0 21,033 0.25 2.00 1.50 35
2003 0.03 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
CLASS A
2006 $0.00(d) $18.17 14.5% $ 220 (0.45)% 2.02%(e) 2.02%(f) 15%
2005 0.00(d) 15.87 15.2 244 0.05 2.06 1.87(f) 26
2004 0.00(d) 13.81 14.0 106 0.26 2.00 1.50 35
2003 0.03 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
CLASS B
2006 $0.00(d) $17.61 13.7% $ 25 (1.14)% 2.77%(e) 2.77%(f) 15%
2005 0.00(d) 15.49 14.2 48 (0.60) 2.79 2.58(f) 26
2004 0.00(d) 13.56 13.2 52 (0.53) 2.75 2.25 35
2003 0.03 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
CLASS C
2006 $0.00(d) $18.45 13.8% $ 4 (1.20)% 2.77%(e) 2.77%(f) 15%
2005 0.00(d) 16.22 14.5 4 (0.66) 2.79 2.68(f) 26
2004 0.00(d) 14.17 14.4 0.1 0.58 2.75 2.25 35
2003 0.03 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
- -----------------------
+ 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.
(a) Per share data is calculated using the average shares outstanding method.
(b) The Fund incurred interest expense during the fiscal years ended December
31, 2004, 2003, and 2002. 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.
(c) The Fund incurred interest expense during the fiscal years ended December
31, 2006 and December 31, 2005. If interest expense had not been incurred,
the ratios of operating expenses to average net assets would have been 2.00%
and 1.84% (Class AAA), 2.00% and 1.86% (Class A), 2.75% and 2.57% (Class B),
and 2.75% and 2.68% (Class C), respectively.
(d) Amount represents less than $0.005 per share.
(e) Under an expense deferral agreement with the Adviser, the Fund repaid the
Adviser $14,200 during 2006, representing previously reimbursed expenses
from the Adviser. During the fiscal year ended December 31, 2006, had such
payment not been made, the expense ratios would have been 1.95%, 1.95%,
2.70%, and 2.70% for Class AAA, Class A, Class B, and Class C, respectively.
(f) 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 fiscal 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. For the fiscal year ended December 31, 2006,
the effect of the custodian fee credits was minimal.
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,
2006, 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 four 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 the year 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, 2006, 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 Opportunity Fund, a series of GAMCO Global Series Funds, Inc., at
December 31, 2006, 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 four years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 16, 2007
16
THE GAMCO GLOBAL OPPORTUNITY FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2006, 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 Board Members") who are not "interested persons" of the Fund.
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 Fund's portfolio managers, the depth of the analyst
pool available to the Adviser and the portfolio managers, the scope of
supervisory, 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 Fund's portfolio managers.
INVESTMENT PERFORMANCE. The Independent Board Members 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 bottom quartile for the one
year period, middle of its peer group for performance for the three year period,
and top quartile performance for the five year period.
PROFITABILITY. The Independent Board Members 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
Independent Board Members also noted that an affiliated broker of the Adviser
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 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 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 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 Independent Board Members noted that the Fund's expense
ratios after waivers were moderately higher than, 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 Independent Board Members also noted that the
advisory fee structure before waivers was the same as that in effect for most of
the Gabelli/GAMCO funds. The Independent Board Members 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 Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
mixed performance record that was understandable in relation to the disclosure
in the Fund's prospectus and periodic shareholder reports as to its purpose and
the outlook of the portfolio managers. The Independent Board Members 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
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 of Directors.
17
THE GAMCO GLOBAL OPPORTUNITY FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The business and affairs of the Corporation are managed under the direction of
the Corporation'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 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 OFFICE NUMBER OF
NAME, POSITION(S) AND LENGTH OF FUNDS IN FUND
ADDRESS 1 TIME COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 BY 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. and Holdings, Inc.(transportation
Chief Investment Officer Chief Investment Officer - Value Portfolios services); Chairman of the
Age: 64 of Gabelli Funds, LLC and GAMCO Asset Board of Lynch Interactive
Management Inc.; Director/Trustee or Chief Corporation (multimedia and
Investment Officer of other registered communication services
investment companies in the Gabelli Funds company)
complex; Chairman and Chief Executive
Officer of GGCP, Inc.
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of GAMCO
Director Company, Inc. Investors, Inc.
Age: 62
INDEPENDENT DIRECTORS 5:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of The LGL Group,
Director Consultants, Inc.; Adviser to Iona Inc. (diversified
Age: 67 College Hagan School of Business manufacturing)
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 71
ARTHUR V. FERRARA Since 2001 7 Former Chairman of the Board and Chief Director of The Guardian
Director Executive Officer of The Guardian Life sponsored mutual funds
Age: 76 Insurance Company of America
(1993 - 1995)
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence --
Director Hospital and practicing private physician
Age: 66
ANTHONIE C. VAN EKRIS Since 1993 17 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 72
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Supplies Director of Hollis-Eden
Director Corp. (distribution of electrical Pharmaceuticals (biotechnology);
Age: 61 supplies) Director of Earl Scheib, Inc.
(automotive services)
18
THE GAMCO GLOBAL OPPORTUNITY FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
TERM OF OFFICE
NAME, POSITION(S) AND 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 Officer of Gabelli Funds, LLC
President since 1988 and an officer of all of the registered investment companies
Age: 55 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 Investors, Inc.
Secretary since 1999 and GAMCO Asset Management Inc. since 1993; Secretary
Age: 43 of all of the registered investment companies in the Gabelli Funds complex
AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds
Treasurer complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer
Age: 48 and Chief Financial Officer of Excelsior Funds from 2004 through 2005;
Chief Financial Officer of AMIC Distribution Partners from 2002 through 2004;
Controller of Reserve Management Corporation and Reserve Partners, Inc. and
Treasurer of Reserve Funds from 2000 through 2002
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief
Chief Compliance Officer Compliance Officer of all of the registered investment companies in the
Age: 53 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
Corporation's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified.
3 "Interested person" of the Corporation as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"). Messrs. Gabelli are each
considered an "interested person" because of their affiliation with Gabelli
Funds, LLC which acts as the Corporation'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, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
5 Directors who are not interested persons are considered "Independent"
Directors.
- --------------------------------------------------------------------------------
2006 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2006, the Fund paid to shareholders, an
ordinary income dividend (comprised of net investment income) totaling $0.003
and $0.008 per share for Class AAA and Class A, respectively. For the year
ended December 31, 2006, 0.00% of the distribution qualifies for the dividend
received deduction available to corporations, and 100% 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 2006 which was derived from U.S. Treasury securities was 2.99%. 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 2006. 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.
- --------------------------------------------------------------------------------
19
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 per share 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 CHAIRMAN
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 SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER 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.
- --------------------------------------------------------------------------------
GAB403Q406SR
GAMCO
THE
GAMCO
GLOBAL
OPPORTUNITY
FUND
ANNUAL REPORT
DECEMBER 31, 2006
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ANNUAL REPORT
DECEMBER 31, 2006
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, 2006 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION (UNAUDITED)
The GAMCO Global Telecommunications Fund (Class AAA) gained 28.91% in
2006, underperforming the MSCI AC World Telecom Index that returned 34.36% for
the year.
In analyzing the performance of The GAMCO Global Telecommunications Fund,
a number of our largest emerging markets holdings are of note: America Movil,
the wireless operator in Mexico and Latin America, had a total 2006 return of
55.5%. In Asia, Philippine Long Distance gained 58.8% for the year. It's
wireless subscriber growth and margins continue to exceed expectations and the
improved balance sheet suggests the potential for higher cash returns to
shareholders in 2007. Sistema Group of Russia, the holding company that controls
MTS, the largest domestic wireless operator, was ahead by 36.3% in 2006. The
Fund's outperformance was not, however, confined to emerging market names.
United States Cellular Corp. rallied by an impressive 40.9% for 2006. In the
cable and satellite sub-sectors, strong Fund contributions came from Cablevision
and DIRECTV Group. The Scandinavian duo Elisa of Finland and TeliaSonera of
Sweden were standout performers among the larger holdings of European national
operators in the Fund.
The importance of industry consolidation and corporate activity in driving
both sector and The GAMCO Global Telecommunications Fund's performance in 2006
cannot, we believe, be overstated. M&A was a truly global phenomenon with
AT&T/BellSouth in the U.S., Telefonica - O2 in Europe, and more recently, the
anticipated actions in the emerging markets of Brazil (Brasil Telecom).
In Canada, the government's decision to tax income trust distributions to
unit holders effectively ended Bell Canada and TELUS's plans to adopt income
trust structures. Although the ruling granted a four-year grace period to
existing trusts, this was of little consolation to those companies that had been
planning the move. The move led to a fall in the price of our Canadian holding,
TELUS.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
January 17, 2007
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2006:
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
Diversified Telecommunications
Services ................................... 47.1%
Wireless Telecommunications
Services .................................. 32.8%
Other ........................................ 19.8%
U.S. Government Obligations .................. 0.1%
Other Assets and Liabilities (Net) ........... 0.2%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER
30, 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
SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF
THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
GAMCO GLOBAL TELECOMMUNICATIONS FUND CLASS AAA SHARES, THE MSCI AC
WORLD TELECOMMUNICATION INDEX, AND THE MSCI AC WORLD FREE INDEX
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
GAMCO Global MSCI AC World
Telecommunications Fund Telecommunications MSCI AC
Class AAA Shares Index World Free Index
11/1/93 $10,000 $10,000
12/31/93 10,300 9,993
12/31/94 9,921 10,496
12/31/95 11,524 12,538
12/31/96 12,560 14,193
12/31/97 16,563 16,321
12/31/98 22,319 19,907
12/31/99 40,234 25,246
12/31/00 30,546 21,727
12/31/01 24,214 $24,214 18,270
12/31/02 17,051 17,683 14,803
12/31/03 24,337 22,504 19,929
12/31/04 30,025 26,832 23,067
12/31/05 30,878 25,488 25,690
12/31/06 39,804 34,245 31,221
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, 2006 (A)
----------------------------------------------------
SINCE
INCEPTION
Quarter 1 Year 3 Year 5 Year 10 Year (11/1/93)
------- ------ ------ ------ ------- ---------
GAMCO GLOBAL TELECOMMUNICATIONS FUND
CLASS AAA ....................................... 12.37% 28.91% 17.82% 10.45% 12.23% 11.07%
MSCI AC World Telecommunication Index ............. 14.42 34.36 15.04 7.18 N/A* N/A*
MSCI AC World Free Index .......................... 9.16 21.53 16.14 11.31 8.20 9.03
Class A ........................................... 12.40 28.96 17.81 10.46 12.22 11.06
5.93(b) 21.54(b) 15.51(b) 9.16(b) 11.56(b) 10.56(b)
Class B ........................................... 12.19 28.00 16.95 9.63 11.69 10.66
7.19(c) 23.00(c) 16.22(c) 9.35(c) 11.69(c) 10.66(c)
Class C ........................................... 12.16 28.03 16.95 9.63 11.68 10.66
11.16(d) 27.03(d) 16.95 9.63 11.68 10.66
(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. 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 ARE NOT
ANNUALIZED. 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 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 MSCI AC WORLD TELECOMMUNICATION INDEX
AND THE MSCI AC WORLD FREE INDEX ARE UNMANAGED INDICATORS OF GLOBAL STOCK
MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED REINVESTED. YOU CANNOT INVEST
DIRECTLY IN AN INDEX.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR,
FIVE YEAR, TEN YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%, 3%, 2%, 0%, AND
0%, RESPECTIVELY, OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE,
WHICHEVER IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER AND ONE YEAR PERIOD OF 1%
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
* INFORMATION FOR THE MSCI AC WORLD INDEX TELECOMMUNICATION INDEX IS NOT
AVAILABLE WITH DIVIDENDS PRIOR TO AUGUST 2001.
- --------------------------------------------------------------------------------
3
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2006 through December 31, 2006
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, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/06 12/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,227.50 1.51% $ 8.48
Class A $1,000.00 $1,227.90 1.51% $ 8.48
Class B $1,000.00 $1,223.50 2.24% $12.55
Class C $1,000.00 $1,223.50 2.26% $12.67
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.59 1.51% $ 7.68
Class A $1,000.00 $1,017.59 1.51% $ 7.68
Class B $1,000.00 $1,013.91 2.24% $11.37
Class C $1,000.00 $1,013.81 2.26% $11.47
* 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, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS -- 99.7%
DIVERSIFIED TELECOMMUNICATIONS SERVICES -- 47.1%
ASIA/PACIFIC -- 4.1%
1,500 Asia Satellite
Telecommunications
Holdings Ltd., ADR .......... $ 22,103 $ 27,450
170,000 First Pacific Co. Ltd. ........ 92,079 88,297
20,000 First Pacific Co. Ltd., ADR ... 30,144 51,946
10 Korea Thrunet Co. Ltd.+ (c) ... 5,250 0
10,000 KT Corp., ADR ................. 183,666 253,500
2,000 Pakistan Telecommunications
Co. Ltd., GDR (a) ........... 155,765 145,532
100,000 PCCW Ltd. ..................... 81,405 60,810
72,000 Philippine Long Distance
Telephone Co., ADR .......... 1,383,105 3,681,360
18,360 PT Telekomunikasi
Indonesia, ADR .............. 165,504 837,216
874,000 Singapore
Telecommunications Ltd. ..... 701,513 1,869,092
25,000 Telecom Corp. of New
Zealand Ltd., ADR ........... 515,375 673,000
350,000 Telekom Malaysia Berhad ....... 1,547,135 967,262
2,400 Telstra Corp. Ltd., ADR ....... 47,304 39,312
8,075 Thai Telephone & Telecom,
GDR+ (a)(b) ................. 100,542 646
1,000,000 True Corp. Public Co. Ltd.+ ... 687,194 172,779
------------ ------------
5,718,084 8,868,202
------------ ------------
EUROPE -- 21.9%
39,000 BT Group plc, ADR ............. 1,474,439 2,335,710
300,000 Cable & Wireless plc .......... 544,359 926,615
8,960 Colt Telecom Group SA+ ........ 39,631 23,508
260,000 Deutsche Telekom AG, ADR ...... 3,009,522 4,732,000
180,000 Elisa Oyj ..................... 2,286,461 4,930,368
38,000 France Telecom SA, ADR ........ 1,021,948 1,052,600
17,500 Golden Telecom Inc. ........... 183,065 819,700
5,507 Hellenic Telecommunications
Organization SA+ ............ 86,065 165,453
36,000 Hellenic Telecommunications
Organization SA, ADR+ ....... 218,769 545,400
18,000 Hungarian Telephone &
Cable Corp.+ ................ 139,278 271,800
500 Magyar Telekom
Telecommunications plc,
ADR+ ........................ 9,650 13,975
3,000 Maroc Telecom ................. 31,797 46,611
15,000 Metromedia International
Group Inc.+ ................. 59,576 22,050
65,000 Neuf Cegetel+ ................. 1,906,725 2,308,098
20,000 Portugal Telecom SGPS SA ...... 235,355 259,785
68,000 Portugal Telecom SGPS
SA, ADR ..................... 277,645 879,920
10,000 Rostelecom, ADR ............... 79,578 455,000
MARKET
SHARES/UNITS COST VALUE
-------------- ---- -------
57,000 Royal KPN NV
Sponsored, ADR .............. $ 472,195 $ 812,820
85,000 Sistema JSFC, GDR (a) ......... 1,563,313 2,720,000
98,000 Swisscom AG, ADR .............. 2,548,286 3,700,480
2,150,000 Telecom Italia SpA ............ 4,174,539 6,499,241
27,000 Telecom Italia SpA, ADR ....... 621,934 813,510
100,000 Telefonica SA, ADR ............ 2,634,654 6,375,000
6,361 Telefonica SA, BDR ............ 108,405 135,021
46,604 Telekom Austria AG ............ 347,582 1,248,843
650,000 TeliaSonera AB ................ 2,791,663 5,340,749
------------ ------------
26,866,434 47,434,257
------------ ------------
JAPAN -- 0.8%
237 Nippon Telegraph &
Telephone Corp. ............. 1,207,105 1,167,027
22,000 Nippon Telegraph &
Telephone Corp., ADR ........ 622,716 545,380
------------ ------------
1,829,821 1,712,407
------------ ------------
LATIN AMERICA -- 5.2%
33,250 Atlantic Tele-Network Inc. .... 112,178 974,225
12,000 Brasil Telecom
Participacoes SA, ADR ....... 595,898 512,280
952 Brasil Telecom SA ............. 3 11
44,448 Brasil Telecom SA, Pfd. ....... 474 228
17,415,054 Cable & Wireless
Jamaica Ltd.+ ............... 406,745 262,427
148,000 Compania de
Telecomunicaciones de
Chile SA, ADR ............... 2,049,285 1,188,440
25,693 Tele Norte Leste
Participacoes SA, ADR ....... 357,296 383,340
210,000 Telecom Argentina SA,
Cl. B, ADR+ ................. 869,186 4,202,100
57,700 Telefonica de Argentina
SA, ADR+ .................... 376,367 1,042,639
92,000 Telefonos de Mexico
SAB de CV, Cl. L, ADR ....... 673,142 2,599,920
3,355 Telemar Norte Leste SA ........ 148,531 76,318
------------ ------------
5,589,105 11,241,928
------------ ------------
NORTH AMERICA -- 15.1%
80,000 AT&T Inc. ..................... 2,815,704 2,860,000
115,000 BCE Inc. ...................... 2,642,934 3,105,000
47,836 Bell Aliant Regional
Communications
Income Fund ................. 882,832 1,105,911
39,372 Bell Aliant Regional
Communications
Income Fund+ (a) ............ 726,616 910,269
65,000 BellSouth Corp. ............... 1,974,279 3,062,150
13,000 CenturyTel Inc. ............... 396,150 567,580
300,000 Cincinnati Bell Inc.+ ......... 2,016,086 1,371,000
See accompanying notes to financial statements.
5
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS (Continued)
DIVERSIFIED TELECOMMUNICATIONS SERVICES (Continued)
NORTH AMERICA (CONTINUED)
50,000 Citizens Communications
Co. ......................... $ 563,742 $ 718,500
49,000 Commonwealth Telephone
Enterprises Inc. ............ 1,479,530 2,051,140
6,000 Covad Communications
Group Inc.+ ................. 11,761 8,280
67,060 D&E Communications Inc. ....... 841,107 848,309
10,000 E.Spire Communications
Inc.+ ....................... 50,000 6
3,230 EarthLink Inc.+ ............... 45,250 22,933
22,500 Embarq Corp. .................. 593,482 1,182,600
80,000 General Communication
Inc., Cl. A+ ................ 376,995 1,258,400
5,000 Manitoba Telecom
Services Inc. ............... 168,270 198,945
22,422 McLeodUSA Inc., Cl. A+ ........ 78,431 110
20,000 NorthPoint Communications
Group Inc.+ ................. 11,250 30
4,756 Pegasus Communications
Corp., Cl. A+ ............... 23,757 10,035
120,000 Price Communications
Corp. ....................... 1,858,269 2,526,000
320,000 Qwest Communications
International Inc.+ ......... 1,176,740 2,678,400
11,000 Shenandoah
Telecommunications Co. ...... 138,825 517,110
45,000 TELUS Corp. ................... 873,965 2,065,258
1,943 TELUS Corp., ADR .............. 34,622 86,691
33,057 TELUS Corp., Non-Voting ....... 827,048 1,474,901
6,000 Time Warner Telecom Inc.,
Cl. A+ ...................... 4,800 119,580
85,000 Verizon Communications
Inc. ........................ 3,121,509 3,165,400
43,941 Windstream Corp. .............. 314,821 624,841
------------ ------------
24,048,775 32,539,379
------------ ------------
TOTAL DIVERSIFIED
TELECOMMUNICATIONS
SERVICES .................... 64,052,219 101,796,173
------------ ------------
OTHER -- 19.8%
ASIA/PACIFIC -- 0.3%
38,000 ABC Communications
Holdings Ltd. ............... 19,234 2,150
19,065 Austar United
Communications Ltd.+ ........ 38,877 19,864
100,000 Champion Technology
Holdings Ltd. ............... 87,982 16,842
MARKET
SHARES COST VALUE
-------- ---- -------
70,000 CP Pokphand Co. Ltd.,
ADR+ ........................ $ 58,725 $ 42,525
10,000 EasyCall International Ltd.+ .. 9,532 947
26,000 Himachal Futuristic
Communications Ltd.,
GDR+ (a)(c) ................. 141,200 53,427
50,000 Hutchison Whampoa Ltd. ........ 487,170 508,144
300,000 Time Engineering Berhad+ ...... 316,448 53,997
------------ ------------
1,159,168 697,896
------------ ------------
EUROPE -- 4.1%
19,520 Alcatel-Lucent, ADR ........... 390,922 277,574
1,500 British Sky Broadcasting
Group plc, ADR .............. 36,400 61,800
3,600 Carlisle Group Ltd.+ .......... 5,790 7,190
3,000 E.ON AG ....................... 126,255 407,221
98,000 GN Store Nord A/S ............. 533,809 1,448,626
59,500 Group 4 Securicor plc ......... 0 219,020
3,200 L. M. Ericsson Telephone
Co., Cl. B, ADR ............. 40,907 128,736
28,000 Nokia Corp., ADR .............. 67,091 568,960
15,428 Seat Pagine Gialle SpA ........ 30,783 9,195
750 Siemens AG, ADR ............... 23,625 73,913
5,852 Telecom Italia Media SpA ...... 4,669 2,785
25,000 Telegraaf Media Groep NV ...... 541,844 655,072
8,000 ThyssenKrupp AG ............... 147,115 376,899
15,000 TNT NV, ADR ................... 198,277 646,200
1,000 Via Net.Works Inc.+ ........... 2,625 12
100,000 Vivendi ....................... 2,087,247 3,908,653
------------ ------------
4,237,359 8,791,856
------------ ------------
JAPAN -- 0.2%
75,000 The Furukawa Electric
Co. Ltd. .................... 381,079 471,409
------------ ------------
LATIN AMERICA -- 0.0%
9,000 BB Holdings Ltd.+ ............. 36,940 34,020
1,400 Claxson Interactive
Group Inc.+ ................. 2,240 14,084
25,693 Contax Participacoes SA,
ADR ......................... 11,051 23,586
562 OneSource Services Inc.+ ...... 5,515 7,070
------------ ------------
55,746 78,760
------------ ------------
NORTH AMERICA -- 15.2%
80,000 Adelphia Communications
Corp., Cl. A+ ............... 74,756 800
10,000 Agere Systems Inc.+ ........... 166,400 191,700
2,000 America Online Latin
America Inc., Cl. A+ ........ 840 4
1,000 Amphenol Corp., Cl. A ......... 8,184 62,080
3,000 Andrew Corp.+ ................. 8,535 30,690
500 Avaya Inc.+ ................... 4,138 6,990
See accompanying notes to financial statements.
6
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS (Continued)
OTHER (Continued)
NORTH AMERICA (CONTINUED)
70,000 Cablevision Systems Corp.,
Cl. A+ ...................... $ 1,037,320 $ 1,993,600
40,000 California Micro Devices
Corp.+ ...................... 235,666 175,200
23,566 CanWest Global
Communications Corp.+ ....... 322,321 222,463
35,434 CanWest Global
Communications
Corp., Cl. A+ ............... 407,389 337,886
20,000 Charter Communications
Inc., Cl. A+ ................ 58,692 61,200
10,000 Cogeco Inc. ................... 195,069 250,911
20,000 Comcast Corp., Cl. A,
Special+ .................... 159,976 837,600
25,000 Communications Systems
Inc. ........................ 237,711 249,750
4,000 Convergys Corp.+ .............. 53,716 95,120
44,000 Discovery Holding Co.,
Cl. A+ ...................... 278,536 707,960
100,000 EchoStar Communications
Corp., Cl. A+ ............... 1,863,471 3,803,000
7,000 Fisher Communications
Inc.+ ....................... 353,932 309,470
410,000 Gemstar-TV Guide
International Inc.+ ......... 1,878,517 1,644,100
1,000 Geoworks Corp.+ ............... 1,375 37
1,000 Google Inc., Cl. A+ ........... 346,423 460,480
4,250 Idearc Inc.+ .................. 130,063 121,762
45,000 IDT Corp.+ .................... 424,047 608,850
40,000 IDT Corp., Cl. B+ ............. 309,786 523,200
35,000 ION Media Networks Inc.+ ...... 55,250 17,500
1,250 JDS Uniphase Corp.+ ........... 45,488 20,825
1,000 L-3 Communications
Holdings Inc. ............... 11,000 81,780
60,732 Liberty Global Inc., Cl. A+ 1,330,262 1,770,338
50,000 Liberty Global Inc., Cl. C+ ... 1,219,998 1,400,000
24,000 Liberty Media Corp. -
Capital, Cl. A+ ............. 1,095,117 2,351,520
85,000 Liberty Media Corp. -
Interactive, Cl. A+ ......... 713,146 1,833,450
1,000 Lockheed Martin Corp. ......... 22,787 92,070
20,000 Mediacom Communications
Corp., Cl. A+ ............... 177,215 160,800
55,000 Motorola Inc. ................. 454,388 1,130,800
30,000 News Corp., Cl. A ............. 439,829 644,400
2,000 News Corp., Cl. B ............. 21,050 44,520
25,000 Nortel Networks Corp.+ ........ 730,036 668,250
2,524 Orbital Sciences Corp.+ ....... 16,208 46,543
4,000 R. H. Donnelley Corp. ......... 53,608 250,920
MARKET
SHARES COST VALUE
-------- ---- -------
11,000 SCANA Corp. ................... $ 290,110 $ 446,820
5,000 SJW Corp. ..................... 78,585 193,800
125,000 The DIRECTV Group Inc.+ ....... 2,487,051 3,117,500
189,000 Time Warner Inc. .............. 3,285,561 4,116,420
2,000 TiVo Inc.+ .................... 11,105 10,240
816 Tut Systems Inc.+ ............. 13,135 914
1,000 Vishay Intertechnology Inc.+ .. 22,908 13,540
64,000 Yahoo! Inc.+ .................. 2,034,909 1,634,560
------------ ------------
23,165,609 32,742,363
------------ ------------
TOTAL OTHER ................... 28,998,961 42,782,284
------------ ------------
WIRELESS TELECOMMUNICATIONS SERVICES -- 32.8%
ASIA/PACIFIC -- 3.4%
80,000 China Mobile Ltd., ADR ........ 1,165,904 3,457,600
75,000 China Unicom Ltd., ADR ........ 628,819 1,116,750
666 Hutchison
Telecommunications
International Ltd.+ ......... 519 1,678
8,000 PT Indosat Tbk, ADR ........... 78,652 308,400
90,000 SK Telecom Co. Ltd., ADR ...... 1,068,189 2,383,200
------------ ------------
2,942,083 7,267,628
------------ ------------
EUROPE -- 4.4%
60,000 Bouygues SA ................... 1,680,722 3,851,627
2,000 Millicom International
Cellular SA+ ................ 17,000 123,280
800 Mobile TeleSystems
OJSC, ADR ................... 29,612 40,152
58,000 Vimpel-Communications,
ADR+ ........................ 442,160 4,579,100
35,075 Vodafone Group plc, ADR ....... 813,443 974,383
------------ ------------
2,982,937 9,568,542
------------ ------------
JAPAN -- 3.0%
600 KDDI Corp. .................... 3,016,473 4,068,737
1,600 NTT DoCoMo Inc. ............... 4,464,327 2,527,625
------------ ------------
7,480,800 6,596,362
------------ ------------
LATIN AMERICA -- 4.7%
216,000 America Movil SAB de
CV, Cl. L, ADR .............. 1,123,833 9,767,520
17,500 Grupo Iusacell SA de CV+ ...... 29,040 133,643
460 Tele Norte Celular
Participacoes SA, ADR ....... 7,079 4,140
1,150 Telemig Celular
Participacoes SA, ADR ....... 30,497 43,987
4,430 Tim Participacoes SA,
ADR ......................... 54,017 153,367
3,020 Vivo Participacoes SA+ ........ 6,747 20,779
23,976 Vivo Participacoes SA, ADR .... 316,130 98,302
13,024 Vivo Participacoes SA, Pfd.+ .. 159,589 53,279
------------ ------------
1,726,932 10,275,017
------------ ------------
See accompanying notes to financial statements.
7
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
-------- ---- -------
COMMON STOCKS (Continued)
WIRELESS TELECOMMUNICATIONS SERVICES (Continued)
NORTH AMERICA -- 17.3%
67,000 Alltel Corp. .................. $ 2,782,629 $ 4,052,160
35,000 Centennial Communications
Corp. ....................... 182,988 251,650
40,000 Dobson Communications
Corp., Cl. A+ ............... 129,100 348,400
155,000 Rogers Communications
Inc., Cl. B ................. 1,647,700 9,238,000
42,800 Rural Cellular Corp., Cl. A+ .. 437,823 562,392
440,000 Sprint Nextel Corp. ........... 5,808,751 8,311,600
6,000 SunCom Wireless Holdings
Inc., Cl. A+ ................ 20,520 4,200
70,000 Telephone & Data
Systems Inc. ................ 1,520,586 3,803,100
62,000 Telephone & Data
Systems Inc., Special ....... 1,323,304 3,075,200
111,000 United States Cellular
Corp.+ ...................... 5,018,635 7,724,490
------------ ------------
18,872,036 37,371,192
------------ ------------
TOTAL WIRELESS
TELECOMMUNICATIONS
SERVICES .................... 34,004,788 71,078,741
------------ ------------
TOTAL COMMON STOCKS ........... 127,055,968 215,657,198
------------ ------------
RIGHTS -- 0.0%
DIVERSIFIED TELECOMMUNICATIONS SERVICES -- 0.0%
ASIA/PACIFIC -- 0.0%
315,789 True Corp. plc+ (c) ........... 0 3,441
------------ ------------
TOTAL RIGHTS .................. 0 3,441
------------ ------------
WARRANTS -- 0.0%
OTHER -- 0.0%
ASIA/PACIFIC -- 0.0%
20,000 Champion Technology
Holdings Ltd.,
expire 08/03/08+ ........... 0 0
20,303 Champion Technology
Holdings Ltd.,
expire 02/26/07+ (c) ........ 0 682
------------ ------------
0 682
------------ ------------
NORTH AMERICA -- 0.0%
1,473 Lucent Technologies Inc.,
expire 12/10/07+ ............ 2,445 457
------------ ------------
TOTAL WARRANTS ................ 2,445 1,139
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
-------- ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 0.1%
$148,000 U.S. Treasury Bill,
5.004%++, 03/29/07 .......... $ 146,296 $ 146,296
------------ ------------
TOTAL
INVESTMENTS -- 99.8% ........ $127,204,709 215,808,074
============
Other Assets and Liabilities (Net) -- 0.2% 440,070
------------
NET ASSETS -- 100.0% ....................... $216,248,144
============
- ----------------
(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, 2006, the market value of Rule 144A securities amounted to $3,829,874
or 1.77% of total net assets. Except as noted in (b), these securities are
liquid.
(b) At December 31, 2006, the Fund held an investment in a restricted and
illiquid security amounting to $646 or 0.00% of total net assets, which was
valued under methods approved by the Board, as follows:
12/31/06
Carrying
Acquisition Acquisition Acquisition Value
Shares Issuer Date Cost Per Unit
------ ------ ---- ---- --------
8,075 Thai Telephone &
Telecom, GDR ................... 03/31/94 $100,542 $0.0800
(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, 2006, the market value of fair
valued securities amounted to $57,550 or 0.03% of total net assets.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
BDR Brazilian Depository Receipt
GDR Global Depository Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
- -------------------------- ----- -----
North America .................... 47.6% $102,799,687
Europe ........................... 30.5 65,794,655
Latin America .................... 10.0 21,595,705
Asia/Pacific ..................... 7.8 16,837,849
Japan ............................ 4.1 8,780,178
------ ------------
100.0% $215,808,074
====== ============
See accompanying notes to financial statements.
8
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
- -------------------------------------------------------------------------------
ASSETS:
Investments at value (cost $127,204,709) ............... $215,808,074
Dividends and interest receivable ...................... 480,530
Receivable for Fund shares sold ........................ 369,653
Prepaid expense ........................................ 9,315
------------
TOTAL ASSETS ........................................... 216,667,572
------------
LIABILITIES:
Payable to custodian ................................... 34,028
Foreign currency, at value (cost $8,052) ............... 7,962
Payable for investment advisory fees ................... 181,238
Payable for shareholder communications
expenses ............................................. 51,625
Payable for distribution fees .......................... 45,708
Payable for shareholder services fees .................. 42,249
Payable for legal and audit fees ....................... 33,631
Payable for Fund shares redeemed ....................... 4,471
Payable for accounting fees ............................ 7,501
Other accrued expenses ................................. 11,015
------------
TOTAL LIABILITIES ...................................... 419,428
------------
NET ASSETS applicable to 9,626,925
shares outstanding ................................... $216,248,144
============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001
par value ............................................ $172,997,060
Accumulated distributions in excess of net
investment income .................................... (253,667)
Accumulated net realized loss on investments
and foreign currency transactions .................... (45,101,628)
Net unrealized appreciation on investments ............. 88,603,365
Net unrealized appreciation on foreign
currency translations ................................ 3,014
------------
NET ASSETS ............................................. $216,248,144
============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($214,436,049 / 9,545,350 shares
outstanding; 75,000,000 shares authorized) ........... $22.46
======
CLASS A:
Net Asset Value and redemption price per share
($1,170,091 / 52,155 shares outstanding;
50,000,000 shares authorized) ........................ $22.43
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ............................... $23.80
======
CLASS B:
Net Asset Value and offering price per share
($291,430 / 13,308 shares outstanding;
25,000,000 shares authorized) ........................ $21.90(a)
======
CLASS C:
Net Asset Value and offering price per share
($350,574 / 16,112 shares outstanding;
25,000,000 shares authorized) ........................ $21.76(a)
======
- -------------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $383,645) ........... $ 3,987,314
Interest ............................................... 223,260
-----------
TOTAL INVESTMENT INCOME ................................ 4,210,574
-----------
EXPENSES:
Investment advisory fees ............................... 1,920,590
Distribution fees - Class AAA .......................... 476,804
Distribution fees - Class A ............................ 1,947
Distribution fees - Class B ............................ 3,257
Distribution fees - Class C ............................ 2,328
Shareholder services fees .............................. 240,167
Shareholder communications expenses .................... 111,665
Custodian fees ......................................... 53,806
Legal and audit fees ................................... 50,778
Accounting fees ........................................ 45,000
Registration expenses .................................. 41,005
Directors' fees ........................................ 20,842
Interest expense ....................................... 4,742
Miscellaneous expenses ................................. 25,400
-----------
TOTAL EXPENSES ......................................... 2,998,331
Less: Custodian fee credits ............................ (1,154)
-----------
NET EXPENSES ........................................... 2,997,177
-----------
NET INVESTMENT INCOME .................................. 1,213,397
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ....................... 16,179,853
Net realized gain on foreign
currency transactions ................................ 3,769
-----------
Net realized gain on investments and foreign
currency transactions ................................ 16,183,622
-----------
Net change in unrealized appreciation/
depreciation on investments .......................... 33,118,735
Net change in unrealized appreciation/
depreciation on foreign currency
translations ......................................... 3,901
-----------
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations ................................ 33,122,636
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ..................... 49,306,258
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $50,519,655
===========
See accompanying notes to financial statements.
9
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
OPERATIONS:
Net investment income ..................................................... $ 1,213,397 $ 1,791,366
Net realized gain on investments and foreign currency transactions ........ 16,183,622 5,129,883
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations ....................................... 33,122,636 (2,147,155)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... 50,519,655 4,774,094
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ............................................................... (1,296,097) (2,003,135)
Class A ................................................................. (7,802) (8,156)
Class C ................................................................. (692) (117)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................... (1,304,591) (2,011,408)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ............................................................... (20,313,616) (25,916,855)
Class A ................................................................. 237,838 124,167
Class B ................................................................. (210,652) (435,480)
Class C ................................................................. 94,168 (62,137)
------------ ------------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ................ (20,192,262) (26,290,305)
------------ ------------
REDEMPTION FEES ........................................................... 589 7,745
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ..................................... 29,023,391 (23,519,874)
NET ASSETS:
Beginning of period ....................................................... 187,224,753 210,744,627
------------ ------------
End of period (including undistributed net investment income of
$0 and $0, respectively) ................................................ $216,248,144 $187,224,753
============ ============
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 United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, unless the Board determines such amount
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons 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.
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would
11
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2006, 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 fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. 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, 2006, there were no
open futures contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions. Short
selling involves selling securities that may or may not be owned and, at times,
borrowing the same securities for delivery to the purchaser, with an obligation
to replace such borrowed securities at a later date. The proceeds received from
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 an 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,
2006.
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
12
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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, 2006, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
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 saleable among qualified
institutional investors under special rules adopted by the SEC may be treated as
liquid if they satisfy liquidity standards established by the Board. The
continued liquidity of such securities is not as well assured as that of
publicly traded securities, and accordingly the Board will monitor their
liquidity.
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 the NAV per share of each class, investment income, realized and
unrealized gains and losses, redemption fees, and expenses other than class
specific expenses, are allocated daily to each class of shares based upon the
proportion of net assets of each class at the beginning of each day.
Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are maintained in
the custody account, the Fund receives credits which are used to offset
custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under U.S. generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities and foreign
currency transactions held by the Fund, timing differences, and differing
characterizations of distributions made by the Fund. Distributions from net
investment income include net realized gains on foreign currency transactions.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2006, reclassifications were made to decrease accumulated
distributions in excess of net investment income by $78,445 and to increase
accumulated net realized loss on investments and foreign currency transactions
by $3,769, with an offsetting adjustment to paid-in capital.
The tax character of distributions paid during the fiscal years ended December
31, 2006 and December 31, 2005 was $1,304,591 and $2,011,408, 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
14
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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, 2006, 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, 2006, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Capital loss carryforwards ......................... $(38,567,402)
Net unrealized appreciation on investments,
foreign receivables and payables ................. 81,818,486
------------
Total accumulated earnings ......................... $ 43,251,084
============
At December 31, 2006, the Fund has net capital loss carryforwards for Federal
income tax purposes of $38,567,402, which are available to reduce future
required distributions of net capital gains to shareholders. $23,342,608 of the
loss carryforward 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,
2006, the Fund utilized net capital loss carryforwards of $15,491,200.
The following summarizes the tax cost of investments and related unrealized
appreciation/(depreciation) at December 31, 2006:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ --------------
Investments .................... $133,992,602 $95,811,420 $(13,995,948) $81,815,472
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for a calendar-year open-end fund no later than its June 29, 2007
NAV, and is to be applied to all open tax years as of the date of effectiveness.
Management has begun to evaluate the application of the Interpretation to the
Fund, and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser.
If total net assets of the Corporation are in excess of $100 million, the
Corporation pays each Director that is not considered to be an affiliated person
an annual retainer of $3,000 plus $500 for each Board meeting attended and they
are reimbursed for any out of pocket expenses incurred in attending meetings. If
total net assets of the Corporation are below $100 million, the Corporation pays
each Independent Director an annual retainer of $1,500 plus $250 for each Board
meeting attended and they are reimbursed for any out of pocket expenses incurred
in attending meetings. All Board committee members receive $500 per meeting
attended. Directors who are directors or employees of the Adviser or an
affiliated company receive no compensation or expense reimbursement from the
Fund.
15
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 fiscal year ended December 31, 2006, other than short-term and U.S.
Government securities, aggregated $12,858,127 and $24,122,075, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the fiscal year ended December 31, 2006,
the Fund paid brokerage commissions of $30,321 to Gabelli & Company.
Additionally, Gabelli & Company informed the Fund that it received $5,983 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 fiscal year
ended December 31, 2006, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
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. This amount, if any, would be shown as "interest expense"
in the Statement of Operations. At December 31, 2006, there were no borrowings
outstanding from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the fiscal year ended December 31, 2006 was $71,899 with a weighted
average interest rate of 5.18%. The maximum amount borrowed at any time during
the fiscal year ended December 31, 2006 was $3,326,000.
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, 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 1.00% 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.
The Fund imposes 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 fiscal
years ended December 31, 2006 and December 31, 2005 amounted to $589 and $7,745,
respectively.
16
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 capital stocks were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ....................................... 1,918,009 $ 37,710,107 947,426 $ 16,136,166
Shares issued upon reinvestment of distributions .. 55,184 1,236,136 108,341 1,901,378
Shares redeemed ................................... (3,033,740) (59,259,859) (2,579,717) (43,954,399)
---------- ------------ ---------- ------------
Net decrease .................................. (1,060,547) $(20,313,616) (1,523,950) $(25,916,855)
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ....................................... 22,898 $ 474,817 22,621 $ 384,773
Shares issued upon reinvestment of distributions .. 303 6,781 386 6,767
Shares redeemed ................................... (13,041) (243,760) (15,718) (267,373)
---------- ------------ ---------- ------------
Net increase .................................. 10,160 $ 237,838 7,289 $ 124,167
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ---------------------------
Shares redeemed ................................... (11,513) $ (210,652) (26,153) $ (435,480)
---------- ------------ ---------- ------------
Net decrease .................................. (11,513) $ (210,652) (26,153) $ (435,480)
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ....................................... 8,244 $ 162,900 6,357 $ 101,796
Shares issued upon reinvestment of distributions .. 32 691 7 118
Shares redeemed ................................... (3,583) (69,423) (9,842) (164,051)
---------- ------------ ---------- ------------
Net increase (decrease) ....................... 4,693 $ 94,168 (3,478) $ (62,137)
========== ============ ========== ============
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 received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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 Realized and Total
Period Value, Net Unrealized from Net
Ended Beginning Investment Gain (Loss) on Investment Investment Total
December 31, of Period Income (Loss)(a) Investments Operations Income Distributions
- ------------ --------- ---------------- ------------- ---------- -------- -------------
CLASS AAA
2006 $17.53 $ 0.12 $ 4.95 $ 5.07 $(0.14) $(0.14)
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) -- --
CLASS A
2006 $17.51 $ 0.12 $ 4.95 $ 5.07 $(0.15) $(0.15)
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)(c) (4.12) (4.12) -- --
CLASS B
2006 $17.11 $(0.03) $ 4.82 $ 4.79 -- --
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) -- --
CLASS C
2006 $17.03 $ 0.00(c) $ 4.77 $ 4.77 $(0.04) $(0.04)
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) -- --
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(a) Period Return+ (in 000's) (Loss) Expenses(b) Rate
- ------------ ----------- ------ ------- -------- ------- ----------- ------
CLASS AAA
2006 $0.00(c) $22.46 28.9% $214,436 0.63% 1.56% 7%
2005 0.00(c) 17.53 2.8 185,870 0.92 1.59 4
2004 0.00(c) 17.23 23.4 209,043 0.49 1.62 15
2003 0.00(c) 14.03 42.7 185,719 (0.38) 1.62 11
2002 -- 9.83 (29.6) 139,455 (0.05) 1.66 8
CLASS A
2006 $0.00(c) $22.43 29.0% $ 1,170 0.64% 1.56% 7%
2005 0.00(c) 17.51 2.8 735 0.83 1.59 4
2004 0.00(c) 17.22 23.3 598 0.52 1.62 15
2003 0.00(c) 14.03 42.7 421 (0.38) 1.62 11
2002 -- 9.83 (29.5) 372 (0.05) 1.66 8
CLASS B
2006 $0.00(c) $21.90 28.0% $ 291 (0.17)% 2.31% 7%
2005 0.00(c) 17.11 2.0 425 0.09 2.33 4
2004 0.00(c) 16.77 22.5 855 (0.25) 2.37 15
2003 0.00(c) 13.69 41.6 817 (1.13) 2.37 11
2002 -- 9.67 (30.1) 610 (0.80) 2.41 8
CLASS C
2006 $0.00(c) $21.76 28.0% $ 351 (0.02)% 2.31% 7%
2005 0.00(c) 17.03 2.0 195 0.26 2.34 4
2004 0.00(c) 16.71 22.5 249 (0.44) 2.37 15
2003 0.00(c) 13.68 41.6 94 (1.13) 2.37 11
2002 -- 9.66 (30.1) 252 (0.80) 2.41 8
- --------------
+ 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.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The Fund incurred interest expense during the fiscal 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. For the fiscal year ended
December 31, 2006, interest expense was minimal.
(c) Amount represents less than $0.005 per share.
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, 2006, 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 four 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 the year 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, 2006, 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, 2006, 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 four years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 16, 2007
19
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2006, 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 Board Members") who are not "interested persons" of the Fund.
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 Fund's portfolio managers, the depth of the analyst
pool available to the Adviser and the Fund's portfolio managers, the scope of
supervisory, 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 Fund's portfolio managers.
INVESTMENT PERFORMANCE. The Independent Board Members 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 middle
of its peer group for the one and three year periods and in the top third for
the five year period.
PROFITABILITY. The Independent Board Members 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 Independent Board
Members 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 Board Members 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 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.
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 Lipper 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 of
the Adviser. The Independent Board Members noted that the Fund's expense ratio
was above average and the Fund's size was below average within this group. The
Independent Board Members compared the advisory fee to the fee for other funds
managed by the Adviser but did not compare it to the fees of other types of
accounts managed by an affiliated adviser.
CONCLUSIONS. The Independent Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
performance record that was understandable in relation to the disclosure in the
Fund's prospectus and periodic shareholder reports as to its purpose and the
outlook of the portfolio managers. The Independent Board Members 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 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 of
Directors.
20
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The business and affairs of the Corporation are managed under the direction of
the Corporation's Board of Directors. Information pertaining to the Directors
and officers of the Corporation is set forth below. The Corporation's Statement
of Additional Information includes additional information about the Fund's
Directors and is available, without charge, upon request, by calling 800-GABELLI
(800-422-3554) or by writing to The GAMCO Global Telecommunications Fund at One
Corporate Center, Rye, NY 10580-1422.
TERM OF OFFICE NUMBER OF
NAME, POSITION(S) AND LENGTH OF FUNDS IN FUND
ADDRESS 1 TIME COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 BY 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. and Holdings, Inc. (transportation
Chief Investment Officer Chief Investment Officer - Value Portfolios services); Chairman of the
Age: 64 of Gabelli Funds, LLC and GAMCO Asset Board of Lynch Interactive
Management Inc.; Director/Trustee or Chief Corporation (multimedia and
Investment Officer of other registered communication services
investment companies in the Gabelli Funds company)
complex; Chairman and Chief Executive
Officer of GGCP, Inc.
JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of GAMCO
Director Company, Inc. Investors, Inc.
Age: 62
INDEPENDENT DIRECTORS 5:
- ------------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of The LGL Group,
Director Consultants, Inc.; Adviser to Iona Inc. (diversified
Age: 67 College Hagan School of Business manufacturing)
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 71
ARTHUR V. FERRARA Since 2001 7 Former Chairman of the Board and Chief Director of The Guardian
Director Executive Officer of The Guardian Life sponsored mutual funds
Age: 76 Insurance Company of America
(1993 - 1995)
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence --
Director Hospital and practicing private physician
Age: 66
ANTHONIE C. VAN EKRIS Since 1993 17 Chairman of BALMAC International, Inc. --
Director (commodities and futures trading)
Age: 72
SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Supplies Director of Hollis-Eden
Director Corp. (distribution of electrical Pharmaceuticals (biotechnology);
Age: 61 supplies) Director of Earl Scheib, Inc.
(automotive services)
21
THE GAMCO GLOBAL TELECOMMUNICATIONS FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
TERM OF OFFICE
NAME, POSITION(S) AND 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 Officer of Gabelli Funds, LLC
President since 1988 and an officer of all of the registered investment companies
Age: 55 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 Investors, Inc.
Secretary since 1999 and GAMCO Asset Management Inc. since 1993; Secretary
Age: 43 of all of the registered investment companies in the Gabelli Funds complex
AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds
Treasurer complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer
Age: 48 and Chief Financial Officer of Excelsior Funds from 2004 through 2005;
Chief Financial Officer of AMIC Distribution Partners from 2002 through 2004;
Controller of Reserve Management Corporation and Reserve Partners, Inc. and
Treasurer of Reserve Funds from 2000 through 2002
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief
Chief Compliance Officer Compliance Officer of all of the registered investment companies in the
Age: 53 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
Corporation's By-Laws and Articles of Incorporation. Each officer will hold
office for an indefinite term until the date he or she resigns or retires or
until his or her successor is elected and qualified.
3 "Interested person" of the Corporation as defined in the 1940 Act. Messrs.
Gabelli are each considered an "interested person" because of their
affiliation with Gabelli Funds, LLC which acts as the Corporation'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.
5 Directors who are not interested persons are considered "Independent"
Directors.
- --------------------------------------------------------------------------------
2006 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2006, the Fund paid to shareholders
ordinary income dividends (comprised of net investment income) totaling
$0.137, $0.150, and $0.043 per share for Class AAA, Class A, and Class C,
respectively. For the fiscal year ended December 31, 2006, 100% 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.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2006 which was derived from U.S. Treasury securities was 5.40%. 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 2006. 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.
- --------------------------------------------------------------------------------
22
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO and Westwood 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
SHAREHOLDER?
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. 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 at the time of investment of $2 billion or less) 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 generally less than $3.0 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. (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.
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 per share 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 CHAIRMAN
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 SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
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This report is submitted for the general information of the shareholders of The
GAMCO Global Telecommunications Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
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GAB401Q406SR
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Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GAMCO
GLOBAL
TELECOMMUNICATIONS
FUND
ANNUAL REPORT
DECEMBER 31, 2006
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 for 2005 and $124,000 for 2006.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2005 and $0 for 2006.
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 for 2005 and $0
for 2006. Tax fees represent tax compliance services provided in
connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2005 and $0 for 2006.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 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 $111,400 for 2005 and $73,050 for 2006.
(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 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) GAMCO Global Series Funds, Inc.
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive Officer
Date 03/01/2007
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive Officer
Date 03/01/2007
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By (Signature and Title)* /s/ Agnes Mullady
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Agnes Mullady,
Principal Financial Officer & Treasurer
Date 03/01/2007
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* Print the name and title of each signing officer under his or her signature.