UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04873
The GAMCO Growth Fund
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: June 30, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GAMCO GROWTH FUND
SEMI-ANNUAL REPORT
JUNE 30, 2008
TO OUR SHAREHOLDERS,
During the second quarter of 2008, The GAMCO Growth Fund's net asset value
("NAV") per share (the "Fund") rose 2.2%, while the Russell 1000 Growth Index
was up 1.3% and the Standard & Poor's ("S&P") 500 Index was down 2.7%. For the
six month period ended June 30, 2008, the Fund shed 9.2% versus declines of 9.1%
and 11.9% for the Russell 1000 Growth Index and the S&P 500 Index, respectively.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2008.
COMPARATIVE RESULTS
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2008 (a)
Since
Year to Inception
Quarter Date 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year (4/10/87)
--------- ---------- ---------- -------- -------- -------- -------- --------- ----------
GAMCO GROWTH FUND CLASS
AAA (b) ....................... 2.18% (9.23)% (1.14)% 8.00% 9.20% 2.38% 8.80% 10.42% 10.99%
S&P 500 Index ................... (2.72) (11.90) (13.11) 4.40 7.58 2.88 9.21 10.44 9.54
Russell 1000 Growth Index ....... 1.25 (9.06) (5.96) 5.91 7.32 0.96 7.96 9.68 8.80
Class A ......................... 2.21 (9.20) (1.11) 8.01 9.22 2.39 8.80 10.42 10.99
(3.67)(b) (14.42)(b) (6.80)(b) 5.90(b) 7.93(b) 1.78(b) 8.37(b) 10.09(b) 10.68(b)
Class B ......................... 1.99 (9.57) (1.89) 7.19 8.47 2.04 8.55 10.23 10.81
(3.01)(c) (14.09)(c) (6.79)(c) 6.31(c) 8.18(c) 2.04 8.55 10.23 10.81
Class C ......................... 1.99 (9.57) (1.89) 7.19 8.47 2.04 8.55 10.23 10.81
0.99(d) (10.48)(d) (2.87)(d) 7.19 8.47 2.04 8.55 10.23 10.81
Class I ......................... 2.24 (9.15) (1.05) 8.03 9.22 2.39 8.80 10.42 10.99
IN THE CURRENT PROSPECTUS, THE EXPENSE RATIOS FOR CLASS AAA, A, B, C, AND I
SHARES ARE 1.45%, 1.45%, 2.20%, 2.20%, AND 1.20%, RESPECTIVELY. CLASS AAA AND
CLASS I SHARES DO NOT HAVE A SALES CHARGE. THE MAXIMUM SALES CHARGE FOR CLASS A,
B, AND C SHARES IS 5.75%, 5.00%, AND 1.00%, RESPECTIVELY.
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE
AND REINVESTMENT OF DISTRIBUTIONS AND ARE NET OF EXPENSES. INVESTMENT
RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN
SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE
INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE
FUND BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS
AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
THE CLASS AAA SHARE NAVS PER SHARE ARE USED TO CALCULATE PERFORMANCE FOR
THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES, AND
CLASS C SHARES ON DECEMBER 31, 2003 AND CLASS I SHARES ON JANUARY 11,
2008. THE ACTUAL PERFORMANCE OF THE CLASS B SHARES AND CLASS C SHARES
WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE
CLASSES OF SHARES. THE ACTUAL PERFORMANCE OF THE CLASS I SHARES WOULD HAVE
BEEN HIGHER DUE TO LOWER EXPENSES RELATED TO THIS CLASS OF SHARES. THE S&P
500 INDEX AND THE RUSSELL 1000 GROWTH INDEX ARE UNMANAGED INDICATORS OF
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, YEAR TO DATE, ONE YEAR,
THREE YEAR, AND FIVE YEAR PERIODS OF 5%, 5%, 5%, 3%, AND 2%, RESPECTIVELY,
OF THE FUND'S NAV PER SHARE 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, YEAR TO DATE, AND ONE
YEAR PERIODS OF 1% OF THE FUND'S NAV PER SHARE AT THE TIME OF PURCHASE OR
SALE, WHICHEVER IS LOWER.
We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The financial
statements and investment portfolio are mailed separately from the commentary.
Both the commentary and the financial statements, including the portfolio of
investments, will be available on our website at www.gabelli.com/funds.
THE GAMCO GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2008
through June 30, 2008 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.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/08 06/30/08 Ratio Period*
------------- ------------- ---------- -----------
THE GAMCO GROWTH FUND
ACTUAL FUND RETURN
Class AAA $ 1,000.00 $ 907.70 1.45% $ 6.88
Class A $ 1,000.00 $ 908.00 1.45% $ 6.88
Class B $ 1,000.00 $ 904.30 2.20% $ 10.42
Class C $ 1,000.00 $ 904.30 2.20% $ 10.42
Class I** $ 1,000.00 $ 908.50 1.20% $ 5.38
HYPOTHETICAL 5% RETURN
Class AAA $ 1,000.00 $ 1,017.65 1.45% $ 7.27
Class A $ 1,000.00 $ 1,017.65 1.45% $ 7.27
Class B $ 1,000.00 $ 1,013.92 2.20% $ 11.02
Class C $ 1,000.00 $ 1,013.92 2.20% $ 11.02
Class I $ 1,000.00 $ 1,018.90 1.20% $ 6.02
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied
by the number of days in the most recent fiscal half-year, then divided by
366.
** Class I Shares were first issued on January 11, 2008. Account values and
expense ratios for the Actual Fund Return are calculated from January 11,
2008 through June 30, 2008.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of net assets as of
June 30, 2008:
THE GAMCO GROWTH FUND
Technology ........................... 22.3%
Other Energy ......................... 13.2%
Consumer Discretionary ............... 10.5%
Materials and Processing ............. 8.2%
Consumer Staples ..................... 8.2%
Health Care .......................... 7.8%
Producer Durables .................... 6.5%
Financial Services ................... 6.1%
Other ................................ 4.0%
Integrated Oils ...................... 3.8%
Utilities ............................ 3.7%
U.S. Treasury Bills .................. 3.5%
Autos and Transportation ............. 0.8%
Other Assets and Liabilities (Net) ... 1.4%
-----
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 MARCH 31,
2008. 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.
3
THE GAMCO GROWTH FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2008 (UNAUDITED)
MARKET
SHARES COST VALUE
- --------- ------------- -------------
COMMON STOCKS -- 95.1%
TECHNOLOGY -- 22.3%
COMMUNICATIONS TECHNOLOGY -- 7.7%
876,000 Cisco Systems Inc.+ ............................... $ 24,426,724 $ 20,375,760
410,000 Corning Inc. ...................................... 10,273,391 9,450,500
300,000 Harris Corp. ...................................... 17,144,958 15,147,000
55,000 L-3 Communications Holdings Inc. .................. 5,002,299 4,997,850
115,000 Research In Motion Ltd.+ .......................... 12,939,941 13,443,500
------------- -------------
69,787,313 63,414,610
------------- -------------
COMPUTER SERVICES SOFTWARE AND SYSTEMS -- 4.5%
330,000 Adobe Systems Inc.+ ............................... 12,778,904 12,998,700
880,000 Microsoft Corp. ................................... 24,985,102 24,208,800
------------- -------------
37,764,006 37,207,500
------------- -------------
COMPUTER TECHNOLOGY -- 3.2%
110,000 Apple Inc.+ ....................................... 18,110,453 18,418,400
310,000 EMC Corp.+ ........................................ 7,157,340 4,553,900
200,000 NVIDIA Corp.+ ..................................... 5,050,395 3,744,000
------------- -------------
30,318,188 26,716,300
------------- -------------
ELECTRONICS -- 0.4%
80,000 FLIR Systems Inc.+ ................................ 3,177,017 3,245,600
------------- -------------
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS -- 5.2%
30,000 First Solar Inc.+ ................................. 5,281,949 8,184,600
755,000 Intel Corp. ....................................... 19,438,333 16,217,400
165,000 SunPower Corp., Cl. A+ ............................ 13,165,207 11,876,700
230,000 Texas Instruments Inc. ............................ 7,702,502 6,476,800
------------- -------------
45,587,991 42,755,500
------------- -------------
ELECTRONICS: TECHNOLOGY -- 1.3%
50,000 General Dynamics Corp. ............................ 2,176,446 4,210,000
180,000 Trimble Navigation Ltd.+ .......................... 6,864,907 6,426,000
------------- -------------
9,041,353 10,636,000
------------- -------------
TOTAL TECHNOLOGY .................................. 195,675,868 183,975,510
------------- -------------
OTHER ENERGY -- 13.2%
72,000 Apache Corp. ...................................... 6,963,171 10,008,000
40,000 Canadian Natural Resources Ltd. ................... 3,002,077 4,010,000
185,000 Chesapeake Energy Corp. ........................... 8,086,451 12,202,600
63,000 EnCana Corp. ...................................... 4,442,239 5,728,590
70,000 FMC Technologies Inc.+ ............................ 5,153,983 5,385,100
130,000 National - Oilwell Varco Inc.+ .................... 7,557,478 11,533,600
67,000 Noble Corp. ....................................... 3,504,276 4,352,320
90,000 Oceaneering International Inc.+ ................... 6,296,908 6,934,500
63,000 Schlumberger Ltd. ................................. 3,764,648 6,768,090
200,000 Suncor Energy Inc. ................................ 10,325,817 11,624,000
100,556 Transocean Inc.+ .................................. 13,291,920 15,323,729
170,000 Weatherford International Ltd.+ ................... 5,442,239 8,430,300
96,250 XTO Energy Inc. ................................... 4,342,564 6,594,088
------------- -------------
TOTAL OTHER ENERGY ................................ 82,173,771 108,894,917
------------- -------------
CONSUMER DISCRETIONARY -- 10.5%
CONSUMER ELECTRONICS -- 5.0%
64,900 Google Inc., Cl. A+ ............................... 21,523,704 34,164,658
12,000 Nintendo Co. Ltd. ................................. 4,950,293 6,769,318
------------- -------------
26,473,997 40,933,976
------------- -------------
ENTERTAINMENT, RADIO, AND TV BROADCASTERS -- 1.0%
205,000 News Corp., Cl. B ................................. 4,651,645 3,146,750
160,000 Viacom Inc., Cl. B+ ............................... 6,732,046 4,886,400
------------- -------------
11,383,691 8,033,150
------------- -------------
JEWELRY, WATCHES, AND GEMSTONES -- 0.5%
98,400 Tiffany & Co. ..................................... 3,275,345 4,009,800
------------- -------------
RESTAURANTS -- 0.4%
230,000 Starbucks Corp.+ .................................. 6,424,044 3,620,200
------------- -------------
RETAIL -- 1.8%
35,000 Abercrombie & Fitch Co., Cl. A .................... 2,896,002 2,193,800
50,000 Amazon.com Inc.+ .................................. 4,174,448 3,666,500
80,000 Costco Wholesale Corp. ............................ 5,367,451 5,611,200
60,000 J. Crew Group Inc.+ ............................... 2,590,154 1,980,600
50,000 Nordstrom Inc. .................................... 1,816,396 1,515,000
------------- -------------
16,844,451 14,967,100
------------- -------------
SERVICES: COMMERCIAL -- 0.4%
115,000 eBay Inc.+ ........................................ 4,128,360 3,142,950
------------- -------------
SHOES -- 0.6%
80,000 NIKE Inc., Cl. B .................................. 4,983,336 4,768,800
------------- -------------
TEXTILES APPAREL MANUFACTURERS -- 0.8%
55,000 Coach Inc.+ ....................................... 1,698,199 1,588,400
30,000 Polo Ralph Lauren Corp. ........................... 1,732,153 1,883,400
140,000 Under Armour Inc., Cl. A+ ......................... 5,312,588 3,589,600
------------- -------------
8,742,940 7,061,400
------------- -------------
TOTAL CONSUMER DISCRETIONARY ...................... 82,256,164 86,537,376
------------- -------------
MATERIALS AND PROCESSING -- 8.2%
35,000 Fluor Corp. ....................................... 5,185,810 6,512,800
160,000 Freeport-McMoRan Copper & Gold Inc. ............... 15,146,008 18,750,400
130,000 McDermott International Inc.+ ..................... 6,993,525 8,045,700
165,000 Monsanto Co. ...................................... 16,723,986 20,862,600
210,000 Syngenta AG, ADR .................................. 13,010,523 13,587,000
------------- -------------
TOTAL MATERIALS AND PROCESSING .................... 57,059,852 67,758,500
------------- -------------
CONSUMER STAPLES -- 8.2%
80,000 Groupe Danone ..................................... 6,169,679 5,617,659
140,000 Nestle SA ......................................... 6,123,266 6,326,073
380,000 PepsiCo Inc. ...................................... 20,823,090 24,164,200
405,000 Procter & Gamble Co. .............................. 23,635,961 24,628,050
150,000 Walgreen Co. ...................................... 4,878,449 4,876,500
80,000 Whole Foods Market Inc. ........................... 3,672,431 1,895,200
------------- -------------
TOTAL CONSUMER STAPLES ............................ 65,302,876 67,507,682
------------- -------------
See accompanying notes to financial statements.
4
THE GAMCO GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2008 (UNAUDITED)
MARKET
SHARES COST VALUE
- --------- ------------- -------------
COMMON STOCKS (CONTINUED)
HEALTH CARE -- 7.8%
BIOTECHNOLOGY, RESEARCH, AND PRODUCTION -- 0.3%
40,000 Celgene Corp.+ .................................... $ 2,526,865 $ 2,554,800
------------- -------------
DRUGS AND PHARMACEUTICALS -- 3.0%
310,000 Gilead Sciences Inc.+ ............................. 14,248,295 16,414,500
121,600 Novo Nordisk A/S, ADR ............................. 5,321,711 8,025,600
------------- -------------
19,570,006 24,440,100
------------- -------------
HEALTH CARE SERVICES -- 1.0%
205,000 CVS Caremark Corp. ................................ 7,605,108 8,111,850
------------- -------------
MEDICAL, DENTAL INSTRUMENTS, AND SUPPLIES -- 3.5%
36,000 Alcon Inc. ........................................ 4,540,139 5,860,440
280,000 St. Jude Medical Inc.+ ............................ 12,217,057 11,446,400
190,000 Stryker Corp. ..................................... 10,970,621 11,947,200
------------- -------------
27,727,817 29,254,040
------------- -------------
TOTAL HEALTH CARE ................................. 57,429,796 64,360,790
------------- -------------
PRODUCER DURABLES -- 6.5%
110,000 ABB Ltd., ADR+ .................................... 3,544,005 3,115,200
155,000 Deere & Co. ....................................... 12,777,134 11,180,150
240,000 Emerson Electric Co. .............................. 10,347,235 11,868,000
200,000 Rockwell Collins Inc. ............................. 12,421,204 9,592,000
110,000 United Technologies Corp. ......................... 6,029,583 6,787,000
85,000 Vestas Wind Systems A/S+ .......................... 6,136,472 11,126,124
------------- -------------
TOTAL PRODUCER DURABLES ........................... 51,255,633 53,668,474
------------- -------------
FINANCIAL SERVICES -- 6.1%
16,000 CME Group Inc. .................................... 8,280,239 6,131,040
75,000 IntercontinentalExchange Inc.+ .................... 10,734,301 8,550,000
155,000 Janus Capital Group Inc. .......................... 4,544,858 4,102,850
45,000 MasterCard Inc., Cl. A ............................ 9,597,491 11,948,400
105,000 T. Rowe Price Group Inc. .......................... 5,598,422 5,929,350
320,000 The Charles Schwab Corp. .......................... 7,356,178 6,572,800
90,000 Visa Inc., Cl. A+ ................................. 5,868,139 7,317,900
------------- -------------
TOTAL FINANCIAL SERVICES .......................... 51,979,628 50,552,340
------------- -------------
OTHER -- 4.0%
MULTI-SECTOR COMPANIES -- 4.0%
670,000 General Electric Co. .............................. 23,266,982 17,882,300
240,000 ITT Corp. ......................................... 11,117,197 15,199,200
------------- -------------
TOTAL OTHER ....................................... 34,384,179 33,081,500
------------- -------------
INTEGRATED OILS -- 3.8%
35,000 Hess Corp. ........................................ 1,685,087 4,416,650
95,000 Murphy Oil Corp. .................................. 6,963,202 9,314,750
43,000 Occidental Petroleum Corp. ........................ 2,308,330 3,863,980
190,000 Petroleo Brasileiro SA, ADR ....................... 11,160,393 13,457,700
------------- -------------
TOTAL INTEGRATED OILS ............................. 22,117,012 31,053,080
------------- -------------
UTILITIES -- 3.7%
85,000 America Movil SAB de CV, Cl. L, ADR ............... 5,109,944 4,483,750
75,000 China Mobile Ltd., ADR ............................ 6,020,137 5,021,250
6,700 Ormat Technologies Inc. ........................... 355,523 329,506
320,000 Rogers Communications Inc., Cl. B ................. 11,709,108 12,371,200
150,000 Veolia Environnement .............................. 12,322,484 8,414,680
------------- -------------
TOTAL UTILITIES ................................... 35,517,196 30,620,386
------------- -------------
AUTOS AND TRANSPORTATION -- 0.8%
70,000 C.H. Robinson Worldwide Inc. ...................... 2,978,774 3,838,800
60,000 Expeditors International of Washington Inc. ....... 2,745,068 2,580,000
------------- -------------
TOTAL AUTOS AND TRANSPORTATION .................... 5,723,842 6,418,800
------------- -------------
TOTAL COMMON STOCKS ............................... 740,875,817 784,429,355
------------- -------------
PRINCIPAL
AMOUNT
- ------------
U.S. GOVERNMENT OBLIGATIONS -- 3.5%
U.S. TREASURY BILLS -- 3.5%
$ 28,868,000 U.S. Treasury Bills, 1.249% to 1.934%++,
07/17/08 to 10/02/08 ......................... 28,747,638 28,746,690
------------- -------------
TOTAL INVESTMENTS -- 98.6% $ 769,623,455 813,176,045
=============
OTHER ASSETS AND LIABILITIES (NET) -- 1.4% 11,366,837
-------------
NET ASSETS -- 100.0% ........................... $ 824,542,882
=============
- ----------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
See accompanying notes to financial statements.
5
THE GAMCO GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2008 (UNAUDITED)
ASSETS:
Investments, at value (cost $769,623,455) ................ $ 813,176,045
Cash ..................................................... 7,072
Receivable for investments sold .......................... 14,161,794
Receivable for Fund shares sold .......................... 475,715
Dividends receivable ..................................... 840,550
Prepaid expense .......................................... 43,164
--------------
TOTAL ASSETS ............................................. 828,704,340
--------------
LIABILITIES:
Payable for investments purchased ........................ 1,678,282
Payable for Fund shares redeemed ......................... 806,496
Payable for investment advisory fees ..................... 708,787
Payable for distribution fees ............................ 177,753
Payable for accounting fees .............................. 3,751
Payable for shareholder services fees .................... 550,789
Other accrued expenses ................................... 235,600
--------------
TOTAL LIABILITIES ........................................ 4,161,458
--------------
NET ASSETS applicable to 25,118,318 shares outstanding ... $ 824,542,882
==============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.01 par value ........... $1,581,993,978
Accumulated net investment loss .......................... (1,496,673)
Accumulated net realized loss on investments and
foreign currency transactions .......................... (799,501,110)
Net unrealized appreciation on investments ............... 43,552,590
Net unrealized depreciation on foreign currency
translations ........................................... (5,903)
--------------
NET ASSETS ............................................... $ 824,542,882
==============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption price per
share ($818,378,088 / 24,928,604 shares outstanding;
unlimited number of shares authorized) ................. $ 32.83
==============
CLASS A:
Net Asset Value and redemption price per share
($1,144,185 / 34,827 shares outstanding;
unlimited number of shares authorized) ................. $ 32.85
==============
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75% of
the offering price) .................................... $ 34.85
==============
CLASS B:
Net Asset Value and offering price per share
($306,524 / 9,658 shares outstanding;
unlimited number of shares authorized) ................. $ 31.74(a)
==============
CLASS C:
Net Asset Value and offering price per share
($1,656,932 / 52,204 shares outstanding;
unlimited number of shares authorized) ................. $ 31.74(a)
==============
CLASS I:
Net Asset Value, offering and redemption price per
share ($3,057,153 / 93,025 shares outstanding;
unlimited number of shares authorized) ................. $ 32.86
==============
- ----------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $229,304) ............. $ 4,477,525
Interest ................................................. 163,031
--------------
TOTAL INVESTMENT INCOME .................................. 4,640,556
--------------
EXPENSES:
Investment advisory fees ................................. 4,243,354
Distribution fees - Class AAA ............................ 1,055,163
Distribution fees - Class A .............................. 1,226
Distribution fees - Class B .............................. 1,550
Distribution fees - Class C .............................. 5,797
Shareholder services fees ................................ 450,216
Shareholder communications expenses ...................... 167,971
Custodian fees ........................................... 70,217
Trustees' fees ........................................... 33,535
Legal and audit fees ..................................... 31,725
Accounting fees .......................................... 22,500
Registration expenses .................................... 15,065
Interest expense ......................................... 490
Miscellaneous expenses ................................... 39,096
--------------
TOTAL EXPENSES ........................................... 6,137,905
Less: Custodian fee credits .............................. (676)
--------------
NET EXPENSES ............................................. 6,137,229
--------------
NET INVESTMENT LOSS ...................................... (1,496,673)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investments ......................... 25,356,540
Net realized loss on foreign currency transactions ....... (5,629)
--------------
Net realized gain on investments and foreign currency
transactions ........................................... 25,350,911
--------------
Net change in unrealized appreciation/depreciation
on investments ......................................... (111,089,701)
Net change in unrealized appreciation/
depreciation on foreign currency translations .......... (5,903)
--------------
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations ....... (111,095,604)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY ................................... (85,744,693)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (87,241,366)
==============
See accompanying notes to financial statements.
6
THE GAMCO GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 2008 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2007
---------------- -----------------
OPERATIONS:
Net investment loss ........................................... $ (1,496,673) $ (4,555,510)
Net realized gain on investments and foreign currency
transactions ................................................ 25,350,911 112,544,175
Net change in unrealized appreciation/depreciation on
investments and foreign currency translations ............... (111,095,604) 47,767,726
------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS .................................................. (87,241,366) 155,756,391
------------- --------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Class AAA ..................................................... (39,798,734) (167,322,376)
Class A ....................................................... 513,079 383,595
Class C ....................................................... 779,158 517,747
Class I ....................................................... 3,174,722 --
------------- --------------
NET DECREASE IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST
TRANSACTIONS ................................................ (35,331,775) (166,421,034)
------------- --------------
REDEMPTION FEES ............................................... 837 2,333
------------- --------------
NET DECREASE IN NET ASSETS (122,572,304) (10,662,310)
NET ASSETS:
Beginning of period ........................................... 947,115,186 957,777,496
------------- --------------
End of period (including undistributed net investment income
of $0 and $0, respectively) ................................. $ 824,542,882 $ 947,115,186
============= ==============
See accompanying notes to financial statements.
7
THE GAMCO GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period:
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
Net
Net Asset Realized and Total Net Asset
Period Value, Net Unrealized from Value,
Ended Beginning Investment Gain/(Loss) on Investment Redemption End of Total
December 31 of Period Loss(a) Investments Operations Fees(a) Period Return+
- ----------- --------- ---------- -------------- ---------- ----------- --------- --------
CLASS AAA
2008 (b) $ 36.17 $(0.06) $ (3.28) $ (3.34) $ 0.00(c) $ 32.83 (9.2)%
2007 30.62 (0.16) 5.71 5.55 0.00(c) 36.17 18.1
2006 28.81 (0.05) 1.86 1.81 0.00(c) 30.62 6.3
2005 26.12 (0.13) 2.82 2.69 0.00(c) 28.81 10.3
2004 24.95 (0.11) 1.28 1.17 0.00(c) 26.12 4.7
2003 18.99 (0.14) 6.10 5.96 -- 24.95 31.4
CLASS A
2008 (b) $ 36.18 $(0.05) $ (3.28) $ (3.33) $ 0.00(c) $ 32.85 (9.2)%
2007 30.63 (0.08) 5.63 5.55 0.00(c) 36.18 18.1
2006 28.82 (0.06) 1.87 1.81 0.00(c) 30.63 6.3
2005 26.13 (0.12) 2.81 2.69 0.00(c) 28.82 10.3
2004 (e) 24.95 (0.02) 1.20 1.18 0.00(c) 26.13 4.7
CLASS B
2008 (b) $ 35.10 $(0.18) $ (3.18) $ (3.36) $ 0.00(c) $ 31.74 (9.6)%
2007 29.93 (0.40) 5.57 5.17 0.00(c) 35.10 17.2
2006 28.38 (0.27) 1.82 1.55 0.00(c) 29.93 5.5
2005 25.93 (0.32) 2.77 2.45 0.00(c) 28.38 9.5
2004 (e) 24.95 (0.28) 1.26 0.98 0.00(c) 25.93 3.9
CLASS C
2008 (b) $ 35.10 $(0.18) $ (3.18) $ (3.36) $ 0.00(c) $ 31.74 (9.6)%
2007 29.93 (0.40) 5.57 5.17 0.00(c) 35.10 17.2
2006 28.38 (0.27) 1.82 1.55 0.00(c) 29.93 5.5
2005 25.93 (0.32) 2.77 2.45 0.00(c) 28.38 9.5
2004 (e) 24.95 (0.21) 1.19 0.98 0.00(c) 25.93 3.9
CLASS I
2008 (f) $ 33.70 $(0.00)(c) $ (0.84) $ (0.84) $ 0.00(c) $ 32.86 (9.2)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
------------------------------------------------
Net Assets
Period End of Net Portfolio
Ended Period Investment Operating Turnover
December 31 (in 000's) Loss Expenses Rate++
- ----------- ----------- ----------- --------- ----------
CLASS AAA
2008 (b) $ 818,378 (0.35)%(d) 1.45%(d) 37%
2007 945,068 (0.49) 1.45 91
2006 956,811 (0.19) 1.44 57
2005 1,139,640 (0.48) 1.49 39
2004 1,447,655 (0.46) 1.53 31
2003 1,881,457 (0.60) 1.47 42
CLASS A
2008 (b) $ 1,144 (0.31)%(d) 1.45%(d) 37%
2007 707 (0.23) 1.45 91
2006 276 (0.19) 1.44 57
2005 274 (0.43) 1.47 39
2004 (e) 73 (0.09) 1.60 31
CLASS B
2008 (b) $ 307 (1.10)%(d) 2.20%(d) 37%
2007 339 (1.23) 2.20 91
2006 289 (0.94) 2.19 57
2005 274 (1.22) 2.24 39
2004 (e) 250 (1.12) 2.30 31
CLASS C
2008 (b) $ 1,657 (1.10)%(d) 2.20%(d) 37%
2007 1,001 (1.23) 2.20 91
2006 401 (0.95) 2.19 57
2005 553 (1.21) 2.23 39
2004 (e) 226 (0.88) 2.37 31
CLASS I
2008 (f) $ 3,057 (0.03)%(d) 1.20%(d) 37%
- ----------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of distributions and does not reflect applicable
sales charges. Total return for a period of less than one year is not
annualized.
++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate. Had this policy been
adopted retroactively, the portfolio turnover rate for the fiscal years
ended December 31, 2007, 2006, 2005, 2004, and 2003 would have been as
shown.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) For the six months ended June 30, 2008, unaudited.
(c) Amount represents less than $0.005 per share.
(d) Annualized.
(e) Class A, Class B, and Class C Shares were initially offered on December 31,
2003.
(f) From the commencement of offering Class I Shares on January 11, 2008
through June 30, 2008, unaudited.
See accompanying notes to financial statements.
8
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The GAMCO Growth Fund (the "Fund") was organized on October 24,
1986 as a Massachusetts business trust. The Fund is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Fund's primary objective is capital
appreciation. The Fund commenced investment operations on April 10, 1987.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
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.
On January 1, 2008, the Fund adopted Statement of Financial Accounting Standard
No. 157, "Fair Value Measurements" ("SFAS 157") that clarifies the definition of
fair value for financial reporting, establishes a framework for measuring fair
value, and requires additional disclosures about the use of fair value
measurements. The three levels of the fair value hierarchy under SFAS 157 are
described below:
- Level 1 - quoted prices in active markets for identical securities;
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit
risk, etc.); and
9
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- Level 3 - significant unobservable inputs (including the Fund's
determinations as to the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
summary of inputs used to value the Fund's net assets as of June 30, 2008 is as
follows:
INVESTMENTS IN
SECURITIES
VALUATION INPUTS (MARKET VALUE)
--------------
Level 1 - Quoted Prices $ 784,429,355
Level 2 - Other Significant Observable Inputs 28,746,690
--------------
TOTAL $ 813,176,045
==============
In March 2008, The Financial Accounting Standards Board (The "FASB") issued
Statement of Financial Accounting Standard No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161") that is effective
for fiscal years beginning after November 15, 2008. SFAS 161 is intended to
improve financial reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why an entity uses
derivatives, how derivatives are accounted for, and how derivative instruments
affect an entity's results of operations and financial position. Management is
currently evaluating the implications of SFAS 161 on the Fund's financial
statement disclosures.
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.
10
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
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 if any are recorded
on the ex-dividend date. Distributions to shareholders are based on income and
capital gains as determined in accordance with federal income tax regulations,
which may differ from income and capital gains as determined under U.S.
generally accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences, and differing characterizations of
distributions made by the Fund. These book/tax differences are either temporary
or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate capital accounts in the period when the
differences arise. These reclassifications have no impact on the NAV of the
Fund.
No distributions were made during the fiscal year ended December 31, 2007.
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for federal income taxes is required.
At December 31, 2007, the Fund had net capital loss carryforwards for federal
income tax purposes of $821,106,933, which are available to reduce future
required distributions of net capital gains to shareholders. $469,914,764 is
available through 2010; $350,050,494 is available through 2011; and $1,141,675
is available through 2012.
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at June 30, 2008:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
------------- ------------ -------------- --------------
Investments ... $ 772,541,340 $ 97,224,774 $ (56,590,069) $ 40,634,705
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109" ("the Interpretation") established a
minimum threshold for financial statement recognition of the benefit of
positions taken in filing tax returns (including whether the Fund is taxable in
a particular jurisdiction) and required certain expanded tax disclosures.
For the six months ended June 30, 2008, the Fund did not have any liability for
any unrecognized tax benefits. The Fund recognizes interest and penalties, if
any, related to unrecognized tax benefits as income tax expenses in the
Statement of Operations. The Fund is not subject to examination by U.S. federal
tax authorities for tax years before 2004 and by state tax authorities for tax
years before 2003.
11
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Trustees of the Fund who are affiliated persons
of the Adviser.
The Fund pays each Trustee who is not considered to be an affiliated person an
annual retainer of $6,000 plus $1,000 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, the Chairmen of
the Audit Committee, Proxy Voting Committee, and the Lead Trustee receive an
annual fee of $1,000. Trustees 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 except for Class I Shares pursuant to Rule
12b-1 under the 1940 Act. Gabelli & Company, Inc. ("Gabelli & Company"), an
affiliate of the Adviser, serves as distributor of the Fund. Under the Class
AAA, Class A, Class B, and Class C Share Plans, payments are authorized to
Gabelli & Company at annual rates of 0.25%, 0.25%, 1.00%, and 1.00%,
respectively, of the average daily net assets of those classes, the annual
limitations under each Plan. Such payments are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended June 30, 2008, other than short-term securities and U.S.
Government obligations, aggregated $289,355,251 and $342,046,434, respectively.
Purchases and proceeds from the sales of U.S. Government obligations for the six
months ended June 30, 2008, other than short-term obligations, aggregated
$20,591,656 and $23,888,675, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2008, the
Fund paid brokerage commissions on security trades of $14,600 to Gabelli &
Company. Additionally, Gabelli & Company informed the Fund that it received
$6,275 from investors representing commissions (sales charges and underwriting
fees) on sales and redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the six months
ended June 30, 2008, the Fund paid or accrued $22,500 to the Adviser in
connection with the cost of computing the Fund's NAV.
7. LINE OF CREDIT. The Fund participates in an unsecured line of credit of up to
$75,000,000, and may borrow up to 10% of its net assets 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. During the
six months ended June 30, 2008, there were no borrowings under the line of
credit.
12
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
8. SHARES OF BENEFICIAL INTEREST. The Fund offers five classes of shares - Class
AAA Shares, Class A Shares, Class B Shares, Class C Shares, and Class I Shares.
Class AAA Shares and Class I Shares are offered to investors without a front-end
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. Class I Shares were
first issued on January 11, 2008.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are
redeemed or exchanged on or before the seventh day after the date of a purchase.
The redemption fee is deducted from the proceeds otherwise payable to the
redeeming shareholders and is retained by the Fund. The redemption fees retained
by the Fund during the six months ended June 30, 2008 and the fiscal year ended
December 31, 2007 amounted to $837 and $2,333, respectively.
The redemption fee does not apply to redemptions of shares where (i) the shares
were purchased through automatic reinvestment of distributions, (ii) the
redemption was initiated by the Fund, (iii) the shares were purchased through
programs that collect the redemption fee at the program level and remit them to
the Fund, or (iv) the shares were purchased through programs that the Adviser
determines to have appropriate anti-short-term trading policies in place or as
to which the Adviser has received assurances that look-through redemption fee
procedures or effective anti-short-term trading policies and procedures are in
place.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2008 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2007
------------------------------ ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- -------------- ----------------- ----------------
CLASS AAA CLASS AAA
Shares sold.......... 902,643 $ 29,958,552 1,554,938 $ 52,014,192
Shares redeemed...... (2,102,858) (69,757,286) (6,677,205) (219,336,568)
----------- -------------- -------------- ----------------
Net decrease....... (1,200,215) $ (39,798,734) (5,122,267) $ (167,322,376)
=========== ============== ============== ================
CLASS A CLASS A
Shares sold.......... 17,148 $ 577,227 13,455 $ 476,635
Shares redeemed...... (1,860) (64,148) (2,938) (93,040)
----------- -------------- -------------- ----------------
Net increase....... 15,288 $ 513,079 10,517 $ 383,595
=========== ============== ============== ================
CLASS C CLASS C
Shares sold.......... 31,708 $ 1,041,837 21,140 $ 700,407
Shares redeemed...... (8,042) (262,679) (6,006) (182,660)
----------- -------------- -------------- ----------------
Net increase....... 23,666 $ 779,158 15,134 $ 517,747
=========== ============== ============== ================
CLASS I*
Share sold........... 96,959 $ 3,301,462
Shares redeemed...... (3,934) (126,740)
----------- --------------
Net increase....... 93,025 $ 3,174,722
=========== ==============
- ----------
* From the commencement of offering Class I Shares on January 11, 2008.
13
THE GAMCO GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
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. On April 24, 2008, the Adviser entered into an administrative
settlement with the SEC to resolve the SEC's inquiry regarding prior frequent
trading activity in shares of the GAMCO Global Growth Fund (the "Global Growth
Fund") by one investor who was banned from the Global Growth Fund in August
2002. In the settlement, the SEC found that the Adviser had violated Section
206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act and Rule
17d-1 thereunder, and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC, and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement will not have a material adverse impact on the
Adviser or its ability to fulfill its obligations under the Advisory Agreement.
On the same day, the SEC filed a civil action against the Executive Vice
President and Chief Operating Officer of the Adviser, alleging violations of
certain federal securities laws arising from the same matter. The officer is
also an officer of the Global Growth Fund and other funds in the Gabelli/GAMCO
fund complex. The officer denies the allegations and is continuing in his
positions with the Adviser and the funds. The Adviser currently expects that any
resolution of the action against the officer will not have a material adverse
impact on the Adviser or its ability to fulfill its obligations under the
Advisory Agreement.
On a separate matter, in August 2008, the Adviser made an offer to the staff of
the SEC to settle a previously disclosed matter concerning compliance with
Section 19(a) and Rule 19a-1 of the 1940 Act by two closed-end funds managed by
the Adviser. These provisions require registered investment companies to provide
written statements to shareholders when a distribution is made in the nature of
a dividend from a source other than net investment income. While the two funds
sent annual statements and provided other materials containing this information,
the funds did not send the notices required by Rule 19a-1 to shareholders with
each distribution in 2002 and 2003. The Adviser believes that the funds have
been in compliance with Rule 19a-1 since that time. The Adviser believes that
the settlement would have no effect on the funds or any material adverse effect
on the Adviser or its ability to manage the funds. This offer of settlement is
subject to final agreement regarding the specific language of the SEC's
administrative order and other settlement documents and approval by the SEC.
14
THE GAMCO GROWTH FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
At its meeting on February 27, 2008, the Board of Trustees ("Board") of the Fund
approved the continuation of the investment advisory agreement with the Adviser
for the Fund on the basis of the recommendation by the trustees who are not
"interested persons" of the Fund (the "Independent Board Members"). The
following paragraphs summarize the material information and factors considered
by the Independent Board Members as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The Independent Board Members considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder, and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The Independent
Board Members noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The Independent Board Members reviewed the short,
medium, and long-term performance of the Fund against a peer group of large cap
growth funds chosen by Lipper as being comparable. The Independent Board Members
noted that the Fund's performance was in the top one-third of the funds in its
category for the one, three, and five year periods.
PROFITABILITY. The Independent Board Members reviewed summary data regarding the
profitability of the Fund to the Adviser both with an administrative overhead
charge and without such a charge. The Independent Board Members also noted that
a small portion of the Fund's portfolio transactions were executed by an
affiliated broker and that the affiliated broker received distribution fees and
minor amounts of sales commissions. The Independent Board Members also noted
that a portion of the Fund's portfolio transactions were executed by an
affiliated broker, and that the affiliated broker received distribution fees and
commissions from the Fund, and the Adviser received a moderate amount of soft
dollar benefits (but no third party research services) from unaffiliated brokers
through the Fund's portfolio brokerage.
ECONOMIES OF SCALE. The Independent Board Members discussed the major elements
of the Adviser's cost structure and the relationship of those elements to
potential economies of scale.
SHARING OF ECONOMIES OF SCALE. The Independent Board Members noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale that may develop.
SERVICE AND COST COMPARISONS. The Independent Board Members compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of large-cap growth funds and
noted that the advisory fee includes substantially all administrative services
of the Fund as well as investment advisory services of the Adviser. The
Independent Board Members noted that the Fund's expense ratios and the Fund's
size were above average within this group. The Independent Board Members also
noted that the advisory fee structure was the same as that in effect for most of
the Gabelli funds. The Independent Board Members were presented with, but did
not consider to be material to their decision, various information comparing the
advisory fee to the fee for other types of accounts managed by affiliates of the
Adviser.
CONCLUSIONS. The Independent Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
good performance record. The Independent Board Members also concluded that the
Fund's expense ratios and the profitability to the Adviser of managing the Fund
were reasonable in light of the Fund's performance 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.
15
THE GAMCO GROWTH FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: www.gabelli.com
E-MAIL: info@gabelli.com
Net Asset Value per share available daily by calling
800-GABELLI after 6:00 P.M.
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Robert J. Morrissey
CHAIRMAN AND CHIEF ATTORNEY-AT-LAW
EXECUTIVE OFFICER MORRISSEY, HAWKINS & LYNCH
GAMCO INVESTORS, INC.
Anthony J. Colavita Anthony R. Pustorino
ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT,
ANTHONY J. COLAVITA, P.C. PROFESSOR EMERITUS
PACE UNIVERSITY
James P. Conn Anthony Torna
FORMER CHIEF INVESTMENT OFFICER MAXIM GROUP LLC
FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.
Dugald A. Fletcher Anthonie C. van Ekris
PRESIDENT CHAIRMAN
FLETCHER & COMPANY, INC. BALMAC INTERNATIONAL, INC.
John D. Gabelli Salvatore J. Zizza
SENIOR VICE PRESIDENT CHAIRMAN
GABELLI & COMPANY, INC. ZIZZA & CO., LTD.
OFFICERS AND PORTFOLIO MANAGER
Bruce N. Alpert Howard F. Ward, CFA
PRESIDENT AND SECRETARY PORTFOLIO MANAGER
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 Growth Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
GAB406Q208SR
GAMCO
THE
GAMCO
GROWTH
FUND
SEMI ANNUAL REPORT
JUNE 30, 2008
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) 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.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 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) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The GAMCO Growth Fund
------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 9/3/08
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 9/3/08
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer & Treasurer
Date 9/3/08
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.