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 811-04719 The GAMCO Westwood Funds (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: September 30 Date of reporting period: September 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. GAMCO WESTWOOD FUNDS MIGHTY MITES(SM) FUND EQUITY FUND BALANCED FUND INTERMEDIATE BOND FUND SMALLCAP EQUITY FUND INCOME FUND ANNUAL REPORT SEPTEMBER 30, 2008 GAMCO WESTWOOD FUNDS (UNAUDITED) CLASS AAA SHARES ----------------------------------------------------------------------- Average Annual Returns - September 30, 2008 (a) Current Expense Ratio after Gross Adviser Maximum Since Expense Reimburse- Sales 1 Year 5 Year 10 Year Inception Ratio ments Charge ------ ------ ------- --------- ------- ----------- ------- Mighty Mites(SM) ... (13.22)% 9.89% 12.30% 11.49% 1.72% 1.72% None Equity ............. (16.02) 10.06 6.73 10.87 1.52 1.52 None Balanced ........... (8.41) 7.47 6.18 9.44 1.27 1.27 None Intermediate Bond .. 3.67 2.76 4.14 5.52 1.64 1.00 None SmallCap Equity .... (20.01) 8.20 4.81 5.79 2.24 1.50 None Income ............. (18.15) 7.33 9.45 7.47 2.20 1.50 None CLASS A SHARES ----------------------------------------------------------------------- Average Annual Returns - September 30, 2008 (a)(b)(e) Current Expense Ratio after Gross Adviser Maximum Since Expense Reimburse- Sales 1 Year 5 Year 10 Year Inception Ratio ments Charge ------ ------ ------- --------- ------- ----------- ------- Mighty Mites(SM) ... (16.95)% 8.75% 11.66% 10.87% 1.97% 1.97% 4.00% Equity ............. (19.91) 8.78 5.98 10.43 1.77 1.77 4.00 Balanced ........... (12.35) 6.33 5.47 8.91 1.52 1.52 4.00 Intermediate Bond .. (0.58) 1.82 3.65 5.22 1.74 1.10 4.00 SmallCap Equity .... (23.41) 7.10 4.27 5.32 2.49 1.75 4.00 Income ............. (21.58) 6.21 8.82 6.90 2.45 1.75 4.00 CLASS B SHARES ----------------------------------------------------------------------- Average Annual Returns - September 30, 2008 (a)(c)(e) Current Expense Ratio after Gross Adviser Maximum Since Expense Reimburse- Sales 1 Year 5 Year 10 Year Inception Ratio ments Charge ------ ------ ------- --------- ------- ----------- ------- Mighty Mites(SM) ... (18.22)% 8.78% 11.69% 10.90% 2.47% 2.47% 5.00% Equity ............. (20.89) 8.93 6.10 10.49 2.27 2.27 5.00 Balanced ........... (13.68) 6.35 5.55 8.96 2.02 2.02 5.00 Intermediate Bond .. (2.10) 1.64 3.54 5.16 2.39 1.75 5.00 SmallCap Equity .... (24.61) 7.13 4.24 5.30 2.99 2.25 5.00 Income ............. (23.53) 6.05 8.86 6.94 2.94 2.25 5.00 CLASS C SHARES ----------------------------------------------------------------------- Average Annual Returns - September 30, 2008 (a)(d)(e) Current Expense Ratio after Gross Adviser Maximum Since Expense Reimburse- Sales 1 Year 5 Year 10 Year Inception Ratio ments Charge ------ ------ ------- --------- ------- ----------- ------- Mighty Mites(SM) ... (14.76)% 9.08% 11.71% 10.92% 2.47% 2.47% 1.00% Equity ............. (17.56) 9.21 6.10 10.49 2.27 2.27 1.00 Balanced ........... (10.03) 6.66 5.59 8.98 2.02 2.02 1.00 Intermediate Bond .. 1.84 2.02 3.59 5.19 2.39 1.75 1.00 SmallCap Equity .... (21.41) 7.01 4.19 5.25 2.99 2.25 1.00 Income ............. (19.65) 6.54 9.02 7.08 2.94 2.25 1.00 CLASS I SHARES ----------------------------------------------------------------------- Average Annual Returns - September 30, 2008 (a)(e) Current Expense Ratio after Gross Adviser Maximum Since Expense Reimburse- Sales 1 Year 5 Year 10 Year Inception Ratio ments Charge ------ ------ ------- --------- ------- ----------- ------- Mighty Mites(SM) ... (13.02)% 9.94% 12.33% 11.51% 1.47% 1.47% None Equity ............. (15.84) 10.11 6.75 10.88 1.27 1.27 None Balanced ........... (8.32) 7.49 6.18 9.45 1.02 1.02 None Intermediate Bond .. 3.82 2.79 4.16 5.53 1.39 0.75 None SmallCap Equity .... (19.95) 8.22 4.82 5.80 1.99 1.25 None Income ............. (18.04) 7.35 9.46 7.48 1.95 1.25 None (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. FOR THE INTERMEDIATE BOND, SMALLCAP EQUITY, AND INCOME FUNDS (AND FOR THE MIGHTY MITES(SM) FUND THROUGH SEPTEMBER 30, 2005), THE ADVISER REIMBURSED EXPENSES TO LIMIT THE EXPENSE RATIO. HAD SUCH LIMITATIONS NOT BEEN IN PLACE, RETURNS WOULD HAVE BEEN LOWER. THE CONTRACTUAL EXPENSE LIMITATIONS ARE IN EFFECT THROUGH JANUARY 31, 2010 AND ARE RENEWABLE ANNUALLY BY THE ADVISER. 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. (b) INCLUDES THE EFFECT OF THE MAXIMUM 4.0% 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 ONE YEAR AND FIVE YEAR PERIODS OF 5% AND 2%, RESPECTIVELY, OF EACH FUND'S NET ASSET VALUES ("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 CHARGE FOR THE CLASS C SHARES UPON REDEMPTION AT THE END OF THE ONE YEAR PERIOD OF 1% OF THE FUND'S NAV PER SHARE AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER. (e) THE PERFORMANCE OF THE CLASS AAA SHARES IS USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES, CLASS C SHARES, AND CLASS I SHARES. THE 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 PERFORMANCE FOR THE CLASS I SHARES WOULD HAVE BEEN HIGHER DUE TO THE LOWER EXPENSES ASSOCIATED WITH THIS CLASS OF SHARES. THE INCEPTION DATES FOR THE CLASS AAA SHARES AND THE INITIAL ISSUANCE DATES FOR THE CLASS A SHARES, CLASS B SHARES, CLASS C SHARES, AND CLASS I SHARES AFTER WHICH SHARES REMAINED CONTINUOUSLY OUTSTANDING ARE LISTED BELOW. Class AAA Shares Class A Shares Class B Shares Class C Shares Class I Shares ---------------- -------------- -------------- -------------- -------------- Mighty Mites(SM) ... 05/11/98 11/26/01 06/06/01 08/03/01 01/11/08 Equity ............. 01/02/87 01/28/94 03/27/01 02/13/01 01/11/08 Balanced ........... 10/01/91 04/06/93 03/27/01 09/25/01 01/11/08 Intermediate Bond .. 10/01/91 07/26/01 03/27/01 10/22/01 01/11/08 SmallCap Equity .... 04/15/97 11/26/01 03/27/01 11/26/01 01/11/08 Income ............. 09/30/97 05/09/01 11/26/01 11/26/01 01/11/08 2 PERFORMANCE DISCUSSION MIGHTY MITES(SM) FUND The GAMCO Westwood Mighty Mites(SM) Fund's Class AAA Shares' total return for the twelve months ended September 30, 2008 was (13.22)% versus the Russell 2000 Index, the Russell Microcap(TM) Index, and the Lipper Small Cap Value Fund Average returns of (14.48)%, (22.51)%, and (16.41)%, respectively. Our top five contributors to performance were: 1) Transact Technologies (1.8% of net assets as of September 30, 2008), a maker of specialty printers for the gaming, banking, and retail industries. In June, the company settled patent litigation with its primary competitor, FutureLogic. The company's patent is intact; FutureLogic will pay royalties to Transact, and the legal overhang is gone. In the interim, Transact has attained default status with IGT, the primary supplier of gaming machines to the casino industry. Also, the company will supply multiple printers to McDonalds' domestic locations. 2) Zep Inc. (1.8%), whose stock price climbed as investors, concerned over credit market turbulence and escalating economic pressures, searched for safety. Zep's defensive product offering (cleaning/sanitizing products), coupled with its limited exposure to GDP sensitive end markets, catered to this demand. 3) Parish National Corp (1.3%), a Louisiana based bank. Parish agreed to be acquired by Whitney Holding Corp in a cash and stock deal valued at $165 million. Whitney operates banks in the Gulf Coast region, and this merger will strengthen Whitney's presence on the north shore of Lake Pontchartrain in Louisiana. 4) Fairchild Corporation (1.0%), a manufacturer of motorcycle clothing and accessories and aircraft parts. The company's two largest shareholders, Phoenix FA Holdings LLC and the Steiner Family, executed a Stockholders' Agreement to vote their stakes in unison to enable them to work together on a restructuring. 5) Herley Industries (1.2%), a leading manufacturer of microwave components, subassemblies, amplifiers, transmitters, receivers, and other devices to the aerospace and defense markets. The company's products are embedded in a variety of radars, flight instrumentation, weapon sensors, electronic warfare, and unmanned aerial systems. In September, Herley engaged Jeffries Quarterdeck as its financial adviser to assist the company in exploring strategic alternatives that include the sale of the enterprise. Our top five detractors to performance were: 1) Haulotte Group (0.5%), a French manufacturer of equipment such as cranes and aerial work platforms. The company reported 1Q sales of (euro)126.2 million, down 7%, due to weakness in Western Europe (-14%). 2) Epoch Holding Corporation (2.8%), an investment management company. The company reported assets under management of $6.1 billion at September 30, 2008 versus $6.6 billion at June 30, 2008. The good news is that the company experienced positive inflows into its products; however, the decline in the equity markets offset the inflows. The stock decreased in sympathy with the declining stock market, as difficult market conditions naturally led to concerns about the ability to continue to grow assets under management. 3) Standard Motor Products (1.8%), an automotive parts supplier, whose earnings during the year were disappointing. The engine division margin contracted as the company moves its operations from Long Island City and Puerto Rico to Mexico. Also, competition from Chinese firms led the temperature control division to reduce prices. 4) Sonesta International Hotels Corp. (1.0%), a Boston, MA based hotel company. Sonesta operates hotels in Boston, New Orleans, Egypt, Brazil, Peru, and St. Maarten and has a hotel pipeline including properties in Orlando, Qatar, Costa Rica, and Mexico. In December 2007, the company completed a review of strategic options for enhancing value and decided to remain an independent entity, with the Board monitoring the markets to maximize shareholder value. The stock price has suffered in the wake of a difficult lodging market and the decreased likelihood of a takeover based on credit market conditions. 5) Jungheinrich AG (0.4%), which makes forklift trucks and shelving systems. The stock fell amid a tangible deceleration of the growth of the material handling equipment market, price competition, higher raw material prices, and uncertain economic conditions. The U.S. has survived the last 100 years with two world wars, inflation, and a depression. The economy may be awful over the next twelve months, but stocks should bottom and start to move up well before the recovery starts. We will be opportunistic. Remaining focused on our basic investment philosophy of Private Market Value (PMV) with a Catalyst(R), we continue to uncover stockS selling substantially below their PMVs with the potential to be big winners during a 2009-12 recovery. 3 AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 2008 (a) (UNAUDITED) SINCE YEAR TO INCEPTION QUARTER DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR (5/11/98) ------- ------- ------ ------ ------ ------- --------- MIGHTY MITES(SM) FUND CLASS AAA ....... (1.97)% (9.21)% (13.22)% 5.43% 9.89% 12.30% 11.49% Russell Microcap(TM) Index ............ (0.83) (16.22) (22.51) (3.11) 4.09 N/A N/A(b) Russell 2000 Index .................... (1.11) (10.38) (14.48) 1.83 8.15 7.81 4.72 Lipper Small Cap Value Average ........ (1.98) (10.50) (16.41) 0.05 8.27 9.90 6.18 THE FUND'S CLASS AAA EXPENSE RATIO IS 1.72% IN THE CURRENT PROSPECTUS. THE FUND'S SHARES DO NOT HAVE A SALES CHARGE. (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. THE ADVISER REIMBURSED EXPENSES THROUGH SEPTEMBER 30, 2005 TO LIMIT THE EXPENSE RATIO. HAD SUCH LIMITATION NOT BEEN IN PLACE, RETURNS WOULD HAVE BEEN LOWER. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER 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. SEE PAGE 2 FOR FURTHER DETAILS ABOUT ADDITIONAL CLASSES OF SHARES. THE RUSSELL MICROCAP(TM) INDEX AND THE RUSSELL 2000 INDEX ARE UNMANAGED INDICATORS OF STOCK MARKET PERFORMANCE, WHILE THE LIPPER SMALL CAP VALUE FUND AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR CATEGORY. INVESTING IN SMALL CAPITALIZATION SECURITIES INVOLVES SPECIAL CHALLENGES BECAUSE THESE SECURITIES MAY TRADE LESS FREQUENTLY AND EXPERIENCE MORE ABRUPT PRICE MOVEMENTS THAN LARGE CAPITALIZATION SECURITIES. DIVIDENDS ARE CONSIDERED REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN INDEX. (b) INCEPTION DATE FOR THE RUSSELL MICROCAP(TM) INDEX IS JULY 1, 2000. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MIGHTY MITES(SM) FUND CLASS AAA, THE RUSSELL 2000 INDEX, AND THE RUSSELL MICROCAP(TM) INDEX (Unaudited) (PERFORMANCE GRAPH) MIGHTY MITES(SM) FUND RUSSELL RUSSELL MICROCAP(TM) (CLASS AAA) 2000 INDEX INDEX** ---------------- ---------- --------------------- 5/11/1998 $10,000 $10,000 9/30/1998 $ 9,700 $ 7,660 9/30/1999 $13,018 $ 9,121 9/30/2000 $15,826 9/30/2000 $16,010 $11,254 9/30/2000 $15,750 9/30/2001 $15,567 $ 8,867 9/30/2001 $13,359 9/30/2002 $16,128 $ 8,042 9/30/2002 $12,594 9/30/2003 $19,314 $10,978 9/30/2003 $19,443 9/30/2004 $21,915 $13,039 9/30/2004 $22,185 9/30/2005 $26,391 $15,395 9/30/2005 $26,067 9/30/2006 $28,755 $16,922 9/30/2006 $28,035 9/30/2007 $35,636 $19,010 9/30/2007 $30,749 9/30/2008 $30,925 $16,257 9/30/2008 $23,828 Average Annual Total Return* 1 Year 3 Year 5 Year Life of Fund ------- ------ ------ ------------ Class AAA (13.22)% 5.43% 9.89% 11.49% * 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. ** The Russell Microcap(TM) Index inception date is July 1, 2000 and the value of the Index prior to July 1, 2000 is that of the Mighty Mites(SM) Fund (Class AAA). 4 EQUITY FUND For the twelve months ended September 30, 2008, the GAMCO Westwood Equity Fund's Class AAA Shares posted a return of (16.02)% and the Standard & Poor's ("S&P") 500 Index and the Lipper Large Cap Value Fund Average had returns of (21.96)% and (23.80)%, respectively. Equity performance for the entire fiscal year was driven almost solely by the upheaval in the Financial Services sector. While a significant decline in crude oil prices was welcome relief, the failure or near failure of several very prominent financial firms in September created a severe sense of panic among investors and produced one of the largest monthly sell-offs in many years. The top five contributing stocks were three financials, the last two of which participated in the government liquidity/rescue plan rallies: MasterCard, Wells Fargo (2.7% of net assets as of September 30, 2008), and JPMorgan Chase (2.5%); and two consumer discretionary stocks: General Mills (2.5%) and Nike, Inc (2.6%). For the fiscal year, Materials and Processing stocks in the Fund had the worst relative performance: Freeport-McMoRan (2.2%) joined by Comerica Inc and AT&T Inc. (2.4%) and McDermott International Inc. McDermott and Comerica were sold from the Fund. AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 2008* (UNAUDITED) SINCE YEAR TO INCEPTION QUARTER DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR 15 YEAR 20 YEAR (1/2/87) ------- ------- ------ ------ ------ ------- ------- ------- --------- EQUITY FUND CLASS AAA ................. (8.18)% (15.74)% (16.02)% 4.45% 10.06% 6.73% 10.71% 10.96% 10.87% S&P 500 Index ......................... (8.36) (19.27) (21.96) 0.22 5.17 3.06 8.39 9.93 9.98 Lipper Large Cap Value Fund Average ... (8.02) (20.08) (23.80) (0.67) 5.52 4.33 7.96 9.55 9.47 THE FUND'S CLASS AAA EXPENSE RATIO IS 1.52% IN THE CURRENT PROSPECTUS. THE FUND'S SHARES DO NOT HAVE A SALES CHARGE. * RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. VISIT www.gabelli.com FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 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. SEE PAGE 2 FOR FURTHER DETAILS ABOUT ADDITIONAL CLASSES OF SHARES. THE S&P 500 INDEX IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE. THE LIPPER LARGE CAP VALUE 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. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE EQUITY FUND CLASS AAA AND THE S&P 500 INDEX (Unaudited) (PERFORMANCE GRAPH) EQUITY FUND S&P 500 (CLASS AAA) INDEX ------------ --------- Jan-87 $ 10,000 $ 10,000 Sep-87 $ 13,148 $ 13,585 Sep-88 $ 11,779 $ 11,902 Sep-89 $ 15,323 $ 15,823 Sep-90 $ 13,700 $ 14,361 Sep-91 $ 16,386 $ 18,826 Sep-92 $ 17,068 $ 20,905 Sep-93 $ 20,509 $ 23,616 Sep-94 $ 22,384 $ 24,485 Sep-95 $ 28,170 $ 31,760 Sep-96 $ 35,742 $ 38,213 Sep-97 $ 49,899 $ 53,663 Sep-98 $ 49,185 $ 58,536 Sep-99 $ 58,909 $ 74,803 Sep-00 $ 70,273 $ 84,729 Sep-01 $ 59,809 $ 62,183 Sep-02 $ 50,754 $ 49,454 Sep-03 $ 58,413 $ 61,506 Sep-04 $ 68,974 $ 70,030 Sep-05 $ 82,796 $ 78,609 Sep-06 $ 93,883 $ 87,083 Sep-07 $112,340 $101,696 Sep-08 $ 94,343 $ 79,363 Average Annual Total Return* 1 Year 5 Year 10 Year Life of Fund ------- ------ ------- ------------ Class AAA (16.02)% 10.06% 6.73% 10.87% * 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. 5 BALANCED FUND For the twelve months ended September 30, 2008, the GAMCO Westwood Balanced Fund's Class AAA Shares posted a return of (8.41)% while the balanced benchmark which is comprised of 60% of the S&P 500 Stock Index and 40% of the Barclays Capital Government/Corporate Bond Index* (the "Barclays Capital Index*") returned (12.21)%, the Barclays Capital Index* returned 2.41%, and the Lipper Mixed-Asset Target Allocation Moderate Fund returned (14.89)%. Equity performance for the fiscal year was driven almost solely by the upheaval in the Financial Services sector. While a significant decline in crude oil prices was welcome relief, the failure or near failure of several very prominent financial firms in September created a severe sense of panic among investors and produced one of the largest monthly sell-offs in many years. The top five contributing stocks were three financials, the last two of which participated in the government liquidity/rescue plan rallies: MasterCard, Wells Fargo (1.7% of net assets as of September 30, 2008), and JPMorgan Chase (1.6%); and two consumer discretionary stocks: General Mills (1.6%) and Nike, Inc (1.7%). For the fiscal year, Materials and Processing stocks in the Fund had the worst relative performance: Freeport-McMoRan (1.4%) joined by Comerica Inc. and AT&T Inc. (1.5%), and McDermott International Inc. McDermott and Comerica were sold from the Fund. Top contributing fixed income holdings for the fiscal year included Treasury notes maturing in 2010 (2.2%), 2012 (1.0%), and 2015 (3.6%), as well as a Freddie Mac 6 year note (1.4%). Producing the only negative returns over the twelve months among the fixed income holdings were 2 to 6 year notes from issuers General Electric (0.8%), Bank of America (0.8%), Citigroup (0.7%), Apache Corp. (0.7%), and Anheuser-Busch (0.6%). The first three have exposure to the financial sector. AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 2008** (UNAUDITED) SINCE YEAR TO INCEPTION QUARTER DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR 15 YEAR (10/1/91) ------- ------- ------- ------ ------ ------- ------- --------- BALANCED FUND CLASS AAA ........................... (5.00)% (9.13)% (8.41)% 4.54% 7.47% 6.18% 9.06% 9.44% 60% S&P 500 and 40% Barclays Capital Indices* ..... (5.67) (11.83) (12.21) 1.57 4.44 3.84 7.33 7.88 Barclays Capital Gov't./Corporate Bond Index* ..... (1.64) (0.67) 2.41 3.60 3.34 5.00 5.73 6.49 Lipper Mixed-Asset Target Allocation Moderate Fund Average .......................... (8.17) (13.93) (14.89) 0.62 3.96 3.67 6.13 6.90 THE FUND'S CLASS AAA EXPENSE RATIO IS 1.27% IN THE CURRENT PROSPECTUS. THE FUND'S SHARES DO NOT HAVE A SALES CHARGE. ** RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE ADVISER REIMBURSED EXPENSES IN YEARS PRIOR TO 1998 TO LIMIT THE EXPENSE RATIO. HAD SUCH LIMITATION NOT BEEN IN PLACE, RETURNS WOULD HAVE BEEN LOWER. 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. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 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. SEE PAGE 2 FOR FURTHER DETAILS ABOUT ADDITIONAL CLASSES OF SHARES. THE S&P 500 INDEX IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE AND THE BARCLAYS CAPITAL GOVERNMENT/CORPORATE BOND INDEX* IS A MARKET VALUE WEIGHTED INDEX THAT TRACKS THE TOTAL RETURN PERFORMANCE OF FIXED RATE, PUBLICLY PLACED, DOLLAR DENOMINATED OBLIGATIONS. THE LIPPER MIXED-ASSET TARGET ALLOCATION MODERATE 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. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE BALANCED FUND CLASS AAA, THE S&P 500 INDEX, AND A COMPOSITE OF 60% OF THE S&P 500 INDEX AND 40% OF THE BARCLAYS CAPITAL GOVERNMENT/CORPORATE BOND INDEX* (Unaudited) (PERFORMANCE GRAPH) 60% S&P 500 AND 40% BARCLAYS CAPITAL GOVERNMENT/ BALANCED FUND CORPORATE S&P 500 (CLASS AAA) BOND INDICES* INDEX ------------- ------------------- ------- Oct-91 $10,000 $10,000 $10,000 Sep-92 $10,797 $11,192 $11,104 Sep-93 $12,622 $12,575 $12,544 Sep-94 $13,291 $12,644 $13,006 Sep-95 $16,212 $15,624 $16,870 Sep-96 $19,297 $17,810 $20,298 Sep-97 $24,762 $22,814 $28,504 Sep-98 $25,460 $25,229 $31,092 Sep-99 $28,658 $29,272 $39,733 Sep-00 $32,495 $32,392 $45,006 Sep-01 $30,620 $28,926 $33,030 Sep-02 $29,062 $26,439 $26,268 Sep-03 $32,325 $30,994 $32,670 Sep-04 $35,972 $33,984 $37,198 Sep-05 $40,591 $36,833 $41,755 Sep-06 $44,556 $39,705 $46,256 Sep-07 $50,625 $44,510 $54,018 Sep-08 $46,367 $39,074 $42,155 Average Annual Total Return** 1 Year 5 Year 10 Year Life of Fund ------ ------ ------- ------------ Class AAA (8.41)% 7.47% 6.18% 9.44% ** 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. * As of October 31, 2008, the name of the Lehman Brothers Government/Corporate Bond Index changed to the Barclays Capital Government/Corporate Bond Index. 6 INTERMEDIATE BOND FUND For the twelve months ended September 30, 2008, the GAMCO Westwood Intermediate Bond Fund's Class AAA Shares posted, net of all fees and expenses, a return of 3.67%, the Barclays Capital Government/Corporate Bond Index* returned 2.41%, and the Lipper Intermediate Investment Grade Debt Fund Average returned (2.43)% for the same period. Treasury yields for maturities less than ten years ended the fiscal year below 4.0%. The Treasury yield curve significantly steepened over the fiscal year and all yields were lower, reflecting the summer flight to quality in short and intermediate term maturity Treasuries. The shortest maturity yields ended below 1.00%; the five year note ended at 2.98%, down from 4.22% one year earlier. Yields for maturities 10 years and longer also ended below their starting points, with the 30 year Treasury yielding 4.30% down from 4.80%. While investors piled into Treasuries during the fiscal year, corporate debt returns markedly lagged government debt returns amidst widening credit spreads that overwhelmed the positive effect of declining yields. Risk was revalued in all markets affected by the credit crunch. Government holdings in the LBG/C returned 7.90%, led by a 9.22% return for 5-10 year debt and a 9.85% return for debt maturing in greater than ten years; U.S. credit holdings in the index lost 4.79%, weighed down by long maturity bonds and the Financial sector. Factors contributing to outperformance of the LBG/C by the Fund during the fiscal year also boosted the current quarter performance above the benchmark index: (1) maturity selection - limiting long maturity debt holdings exclusively to U.S. Treasuries, thereby avoiding the compound effect of wider corporate spreads and greater interest rate sensitivity and benefiting from the top performance of long Treasury debt; (2) credit selection that elicited marked outperformance in the Financial sector and excess return in both the Industrial and Yankee credit sectors; (3) investment in mortgage backed securities, with Fannie Mae having been deprivatized and joining Ginnie Mae as an explicit government backed entity. Although the Fund was underweight in government debt, the three factors mentioned above combined to produce strong excess return for the Fund. Top contributing securities for the fiscal year were U.S. Treasury notes and bonds of maturities 2015-16 (5.2% of net assets as of September 30, 2008), 2023 (2.8%), 2027 (3.2%), and a Treasury Inflation Protected security (TIPs) due in 2010 (2.7%). Every detractor from performance had financial exposure: 3 to 7 year notes issued by Merrill Lynch (2.0%) (soon to be owned by Bank of America), American Express - floating rate note (since interest rate resets were expected to head lower) (1.5%), General Electric (2.0%), Bank of America (2.4%), and Citigroup (1.9%). All other securities in the Fund earned positive returns. * AS OF OCTOBER 31, 2008, THE NAME OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX CHANGED TO THE BARCLAYS CAPITAL GOVERNMENT/CORPORATE BOND INDEX. 7 AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 2008* (UNAUDITED) SINCE YEAR TO INCEPTION QUARTER DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR 15 YEAR (10/1/91) ------- ------- ------- ------ ------ ------- ------- --------- INTERMEDIATE BOND FUND CLASS AAA .................. (0.14)% 0.90% 3.67% 3.38% 2.76% 4.14% 4.80% 5.52% Barclays Capital Gov't./Corporate Bond Index** .... (1.64) (0.67) 2.41 3.60 3.34 5.00 5.73 6.49 Lipper Intermediate Investment Grade Debt Fund Average .............................. (3.68) (4.36) (2.43) 1.33 2.00 4.06 0.05 5.87 THE FUND'S CLASS AAA GROSS EXPENSE RATIO IS 1.64% IN THE CURRENT PROSPECTUS. THE NET EXPENSE RATIO IS 1.00%, AFTER CONTRACTUAL REIMBURSEMENTS AND CUSTODY FEE CREDITS BY THE ADVISER IN PLACE THROUGH JANUARY 31, 2010. THE FUND'S SHARES DO NOT HAVE A SALES CHARGE. * 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. THE ADVISER REIMBURSED EXPENSES TO LIMIT THE EXPENSE RATIO. HAD SUCH LIMITATION NOT BEEN IN PLACE, RETURNS WOULD HAVE BEEN LOWER. 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. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 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. SEE PAGE 2 FOR FURTHER DETAILS ABOUT ADDITIONAL CLASSES OF SHARES. THE BARCLAYS CAPITAL GOVERNMENT/CORPORATE BOND INDEX** IS A MARKET VALUE WEIGHTED INDEX THAT TRACKS THE PERFORMANCE OF FIXED RATE, PUBLICLY PLACED, DOLLAR DENOMINATED OBLIGATIONS, WHILE THE LIPPER INTERMEDIATE INVESTMENT GRADE DEBT 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. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE INTERMEDIATE BOND FUND CLASS AAA AND THE BARCLAYS CAPITAL GOVERNMENT/CORPORATE BOND INDEX** (Unaudited) (PERFORMANCE GRAPH) BARCLAYS CAPITAL INTERMEDIATE GOVERNMENT/ BOND FUND CORPORATE (CLASS AAA) BOND INDEX** ------------ ------------ Oct-91 $10,000 $10,000 Sep-92 $11,186 $11,323 Sep-93 $12,331 $12,618 Sep-94 $11,658 $12,096 Sep-95 $12,956 $13,832 Sep-96 $13,539 $14,454 Sep-97 $15,077 $15,842 Sep-98 $16,612 $17,876 Sep-99 $16,218 $17,586 Sep-00 $17,256 $18,772 Sep-01 $19,442 $21,244 Sep-02 $21,172 $23,200 Sep-03 $21,772 $24,711 Sep-04 $22,194 $25,534 Sep-05 $22,571 $26,192 Sep-06 $23,203 $27,064 Sep-07 $24,055 $28,439 Sep-08 $24,938 $29,125 Average Annual Total Return* 1 Year 5 Year 10 Year Life of Fund ------ ------ ------- ------------ Class AAA 3.67% 2.76% 4.14% 5.52% * 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. ** As of October 31, 2008, the name of the Lehman Brothers Government/Corporate Bond Index changed to the Barclays Capital Government/Corporate Bond Index. 8 SMALLCAP EQUITY FUND For the twelve months ended September 30, 2008, the GAMCO Westwood SmallCap Equity Fund's Class AAA Shares depreciated 20.01% versus declines of 14.48%, 17.07%, and 23.62% for the Russell 2000 Index, the Russell 2000 Growth Index, and the Lipper Small Cap Growth Fund Average, respectively. For the first nine months of the fiscal year the Fund was managed by Elizabeth Lilly, CFA, and since July 1st, 2008, by Nicholas Galluccio. Both managers use different strategies and we present Mrs. Lilly's performance analysis for the first nine months followed by Mr. Galluccio's analysis for the final three months of the fiscal year. ELIZABETH LILLY, CFA During the nine months of the fiscal year through June 30, 2008, there were several investments that added to the overall performance. Two of the more significant contributors were NewMarket Corporation and Hawk Corporation (0.3% of net assets as of September 30, 2008). NewMarket Corporation increased double digits and is a global producer of petroleum additives that include detergents, dispersants, and friction modifiers among others. Hawk, which also increased significantly, is one of the top manufacturers of friction products in the world. We see tremendous value in Hawk and with management's 30% ownership stake we are confident they have shareholders' best interest in mind. Among the stocks that were disappointments over the past nine months were Deluxe Corporation and Tennant Corporation (1.2%). Over the past year, CEO Lee Schram and CFO Rick Green have significantly restructured and refocused Deluxe. Going forward, Deluxe will demonstrate significant operating leverage, substantially improved margins, and strong free cash flow and the valuation will respond accordingly. Tennant Corporation declined over 37%. Tennant is a Minnesota based company that serves the floor maintenance and outdoor cleaning equipment market. Going forward, we expect Tennant to achieve 12-13% operating margins from 7.5% level at present, generate significant cash flows and look to profitably expand internationally. NewMarket and Deluxe have been sold from the Fund. NICHOLAS GALLUCCIO Among the best performing stocks during the last quarter of the fiscal year were Webster Financial Corp. (2.1%), the second largest independent bank in Connecticut, which gained 39% and KBW, Inc. (1.0%), a full service investment bank specializing in financial services, which should benefit from industry recapitalization, restructuring, and consolidation. Brown and Brown, Inc. (1.9%) is an insurance broker, with significant exposure to the soft Florida real estate market. A competitor, Hilb Rogal & Hobbs, was acquired earlier this year by Willis Group Holdings. Brown has earnings power of $1.50 to $2.00. Among the portfolio's disappointments were Commercial Metals Co. (0.3%), a broad maker of steel and metal products. The stock fell along with other commodity producers over worries that a global economic slowdown would dramatically curb end demand. Another disappointing performer during the last fiscal quarter was ATMI (1.4%), which fell 35%. ATMI, Inc. is a special chemical and high purity materials supplier to the semiconductor industry The company reduced its guidance as customers curbed inventories as a consequence of moderating chip demand. Another disappointment was GSI Group (0.6%), a maker of precision motor components and lasers. The stock fell over its announced acquisition of Excel Technology, an industrial laser company. The portfolio is diversified across a broad range of industries with holdings in approximately 200 companies. We employ bottom up fundamental research, with emphasis on strong balance sheets and attractive valuations. The stock market will eventually recognize cheap valuations in the portfolio as it looks through the valley to the next market recovery cycle. 9 AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 2008* (UNAUDITED) SINCE YEAR TO INCEPTION QUARTER DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR (4/15/97) -------- -------- -------- ------ ------ ------- --------- SMALLCAP EQUITY FUND CLASS AAA ..... (4.84)% (14.78)% (20.01)% 2.42% 8.20% 4.81% 5.79% Russell 2000 Index ................. (1.11) (10.38) (14.48) 1.83 8.15 7.81 7.56 Russell 2000 Growth Index .......... (6.99) (15.29) (17.07) 1.45 6.64 4.67 4.50 Lipper Small Cap Growth Average .... (10.35) (21.03) (23.62) (1.20) 4.81 6.57 6.83 THE FUND'S CLASS AAA GROSS EXPENSE RATIO IS 2.24% IN THE CURRENT PROSPECTUS. THE NET EXPENSE RATIO IS 1.50%, AFTER CONTRACTUAL REIMBURSEMENTS AND CUSTODY FEE CREDITS BY THE ADVISER IN PLACE THROUGH JANUARY 31, 2010. THE FUND'S SHARES DO NOT HAVE A SALES CHARGE. TETON ADVISORS, INC. (FORMERLY GABELLI ADVISERS, INC.) ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES ON JULY 1, 2007 FROM WESTWOOD MANAGEMENT CORPORATION, PREVIOUSLY THE SUBADVISER. * RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE ADVISER REIMBURSED EXPENSES TO LIMIT THE EXPENSE RATIO. HAD SUCH LIMITATION NOT BEEN IN PLACE, RETURNS WOULD HAVE BEEN LOWER. 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. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 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. SEE PAGE 2 FOR FURTHER DETAILS ABOUT ADDITIONAL CLASSES OF SHARES. THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX OF THE 2,000 SMALLEST COMMON STOCKS IN THE RUSSELL 3000 INDEX, WHICH CONTAINS THE 3,000 LARGEST STOCKS IN THE U.S. BASED ON TOTAL MARKET CAPITALIZATION WHILE THE LIPPER SMALL CAP GROWTH FUND AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR CATEGORY. INVESTING IN SMALL CAPITALIZATION SECURITIES INVOLVES SPECIAL CHALLENGES BECAUSE THESE SECURITIES MAY TRADE LESS FREQUENTLY AND EXPERIENCE MORE ABRUPT PRICE MOVEMENTS THAN LARGE CAPITALIZATION SECURITIES. DIVIDENDS ARE CONSIDERED REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN INDEX. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SMALLCAP EQUITY FUND CLASS AAA, THE RUSSELL 2000 INDEX, AND THE RUSSELL 2000 GROWTH INDEX (Unaudited) (PERFORMANCE GRAPH) SmallCap Equity Russell 2000 Fund (Class AAA) Russell 2000 Index Growth Index 4/15/1997 $10,000 $10,000 $10,000 9/30/1997 14,480 13,410 13,942 9/30/1998 11,923 10,859 10,480 9/30/1999 18,950 12,930 13,900 9/30/2000 24,512 15,955 18,024 9/30/2001 13,930 12,571 10,348 9/30/2002 11,777 11,402 8,468 9/30/2003 12,861 15,563 12,001 9/30/2004 14,276 18,484 13,432 9/30/2005 17,751 21,825 15,846 9/30/2006 19,670 23,990 16,778 9/30/2007 23,843 26,950 19,955 9/30/2008 19,072 23,048 16,549 Average Annual Total Return* 1 Year 3 Year 5 Year 10 Year Life of Fund ------ ------ ------ ------- ------------ Class AAA (20.01)% 2.42% 8.20% 4.81% 5.79% * 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. 10 INCOME FUND For the twelve months ended September 30, 2008, the GAMCO Westwood Income Fund's Class AAA Shares declined 18.15%, net of all fees and expenses, versus the 6.03% decrease of a stock/bond blend comprised of a 50% blend of each of the 10 Year Treasury Note Index and the S&P 500 Index, and the 20.75% depreciation for the Lipper Equity Income Fund Average. For the fiscal year ended September 30, 2008, we had a few stocks that did well despite the miserable performance of the overall market. Stocks that appreciated in value over the full year were General Mills (4.2% of net assets as of September 30, 2008), Wells Fargo (2.9%), and USBancorp (4.2%). We also had gains in our purchases of State Street (1.1%), which were not held for the full year. Stocks which performed poorly for us included General Electric (3.0%), Pfizer (3.6%), Citigroup (1.9%), and Verizon (3.3%). AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 2008* (UNAUDITED) SINCE YEAR TO INCEPTION QUARTER DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR (9/30/97) ------- -------- -------- ------- ------- ------- --------- INCOME FUND CLASS AAA ............... (5.99)% (12.79)% (18.15)% (2.36)% 7.33% 9.45% 7.47% Blended Index** ..................... (3.01) (7.44) (6.03) 2.71 4.65 3.84 4.70 10 Year Treasury Note Index ......... 2.35 4.40 9.90 5.20 4.13 4.61 5.81 S&P 500 Index ....................... (8.36) (19.27) (21.96) 0.22 5.17 3.06 3.59 Lipper Equity Income Fund Average ... (6.92) (17.48) (20.75) 0.79 6.15 4.59 4.38 THE FUND'S CLASS AAA GROSS EXPENSE RATIO IS 2.20% IN THE CURRENT PROSPECTUS. THE NET EXPENSE RATIO IS 1.50%, AFTER CONTRACTUAL REIMBURSEMENTS AND CUSTODY FEE CREDITS BY THE ADVISER IN PLACE THROUGH JANUARY 31, 2010. THE FUND'S SHARES DO NOT HAVE A SALES CHARGE. TETON ADVISORS, INC. (FORMERLY GABELLI ADVISERS, INC.) ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES ON JULY 1, 2007 FROM WESTWOOD MANAGEMENT CORPORATION, PREVIOUSLY THE SUBADVISER. * 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. THE ADVISER REIMBURSED EXPENSES TO LIMIT THE EXPENSE RATIO. HAD SUCH LIMITATION NOT BEEN IN PLACE, RETURNS WOULD HAVE BEEN LOWER. 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. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 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. SEE PAGE 2 FOR FURTHER DETAILS ABOUT ADDITIONAL CLASSES OF SHARES. THE STANDARD & POOR'S ("S&P") 500 INDEX IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE. THE 10 YEAR TREASURY NOTE INDEX IS AN UNMANAGED INDEX TRACKING U.S. TREASURY NOTES WITH A 10 YEAR MATURITY. DIVIDENDS ARE CONSIDERED REINVESTED EXCEPT FOR THE 10 YEAR TREASURY NOTE INDEX. YOU CANNOT INVEST DIRECTLY IN AN INDEX. ** THE BLENDED INDEX CONSISTS OF A 50% BLEND OF EACH OF THE 10 YEAR TREASURY NOTE INDEX AND THE S&P 500 INDEX. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE INCOME FUND CLASS AAA, THE BLENDED INDEX, AND THE S&P 500 INDEX (Unaudited) (PERFORMANCE GRAPH) INCOME FUND BLENDED S&P 500 (CLASS AAA) INDEX INDEX ----------- ------- ------- 9/30/1997 $10,000 $10,000 $10,000 9/30/1998 $ 8,950 $11,384 $10,908 9/30/1999 $ 8,442 $12,575 $13,939 9/30/2000 $10,541 $13,734 $15,789 9/30/2001 $11,741 $12,851 $11,588 9/30/2002 $12,622 $12,354 $ 9,216 9/30/2003 $15,503 $13,987 $11,461 9/30/2004 $18,986 $15,176 $13,050 9/30/2005 $23,718 $16,256 $14,649 9/30/2006 $24,524 $17,227 $16,228 9/30/2007 $26,969 $19,079 $18,951 9/30/2008 $22,074 $17,928 $14,789 Average Annual Total Return* 1 Year 5 Year 10 Year Life of Fund ------ ------ ------- ------------ Class AAA (18.15)% 7.33% 9.45% 7.47% * 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. 11 GAMCO WESTWOOD FUNDS DISCLOSURE OF FUND EXPENSES (UNAUDITED) For the Six Month Period from April 1, 2008 through September 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. 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 September 30, 2008. Beginning Ending Annualized Expenses Account Value Account Value Expense Paid During 04/01/08 09/30/08 Ratio Period* ------------- ------------- ---------- ----------- GAMCO WESTWOOD MIGHTY MITES(SM) FUND ACTUAL FUND RETURN Class AAA $1,000.00 $ 981.00 1.76% $ 8.72 Class A $1,000.00 $ 980.00 2.00% $ 9.90 Class B $1,000.00 $ 976.80 2.57% $12.70 Class C $1,000.00 $ 977.40 2.50% $12.36 Class I $1,000.00 $ 982.50 1.47% $ 7.29 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,016.20 1.76% $ 8.87 Class A $1,000.00 $1,015.00 2.00% $10.08 Class B $1,000.00 $1,012.15 2.57% $12.93 Class C $1,000.00 $1,012.50 2.50% $12.58 Class I $1,000.00 $1,017.65 1.47% $ 7.41 GAMCO WESTWOOD EQUITY FUND ACTUAL FUND RETURN Class AAA $1,000.00 $ 910.10 1.48% $ 7.07 Class A $1,000.00 $ 904.70 1.73% $ 8.24 Class B $1,000.00 $ 905.90 2.23% $10.63 Class C $1,000.00 $ 905.90 2.22% $10.58 Class I $1,000.00 $ 911.20 1.22% $ 5.83 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,017.60 1.48% $ 7.47 Class A $1,000.00 $1,016.35 1.73% $ 8.72 Class B $1,000.00 $1,013.85 2.23% $11.23 Class C $1,000.00 $1,013.90 2.22% $11.18 Class I $1,000.00 $1,018.90 1.22% $ 6.16 GAMCO WESTWOOD BALANCED FUND ACTUAL FUND RETURN Class AAA $1,000.00 $ 941.30 1.21% $ 5.87 Class A $1,000.00 $ 939.50 1.46% $ 7.08 Class B $1,000.00 $ 937.60 1.96% $ 9.49 Class C $1,000.00 $ 937.70 1.96% $ 9.49 Class I $1,000.00 $ 941.60 0.96% $ 4.66 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,018.95 1.21% $ 6.11 Class A $1,000.00 $1,017.70 1.46% $ 7.36 Class B $1,000.00 $1,015.20 1.96% $ 9.87 Class C $1,000.00 $1,015.20 1.96% $ 9.87 Class I $1,000.00 $1,020.20 0.96% $ 4.85 GAMCO WESTWOOD INTERMEDIATE BOND FUND ACTUAL FUND RETURN Class AAA $1,000.00 $ 988.30 1.00% $ 4.97 Class A $1,000.00 $ 987.80 1.10% $ 5.47 Class B $1,000.00 $ 984.50 1.75% $ 8.68 Class C $1,000.00 $ 984.20 1.75% $ 8.68 Class I $1,000.00 $ 990.40 0.75% $ 3.73 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,020.00 1.00% $ 5.05 Class A $1,000.00 $1,019.50 1.10% $ 5.55 Class B $1,000.00 $1,016.25 1.75% $ 8.82 Class C $1,000.00 $1,016.25 1.75% $ 8.82 Class I $1,000.00 $1,021.25 0.75% $ 3.79 GAMCO WESTWOOD SMALLCAP EQUITY FUND ACTUAL FUND RETURN Class AAA $1,000.00 $ 953.10 1.51% $ 7.37 Class A $1,000.00 $ 951.90 1.76% $ 8.59 Class B $1,000.00 $ 949.50 2.27% $11.06 Class C $1,000.00 $ 949.80 2.27% $11.07 Class I $1,000.00 $ 953.90 1.26% $ 6.15 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,017.45 1.51% $ 7.62 Class A $1,000.00 $1,016.20 1.76% $ 8.87 Class B $1,000.00 $1,013.65 2.27% $11.43 Class C $1,000.00 $1,013.65 2.27% $11.43 Class I $1,000.00 $1,018.70 1.26% $ 6.36 GAMCO WESTWOOD INCOME FUND ACTUAL FUND RETURN Class AAA $1,000.00 $ 911.00 1.53% $ 7.31 Class A $1,000.00 $ 910.00 1.78% $ 8.50 Class B $1,000.00 $ 905.30 2.28% $10.86 Class C $1,000.00 $ 906.60 2.28% $10.87 Class I $1,000.00 $ 911.90 1.29% $ 6.17 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,017.35 1.53% $ 7.72 Class A $1,000.00 $1,016.10 1.78% $ 8.97 Class B $1,000.00 $1,013.60 2.28% $11.48 Class C $1,000.00 $1,013.60 2.28% $11.48 Class I $1,000.00 $1,018.55 1.29% $ 6.51 * 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. 12 SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED) The following tables present portfolio holdings as a percent of net assets as of September 30, 2008: GAMCO WESTWOOD MIGHTY MITES(SM) FUND U.S. Government Obligations .......................................... 37.2% Financial Services ................................................... 8.8% Health Care .......................................................... 7.1% Equipment and Supplies ............................................... 5.4% Diversified Industrial ............................................... 5.0% Business Services .................................................... 3.5% Automotive: Parts and Accessories .................................... 2.9% Specialty Chemicals .................................................. 2.8% Energy and Utilities: Natural Gas .................................... 2.7% Telecommunications ................................................... 2.5% Machinery ............................................................ 2.0% Electronics .......................................................... 2.0% Consumer Products .................................................... 1.7% Real Estate .......................................................... 1.6% Energy and Utilities: Integrated ..................................... 1.6% Food and Beverage .................................................... 1.6% Broadcasting ......................................................... 1.5% Manufactured Housing and Recreational Vehicles ....................... 1.4% Aviation: Parts and Services ......................................... 1.3% Entertainment ........................................................ 1.2% Energy and Utilities: Water .......................................... 1.2% Aerospace ............................................................ 1.2% Hotels and Gaming .................................................... 1.1% Energy and Utilities: Electric ....................................... 1.1% Energy and Utilities: Services ....................................... 1.0% Restaurants .......................................................... 0.8% Closed-End Business Development Company .............................. 0.6% Computer Software and Services ....................................... 0.6% Transportation ....................................................... 0.5% Agriculture .......................................................... 0.5% Publishing ........................................................... 0.5% Communications Equipment ............................................. 0.3% Building and Construction ............................................ 0.3% Retail ............................................................... 0.3% Paper and Forest Products ............................................ 0.2% Cable ................................................................ 0.1% Educational Services ................................................. 0.1% Environmental Control ................................................ 0.0% Consumer Services .................................................... 0.0% Metals and Mining .................................................... 0.0% Other Assets and Liabilities (Net) ................................... (4.2)% ----- 100.0% ===== GAMCO WESTWOOD EQUITY FUND Financial Services ................................................... 12.3% Banking .............................................................. 11.3% Energy: Oil .......................................................... 9.1% Energy: Integrated ................................................... 7.8% Consumer Products .................................................... 7.6% Health Care .......................................................... 6.8% Computer Software and Services ....................................... 5.8% Business Services .................................................... 5.0% Telecommunications ................................................... 5.0% Mutual Funds ......................................................... 4.1% Energy: Natural Gas .................................................. 3.6% Diversified Industrial ............................................... 3.2% Aviation: Parts and Services ......................................... 2.6% Communications Equipment ............................................. 2.5% Computer Hardware .................................................... 2.5% Retail ............................................................... 2.5% Food and Beverage .................................................... 2.5% Entertainment ........................................................ 2.4% Metals and Mining .................................................... 2.2% Electronics .......................................................... 1.3% Energy: Services ..................................................... 1.2% Other Assets and Liabilities (Net) ................................... (1.3)% ----- 100.0% ===== GAMCO WESTWOOD BALANCED FUND U.S. Government Agency Obligations ................................... 15.9% U.S. Government Obligations .......................................... 10.2% Financial Services ................................................... 9.0% Banking .............................................................. 8.6% Energy: Oil .......................................................... 7.1% Consumer Products .................................................... 4.8% Health Care .......................................................... 4.7% Computer Software and Services ....................................... 3.9% Utilities ............................................................ 3.2% Telecommunications ................................................... 3.1% Mutual Funds ......................................................... 3.1% Diversified Industrial ............................................... 3.0% Business Services .................................................... 2.9% Energy: Natural Gas .................................................. 2.9% Retail ............................................................... 2.5% Food and Beverage .................................................... 2.2% Computer Hardware .................................................... 2.1% Energy: Integrated ................................................... 1.6% Aviation: Parts and Services ......................................... 1.6% Entertainment ........................................................ 1.5% Communications Equipment ............................................. 1.5% Metals and Mining .................................................... 1.4% Electronics .......................................................... 1.2% Energy: Services ..................................................... 0.7% Transportation ....................................................... 0.7% Other Assets and Liabilities (Net) ................................... 0.6% ----- 100.0% ===== 13 SUMMARY OF PORTFOLIO HOLDINGS (CONTINUED) (UNAUDITED) GAMCO WESTWOOD INTERMEDIATE BOND FUND Common Stocks ........................................................ 13.2% Corporate Bonds ...................................................... 34.3% U.S. Government Agency Obligations ................................... 33.4% U.S. Government Obligations .......................................... 23.6% Other Assets and Liabilities (Net) ................................... (4.5)% ----- 100.0% ===== GAMCO WESTWOOD SMALLCAP EQUITY FUND Financial Services ................................................... 17.6% Electronics .......................................................... 14.6% Semiconductors ....................................................... 12.0% Specialty Chemicals .................................................. 6.2% Computer Software and Services ....................................... 6.1% Health Care .......................................................... 5.1% Equipment and Supplies ............................................... 4.8% Diversified Industrial ............................................... 4.4% Machinery ............................................................ 4.3% Retail ............................................................... 4.0% Consumer Products .................................................... 3.7% Business Services .................................................... 3.5% Aerospace ............................................................ 1.8% Food and Beverage .................................................... 1.4% Communications Equipment ............................................. 1.3% Educational Services ................................................. 1.3% Energy and Utilities ................................................. 1.1% Publishing ........................................................... 1.0% Manufactured Housing and Recreational Vehicles ....................... 0.9% Computer Hardware .................................................... 0.8% Automotive: Parts and Accessories .................................... 0.8% Building and Construction ............................................ 0.6% Metals and Mining .................................................... 0.6% Transportation ....................................................... 0.3% Restaurants .......................................................... 0.3% Hotels and Gaming .................................................... 0.3% Aviation: Parts and Services ......................................... 0.3% Telecommunications ................................................... 0.2% Consumer Services .................................................... 0.2% Other Assets and Liabilities (Net) ................................... 0.5% ----- 100.0% ===== GAMCO WESTWOOD INCOME FUND Financial Services ................................................... 19.9% Banking .............................................................. 14.3% Energy and Utilities: Integrated ..................................... 9.0% Food and Beverage .................................................... 8.9% Energy and Utilities: Oil ............................................ 8.8% Telecommunications ................................................... 7.7% U.S. Government Agency Obligations ................................... 7.1% Health Care .......................................................... 5.5% Business Services .................................................... 4.1% Diversified Industrial ............................................... 3.5% Energy and Utilities: Services ....................................... 3.1% Energy and Utilities: Natural Gas .................................... 2.6% Specialty Chemicals .................................................. 2.6% Paper and Forest Products ............................................ 2.0% Broadcasting ......................................................... 2.0% Electronics .......................................................... 1.9% Retail ............................................................... 1.7% Other Assets and Liabilities (Net) ................................... (4.7)% ----- 100.0% ===== THE FUNDS FILE 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 JUNE 30, 2008. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT www.gabelli.com OR BY CALLING THE FUND AT 800-GABELLI (800-422-3554). THE FUNDS' 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 Each 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 Funds' proxy voting policies, procedures, and how the Funds voted proxies relating to portfolio securities are 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. We have separated the portfolio managers' commentaries 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 managers' commentaries are unrestricted. The financial statements and investment portfolio are mailed separately from the commentaries. Both the commentaries and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com/funds. 14 GAMCO WESTWOOD MIGHTY MITES(SM) FUND SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 SHARES COST MARKET VALUE - ----------- ------------ ------------ COMMON STOCKS -- 66.4% AEROSPACE -- 1.2% 45,500 Herley Industries Inc.+ ................ $ 666,746 $ 778,050 500 Innovative Solutions & Support Inc. .... 8,972 2,730 ------------ ------------ 675,718 780,780 ------------ ------------ AGRICULTURE -- 0.5% 225 J.G. Boswell Co. ....................... 144,676 157,500 792 Limoneira Co. .......................... 196,267 190,080 ------------ ------------ 340,943 347,580 ------------ ------------ AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.5% 400 Amerityre Corp.+ ....................... 1,486 408 52,000 Earl Scheib Inc.+ ...................... 249,890 114,660 25,500 Midas Inc.+ ............................ 379,203 350,880 19,000 Proliance International Inc.+ .......... 89,019 14,250 2,000 Puradyn Filter Technologies Inc.+ ...... 1,956 640 197,000 Standard Motor Products Inc. ........... 1,613,394 1,225,340 300 Strattec Security Corp. ................ 8,285 7,926 ------------ ------------ 2,343,233 1,714,104 ------------ ------------ AVIATION: PARTS AND SERVICES -- 1.3% 800 Curtiss-Wright Corp. ................... 8,610 36,360 6,200 Kaman Corp. ............................ 92,246 176,576 265,410 The Fairchild Corp., Cl. A+ ............ 920,039 690,066 ------------ ------------ 1,020,895 903,002 ------------ ------------ BROADCASTING -- 1.5% 65,000 Acme Communications Inc.+ .............. 308,949 61,750 24,500 Beasley Broadcast Group Inc., Cl. A .... 227,415 41,405 50,000 Citadel Broadcasting Corp.+ ............ 77,290 39,000 45,000 Crown Media Holdings Inc., Cl. A+ ...... 353,143 226,350 21,400 Equity Media Holdings Corp.+ ........... 100,223 11,770 14,000 Fisher Communications Inc. ............. 548,402 551,600 924 Granite Broadcasting Corp.+ ............ 24,780 6,468 25,000 Gray Television Inc. ................... 217,569 43,000 16,000 Salem Communications Corp., Cl. A+ ..... 110,224 20,000 45,000 Young Broadcasting Inc., Cl. A+ ........ 140,544 2,363 ------------ ------------ 2,108,539 1,003,706 ------------ ------------ BUILDING AND CONSTRUCTION -- 0.3% 4,000 Huttig Building Products Inc.+ ......... 13,358 8,360 6,000 Material Sciences Corp.+ ............... 75,551 34,500 6,400 The Monarch Cement Co. ................. 152,845 172,800 ------------ ------------ 241,754 215,660 ------------ ------------ BUSINESS SERVICES -- 3.5% 250,000 AMICAS Inc.+ ........................... 978,813 600,000 28,000 ANC Rental Corp.+ ...................... 840 3 31,000 Ascent Media Corp., Cl. A+ ............. 872,313 756,710 103 Chazak Value Corp.+ (a) ................ 0 0 99,000 Edgewater Technology Inc.+ ............. 474,450 481,140 67,500 Nashua Corp.+ .......................... 551,362 542,025 500 StarTek Inc.+ .......................... 8,375 3,210 ------------ ------------ 2,886,153 2,383,088 ------------ ------------ CABLE -- 0.1% 90,000 Adelphia Communications Corp., Cl. A+ (a) ................... 15,750 0 90,000 Adelphia Communications Corp., Cl. A, Escrow+ (a) .............. 0 0 90,000 Adelphia Recovery Trust+ ............... 0 180 7,800 Outdoor Channel Holdings Inc.+ ......... 59,370 68,640 ------------ ------------ 75,120 68,820 ------------ ------------ SHARES COST MARKET VALUE - ----------- ------------ ------------ CLOSED-END BUSINESS DEVELOPMENT COMPANY -- 0.6% 27,000 MVC Capital Inc. ....................... $ 270,762 $ 411,750 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 0.3% 16,200 Communications Systems Inc. ............ 151,467 172,368 2,000 Symmetricom Inc.+ ...................... 9,821 9,940 4,000 Technical Communications Corp.+ ........ 25,077 21,800 40,000 ViewCast.com Inc.+ ..................... 18,600 14,400 ------------ ------------ 204,965 218,508 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 0.6% 18,000 Furmanite Corp.+ ....................... 75,374 186,120 1,910 Gemalto NV+ ............................ 10,942 67,733 2,000 Mercury Computer Systems Inc.+ ......... 17,259 17,800 834 Prosoft Learning Corp.+ (a) ............ 11,216 0 850,000 StorageNetworks Inc., Escrow+ (a) ...... 0 25,500 5,000 Tier Technologies Inc., Cl. B+ ......... 37,833 37,150 2,000 Tyler Technologies Inc.+ ............... 8,050 30,340 2,000 VMetro ASA ............................. 4,112 3,932 ------------ ------------ 164,786 368,575 ------------ ------------ CONSUMER PRODUCTS -- 1.7% 18,000 Adams Golf Inc.+ ....................... 122,578 81,540 1,000 Ducati Motor Holding SpA, ADR+ ......... 15,665 23,050 4,000 Heelys Inc.+ ........................... 21,324 17,920 4,500 Marine Products Corp. .................. 4,609 37,350 300 National Presto Industries Inc. ........ 8,618 22,350 136,400 Schiff Nutrition International Inc.+ ... 278,919 931,612 41,530 Syratech Corp.+ ........................ 10,382 831 ------------ ------------ 462,095 1,114,653 ------------ ------------ CONSUMER SERVICES -- 0.0% 7,000 Bowlin Travel Centers Inc.+ ............ 11,193 11,550 1,000 Collectors Universe Inc. ............... 3,530 9,300 ------------ ------------ 14,723 20,850 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 5.0% 6,500 Ampco-Pittsburgh Corp. ................. 130,000 168,350 200 Burnham Holdings Inc., Cl. A ........... 3,294 2,150 25,000 Haulotte Group ......................... 134,090 310,419 54,700 Hawk Corp., Cl. A+ ..................... 966,711 1,101,111 93,000 Katy Industries Inc.+ .................. 338,193 134,850 98,000 Magnetek Inc.+ ......................... 448,027 396,900 30,000 National Patent Development Corp.+ ..... 72,240 64,500 10,000 RWC Inc.+ .............................. 217,878 17,500 431,000 Stamford Industrial Group Inc.+ ........ 178,289 603,400 40,000 Tech/Ops Sevcon Inc. ................... 241,817 172,000 305,000 WHX Corp.+ ............................. 597,764 427,000 ------------ ------------ 3,328,303 3,398,180 ------------ ------------ EDUCATIONAL SERVICES -- 0.1% 2,200 Universal Technical Institute Inc.+ .... 34,193 37,532 ------------ ------------ ELECTRONICS -- 2.0% 50,000 Alliance Semiconductor Corp. ........... 159,909 37,500 4,000 Bel Fuse Inc., Cl. A ................... 122,125 110,000 2,000 BTU International Inc.+ ................ 18,435 17,600 70,000 California Micro Devices Corp.+ ........ 285,950 209,300 28,000 CTS Corp. .............................. 254,260 357,840 2,000 GSI Group Inc.+ ........................ 7,080 7,060 70,000 IntriCon Corp.+ ........................ 230,961 275,800 5,000 Methode Electronics Inc. ............... 46,441 44,700 1,000 Schmitt Industries Inc.+ ............... 6,409 6,325 See accompanying notes to financial statements. 15 GAMCO WESTWOOD MIGHTY MITES(SM) FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2008 SHARES COST MARKET VALUE - ----------- ------------ ------------ COMMON STOCKS (CONTINUED) ELECTRONICS (CONTINUED) 20,000 SIRIT Inc.+ ............................ $ 11,714 $ 3,289 18,000 Stoneridge Inc.+ ....................... 174,517 202,500 178 Trimble Navigation Ltd.+ ............... 4,943 4,603 2,000 Ultra Clean Holdings Inc.+ ............. 12,832 10,080 5,000 Ultralife Corp.+ ....................... 53,740 38,750 3,500 Zoran Corp.+ ........................... 22,500 28,560 ------------ ------------ 1,411,816 1,353,907 ------------ ------------ ENERGY AND UTILITIES: ELECTRIC -- 1.0% 2,140 Great Plains Energy Inc. ............... 55,469 47,551 11,000 Maine & Maritimes Corp.+ ............... 344,485 362,450 11,050 Unitil Corp. ........................... 290,031 288,294 ------------ ------------ 689,985 698,295 ------------ ------------ ENERGY AND UTILITIES: INTEGRATED -- 1.6% 49,950 Florida Public Utilities Co. ........... 497,334 644,355 6,000 MGE Energy Inc. ........................ 189,291 213,300 801 Pardee Resources Co. Inc. .............. 72,384 182,227 95,200 Progress Energy Inc., CVO+ (a) ......... 10,472 31,416 10,000 ProSep Inc.+ ........................... 3,396 2,819 ------------ ------------ 772,877 1,074,117 ------------ ------------ ENERGY AND UTILITIES: NATURAL GAS -- 2.7% 7,400 Chesapeake Utilities Corp. ............. 207,025 245,754 31,000 Corning Natural Gas Corp.+ ............. 482,189 499,100 8,900 EnergySouth Inc. ....................... 500,584 546,727 3,000 Evergreen Energy Inc.+ ................. 11,060 2,820 31,200 PetroCorp Escrow Shares+ (a) ........... 0 1,872 16,500 RGC Resources Inc. ..................... 363,162 466,785 20,300 U.S. Energy Corp.+ ..................... 85,659 52,577 ------------ ------------ 1,649,679 1,815,635 ------------ ------------ ENERGY AND UTILITIES: SERVICES -- 1.0% 9,500 Acergy SA, ADR ......................... 32,064 95,570 950 Covanta Holding Corp.+ ................. 3,996 22,743 40,000 RPC Inc. ............................... 173,633 562,400 ------------ ------------ 209,693 680,713 ------------ ------------ ENERGY AND UTILITIES: WATER -- 1.2% 4,500 Artesian Resources Corp., Cl. A ........ 48,063 76,185 2,500 California Water Service Group ......... 55,553 96,250 4,000 Consolidated Water Co. Ltd. ............ 55,124 68,080 5,700 Middlesex Water Co. .................... 96,987 99,579 10,000 Pennichuck Corp. ....................... 232,997 230,000 8,000 SJW Corp. .............................. 98,372 239,760 ------------ ------------ 587,096 809,854 ------------ ------------ ENTERTAINMENT -- 1.2% 13,500 Canterbury Park Holding Corp. .......... 138,262 118,125 1,802 Chestnut Hill Ventures+ (a) ............ 67,956 50,733 34,000 Dover Motorsports Inc. ................. 170,332 185,300 20,500 Jetix Europe NV+ ....................... 119,990 460,026 800 LodgeNet Entertainment Corp.+ .......... 8,800 1,624 40,000 Triple Crown Media Inc.+ ............... 46,834 680 ------------ ------------ 552,174 816,488 ------------ ------------ ENVIRONMENTAL CONTROL -- 0.0% 10,000 BioteQ Environmental Technologies Inc.+ ............................... 16,559 20,672 500 Sharps Compliance Corp.+ ............... 1,265 1,400 ------------ ------------ 17,824 22,072 ------------ ------------ EQUIPMENT AND SUPPLIES -- 5.4% 130,800 Baldwin Technology Co. Inc., Cl. A+ .... 308,707 334,848 15,000 Capstone Turbine Corp.+ ................ 27,450 19,350 20,000 Cherokee International Corp.+ .......... 93,467 57,000 SHARES COST MARKET VALUE - ----------- ------------ ------------ 17,000 Core Molding Technologies Inc.+ ........ $ 73,283 $ 102,000 6,100 Fedders Corp.+ (a) ..................... 1,646 0 1,000 Genoil Inc.+ ........................... 225 160 10,000 Gerber Scientific Inc.+ ................ 82,578 91,400 8,500 Gildemeister AG ........................ 61,536 141,800 4,000 GrafTech International Ltd.+ ........... 24,000 60,440 21,000 L.S. Starrett Co., Cl. A ............... 345,440 387,030 20,000 Maezawa Kyuso Industries Co. Ltd. ...... 108,117 281,134 14,000 Met-Pro Corp. .......................... 182,775 204,260 9,000 Mine Safety Appliances Co. ............. 294,989 343,080 17,600 SL Industries Inc.+ .................... 140,620 233,200 1,000 SRS Labs Inc.+ ......................... 5,500 5,510 5,000 The Eastern Co. ........................ 50,980 67,500 150,000 TransAct Technologies Inc.+ ............ 940,481 1,194,000 9,000 Vicor Corp. ............................ 99,181 79,920 1,000 WaterFurnace Renewable Energy Inc. ..... 24,510 24,825 500 Watts Water Technologies Inc., Cl. A ............................... 7,648 13,675 ------------ ------------ 2,873,133 3,641,132 ------------ ------------ FINANCIAL SERVICES -- 8.8% 2,400 Bank of Florida Corp.+ ................. 26,835 19,776 16,100 Berkshire Bancorp Inc. ................. 219,414 160,678 75 Burke & Herbert Bank and Trust Co. ..... 95,726 111,000 27,500 Crazy Woman Creek Bancorp Inc. ......... 474,571 579,563 179,000 Epoch Holding Corp. .................... 464,160 1,888,450 14 Farmers & Merchants Bank of Long Beach ............................... 90,195 62,300 6,000 Fidelity Southern Corp. ................ 53,378 25,920 30,300 Flushing Financial Corp. ............... 454,751 530,250 7,400 Gateway Financial Holdings Inc. ........ 90,921 39,590 10 Guaranty Corp., Cl. A+ ................. 137,500 161,250 40,000 Integrity Mutual Funds Inc.+ ........... 35,200 14,000 7,000 Nara Bancorp Inc. ...................... 89,101 78,400 11,055 New York Community Bancorp Inc. ........ 143,811 185,613 5,697 Northrim BanCorp Inc. .................. 119,035 93,431 7,400 Oritani Financial Corp.+ ............... 97,879 124,690 6,500 Parish National Corp. (a) .............. 253,149 900,250 9,167 Patriot National Bancorp Inc. .......... 141,747 107,712 5,000 Provident New York Bancorp ............. 74,850 66,100 6,000 Seacoast Banking Corp. of Florida ...... 71,205 64,380 116 Sunwest Bank+ .......................... 322,721 208,800 19,000 SWS Group Inc. ......................... 238,753 383,040 1,020 TIB Financial Corp. .................... 7,780 5,743 10,000 Tree.com Inc.+ ......................... 82,623 48,200 9,000 Wilshire Bancorp Inc. .................. 78,874 109,530 ------------ ------------ 3,864,179 5,968,666 ------------ ------------ FOOD AND BEVERAGE -- 1.5% 1,000 Andrew Peller Ltd., Cl. A .............. 9,614 8,569 2,500 Boston Beer Co. Inc., Cl. A+ ........... 55,125 118,725 4,000 Genesee Corp., Cl. A+ (a) .............. 4,060 0 30,100 Genesee Corp., Cl. B+ (a) .............. 13,986 0 1,100 Hanover Foods Corp., Cl. A+ ............ 110,881 102,025 2,000 J & J Snack Foods Corp. ................ 28,830 67,820 45,000 Lifeway Foods Inc.+ .................... 316,480 526,500 14,000 MGP Ingredients Inc. ................... 67,550 39,760 7,000 Rock Field Co. Ltd. .................... 113,721 87,405 900 Scheid Vineyards Inc., Cl. A+ .......... 29,446 28,575 1,000 The Inventure Group Inc.+ .............. 2,660 1,700 6,400 Willamette Valley Vineyards Inc.+ ...... 41,644 30,016 ------------ ------------ 793,997 1,011,095 ------------ ------------ See accompanying notes to financial statements. 16 GAMCO WESTWOOD MIGHTY MITES(SM) FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------ COMMON STOCKS (CONTINUED) HEALTH CARE -- 7.1% 18,000 AFP Imaging Corp.+ ..................... $ 38,720 $ 3,420 2,000 Alpharma Inc., Cl. A+ .................. 44,140 73,780 59,000 BioLase Technology Inc.+ ............... 567,974 111,510 10,000 Boiron SA .............................. 166,957 263,680 1,000 Bruker Corp.+ .......................... 5,980 13,330 6,000 Cepheid Inc.+ .......................... 91,579 82,980 110,000 Continucare Corp.+ ..................... 261,281 293,700 100 CPEX Pharmaceuticals Inc.+ ............. 1,490 1,875 96,000 Del Global Technologies Corp.+ ......... 205,665 124,800 5,000 DexCom Inc.+ ........................... 65,375 30,950 1,000 Elite Pharmaceuticals Inc., Cl. A+ ..... 2,690 170 7,000 Exactech Inc.+ ......................... 111,892 155,680 24,000 Heska Corp.+ ........................... 47,041 15,600 24,000 I-Flow Corp.+ .......................... 271,930 223,440 4,000 ICU Medical Inc.+ ...................... 105,038 121,640 5,000 Inverness Medical Innovations Inc.+ .... 94,541 150,000 10,000 Langer Inc.+ ........................... 49,577 9,000 40,000 Matrixx Initiatives Inc.+ .............. 627,576 719,600 20,000 Micrus Endovascular Corp.+ ............. 249,903 279,000 10,000 Monogram Biosciences Inc.+ ............. 15,050 7,600 21,000 Neogen Corp.+ .......................... 160,903 591,780 2,500 NMT Medical Inc.+ ...................... 7,858 7,800 7,000 Opko Health Inc.+ ...................... 24,563 12,250 2,000 Orthofix International NV+ ............. 45,220 37,260 10,000 Pain Therapeutics Inc.+ ................ 80,754 97,700 10,000 PreMD Inc.+ ............................ 18,320 460 20,000 Quidel Corp.+ .......................... 88,363 328,200 37,415 RTI Biologics Inc.+ .................... 321,817 349,830 200 Sirona Dental Systems Inc.+ ............ 3,900 4,656 87,000 Sonic Innovations Inc.+ ................ 396,779 220,980 15,000 Syneron Medical Ltd.+ .................. 204,831 213,750 1,000 ThermoGenesis Corp.+ ................... 2,520 1,250 16,000 United-Guardian Inc. ................... 154,087 168,800 3,000 Young Innovations Inc. ................. 81,168 60,540 ------------ ------------ 4,615,482 4,777,011 ------------ ------------ HOTELS AND GAMING -- 1.1% 4,000 Dover Downs Gaming & Entertainment Inc. ................................ 24,903 31,120 2,000 Florida Gaming Corp.+ .................. 6,950 8,000 8,500 Multimedia Games Inc.+ ................. 76,734 36,805 33,000 Sonesta International Hotels Corp., Cl. A ............................... 1,257,272 686,400 ------------ ------------ 1,365,859 762,325 ------------ ------------ MACHINERY -- 2.0% 45,000 Gehl Co.+ .............................. 1,328,674 1,324,350 5,000 TurboChef Technologies Inc.+ ........... 29,829 30,750 ------------ ------------ 1,358,503 1,355,100 ------------ ------------ MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 1.4% 100,000 Cavalier Homes Inc.+ ................... 473,540 168,000 8,800 Cavco Industries Inc.+ ................. 174,393 318,120 15,000 Coachmen Industries Inc.+ .............. 53,748 24,750 9,000 Nobility Homes Inc. .................... 141,603 145,800 15,000 Palm Harbor Homes Inc.+ ................ 259,956 148,650 5,000 Skyline Corp. .......................... 169,393 132,150 ------------ ------------ 1,272,633 937,470 ------------ ------------ METALS AND MINING -- 0.0% 4,000 Uranium Resources Inc.+ ................ 22,056 6,760 ------------ ------------ PAPER AND FOREST PRODUCTS -- 0.2% 700 Keweenaw Land Association Ltd. ......... 130,662 143,500 ------------ ------------ MARKET SHARES COST VALUE - ----------- ------------ ------------ PUBLISHING -- 0.5% 54,000 Journal Communications Inc., Cl. A ..... $ 264,180 $ 263,520 11,000 PRIMEDIA Inc. .......................... 95,380 26,730 3,333 The E.W. Scripps Co., Cl. A ............ 33,283 23,564 ------------ ------------ 392,843 313,814 ------------ ------------ REAL ESTATE -- 1.6% 7,300 Bresler & Reiner Inc. .................. 225,886 125,925 6,000 Capital Properties Inc., Cl. A ......... 97,890 138,600 11,200 Griffin Land & Nurseries Inc. .......... 271,918 415,296 3,000 Gyrodyne Co. of America Inc.+ .......... 53,308 114,270 1,000 Holobeam Inc.+ ......................... 32,612 25,655 20,000 Reading International Inc., Cl. A+ ..... 163,770 137,700 19,000 Reading International Inc., Cl. B+ ..... 178,706 150,100 2,508 Royalty LLC+ (a)(b) .................... 0 3,985 ------------ ------------ 1,024,090 1,111,531 ------------ ------------ RESTAURANTS -- 0.8% 26,600 Nathan's Famous Inc.+ .................. 266,356 423,206 10,000 The Steak n Shake Co.+ ................. 116,209 86,800 ------------ ------------ 382,565 510,006 ------------ ------------ RETAIL -- 0.3% 40,000 CoolBrands International Inc.+ ......... 56,232 25,934 4,000 Movado Group Inc. ...................... 59,970 89,400 2,000 Village Super Market Inc., Cl. A ...... 88,308 95,340 ------------ ------------ 204,510 210,674 ------------ ------------ SPECIALTY CHEMICALS -- 2.8% 267,226 General Chemical Group Inc.+ ........... 59,859 4,676 32,000 Hawkins Inc. ........................... 411,190 560,640 1,000 KMG Chemicals Inc. ..................... 3,270 6,980 55,000 Omnova Solutions Inc.+ ................. 302,076 109,450 70,000 Zep Inc. ............................... 909,647 1,234,800 ------------ ------------ 1,686,042 1,916,546 ------------ ------------ TELECOMMUNICATIONS -- 2.5% 1,000 Ambient Corp.+ ......................... 280 29 1,000 Applied Signal Technology Inc. ......... 16,330 17,380 175 Consolidated Communications Holdings Inc. ....................... 3,117 2,639 29,000 D&E Communications Inc. ................ 312,536 218,950 2,000 Electronic Systems Technology Inc. ..... 1,410 950 48,000 HickoryTech Corp. ...................... 453,022 278,880 80 Horizon Telecom Inc., Cl. A ............ 9,250 10,960 350 Horizon Telecom Inc., Cl. B ............ 39,964 41,134 1,400 Lexcom Inc., Cl. B, Non-Voting+ ........ 78,659 118,055 36,200 New Ulm Telecom Inc. (a) ............... 395,552 331,230 10,000 PNV Inc.+ .............................. 3 18 2,500 Preformed Line Products Co. ............ 115,368 145,850 18,000 Shenandoah Telecommunications Co. ...... 94,686 397,260 33,000 Sycamore Networks Inc.+ ................ 107,085 106,590 152 Telecorp Escrow Shares (a) ............. 0 0 2,305 Virgin Media Inc. ...................... 31,540 18,210 ------------ ------------ 1,658,802 1,688,135 ------------ ------------ TRANSPORTATION -- 0.5% 21,100 Providence and Worcester Railroad Co. .. 369,656 358,700 400 Trailer Bridge Inc.+ ................... 4,452 2,204 ------------ ------------ 374,108 360,904 ------------ ------------ TOTAL COMMON STOCKS .................... 42,082,790 44,972,538 ------------ ------------ See accompanying notes to financial statements. 17 GAMCO WESTWOOD MIGHTY MITES(SM) FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------ PREFERRED STOCKS -- 0.4% AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.4% 15,000 Jungheinrich AG Pfd. ................... $ 121,895 $ 259,527 ------------ ------------ CONVERTIBLE PREFERRED STOCKS -- 0.1% BUSINESS SERVICES -- 0.0% 150 Interep National Radio Sales Inc., 4.000% Cv. Pfd., Ser. A (a)(b)(c)+ .. 13,849 0 ------------ ------------ FOOD AND BEVERAGE -- 0.1% 2,400 Seneca Foods Corp., Cv. Pfd., Ser. 2003+ .......................... 36,600 47,112 ------------ ------------ TOTAL CONVERTIBLE PREFERRED STOCKS ..... 50,449 47,112 ------------ ------------ WARRANTS -- 0.1% BROADCASTING -- 0.0% 63 Granite Broadcasting Corp., Ser. A, expire 06/04/12+ .................... 0 7 63 Granite Broadcasting Corp., Ser. B, expire 06/04/12+ (a) ................ 0 16 ------------ ------------ 0 23 ------------ ------------ BUSINESS SERVICES -- 0.0% 1,666 Avalon Digital Marketing Systems Inc., expire 11/11/11+ (a)(b) ............. 0 0 ------------ ------------ ENERGY AND UTILITIES: ELECTRIC -- 0.1% 1,680 British Energy Group plc, expire 01/17/10+ .................... 5,489 19,190 15,000 Corning Natural Gas Corp., expire 08/17/11+ .................... 0 23,250 ------------ ------------ 5,489 42,440 ------------ ------------ TOTAL WARRANTS ......................... 5,489 42,463 ------------ ------------ PRINCIPAL MARKET AMOUNT COST VALUE - ----------- ------------ ------------ U.S. GOVERNMENT OBLIGATIONS -- 37.2% U.S. TREASURY BILLS -- 23.7% $16,064,000 U.S. Treasury Bills, 0.284% to 1.924%++, 10/02/08 to 01/29/09 ................ $ 16,033,941 $ 16,048,595 ------------ ------------ U.S. TREASURY NOTES -- 13.5% 3,070,000 4.500%, 04/30/09 .................... 3,128,728 3,120,609 5,975,000 4.750%, 12/31/08 .................... 6,033,084 6,032,420 ------------ ------------ 9,161,812 9,153,029 ------------ ------------ TOTAL U.S. GOVERNMENT OBLIGATIONS ...... 25,195,753 25,201,624 ------------ ------------ TOTAL INVESTMENTS -- 104.2% ............ $ 67,456,376 70,523,264 ============ OTHER ASSETS AND LIABILITIES (NET) -- (4.2)% ......... (2,848,035) ------------ NET ASSETS -- 100.0%.................................. $ 67,675,229 ============ - ---------- (a) Security fair valued under procedures established by the Board of Trustees. The procedures may include reviewing available financial information about the company and reviewing the valuation of comparable securities and other factors on a regular basis. At September 30, 2008, the market value of fair valued securities amounted to $1,345,002 or 1.99% of net assets. (b) At September 30, 2008, the Fund held investments in restricted and illiquid securities amounting to $3,985 or 0.01% of net assets, which were valued under methods approved by the Board of Trustees, as follows: 09/30/08 CARRYING ACQUISITION ACQUISITION ACQUISITION VALUE SHARES ISSUER DATE COST PER UNIT - ----------- -------------------------------- ----------- ----------- -------- 1,666 Avalon Digital Marketing Systems Inc., Warrants expire 11/11/11 ............. 04/03/00 -- $0.0000 150 Interep National Radio Sales Inc., 4.000% Cv. Pfd., Ser. A ..... 05/03/02 $13,849 0.0000 2,508 Royalty LLC .................... 09/09/03 -- 1.5889 (c) Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2008, the market value of the Rule 144A security amounted to $0 or 0.00% of net assets. + Non-income producing security. ++ Represents annualized yield at date of purchase. ADR American Depositary Receipt CVO Contingent Value Obligation See accompanying notes to financial statements. 18 GAMCO WESTWOOD EQUITY FUND SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------ COMMON STOCKS -- 101.3% AVIATION: PARTS AND SERVICES -- 2.6% 75,900 United Technologies Corp. .............. $ 4,703,491 $ 4,558,554 ------------ ------------ BANKING -- 11.3% 128,800 Bank of America Corp. .................. 4,428,192 4,508,000 186,233 Citigroup Inc. ......................... 3,954,688 3,819,639 93,884 JPMorgan Chase & Co. ................... 3,687,277 4,384,383 60,900 U.S. Bancorp ........................... 2,057,391 2,193,618 127,700 Wells Fargo & Co. ...................... 3,715,999 4,792,581 ------------ ------------ 17,843,547 19,698,221 ------------ ------------ BUSINESS SERVICES -- 5.0% 118,400 Accenture Ltd., Cl. A .................. 4,671,351 4,499,200 100,400 Automatic Data Processing Inc. ......... 4,181,072 4,292,100 ------------ ------------ 8,852,423 8,791,300 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 2.5% 196,600 Cisco Systems Inc.+ .................... 5,148,407 4,435,296 ------------ ------------ COMPUTER HARDWARE -- 2.5% 37,900 International Business Machines Corp. .. 4,503,731 4,432,784 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 5.8% 268,800 EMC Corp.+ ............................ 4,123,367 3,214,848 90,700 Microsoft Corp. ....................... 2,638,330 2,420,783 223,000 Oracle Corp.+ ......................... 3,537,724 4,529,130 ------------ ------------ 10,299,421 10,164,761 ------------ ------------ CONSUMER PRODUCTS -- 7.6% 60,700 Colgate-Palmolive Co. ................. 3,984,881 4,573,745 68,100 NIKE Inc., Cl. B ....................... 3,974,194 4,555,890 86,880 Philip Morris International Inc. ....... 4,264,708 4,178,928 ------------ ------------ 12,223,783 13,308,563 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 3.2% 97,800 General Electric Co. ................... 3,027,750 2,493,900 55,000 ITT Corp. .............................. 2,721,043 3,058,550 ------------ ------------ 5,748,793 5,552,450 ------------ ------------ ELECTRONICS -- 1.3% 54,800 Emerson Electric Co. ................... 2,600,155 2,235,292 ------------ ------------ ENERGY: INTEGRATED -- 7.8% 110,900 Dominion Resources Inc. ................ 4,770,538 4,744,302 68,100 Exelon Corp. ........................... 4,082,484 4,264,422 120,300 PG&E Corp. ............................. 4,823,870 4,505,235 ------------ ------------ 13,676,892 13,513,959 ------------ ------------ ENERGY: NATURAL GAS -- 3.6% 22,306 Apache Corp. ........................... 1,580,060 2,326,070 84,900 XTO Energy Inc. ........................ 5,176,288 3,949,548 ------------ ------------ 6,756,348 6,275,618 ------------ ------------ MARKET SHARES COST VALUE - ----------- ------------ ------------ ENERGY: OIL -- 9.1% 60,400 ConocoPhillips ......................... $ 3,737,073 $ 4,424,300 60,700 Exxon Mobil Corp. ...................... 2,897,011 4,713,962 34,935 Murphy Oil Corp. ....................... 1,945,371 2,240,731 63,110 Occidental Petroleum Corp. ............. 3,540,488 4,446,099 ------------ ------------ 12,119,943 15,825,092 ------------ ------------ ENERGY: SERVICES -- 1.2% 19,400 Transocean Inc.+ ....................... 2,295,399 2,130,896 ------------ ------------ ENTERTAINMENT -- 2.4% 138,600 The Walt Disney Co. .................... 4,877,651 4,253,634 ------------ ------------ FINANCIAL SERVICES -- 12.3% 80,100 ACE Ltd. ............................... 4,655,127 4,335,813 46,600 Franklin Resources Inc. ................ 4,473,120 4,106,858 78,500 MetLife Inc. ........................... 4,774,000 4,396,000 58,400 PNC Financial Services Group Inc. ...... 4,317,066 4,362,480 73,700 State Street Corp. ..................... 4,898,982 4,192,056 ------------ ------------ 23,118,295 21,393,207 ------------ ------------ FOOD AND BEVERAGE -- 2.5% 62,500 General Mills Inc. ..................... 3,601,098 4,295,000 ------------ ------------ HEALTH CARE -- 6.8% 55,500 Covidien Ltd. .......................... 2,718,124 2,983,680 66,600 Johnson & Johnson ...................... 4,400,270 4,614,048 116,700 Wyeth .................................. 5,054,168 4,310,898 ------------ ------------ 12,172,562 11,908,626 ------------ ------------ METALS AND MINING -- 2.2% 68,380 Freeport-McMoRan Copper & Gold Inc. .... 5,252,031 3,887,403 ------------ ------------ MUTUAL FUNDS -- 4.1% 7,182,070 Dreyfus Treasury Cash Management Fund .. 7,182,070 7,182,070 ------------ ------------ RETAIL -- 2.5% 130,600 CVS Caremark Corp. ..................... 4,182,504 4,395,996 ------------ ------------ TELECOMMUNICATIONS -- 5.0% 152,900 AT&T Inc. .............................. 5,479,580 4,268,968 137,404 Verizon Communications Inc. ............ 4,839,247 4,409,294 ------------ ------------ 10,318,827 8,678,262 ------------ ------------ TOTAL COMMON STOCKS .................... 177,477,371 176,916,984 ------------ ------------ TOTAL INVESTMENTS -- 101.3% ............ $177,477,371 176,916,984 ============ OTHER ASSETS AND LIABILITIES (NET) -- (1.3)% .............................. (2,346,466) ------------ NET ASSETS -- 100.0% ................... $174,570,518 ============ - ---------- + Non-income producing security. See accompanying notes to financial statements. 19 GAMCO WESTWOOD BALANCED FUND SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------ COMMON STOCKS -- 63.5% AVIATION: PARTS AND SERVICES -- 1.6% 39,900 United Technologies Corp. .............. $ 2,230,249 $ 2,396,394 ------------ ------------ BANKING -- 7.1% 67,600 Bank of America Corp. .................. 2,321,979 2,366,000 97,733 Citigroup Inc. ......................... 2,078,471 2,004,504 50,396 JPMorgan Chase & Co. ................... 2,029,388 2,353,493 31,700 U.S. Bancorp ........................... 1,070,835 1,141,834 67,100 Wells Fargo & Co. ...................... 1,960,498 2,518,263 ------------ ------------ 9,461,171 10,384,094 ------------ ------------ BUSINESS SERVICES -- 2.9% 56,300 Accenture Ltd., Cl. A .................. 2,219,213 2,139,400 48,400 Automatic Data Processing Inc. ......... 2,047,642 2,069,100 ------------ ------------ 4,266,855 4,208,500 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 1.5% 96,400 Cisco Systems Inc.+ .................... 2,512,843 2,174,784 ------------ ------------ COMPUTER HARDWARE -- 1.5% 18,200 International Business Machines Corp. .. 2,165,974 2,128,672 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 3.4% 128,700 EMC Corp.+ ............................. 1,972,961 1,539,252 43,400 Microsoft Corp. ........................ 1,260,278 1,158,346 113,680 Oracle Corp.+ .......................... 1,840,562 2,308,841 ------------ ------------ 5,073,801 5,006,439 ------------ ------------ CONSUMER PRODUCTS -- 4.8% 30,900 Colgate-Palmolive Co. .................. 1,999,742 2,328,315 36,700 NIKE Inc., Cl. B ....................... 2,114,347 2,455,230 47,420 Philip Morris International Inc. ....... 2,301,680 2,280,902 ------------ ------------ 6,415,769 7,064,447 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 2.3% 49,300 General Electric Co. ................... 1,494,635 1,257,150 37,090 ITT Corp. .............................. 1,951,941 2,062,575 ------------ ------------ 3,446,576 3,319,725 ------------ ------------ ELECTRONICS -- 0.7% 26,800 Emerson Electric Co. ................... 1,268,054 1,093,172 ------------ ------------ ENERGY: INTEGRATED -- 1.6% 56,300 Dominion Resources Inc. ................ 2,407,318 2,408,514 ------------ ------------ ENERGY: NATURAL GAS -- 2.2% 10,555 Apache Corp. ........................... 759,770 1,100,675 44,900 XTO Energy Inc. ........................ 2,745,996 2,088,748 ------------ ------------ 3,505,766 3,189,423 ------------ ------------ ENERGY: OIL -- 5.4% 30,800 ConocoPhillips ......................... 1,996,590 2,256,100 29,800 Exxon Mobil Corp. ...................... 1,452,355 2,314,268 17,086 Murphy Oil Corp. ....................... 963,019 1,095,896 32,200 Occidental Petroleum Corp. ............. 1,823,866 2,268,490 ------------ ------------ 6,235,830 7,934,754 ------------ ------------ ENERGY: SERVICES -- 0.7% 9,900 Transocean Inc.+ ....................... 1,172,887 1,087,416 ------------ ------------ ENTERTAINMENT -- 1.5% 72,100 The Walt Disney Co. .................... 2,539,328 2,212,749 ------------ ------------ FINANCIAL SERVICES -- 7.6% 41,200 ACE Ltd. ............................... 2,381,517 2,230,156 25,100 Franklin Resources Inc. ................ 2,402,676 2,212,063 41,200 MetLife Inc. ........................... 2,487,568 2,307,200 29,800 PNC Financial Services Group Inc. ...... 2,196,765 2,226,060 38,800 State Street Corp. ..................... 2,543,933 2,206,944 ------------ ------------ 12,012,459 11,182,423 ------------ ------------ MARKET SHARES COST VALUE - ----------- ------------ ------------ FOOD AND BEVERAGE -- 1.6% 34,100 General Mills Inc. ..................... $ 1,962,775 $ 2,343,352 ------------ ------------ HEALTH CARE -- 4.7% 43,000 Covidien Ltd. .......................... 2,216,497 2,311,680 33,400 Johnson & Johnson ...................... 2,215,058 2,313,952 61,700 Wyeth .................................. 2,642,857 2,279,198 ------------ ------------ 7,074,412 6,904,830 ------------ ------------ METALS AND MINING -- 1.4% 35,235 Freeport-McMoRan Copper & Gold Inc. .... 2,774,113 2,003,110 ------------ ------------ MUTUAL FUNDS -- 3.1% 4,602,740 Dreyfus Treasury Cash Management Fund .. 4,602,740 4,602,740 ------------ ------------ RETAIL -- 1.6% 68,300 CVS Caremark Corp. ..................... 2,175,144 2,298,978 ------------ ------------ TELECOMMUNICATIONS -- 3.1% 80,100 AT&T Inc. .............................. 2,787,442 2,236,392 73,818 Verizon Communications Inc. ............ 2,484,794 2,368,820 ------------ ------------ 5,272,236 4,605,212 ------------ ------------ UTILITIES -- 3.2% 37,200 Exelon Corp. ........................... 2,205,874 2,329,464 63,200 PG&E Corp. ............................. 2,490,546 2,366,840 ------------ ------------ 4,696,420 4,696,304 ------------ ------------ TOTAL COMMON STOCKS .................... 93,272,720 93,246,032 ------------ ------------ PRINCIPAL AMOUNT - ----------- CORPORATE BONDS -- 9.8% BANKING -- 1.5% $ 1,250,000 Bank of America Corp., 5.375%, 06/15/14 .................... 1,287,817 1,157,109 1,125,000 Citigroup Inc., 6.500%, 01/18/11 .................... 1,177,110 1,091,598 ------------ ------------ 2,464,927 2,248,707 ------------ ------------ COMPUTER HARDWARE -- 0.6% 950,000 International Business Machines Corp., 5.700%, 09/14/17 .................... 966,850 921,830 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 0.5% 750,000 Oracle Corp., 4.950%, 04/15/13 .................... 750,384 748,330 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 0.7% 1,200,000 General Electric Co., 5.000%, 02/01/13 .................... 1,208,634 1,106,269 ------------ ------------ ELECTRONICS -- 0.5% 750,000 Koninklijke Philips Electronics NV, 4.625%, 03/11/13 .................... 747,381 731,600 ------------ ------------ ENERGY: NATURAL GAS -- 0.7% 1,000,000 Apache Corp., 5.250%, 04/15/13 .................... 999,902 972,323 ------------ ------------ ENERGY: OIL -- 1.7% 1,000,000 Anadarko Petroleum Corp., 3.219%, 09/15/09 (a) ................ 1,000,000 988,453 500,000 Marathon Oil Corp., 5.900%, 03/15/18 .................... 502,775 444,793 1,005,000 Occidental Petroleum Corp., MTN, 4.250%, 03/15/10 .................... 1,005,854 1,013,964 ------------ ------------ 2,508,629 2,447,210 ------------ ------------ See accompanying notes to financial statements. 20 GAMCO WESTWOOD BALANCED FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2008 PRINCIPAL MARKET AMOUNT COST VALUE - ----------- ------------ ------------ CORPORATE BONDS (CONTINUED) FINANCIAL SERVICES -- 1.4% $ 750,000 ACE INA Holdings Inc., 5.600%, 05/15/15 .................... $ 747,472 $ 710,651 1,450,00 The Goldman Sachs Group Inc., 6.650%, 05/15/09 .................... 1,451,648 1,420,924 ------------ ------------ 2,199,120 2,131,575 ------------ ------------ FOOD AND BEVERAGE -- 0.6% 950,000 Anheuser-Busch Companies Inc., 4.375%, 01/15/13 .................... 940,898 890,492 ------------ ------------ RETAIL -- 0.9% 1,250,00 Wal-Mart Stores Inc., 6.875%, 08/10/09 .................... 1,263,369 1,284,097 ------------ ------------ TRANSPORTATION -- 0.7% 1,000,00 Burlington Northern Santa Fe Corp., Deb., 5.650%, 05/01/17 .................... 983,603 959,607 ------------ ------------ TOTAL CORPORATE BONDS .................. 15,033,697 14,442,040 ------------ ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS -- 15.9% FEDERAL HOME LOAN BANK -- 1.0% 1,500,00 4.625%, 11/21/08 .................... 1,499,061 1,503,173 ------------ ------------ FEDERAL HOME LOAN MORTGAGE CORP. -- 6.5% 1,500,00 4.250%, 07/15/09 .................... 1,492,196 1,512,692 1,500,00 4.125%, 11/30/09 .................... 1,519,630 1,516,789 1,500,00 4.750%, 12/08/10 .................... 1,493,129 1,545,603 1,250,00 5.125%, 07/15/12 .................... 1,240,896 1,308,681 2,000,00 5.000%, 07/15/14 .................... 2,040,370 2,082,910 1,500,00 5.250%, 04/18/16 .................... 1,480,683 1,567,992 ------------ ------------ 9,266,904 9,534,667 ------------ ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 8.4% 1,500,00 2.081%++, 10/22/08 .................. 1,498,198 1,499,584 1,250,00 2.544%++, 12/08/08 .................. 1,244,050 1,244,050 1,250,00 3.250%, 02/15/09 .................... 1,245,006 1,250,146 1,600,00 4.250%, 05/15/09 .................... 1,592,300 1,609,131 1,250,00 2.500%, 04/09/10 .................... 1,252,930 1,238,159 1,500,00 4.250%, 08/15/10 .................... 1,472,743 1,531,293 1,500,00 5.375%, 11/15/11 .................... 1,507,010 1,586,337 1,500,00 5.000%, 04/15/15 .................... 1,555,908 1,553,589 775,000 5.375%, 06/12/17 .................... 843,969 813,977 ------------ ------------ 12,212,114 12,326,266 ------------ ------------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS ......................... 22,978,079 23,364,106 ------------ ------------ PRINCIPAL MARKET AMOUNT COST VALUE - ----------- ------------ ------------ U.S. GOVERNMENT OBLIGATIONS -- 10.2% U.S. TREASURY BILLS -- 1.0% $ 1,500,000 U.S. Treasury Bill, 1.480%++, 10/09/08 .................. $ 1,499,510 $ 1,499,936 ------------ ------------ U.S. TREASURY INFLATION INDEXED NOTES -- 1.2% 1,500,000 0.875%, 04/15/10 .................... 1,750,320 1,711,135 ------------ ------------ U.S. TREASURY NOTES -- 8.0% 2,000,000 3.375%, 12/15/08 .................... 1,996,644 2,011,252 1,250,000 4.000%, 06/15/09 .................... 1,264,951 1,269,727 1,500,000 2.625%, 05/31/10 .................... 1,501,183 1,517,227 1,500,000 3.375%, 11/30/12 .................... 1,496,935 1,536,564 1,500,000 4.000%, 02/15/15 .................... 1,474,265 1,575,704 2,000,000 4.250%, 08/15/15 .................... 1,995,676 2,114,844 1,500,000 5.125%, 05/15/16 .................... 1,508,710 1,651,173 ------------ ------------ 11,238,364 11,676,491 ------------ ------------ TOTAL U.S. GOVERNMENT OBLIGATIONS ...... 14,488,194 14,887,562 ------------ ------------ TOTAL INVESTMENTS -- 99.4% ............. $145,772,690 145,939,740 ============ OTHER ASSETS AND LIABILITIES (NET) -- 0.6% ................................ 877,748 ------------ NET ASSETS -- 100.0% ................... $146,817,488 ============ - ---------- (a) Floating rate security. The rate disclosed is that in effect at September 30, 2008. + Non-income producing security. ++ Represents annualized yield at date of purchase. MTN Medium Term Note See accompanying notes to financial statements. 21 GAMCO WESTWOOD INTERMEDIATE BOND FUND SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------ COMMON STOCKS -- 13.2% MUTUAL FUNDS -- 13.2% 1,511,583 Dreyfus Treasury Cash Management Fund .................... $ 1,511,583 $ 1,511,583 ------------ ------------ TOTAL COMMON STOCKS ................... 1,511,583 1,511,583 ------------ ------------ PRINCIPAL AMOUNT - ----------- CORPORATE BONDS -- 34.3% BANKING -- 4.3% $ 300,000 Bank of America Corp., 5.375%, 06/15/14 ................... 309,076 277,706 225,000 Citigroup Inc., 6.500%, 01/18/11 ................... 235,262 218,320 ------------ ------------ 544,338 496,026 ------------ ------------ COMPUTER HARDWARE -- 1.7% 200,000 International Business Machines Corp., 5.700%, 09/14/17 ................... 203,548 194,069 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 1.3% 150,000 Oracle Corp., 4.950%, 04/15/13 ................... 149,952 149,666 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 2.0% 250,000 General Electric Co., 5.000%, 02/01/13 ................... 251,799 230,473 ------------ ------------ ELECTRONICS -- 1.7% 200,000 Koninklijke Philips Electronics NV, 4.625%, 03/11/13 ................... 199,307 195,093 ------------ ------------ ENERGY AND UTILITIES: NATURAL GAS -- 1.7% 200,000 Apache Corp., 5.250%, 04/15/13 ................... 199,610 194,465 ------------ ------------ ENERGY AND UTILITIES: OIL -- 4.7% 200,000 Anadarko Petroleum Corp., 3.219%, 09/15/09 (a) ............... 200,000 197,691 125,000 Marathon Oil Corp., 5.900%, 03/15/18 ................... 125,694 111,198 225,000 Occidental Petroleum Corp., MTN, 4.250%, 03/15/10 ................... 225,000 227,007 ------------ ------------ 550,694 535,896 ------------ ------------ FINANCIAL SERVICES -- 10.4% 175,000 ACE INA Holdings Inc., 5.600%, 05/15/15 ................... 174,410 165,819 200,000 American Express Credit Corp., MTN, 2.648%, 06/16/11 (a) ............... 200,000 175,002 260,000 International Bank for Reconstruction & Development, 8.625%, 10/15/16 ................... 307,936 329,248 275,000 Merrill Lynch & Co. Inc., MTN, Series C, 5.000%, 01/15/15 ................... 275,190 225,300 300,000 The Goldman Sachs Group Inc., 6.650%, 05/15/09 ................... 301,589 293,984 ------------ ------------ 1,259,125 1,189,353 ------------ ------------ FOOD AND BEVERAGE -- 2.0% 250,000 Anheuser-Busch Companies Inc., 4.375%, 01/15/13 ................... 247,611 234,340 ------------ ------------ RETAIL -- 1.8% 200,000 Wal-Mart Stores Inc., 6.875%, 08/10/09 ................... 202,139 205,456 ------------ ------------ TRANSPORTATION -- 2.7% 200,000 Burlington Northern Santa Fe Corp., Deb., 5.650%, 05/01/17 ................... 199,118 191,921 125,000 CSX Corp., 6.250%, 04/01/15 ................... 124,934 119,236 ------------ ------------ 324,052 311,157 ------------ ------------ TOTAL CORPORATE BONDS ................. 4,132,175 3,935,994 ------------ ------------ PRINCIPAL MARKET AMOUNT COST VALUE - ----------- ------------ ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS -- 33.4% FEDERAL HOME LOAN BANK -- 3.8% $ 175,000 3.875%, 01/15/10 ................... $ 172,534 $ 176,458 250,000 5.375%, 05/18/16 ................... 251,336 262,001 ------------ ------------ 423,870 438,459 ------------ ------------ FEDERAL HOME LOAN MORTGAGE CORP. -- 2.3% 250,000 5.125%, 07/15/12 ................... 261,060 261,736 ------------ ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 21.7% 250,000 2.081%++, 10/22/08 ................. 249,700 249,931 250,000 2.544%++, 12/08/08 ................. 248,810 248,831 250,000 4.250%, 05/15/09 ................... 249,441 251,427 300,000 2.500%, 04/09/10 ................... 300,703 297,158 250,000 4.250%, 08/15/10 ................... 248,407 255,216 350,000 5.375%, 11/15/11 ................... 363,443 370,145 300,000 5.000%, 04/15/15 ................... 312,830 310,718 275,000 5.375%, 06/12/17 ................... 299,473 288,831 111,916 Pool #745122, 5.500%, 09/01/20 ................ 111,675 113,456 115,986 Pool #255554, 5.500%, 01/01/35 ................ 117,702 115,915 ------------ ------------ 2,502,184 2,501,628 ------------ ------------ GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 5.6% 68,597 Pool #562288, 6.000%, 12/15/33 ................... 69,850 69,854 120,942 Pool #604946, 5.500%, 01/15/34 ................... 122,588 121,362 105,333 Pool #604970, 5.500%, 01/15/34 ................... 106,469 105,699 147,889 Pool #003747, 5.000%, 08/20/35 ................... 146,583 144,571 199,634 Pool #550728, 5.500%, 11/15/35 ................... 200,023 200,235 ------------ ------------ 645,513 641,721 ------------ ------------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS ........................ 3,832,627 3,843,544 ------------ ------------ U.S. GOVERNMENT OBLIGATIONS -- 23.6% U.S. TREASURY BILLS -- 1.5% 175,000 U.S. Treasury Bill, 1.480%++, 10/09/08 ................. 174,943 174,992 ------------ ------------ U.S. TREASURY BONDS -- 7.5% 250,000 7.125%, 02/15/23 ................... 303,467 322,696 300,000 6.125%, 11/15/27 ................... 308,292 365,297 150,000 5.375%, 02/15/31 ................... 168,575 170,496 ------------ ------------ 780,334 858,489 ------------ ------------ U.S. TREASURY INFLATION INDEXED NOTES -- 2.7% 275,000 0.875%, 04/15/10 ................... 320,980 313,708 ------------ ------------ U.S. TREASURY NOTES -- 11.9% 200,000 4.000%, 06/15/09 ................... 202,392 203,156 300,000 2.000%, 09/30/10 ................... 300,446 300,188 300,000 4.250%, 08/15/15 ................... 298,781 317,227 250,000 5.125%, 05/15/16 ................... 254,978 275,195 275,000 3.500%, 02/15/18 ................... 275,418 269,758 ------------ ------------ 1,332,015 1,365,524 ------------ ------------ TOTAL U.S. GOVERNMENT OBLIGATIONS ..... 2,608,272 2,712,713 ------------ ------------ TOTAL INVESTMENTS -- 104.5% .............. $ 12,084,657 12,003,834 ============ OTHER ASSETS AND LIABILITIES (NET) -- (4.5)% .......................... (516,027) ------------ NET ASSETS -- 100.0% .................. $ 11,487,807 ============ - ---------- (a) Floating rate security. The rate disclosed is that in effect at September 30, 2008. ++ Represents annualized yield at date of purchase. MTN Medium Term Note See accompanying notes to financial statements. 22 GAMCO WESTWOOD SMALLCAP EQUITY FUND SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------ COMMON STOCKS -- 99.5% AEROSPACE -- 1.8% 2,400 AAR Corp.+ ............................ $ 37,301 $ 39,816 3,400 Hexcel Corp.+ ......................... 61,677 46,546 1,699 Kaman Corp. ........................... 41,548 48,388 2,050 Ladish Co. Inc.+ ...................... 46,518 41,512 ------------ ------------ 187,044 176,262 ------------ ------------ AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.8% 1,150 Gentex Corp. .......................... 16,688 16,445 3,200 Midas Inc.+ ........................... 54,881 44,032 1,300 Modine Manufacturing Co. .............. 17,463 18,824 ------------ ------------ 89,032 79,301 ------------ ------------ AVIATION: PARTS AND SERVICES -- 0.3% 1,050 Ducommun Inc. ......................... 27,947 25,074 ------------ ------------ BUILDING AND CONSTRUCTION -- 0.6% 1,050 Chicago Bridge & Iron Co., NV ......... 32,157 20,202 2,500 Insituform Technologies Inc., Cl. A+ .. 36,251 37,400 ------------ ------------ 68,408 57,602 ------------ ------------ BUSINESS SERVICES -- 3.5% 350 Ascent Media Corp., Cl. A+ ............ 8,665 8,543 4,350 Bowne & Co. Inc. ...................... 51,160 50,243 7,043 Edgewater Technology Inc.+ ............ 47,384 34,229 3,631 Federal Signal Corp. .................. 43,889 49,745 3,300 Healthcare Services Group ............. 55,411 60,357 600 Mine Safety Appliances Co. ............ 19,332 22,872 3,200 RSC Holdings Inc.+ .................... 30,824 36,352 1,600 Tetra Tech Inc.+ ...................... 33,948 38,496 1,950 United Rentals Inc.+ .................. 36,248 29,718 ------------ ------------ 326,861 330,555 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 1.3% 2,350 ADC Telecommunications Inc.+ .......... 28,072 19,857 2,700 Network Equipment Technologies Inc.+ .. 9,405 9,234 1,700 Plantronics Inc. ...................... 37,482 38,284 8,600 Symmetricom Inc.+ ..................... 35,593 42,742 1,150 Tekelec+ .............................. 16,613 16,089 ------------ ------------ 127,165 126,206 ------------ ------------ COMPUTER HARDWARE -- 0.8% 2,400 Electronics for Imaging Inc.+ ......... 35,161 33,432 3,150 QLogic Corp.+ ......................... 46,873 48,384 ------------ ------------ 82,034 81,816 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 6.1% 2,050 ACI Worldwide Inc.+ ................... 34,884 35,916 10,750 Lawson Software Inc.+ ................. 90,635 75,250 4,350 Macrovision Solutions Corp.+ .......... 69,740 66,903 5,700 Magma Design Automation Inc.+ ......... 35,620 22,914 5,850 Mercury Computer Systems Inc.+ ........ 45,195 52,065 3,850 MSC.Software Corp.+ ................... 44,503 41,195 3,400 Omnicell Inc.+ ........................ 45,837 44,710 3,500 Parametric Technology Corp.+ .......... 61,557 64,400 1,500 Phoenix Technologies Ltd.+ ............ 17,318 11,985 8,600 Saba Software Inc.+ ................... 26,510 27,864 28,500 Safeguard Scientifics Inc.+ ........... 36,466 35,625 4,150 THQ Inc.+ ............................. 76,685 49,966 7,567 Tier Technologies Inc., Cl. B+ ........ 69,984 56,223 ------------ ------------ 654,934 585,016 ------------ ------------ MARKET SHARES COST VALUE - ----------- ------------ ------------ CONSUMER PRODUCTS -- 3.7% 1,050 Alberto-Culver Co. .................... $ 24,658 $ 28,602 2,000 American Greetings Corp., Cl. A ....... 30,861 30,580 2,400 Callaway Golf Co. ..................... 27,911 33,768 1,400 Jarden Corp.+ ......................... 26,156 32,830 2,050 Kenneth Cole Productions Inc., Cl. A .. 28,123 30,135 2,700 Knoll Inc. ............................ 36,760 40,824 2,300 Pactiv Corp.+ ......................... 49,727 57,109 4,650 Quiksilver Inc.+ ...................... 43,528 26,691 4,100 Sealy Corp. ........................... 27,072 26,486 1,061 Steinway Musical Instruments Inc.+ .... 29,886 30,048 1,050 Timberland Co., Cl. A+ ................ 15,984 18,239 ------------ ------------ 340,666 355,312 ------------ ------------ CONSUMER SERVICES -- 0.2% 750 Sotheby's ............................. 19,972 15,045 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 4.4% 2,756 Barnes Group Inc. ..................... 73,428 55,726 1,860 Columbus McKinnon Corp.+ .............. 47,224 43,840 8,789 Griffon Corp.+ ........................ 78,362 79,275 1,400 Hawk Corp., Cl. A+ .................... 20,110 28,182 1,950 Littelfuse Inc.+ ...................... 60,900 57,973 6,223 Magnetek Inc.+ ........................ 28,007 25,203 2,650 Sealed Air Corp. ...................... 55,103 58,274 800 Standex International Corp. ........... 16,097 22,200 3,050 Tredegar Corp. ........................ 43,094 54,260 ------------ ------------ 422,325 424,933 ------------ ------------ EDUCATIONAL SERVICES -- 1.3% 3,650 Corinthian Colleges Inc.+ ............. 45,463 54,750 8,350 Princeton Review Inc.+ ................ 53,162 66,800 ------------ ------------ 98,625 121,550 ------------ ------------ ELECTRONICS -- 14.6% 4,150 Avnet Inc.+ ........................... 110,843 102,214 7,200 Bell Microproducts Inc.+ .............. 17,460 12,960 2,000 BTU International Inc.+ ............... 21,089 17,600 1,450 Coherent Inc.+ ........................ 45,109 51,547 4,350 CTS Corp. ............................. 45,638 55,593 3,150 Electro Scientific Industries Inc.+ ... 48,617 44,793 1,400 FARO Technologies Inc.+ ............... 34,061 28,518 17,200 GSI Group Inc.+ ....................... 90,751 60,716 4,050 International Rectifier Corp.+ ........ 70,093 77,031 4,500 Keithley Instruments Inc. ............. 43,830 37,665 9,177 LeCroy Corp.+ ......................... 85,698 70,571 15,700 Merix Corp.+ .......................... 36,225 20,096 1,300 MKS Instruments Inc.+ ................. 28,850 25,883 5,350 Molex Inc. ............................ 123,338 120,107 2,250 Orbotech Ltd.+ ........................ 26,246 17,978 1,600 OSI Systems Inc.+ ..................... 39,544 37,616 1,750 Park Electrochemical Corp. ............ 42,126 42,420 1,300 Pericom Semiconductor Corp.+ .......... 18,429 13,650 5,900 Radisys Corp.+ ........................ 55,368 50,740 7,300 Smart Modular Technologies WWH Inc.+ .. 28,777 21,900 5,800 TTM Technologies Inc.+ ................ 68,168 57,536 1,350 Varian Inc.+ .......................... 60,183 57,915 3,100 Varian Semiconductor Equipment Associates Inc.+ ................... 86,770 77,872 18,000 Vishay Intertechnology Inc.+ .......... 147,518 119,160 3,000 Zebra Technologies Corp., Cl. A+ ...... 95,832 83,550 11,350 Zoran Corp.+ .......................... 107,940 92,616 ------------ ------------ 1,578,503 1,398,247 ------------ ------------ See accompanying notes to financial statements. 23 GAMCO WESTWOOD SMALLCAP EQUITY FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------- COMMON STOCKS (CONTINUED) ENERGY AND UTILITIES -- 1.1% 2,600 Allis-Chalmers Energy Inc.+ ........... $ 38,450 $ 32,890 2,400 Key Energy Services Inc.+ ............. 40,665 27,840 1,600 Superior Well Services Inc.+ .......... 47,608 40,496 ------------ ------------- 126,723 101,226 ------------ ------------- EQUIPMENT AND SUPPLIES -- 4.8% 1,600 Cohu Inc. ............................. 25,048 25,312 4,950 Gerber Scientific Inc.+ ............... 55,085 45,243 1,800 IDEX Corp. ............................ 61,693 55,836 3,450 Tennant Co. ........................... 140,657 118,197 2,400 The Greenbrier Cos. Inc. .............. 44,827 46,824 2,954 The Toro Co. .......................... 122,892 122,000 1,750 Thermadyne Holdings Corp.+ ............ 27,000 29,173 1,750 Vicor Corp. ........................... 17,181 15,540 ------------ ------------- 494,383 458,125 ------------ ------------- FINANCIAL SERVICES -- 17.6% 1,750 Aspen Insurance Holdings Ltd. ......... 41,030 48,125 6,300 Astoria Financial Corp. ............... 138,820 130,599 8,450 Brown & Brown Inc. .................... 149,715 182,689 1,200 Cowen Group Inc.+ ..................... 9,663 10,260 1,750 Danvers Bancorp Inc. .................. 20,319 22,312 2,950 Epoch Holding Corp. ................... 27,816 31,122 6,850 FBR Capital Markets Corp.+ ............ 35,763 44,388 5,074 First Horizon National Corp. .......... 43,686 47,497 7,200 Fulton Financial Corp. ................ 68,324 78,552 3,400 Investors Bancorp Inc.+ ............... 48,529 51,170 2,850 KBW Inc.+ ............................. 62,302 93,879 3,250 Knight Capital Group Inc., Cl. A+ ..... 54,280 48,295 2,550 Max Capital Group Ltd. ................ 55,512 59,237 11,350 Meadowbrook Insurance Group Inc. ...... 63,124 80,131 2,950 NewAlliance Bancshares Inc. ........... 36,638 44,339 1,150 Northfield Bancorp Inc.+ .............. 14,858 13,926 2,150 OneBeacon Insurance Group Ltd. ........ 35,530 45,473 2,700 Oritani Financial Corp.+ .............. 43,633 45,495 3,850 Provident Financial Services Inc. ..... 57,449 63,563 3,900 Sterling Bancorp. ..................... 45,689 56,394 3,050 TCF Financial Corp. ................... 52,658 54,900 2,900 Texas Capital Bancshares Inc.+ ........ 49,581 60,204 5,800 The Colonial Bancgroup Inc. ........... 33,573 45,588 2,250 Valley National Bancorp ............... 41,858 47,160 2,300 Viewpoint Financial Group ............. 34,953 40,250 7,900 Webster Financial Corp. ............... 151,087 199,475 3,750 Westfield Financial Inc. .............. 35,041 38,625 ------------ ------------- 1,451,431 1,683,648 ------------ ------------- FOOD AND BEVERAGE -- 1.4% 950 J & J Snack Foods Corp. ............... 32,488 32,215 5,200 Smart Balance Inc.+ ................... 31,915 34,112 4,700 The Cheesecake Factory Inc.+ .......... 74,463 68,714 ------------ ------------- 138,866 135,041 ------------ ------------- HEALTH CARE -- 5.1% 1,050 Advanced Medical Optics Inc.+ ......... 20,132 18,669 1,050 AMN Healthcare Services Inc.+ ......... 18,118 18,448 3,200 AngioDynamics Inc.+ ................... 44,487 50,560 5,000 Assisted Living Concepts Inc., Cl. A+ ............................. 28,102 31,850 MARKET SHARES COST VALUE - ----------- ------------ ------------- 450 Greatbatch Inc.+. ..................... $ 10,768 $ 11,043 3,900 Home Diagnostics Inc.+ ................ 30,526 37,752 2,300 K-V Pharmaceutical Co., Cl. A+ ........ 62,100 52,233 950 Kindred Healthcare Inc.+ .............. 28,157 26,191 1,150 Omnicare Inc. ......................... 32,395 33,086 1,500 PharMerica Corp.+ ..................... 33,426 33,735 3,775 Rochester Medical Corp.+ .............. 45,108 50,057 2,600 Skilled Healthcare Group Inc., Cl. A+ ............................. 35,713 41,314 1,500 SonoSite Inc.+ . ...................... 42,657 47,100 1,800 Sun Healthcare Group Inc.+ ............ 31,371 26,388 800 Syneron Medical Ltd.+ ................. 11,215 11,400 ------------ ------------- 474,275 489,826 ------------ ------------- HOTELS AND GAMING -- 0.3% 1,050 Orient-Express Hotels Ltd., Cl. A ..... 46,444 25,337 ------------ ------------- MACHINERY -- 4.3% 1,050 Altra Holdings Inc.+ .................. 16,992 15,498 1,150 Dynamic Materials Corp. ............... 33,061 26,691 11,550 Flow International Corp.+ ............. 81,736 58,674 950 Gardner Denver Inc.+ .................. 45,681 32,984 2,050 Lydall Inc.+ .......................... 28,559 19,741 3,400 Mueller Water Products Inc., Cl. A .... 27,028 30,532 6,100 Newport Corp.+ ........................ 72,398 65,758 1,300 NN Inc. ............................... 17,739 16,705 800 Sauer-Danfoss Inc. .................... 23,600 19,752 7,200 TriMas Corp.+ ......................... 44,028 47,232 1,900 Trinity Industries Inc. ............... 60,510 48,887 1,050 Watts Water Technologies Inc., Cl. A .. 25,534 28,718 ------------ ------------- 476,866 411,172 ------------ ------------- MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.9% 8,800 Monaco Coach Corp. .................... 24,734 17,160 5,050 Winnebago Industries Inc. ............. 55,245 65,246 ------------ ------------- 79,979 82,406 ------------ ------------- METALS AND MINING -- 0.6% 1,550 Commercial Metals Co. ................. 48,476 26,179 2,650 Titanium Metals Corp. ................. 31,417 30,051 ------------ ------------- 79,893 56,230 ------------ ------------- PUBLISHING -- 1.0% 2,700 Belo Corp., Cl. A. .................... 18,150 16,092 3,900 Journal Communications Inc., Cl. A .... 18,539 19,032 2,200 Meredith Corp. 60,750 61,688 ------------ ------------- 97,439 96,812 ------------ ------------- RESTAURANTS -- 0.3% 5,200 Morton's Restaurant Group Inc.+ ....... 33,000 26,364 ------------ ------------- RETAIL -- 4.0% 4,100 American Eagle Outfitters Inc. ........ 57,681 62,525 1,950 AnnTaylor Stores Corp.+ ............... 47,101 40,248 5,150 Coldwater Creek Inc.+ ................. 27,842 29,818 5,300 J. Crew Group Inc.+ ................... 161,923 151,421 6,150 Saks Inc.+ ............................ 62,186 56,888 450 Tractor Supply Co.+ ................... 15,015 18,923 950 Zale Corp.+ ........................... 17,431 23,750 ------------ ------------- 389,179 383,573 ------------ ------------- SEMICONDUCTORS -- 12.0% 14,200 Advanced Analogic Technologies Inc.+ .. 65,396 66,030 7,300 ATMI Inc.+ ............................ 178,350 131,254 6,150 AXT Inc.+ ............................. 27,207 11,562 See accompanying notes to financial statements. 24 GAMCO WESTWOOD SMALLCAP EQUITY FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------- COMMON STOCKS (CONTINUED) SEMICONDUCTORS (CONTINUED) 5,150 Brooks Automation Inc.+ ............... $ 43,887 $ 43,054 2,850 California Micro Devices Corp.+ ....... 8,835 8,521 6,700 Cascade Microtech Inc.+ ............... 42,557 28,341 19,900 Entegris Inc.+ ........................ 124,491 96,316 8,000 FormFactor Inc.+ ...................... 148,499 139,360 6,700 FSI International Inc.+ ............... 9,055 4,958 9,550 Integrated Device Technology Inc.+ .... 93,033 74,299 9,400 Kulicke & Soffa Industries Inc.+ ...... 56,647 42,394 15,650 Lattice Semiconductor Corp.+ .......... 43,665 32,239 8,700 Mattson Technology Inc.+ .............. 42,369 41,151 1,750 Microsemi Corp.+ ...................... 41,075 44,590 4,700 MoSys Inc.+ ........................... 21,427 19,928 5,850 O2Micro International Ltd.+ ........... 29,532 21,236 11,350 ON Semiconductor Corp.+ ............... 90,874 76,726 6,950 PLX Technology Inc.+ .................. 45,126 35,584 15,000 RF Micro Devices Inc.+ ................ 43,526 43,800 4,100 Silicon Image Inc.+ ................... 27,055 21,894 950 Silicon Laboratories Inc.+ ............ 32,425 29,165 5,050 Ultra Clean Holdings+ ................. 35,636 25,452 4,750 Veeco Instruments Inc.+ ............... 72,711 70,348 2,400 Verigy Ltd.+ .......................... 54,228 39,072 ------------ ------------- 1,377,606 1,147,274 ------------ ------------- MARKET SHARES COST VALUE - ----------- ------------ ------------- SPECIALTY CHEMICALS -- 6.2% 4,000 American Vanguard Corp. ............... $ 43,474 $ 60,320 2,100 Arch Chemicals Inc. ................... 69,244 74,130 6,769 Ferro Corp. ........................... 124,792 136,057 5,275 H.B. Fuller Co. ....................... 142,191 110,089 4,650 Material Sciences Corp.+ .............. 36,596 26,737 1,750 Olin Corp. ............................ 45,477 33,950 3,850 Penford Corp. ......................... 54,843 68,106 2,200 Valspar Corp. ......................... 46,436 49,038 1,750 Zep Inc. .............................. 26,068 30,870 ------------ ------------- 589,121 589,297 ------------ ------------- TELECOMMUNICATIONS -- 0.2% 4,100 HickoryTech Corp. ..................... 39,234 23,821 ------------ ------------- TRANSPORTATION -- 0.3% 2,250 YRC Worldwide Inc.+ ................... 36,323 26,910 ------------ ------------- TOTAL COMMON STOCKS ................... 9,954,278 9,513,981 ------------ ------------- TOTAL INVESTMENTS -- 99.5% $ 9,954,278 9,513,981 ============ OTHER ASSETS AND LIABILITIES (NET) -- 0.5% ...................... 45,800 ------------- NET ASSETS -- 100.0% .................. $ 9,559,781 ============= - ---------- + Non-income producing security. See accompanying notes to financial statements. 25 GAMCO WESTWOOD INCOME FUND SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 MARKET SHARES COST VALUE - ----------- ------------ ------------- COMMON STOCKS -- 80.5% BANKING -- 14.3% 9,000 Bank of America Corp. ................. $ 444,292 $ 315,000 7,000 Citigroup Inc. ........................ 194,671 143,570 3,000 HSBC Holdings plc, ADR ................ 274,455 242,490 9,000 U.S. Bancorp .......................... 297,267 324,180 4,150 Valley National Bancorp ............... 89,044 86,984 ------------ ------------- 1,299,729 1,112,224 ------------ ------------- BUSINESS SERVICES -- 4.1% 6,000 Deluxe Corp. .......................... 131,449 86,340 7,000 Paychex Inc. .......................... 307,178 231,210 ------------ ------------- 438,627 317,550 ------------ ------------- DIVERSIFIED INDUSTRIAL -- 3.5% 9,000 General Electric Co. .................. 327,575 229,500 1,000 Honeywell International Inc. .......... 42,208 41,550 ------------ ------------- 369,783 271,050 ------------ ------------- ELECTRONICS -- 1.9% 8,000 Intel Corp. ........................... 188,828 149,840 ------------ ------------- ENERGY AND UTILITIES: INTEGRATED -- 9.0% 1,000 BP plc, ADR ........................... 75,428 50,170 4,000 Integrys Energy Group Inc. ............ 203,201 199,760 9,000 National Oilwell Varco Inc.+ .......... 491,549 452,070 ------------ ------------- 770,178 702,000 ------------ ------------- ENERGY AND UTILITIES: NATURAL GAS -- 2.6% 8,500 Spectra Energy Corp. .................. 221,225 202,300 ------------ ------------- ENERGY AND UTILITIES: OIL -- 5.0% 2,000 Chevron Corp. ......................... 169,778 164,960 3,000 ConocoPhillips ........................ 240,082 219,750 ------------ ------------- 409,860 384,710 ------------ ------------- ENERGY AND UTILITIES: SERVICES -- 3.1% 6,000 Halliburton Co. ....................... 214,955 194,340 1,000 Noble Corp. ........................... 49,008 43,900 ------------ ------------- 263,963 238,240 ------------ ------------- FINANCIAL SERVICES -- 8.6% 1,000 American International Group Inc. ......................... 38,000 3,330 5,000 Discover Financial Services ........... 77,374 69,100 9,000 H&R Block Inc. ........................ 197,560 204,750 1,500 State Street Corp. .................... 76,504 85,320 2,500 The Bank of New York Mellon Corp. ....................... 86,260 81,450 6,000 Wells Fargo & Co. ..................... 193,140 225,180 ------------ ------------- 668,838 669,130 ------------ ------------- FOOD AND BEVERAGE -- 8.9% 7,000 ConAgra Foods Inc. .................... 174,145 136,220 4,761 General Mills Inc. .................... 278,679 327,176 7,000 Kraft Foods Inc., Cl. A ............... 231,325 229,250 ------------ ------------- 684,149 692,646 ------------ ------------- HEALTH CARE -- 5.5% 15,000 Pfizer Inc. ........................... 387,232 276,600 4,000 Wyeth ................................. 201,908 147,760 ------------ ------------- 589,140 424,360 ------------ ------------- PAPER AND FOREST PRODUCTS -- 2.0% 6,000 International Paper Co. ............... 166,722 157,080 ------------ ------------- RETAIL -- 1.7% 5,000 The Home Depot Inc. ................... 198,531 129,450 ------------ ------------- MARKET SHARES COST VALUE - ----------- ------------ ------------- SPECIALTY CHEMICALS -- 2.6% 5,000 E.I. du Pont de Nemours & Co. ...................... $ 250,408 $ 201,500 ------------ ------------- TELECOMMUNICATIONS -- 7.7% 8,000 AT&T Inc. ............................. 270,305 223,360 3,000 Embarq Corp. .......................... 130,007 121,650 8,000 Verizon Communications Inc. ........... 332,998 256,720 ------------ ------------- 733,310 601,730 ------------ ------------- TOTAL COMMON STOCKS ................... 7,253,291 6,253,810 ------------ ------------- PREFERRED STOCKS -- 8.4% BROADCASTING -- 2.0% 9,000 CBS Corp., 7.250% Pfd. ................ 227,727 152,100 ------------ ------------- FINANCIAL SERVICES -- 6.4% 12,000 Bank One Capital Trust VI, 7.200% Pfd. ........................ 305,738 243,000 6,300 General Electric Capital Corp., 5.875% Pfd. ......... 154,617 125,811 5,900 Wells Fargo Capital Trust IV, 7.000% Pfd. ........................ 150,504 129,800 ------------ ------------- 610,859 498,611 ------------ ------------- TOTAL PREFERRED STOCKS ................ 838,586 650,711 ------------ ------------- CONVERTIBLE PREFERRED STOCKS -- 2.1% FINANCIAL SERVICES -- 2.1% 500 Alleghany Corp., 5.750% Cv. Pfd. .................... 139,920 166,988 ------------ ------------- PRINCIPAL AMOUNT - ----------- CORPORATE BONDS -- 6.6% ENERGY AND UTILITIES: OIL -- 3.8% $300,000 Anadarko Petroleum Corp., 3.219%, 09/15/09 (a) ............... 300,186 296,536 ------------ ------------- FINANCIAL SERVICES -- 2.8% 250,000 American Express Credit Corp., MTN, 2.648%, 06/16/11 (a) ............... 250,000 218,753 ------------ ------------- TOTAL CORPORATE BONDS ................. 550,186 515,289 ------------ ------------- U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.1% FEDERAL HOME LOAN BANK -- 7.1% 550,000 4.625%, 11/21/08 ................... 549,654 551,163 ------------ ------------- TOTAL INVESTMENTS -- 104.7% ........... $ 9,331,637 8,137,961 ============ OTHER ASSETS AND LIABILITIES (NET) -- (4.7)% .................... (364,707) ------------- NET ASSETS -- 100.0% .................. $ 7,773,254 ============= - ---------- (a) Floating rate security. The rate disclosed is that in effect at September 30, 2008. + Non-income producing security. ADR American Depositary Receipt MTN Medium Term Note See accompanying notes to financial statements. 26 GAMCO WESTWOOD FUNDS STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2008 MIGHTY EQUITY BALANCED INTERMEDIATE SMALLCAP INCOME MITES(SM) FUND FUND FUND BOND FUND EQUITY FUND FUND -------------- ------------ ------------ ------------ -------------- ----------- ASSETS: Investments, at value (cost $67,456,376, $177,477,371, $145,772,690, $12,084,657, $9,954,278, and $9,331,637, respectively) ..................... $70,523,264 $176,916,984 $145,939,740 $12,003,834 $ 9,513,981 $ 8,137,961 Cash ................................. 921,922 -- -- -- -- 76,336 Receivable for Fund shares sold ...... 818,505 349,255 933,186 6,590 97,181 190 Receivable for investments sold ...... 52,331 699,540 301,126 -- 196,841 -- Receivable from Adviser .............. -- -- -- 3,605 4,687 13,344 Dividends and interest receivable .... 165,221 323,631 760,492 121,621 5,118 25,219 Prepaid expenses ..................... 26,470 30,674 27,075 20,588 16,934 24,723 ----------- ------------ ------------ ----------- ----------- ----------- TOTAL ASSETS ......................... 72,507,713 178,320,084 147,961,619 12,156,238 9,834,742 8,277,773 ----------- ------------ ------------ ----------- ----------- ----------- LIABILITIES: Payable to custodian ................. -- -- -- -- 8,537 -- Payable for investments purchased .... 4,371,700 809,189 514,982 620,210 136,155 442,215 Payable for Fund shares redeemed ..... 305,300 2,631,943 410,402 4,455 88,590 16,168 Distributions payable ................ -- -- -- 8,705 -- -- Payable for investment advisory fees ..................... 56,744 148,797 90,724 -- -- -- Payable for distribution fees ........ 18,254 39,135 32,015 2,548 2,345 1,876 Payable for accounting fees .......... 7,501 7,503 7,503 -- -- -- Payable for legal and audit fees ..... 37,005 36,436 35,840 26,467 28,465 29,356 Payable for shareholder communications expenses .......................... 13,798 38,736 30,872 1,273 3,055 5,325 Payable for shareholder services fees ..................... 12,730 34,529 18,591 2,172 2,215 2,867 Other accrued expenses ............... 9,452 3,298 3,202 2,601 5,599 6,712 ----------- ------------ ------------ ----------- ----------- ----------- TOTAL LIABILITIES .................... 4,832,484 3,749,566 1,144,131 668,431 274,961 504,519 ----------- ------------ ------------ ----------- ----------- ----------- NET ASSETS ........................... $67,675,229 $174,570,518 $146,817,488 $11,487,807 $ 9,559,781 $ 7,773,254 =========== ============ ============ =========== =========== =========== NET ASSETS CONSIST OF: Paid-in capital, at $0.001 par value ......................... $63,178,669 $176,129,550 $146,851,649 $11,566,118 $17,085,143 $ 9,990,147 Accumulated net investment income/(loss) ..................... (1,210) 1,094,396 14,702 (1,306) -- (9,531) Accumulated net realized gain/(loss) on investments and foreign currency transactions ...................... 1,430,487 (2,093,041) (215,913) 3,791 (7,085,065) (1,013,686) Net unrealized appreciation/ (depreciation) on investments ..... 3,066,888 (560,387) 167,050 (80,823) (440,297) (1,193,676) Net unrealized appreciation on foreign currency translations ............. 395 -- -- 27 -- -- ----------- ------------ ------------ ----------- ----------- ----------- NET ASSETS ........................... $67,675,229 $174,570,518 $146,817,488 $11,487,807 $ 9,559,781 $ 7,773,254 =========== ============ ============ =========== =========== =========== SHARES OF BENEFICIAL INTEREST: CLASS AAA: Net assets ........................... $55,808,414 $167,946,068 $138,173,878 $10,497,777 $ 8,490,601 $ 7,284,702 =========== ============ ============ =========== =========== =========== Shares of beneficial interest outstanding; unlimited number of shares authorized ................. 4,162,260 18,241,069 13,194,234 968,408 708,143 928,013 =========== ============ ============ =========== =========== =========== NET ASSET VALUE, offering, and redemption price per share ........ $ 13.41 $ 9.21 $ 10.47 $ 10.84 $ 11.99 $ 7.85 =========== ============ ============ =========== =========== =========== CLASS A: Net assets ........................... $ 6,133,856 $ 5,078,450 $ 5,639,060 $ 100,797 $ 702,732 $ 51,351 =========== ============ ============ =========== =========== =========== Shares of beneficial interest outstanding; unlimited number of shares authorized .............. 462,468 557,428 536,299 9,299 59,132 6,325 =========== ============ ============ =========== =========== =========== NET ASSET VALUE and redemption price per share ......................... $ 13.26 $ 9.11(a) $ 10.51 $ 10.84 $ 11.88 $ 8.12 =========== ============ ============ =========== =========== =========== Maximum offering price per share (NAV/.96, based on maximum sales charge of 4.00% of the offering price) ................... $ 13.82 $ 9.49(a) $ 10.95 $ 11.29 $ 12.38 $ 8.46 =========== ============ ============ =========== =========== =========== CLASS B: Net assets ........................... $ 169,230 $ 12,920 $ 125,571 $ 47,868 $ 5,170 $ 86 =========== ============ ============ =========== =========== =========== Shares of beneficial interest outstanding; unlimited number of shares authorized ................. 13,397 1,443 11,841 4,417 451 10.4 =========== ============ ============ =========== =========== =========== NET ASSET VALUE and offering price per share (b) ......................... $ 12.63 $ 8.95 $ 10.60 $ 10.84 $ 11.46 $ 8.27 =========== ============ ============ =========== =========== =========== CLASS C: Net assets ........................... $ 4,671,186 $ 736,320 $ 1,388,940 $ 477,748 $ 196,265 $ 319,479 =========== ============ ============ =========== =========== =========== Shares of beneficial interest outstanding; unlimited number of shares authorized ................. 372,231 82,231 130,850 46,323 17,277 36,926 =========== ============ ============ =========== =========== =========== NET ASSET VALUE and offering price per share (b) ..................... $ 12.55 $ 8.95 $ 10.61 $ 10.31(a) $ 11.36 $ 8.65 =========== ============ ============ =========== =========== =========== CLASS I: Net assets ........................... $ 892,543 $ 796,760 $ 1,490,039 $ 363,617 $ 165,013 $ 117,636 =========== ============ ============ =========== =========== =========== Shares of beneficial interest outstanding; unlimited number of shares authorized .............. 66,405 86,314 142,430 33,522 13,753 14,980 =========== ============ ============ =========== =========== =========== NET ASSET VALUE, offering, and redemption price per share ........ $ 13.44 $ 9.23 $ 10.46 $ 10.85 $ 12.00(a) $ 7.85 =========== ============ ============ =========== =========== =========== - ---------- (a) Shareholder transactions may have been processed at a different net asset value. (b) Redemption price varies based on the length of time held. See accompanying notes to financial statements. 27 GAMCO WESTWOOD FUNDS STATEMENTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2008 MIGHTY EQUITY BALANCED INTERMEDIATE SMALLCAP INCOME MITES(SM) FUND FUND FUND BOND FUND EQUITY FUND FUND -------------- ------------ ------------ ------------ ----------- ----------- INVESTMENT INCOME: Dividends (net of foreign taxes of $4,108, $0, $0, $0, $0, and $54, respectively) .......................... $ 652,521 $ 4,198,995 $ 2,064,499 $ 1,729 $ 101,230 $ 363,047 Interest .................................. 362,081 37 2,596,313 490,403 11,685 122,729 ------------ ------------ ------------ -------- ----------- ----------- TOTAL INVESTMENT INCOME ................... 1,014,602 4,199,032 4,660,812 492,132 112,915 485,776 ------------ ------------ ------------ -------- ----------- ----------- EXPENSES: Investment advisory fees .................. 597,093 1,905,623 1,149,679 70,078 88,735 111,909 Distribution fees - Class AAA ............. 126,255 457,977 364,039 25,438 19,356 26,742 Distribution fees - Class A ............... 24,938 32,212 27,894 272 3,936 341 Distribution fees - Class B ............... 2,839 195 1,576 625 61 5 Distribution fees - Class C ............... 34,698 4,767 12,189 12,307 2,340 3,507 Accounting fees ........................... 45,000 45,000 45,000 -- -- -- Custodian fees ............................ 28,626 32,131 28,555 8,241 14,202 12,676 Interest expense .......................... 264 -- -- -- 682 4,188 Legal and audit fees ...................... 57,054 40,022 42,406 41,444 46,846 43,208 Registration expenses ..................... 35,577 66,070 38,090 30,816 30,798 39,278 Shareholder communications expenses ....... 33,117 81,325 64,792 1,176 7,697 12,188 Shareholder services fees ................. 63,882 160,212 102,318 12,525 13,240 17,540 Trustees' fees ............................ 3,270 11,070 8,922 662 516 763 Miscellaneous expenses .................... 11,272 20,227 18,215 11,226 7,618 7,816 ------------ ------------ ------------ -------- ----------- ----------- TOTAL EXPENSES ............................ 1,063,885 2,856,831 1,903,675 214,810 236,027 280,161 ------------ ------------ ------------ -------- ----------- ----------- LESS: Expense reimbursements (see Note 3) .... -- -- -- (80,804) (92,150) (100,688) Custodian fee credits .................. (679) (31,657) (27,844) (7,767) (6,653) (7,461) ------------ ------------ ------------ -------- ----------- ----------- TOTAL REIMBURSEMENTS AND CREDITS .......... (679) (31,657) (27,844) (88,571) (98,803) (108,149) ------------ ------------ ------------ -------- ----------- ----------- NET EXPENSES .............................. 1,063,206 2,825,174 1,875,831 126,239 137,224 172,012 ------------ ------------ ------------ -------- ----------- ----------- NET INVESTMENT INCOME/(LOSS) .............. (48,604) 1,373,858 2,784,981 365,893 (24,309) 313,764 ------------ ------------ ------------ -------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain/(loss) on investments ... 1,926,273 (1,553,069) 150,087 42,191 (267,244) (1,026,115) Net realized loss on foreign currency transactions ........................... (1,153) -- -- -- -- -- ------------ ------------ ------------ -------- ----------- ----------- Net realized gain/(loss) on investments and foreign currency transactions .......... 1,925,120 (1,553,069) 150,087 42,191 (267,244) (1,026,115) ------------ ------------ ------------ -------- ----------- ----------- Net change in unrealized appreciation/ (depreciation) on investments .......... (10,388,184) (32,856,852) (16,151,151) (75,665) (1,837,044) (1,440,749) Net change in unrealized appreciation/ (depreciation) on foreign currency translations ........................... (329) -- -- 16 -- -- ------------ ------------ ------------ -------- ----------- ----------- Net change in unrealized appreciation/ (depreciation) on investments and foreign currency translations .......... (10,388,513) (32,856,852) (16,151,151) (75,649) (1,837,044) (1,440,749) ------------ ------------ ------------ -------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY .... (8,463,393) (34,409,921) (16,001,064) (33,458) (2,104,288) (2,466,864) ------------ ------------ ------------ -------- ----------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .............. $ (8,511,997) $(33,036,063) $(13,216,083) $332,435 $(2,128,597) $(2,153,100) ============ ============ ============ ======== =========== =========== See accompanying notes to financial statements. 28 GAMCO WESTWOOD FUNDS STATEMENTS OF CHANGES IN NET ASSETS MIGHTY MITES(SM) FUND EQUITY FUND -------------------------------- -------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, FOR THE YEAR ENDED SEPTEMBER 30, -------------------------------- -------------------------------- 2008 2007 2008 2007 ------------ ----------- ------------ ------------ OPERATIONS: Net investment income/(loss) .......................... $ (48,604) $ 199,835 $ 1,373,858 $ 679,596 Net realized gain/(loss) on investments and foreign currency transactions .............................. 1,925,120 5,198,020 (1,553,069) 25,589,048 Net change in unrealized appreciation/(depreciation) on investments and foreign currency translations ... (10,388,513) 2,972,257 (32,856,852) 7,079,829 ------------ ----------- ------------ ------------ NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................................... (8,511,997) 8,370,112 (33,036,063) 33,348,473 ------------ ----------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA .......................................... (173,195) -- (788,363) (737,096) Class A ............................................ (20,881) -- (14,656) (4,914) Class C ............................................ (2,086) -- -- -- ------------ ----------- ------------ ------------ (196,162) -- (803,019) (742,010) ------------ ----------- ------------ ------------ Net realized gain on investments Class AAA .......................................... (4,398,562) (5,192,410) (23,536,496) (28,093,088) Class A ............................................ (427,184) (567) (594,524) (451,192) Class B ............................................ (37,625) (72,032) (2,963) (5,227) Class C ............................................ (219,499) (45,681) (43,046) (52,506) ------------ ----------- ------------ ------------ (5,082,870) (5,310,690) (24,177,029) (28,602,013) ------------ ----------- ------------ ------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................... (5,279,032) (5,310,690) (24,980,048) (29,344,023) ------------ ----------- ------------ ------------ SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares issued Class AAA .......................................... 31,088,927 13,160,409 56,113,757 38,533,796 Class A ............................................ 7,562,274 2,241,765 7,236,476 564,785 Class B ............................................ 15 -- -- -- Class C ............................................ 3,724,307 1,845,146 717,153 18,205 Class I ............................................ 963,567 -- 984,430 -- ------------ ----------- ------------ ------------ 43,339,090 17,247,320 65,051,816 39,116,786 ------------ ----------- ------------ ------------ Proceeds from reinvestment of distributions Class AAA .......................................... 4,129,014 4,658,234 23,304,371 27,658,190 Class A ............................................ 429,306 545 604,502 451,854 Class B ............................................ 37,512 71,845 1,929 3,906 Class C ............................................ 193,520 45,659 42,305 51,834 ------------ ----------- ------------ ------------ 4,789,352 4,776,283 23,953,107 28,165,784 ------------ ----------- ------------ ------------ Cost of shares redeemed Class AAA .......................................... (15,832,340) (9,412,055) (45,590,193) (49,588,854) Class A ............................................ (2,956,021) (11,391) (4,355,199) (363,055) Class B ............................................ (197,245) (131,824) (5,786) (12,586) Class C ............................................ (595,613) (176,399) (172,081) (71,724) Class I ............................................ (43,498) -- (77,851) -- ------------ ----------- ------------ ------------ (19,624,717) (9,731,669) (50,201,110) (50,036,219) ------------ ----------- ------------ ------------ NET INCREASE IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST TRANSACTIONS ................... 28,503,725 12,291,934 38,803,813 17,246,351 ------------ ----------- ------------ ------------ REDEMPTION FEES ....................................... 1,648 131 -- -- ------------ ----------- ------------ ------------ NET INCREASE/(DECREASE) IN NET ASSETS ................. 14,714,344 15,351,487 (19,212,298) 21,250,801 NET ASSETS: Beginning of period ................................... 52,960,885 37,609,398 193,782,816 172,532,015 ------------ ----------- ------------ ------------ End of period ......................................... $ 67,675,229 $52,960,885 $174,570,518 $193,782,816 ============ =========== ============ ============ Undistributed net investment income ................... -- $ 195,407 $ 1,094,396 $ 531,934 ============ =========== ============ ============ See accompanying notes to financial statements. 29 GAMCO WESTWOOD FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) BALANCED FUND INTERMEDIATE BOND FUND --------------------------- ------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------- ------------------------- 2008 2007 2008 2007 ------------ ------------ ----------- ----------- OPERATIONS: Net investment income ....................... $ 2,784,981 $ 2,722,688 $ 365,893 $ 350,907 Net realized gain/(loss) on investments ..... 150,087 11,476,050 42,191 (2,613) Net change in unrealized appreciation/(depreciation) on investments .............................. (16,151,151) 5,542,110 (75,649) 2,748 ------------ ------------ ----------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ (13,216,083) 19,740,848 332,435 351,042 ------------ ------------ ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA ................................ (2,719,978) (2,562,323) (329,078) (350,708) Class A .................................. (91,923) (81,823) (2,394) (2,513) Class B .................................. (1,568) (1,846) (1,579) (4,748) Class C .................................. (13,621) (9,350) (28,066) (73) Class I .................................. (16,935) -- (4,776) -- ------------ ------------ ----------- ----------- (2,844,025) (2,655,342) (365,893) (358,042) ------------ ------------ ----------- ----------- Net realized gain on investments Class AAA ................................ (11,110,478) (18,214,060) -- -- Class A .................................. (405,420) (697,805) -- -- Class B .................................. (14,126) (22,753) -- -- Class C .................................. (71,581) (127,276) -- -- ------------ ------------ ----------- ----------- (11,601,605) (19,061,894) -- -- ------------ ------------ ----------- ----------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ......... (14,445,630) (21,717,236) (365,893) (358,042) ------------ ------------ ----------- ----------- SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares issued Class AAA ................................ 35,309,365 27,827,449 3,653,273 1,292,471 Class A .................................. 1,374,427 376,204 156,785 9,000 Class B .................................. -- 43,323 -- -- Class C .................................. 782,745 174,540 3,323,184 89,952 Class I .................................. 1,660,440 -- 396,494 -- ------------ ------------ ----------- ----------- 39,126,977 28,421,516 7,529,736 1,391,423 ------------ ------------ ----------- ----------- Proceeds from reinvestment of distributions Class AAA ................................ 13,358,522 19,991,375 236,256 272,125 Class A .................................. 441,381 685,203 1,560 2,478 Class B .................................. 10,778 15,985 230 880 Class C .................................. 69,575 108,766 21,145 17 Class I .................................. 16,935 -- 4,776 -- ------------ ------------ ----------- ----------- 13,897,191 20,801,329 263,967 275,500 ------------ ------------ ----------- ----------- Cost of shares redeemed Class AAA ................................ (36,401,407) (38,789,648) (2,809,664) (2,061,718) Class A .................................. (696,633) (1,054,294) (125,247) (34,365) Class B .................................. (48,649) (3,077) (46,518) (190,022) Class C .................................. (256,624) (209,433) (2,850,287) (75,258) Class I .................................. (42,169) -- (30,597) -- ------------ ------------ ----------- ----------- (37,445,482) (40,056,452) (5,862,313) (2,361,363) ------------ ------------ ----------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST TRANSACTIONS ............................. 15,578,686 9,166,393 1,931,390 (694,440) ------------ ------------ ----------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS ....... (12,083,027) 7,190,005 1,897,932 (701,440) NET ASSETS: Beginning of period ......................... 158,900,515 151,710,510 9,589,875 10,291,315 ------------ ------------ ----------- ----------- End of period ............................... $146,817,488 $158,900,515 $11,487,807 $ 9,589,875 ============ ============ =========== =========== Undistributed net investment income ......... $ 14,702 $ 73,636 -- -- ============ ============ =========== =========== See accompanying notes to financial statements. 30 GAMCO WESTWOOD FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) SMALLCAP EQUITY FUND INCOME FUND -------------------------- --------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- --------------------------- 2008 2007 2008 2007 ------------ ----------- ------------ ------------ OPERATIONS: Net investment income/(loss) ................ $ (24,309) $ (32,083) $ 313,764 $ 672,609 Net realized gain/(loss) on investments ..... (267,244) 1,433,147 (1,026,115) 304,989 Net change in unrealized appreciation/(depreciation) on investments .............................. (1,837,044) 463,604 (1,440,749) 1,934 ----------- ----------- ------------ ------------ NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ (2,128,597) 1,864,668 (2,153,100) 979,532 ----------- ----------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA ................................ -- (105,452) (385,568) (635,769) Class A .................................. -- (4,971) (2,392) (3,135) Class B .................................. -- (18) (2) (78) Class C .................................. -- (1,872) (10,506) (4,873) Class I .................................. -- -- (3,014) -- ----------- ----------- ------------ ------------ -- (112,313) (401,482) (643,855) ----------- ----------- ------------ ------------ Net realized gain on investments Class AAA ................................ -- -- (271,625) (2,261,447) Class A .................................. -- -- (2,299) (20,488) Class B .................................. -- -- (2) (414) Class C .................................. -- -- (7,478) (3,062) ----------- ----------- ------------ ------------ -- -- (281,404) (2,285,411) ----------- ----------- ------------ ------------ Return of capital Class AAA ................................ -- -- (27,456) -- Class A .................................. -- -- (170) -- Class B .................................. -- -- (1) -- Class C .................................. -- -- (748) -- Class I .................................. -- -- (214) -- ----------- ----------- ------------ ------------ -- -- (28,589) -- ----------- ----------- ------------ ------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS ......... -- (112,313) (711,475) (2,929,266) ----------- ----------- ------------ ------------ SHARES OF BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares issued Class AAA ................................ 5,087,091 3,612,664 2,284,562 13,573,132 Class A .................................. 619,158 382,618 41,454 81,406 Class B .................................. -- -- 1 -- Class C .................................. 22,221 37,487 120,035 386,845 Class I .................................. 219,169 -- 138,846 -- ----------- ----------- ------------ ------------ 5,947,639 4,032,769 2,584,898 14,041,383 ----------- ----------- ------------ ------------ Proceeds from reinvestment of distributions Class AAA ................................ -- 77,961 650,580 2,752,191 Class A .................................. -- 4,969 4,565 22,075 Class B .................................. -- 18 -- 463 Class C .................................. -- 1,871 16,924 7,879 Class I .................................. -- -- 3,229 -- ----------- ----------- ------------ ------------ -- 84,819 675,298 2,782,608 ----------- ----------- ------------ ------------ Cost of shares redeemed Class AAA ................................ (3,379,770) (5,355,936) (10,789,585) (8,584,925) Class A .................................. (522,719) (95,381) (56,240) (104,769) Class B .................................. (605) (70) (2,007) -- Class C .................................. (69,343) (27,549) (119,039) (3,037) Class I .................................. (42,115) -- (5,959) -- ----------- ----------- ------------ ------------ (4,014,552) (5,478,936) (10,972,830) (8,692,731) ----------- ----------- ------------ ------------ NET INCREASE/(DECREASE) IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST TRANSACTIONS ............................. 1,933,087 (1,361,348) (7,712,634) 8,131,260 ----------- ----------- ------------ ------------ NET INCREASE/(DECREASE) IN NET ASSETS ....... (195,510) 391,007 (10,577,209) 6,181,526 NET ASSETS: Beginning of period ......................... 9,755,291 9,364,284 18,350,463 12,168,937 ----------- ----------- ------------ ------------ End of period ............................... $ 9,559,781 $ 9,755,291 $ 7,773,254 $ 18,350,463 =========== =========== ============ ============ Undistributed net investment income ......... -- -- -- $ 154,764 =========== =========== ============ ============ See accompanying notes to financial statements. 31 GAMCO WESTWOOD FUNDS FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period: OPERATING PERFORMANCE DISTRIBUTIONS TO SHAREHOLDERS ---------------------------------------- -------------------------------------- NET NET ASSET NET REALIZED AND TOTAL NET VALUE, INVESTMENT UNREALIZED FROM NET REALIZED PERIOD ENDED BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT GAIN ON TOTAL SEPTEMBER 30 OF PERIOD (LOSS)(a)(b) INVESTMENTS OPERATIONS INCOME INVESTMENTS DISTRIBUTIONS - ------------ --------- ------------ -------------- ---------- ---------- ----------- ------------- MIGHTY MITES(SM) FUND CLASS AAA 2008 $17.05 $(0.00)(d) $(2.11) $(2.11) $(0.06) $(1.47) $(1.53) 2007 16.01 0.08 3.42 3.50 -- (2.46) (2.46) 2006 16.73 (0.04) 1.34 1.30 -- (2.02) (2.02) 2005 15.07 (0.02) 2.97 2.95 -- (1.29) (1.29) 2004 13.42 (0.03) 1.84 1.81 -- (0.16) (0.16) CLASS A 2008 $16.94 $(0.04) $(2.10) $(2.14) $(0.07) $(1.47) $(1.54) 2007 15.94 0.36 3.10 3.46 -- (2.46) (2.46) 2006 16.70 (0.10) 1.36 1.26 -- (2.02) (2.02) 2005 15.08 (0.06) 2.97 2.91 -- (1.29) (1.29) 2004 13.46 (0.06) 1.84 1.78 -- (0.16) (0.16) CLASS B 2008 $16.21 $(0.10) $(2.01) $(2.11) -- $(1.47) $(1.47) 2007 15.43 (0.06) 3.30 3.24 -- (2.46) (2.46) 2006 16.31 (0.15) 1.29 1.14 -- (2.02) (2.02) 2005 14.82 (0.14) 2.92 2.78 -- (1.29) (1.29) 2004 13.30 (0.14) 1.82 1.68 -- (0.16) (0.16) CLASS C 2008 $16.13 $(0.10) $(2.00) $(2.10) $(0.01) $(1.47) $(1.48) 2007 15.35 0.10 3.14 3.24 -- (2.46) (2.46) 2006 16.24 (0.15) 1.28 1.13 -- (2.02) (2.02) 2005 14.77 (0.14) 2.90 2.76 -- (1.29) (1.29) 2004 13.25 0.02 1.66 1.68 -- (0.16) (0.16) CLASS I 2008(f) $13.96 $ 0.03 $(0.55) $(0.52) -- -- -- RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA ---------------------------------------------------------------------- OPERATING EXPENSES OPERATING NET OF OPERATING NET NET EXPENSES WAIVERS/ EXPENSES ASSET ASSETS, NET NET OF REIMBURSE- BEFORE VALUE, END OF INVESTMENT WAIVERS/ MENTS/ WAIVERS/ PORTFOLIO PERIOD ENDED REDEMPTION END OF TOTAL PERIOD INCOME REIMBURSE- CUSTODIAN REIMBURSE- TURNOVER SEPTEMBER 30 FEES(a) PERIOD RETURN+ (IN 000'S) (LOSS)(b) MENTS FEE CREDITS MENTS(c) RATE++ - ------------ ---------- ------ ------- ---------- ---------- ---------- ----------- ---------- --------- MIGHTY MITES(SM) FUND CLASS AAA 2008 $0.00(d) $13.41 (13.2)% $55,808 (0.01)% 1.71% 1.71% 1.71%(e) 18% 2007 0.00(d) 17.05 23.9 48,252 0.48 1.64 1.64 1.64(e) 21 2006 -- 16.01 9.0 36,843 (0.28) 1.61 1.61 1.61(e) 4 2005 0.00(d) 16.73 20.4 46,497 (0.13) 1.50 1.50 1.74 9 2004 0.00(d) 15.07 13.6 50,805 (0.20) 1.50 1.50 1.66 36 CLASS A 2008 $0.00(d) $13.26 (13.5)% $ 6,134 (0.27)% 1.96% 1.96% 1.96%(e) 18% 2007 0.00(d) 16.94 23.8 2,246 2.13 1.89 1.89 1.89(e) 21 2006 -- 15.94 8.7 3 (0.63) 1.86 1.86 1.86(e) 4 2005 0.00(d) 16.70 20.1 41 (0.41) 1.75 1.75 2.00 9 2004 0.00(d) 15.08 13.3 39 (0.42) 1.75 1.75 1.91 36 CLASS B 2008 $0.00(d) $12.63 (13.9)% $ 169 (0.73)% 2.46% 2.46% 2.46%(e) 18% 2007 0.00(d) 16.21 23.0 422 (0.40) 2.39 2.39 2.39(e) 21 2006 -- 15.43 8.1 452 (1.00) 2.36 2.36 2.36(e) 4 2005 0.00(d) 16.31 19.6 433 (0.89) 2.25 2.25 2.49 9 2004 0.00(d) 14.82 12.7 400 (0.95) 2.25 2.25 2.41 36 CLASS C 2008 $0.00(d) $12.55 (13.9)% $ 4,671 (0.78)% 2.46% 2.46% 2.46%(e) 18% 2007 0.00(d) 16.13 23.2 2,041 0.65 2.39 2.39 2.39(e) 21 2006 -- 15.35 8.1 311 (1.01) 2.36 2.36 2.36(e) 4 2005 0.00(d) 16.24 19.5 327 (0.91) 2.25 2.25 2.49 9 2004 0.00(d) 14.77 12.7 308 (0.89) 2.25 2.25 2.41 36 CLASS I 2008(f) $0.00(d) $13.44 (3.7)% $ 893 0.26%(g) 1.46%(g) 1.46%(g) 1.46%(e)(g) 18% - ---------- + 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 to include cash due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the fiscal years ended September 30, 2007 and 2004 would have been 23% and 39%, respectively. The portfolio turnover rate for the fiscal years ended 2006 and 2005 would have been as shown. (a) Per share data is calculated using the average shares outstanding method. (b) Due to capital share activity throughout the fiscal year, net investment income per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. (c) Prior to the period beginning October 1, 2005, fees and expenses were voluntarily reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratio would have been as shown. (d) Amount represents less than $0.005 per share. (e) The fund incurred interest expense during the fiscal year ended September 30, 2006. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.57% (Class AAA), 1.82% (Class A), 2.32% (Class B and Class C), respectively. For the fiscal years ended September 30, 2008 and 2007, the effect of interest expense was minimal. (f) From the commencement of offering Class I Shares on January 11, 2008 through September 30, 2008. (g) Annualized. See accompanying notes to financial statements. 32 GAMCO WESTWOOD FUNDS FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period: OPERATING PERFORMANCE DISTRIBUTIONS TO SHAREHOLDERS -------------------------------------- --------------------------------------- NET REALIZED NET ASSET NET AND TOTAL VALUE, INVESTMENT UNREALIZED FROM NET NET REALIZED PERIOD ENDED BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT GAIN ON TOTAL SEPTEMBER 30 OF PERIOD (LOSS)(a) INVESTMENTS OPERATIONS INCOME INVESTMENTS DISTRIBUTIONS - ------------ --------- ---------- -------------- ---------- ---------- ------------ ------------- EQUITY FUND CLASS AAA 2008 $12.63 $ 0.08 $(1.87) $(1.79) $(0.05) $(1.58) $(1.63) 2007 12.51 0.04 2.15 2.19 (0.05) (2.02) (2.07) 2006 11.08 0.06 1.42 1.48 (0.05) -- (0.05) 2005 9.32 0.07 1.79 1.86 (0.10) -- (0.10) 2004 7.99 0.08 1.36 1.44 (0.11) -- (0.11) CLASS A 2008 $12.57 $ 0.05 $(1.89) $(1.84) $(0.04) $(1.58) $(1.62) 2007 12.45 0.01 2.15 2.16 (0.02) (2.02) (2.04) 2006 11.05 0.03 1.41 1.44 (0.04) -- (0.04) 2005 9.28 0.06 1.75 1.81 (0.04) -- (0.04) 2004 7.97 0.05 1.35 1.40 (0.09) -- (0.09) CLASS B 2008 $12.36 $(0.00)(b) $(1.83) $(1.83) -- $(1.58) $(1.58) 2007 12.31 (0.05) 2.12 2.07 -- (2.02) (2.02) 2006 10.96 (0.02) 1.40 1.38 $(0.03) -- (0.03) 2005 9.21 (0.00)(b) 1.75 1.75 -- -- -- 2004 7.92 0.02 1.34 1.36 (0.07) -- (0.07) CLASS C 2008 $12.36 $(0.00)(b) $(1.83) $(1.83) -- $(1.58) $(1.58) 2007 12.31 (0.05) 2.12 2.07 -- (2.02) (2.02) 2006 10.97 (0.03) 1.40 1.37 $(0.03) -- (0.03) 2005 9.24 (0.01) 1.77 1.76 (0.03) -- (0.03) 2004 7.89 0.01 1.34 1.35 -- -- -- CLASS I 2008(c) $10.35 $ 0.07 $(1.19) $(1.12) -- -- -- RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA ------------------------------------------------------------- NET OPERATING ASSET NET ASSETS, EXPENSES VALUE, END OF NET NET OF PORTFOLIO PERIOD ENDED REDEMPTION END OF TOTAL PERIOD INVESTMENT OPERATING CUSTODIAN TURNOVER SEPTEMBER 30 FEES(a) PERIOD RETURN+ (IN 000'S) INCOME (LOSS) EXPENSES FEE CREDITS RATE++ - ------------ ---------- ------ ------- ----------- ------------- --------- ----------- --------- EQUITY FUND CLASS AAA 2008 -- $ 9.21 (16.0)% $167,946 0.73% 1.49% 1.47% 71% 2007 -- 12.63 19.7 189,913 0.37 1.52 1.47 58 2006 -- 12.51 13.4 169,404 0.55 1.54 1.50 73 2005 $(0.00)(b) 11.08 20.0 178,394 0.69 1.51 1.49 59 2004 0.00(b) 9.32 18.1 179,407 0.90 1.50 1.49 44 CLASS A 2008 -- $ 9.11 (16.6)% $ 5,079 0.47% 1.74% 1.72% 71% 2007 -- 12.57 19.5 3,527 0.12 1.77 1.72 58 2006 -- 12.45 13.1 2,780 0.27 1.79 1.75 73 2005 $(0.00)(b) 11.05 19.6 2,267 0.59 1.76 1.74 59 2004 0.00(b) 9.28 17.7 3,328 0.61 1.75 1.74 44 CLASS B 2008 -- $ 8.95 (16.7)% $ 13 (0.01)% 2.24% 2.22% 71% 2007 -- 12.36 18.8 23 (0.39) 2.27 2.22 58 2006 -- 12.31 12.6 32 (0.20) 2.29 2.25 73 2005 $(0.00)(b) 10.96 19.0 30 (0.01) 2.26 2.24 59 2004 0.00(b) 9.21 17.2 38 0.21 2.25 2.24 44 CLASS C 2008 -- $ 8.95 (16.7)% $ 736 (0.02)% 2.24% 2.22% 71% 2007 -- 12.36 18.8 320 (0.39) 2.27 2.22 58 2006 -- 12.31 12.6 316 (0.28) 2.29 2.25 73 2005 $(0.00)(b) 10.97 19.1 149 (0.06) 2.26 2.24 59 2004 0.00(b) 9.24 17.1 152 0.11 2.25 2.24 44 CLASS I 2008(c) -- $ 9.23 (10.8)% $ 797 1.00%(d) 1.24%(d) 1.22%(d) 71% - ---------- + 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 to include cash due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the fiscal years ended September 30, 2007, 2006, 2005, and 2004 would have been as shown. (a) Per share data is calculated using the average shares outstanding method. (b) Amount represents less than $0.005 per share. (c) From the commencement of offering Class I Shares on January 11, 2008 through September 30, 2008. (d) Annualized. See accompanying notes to financial statements. 33 GAMCO WESTWOOD FUNDS FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period: OPERATING PERFORMANCE DISTRIBUTIONS TO SHAREHOLDERS ------------------------------------- -------------------------------------- NET NET ASSET REALIZED AND NET NET VALUE, NET UNREALIZED TOTAL FROM NET REALIZED ASSET VALUE, PERIOD ENDED BEGINNING INVESTMENT GAIN(LOSS) ON INVESTMENT INVESTMENT GAIN ON TOTAL REDEMPTION END OF SEPTEMBER 30 OF PERIOD INCOME(A) INVESTMENTS OPERATIONS INCOME INVESTMENTS DISTRIBUTIONS FEES(A) PERIOD - ------------ --------- ---------- ------------- ---------- ---------- ----------- ------------- ---------- ------------ BALANCED FUND CLASS AAA 2008 $12.58 $0.21 $(1.17) $(0.96) $(0.22) $(0.93) $(1.15) -- $10.47 2007 12.82 0.22 1.36 1.58 (0.21) (1.61) (1.82) -- 12.58 2006 12.74 0.22 0.95 1.17 (0.24) (0.85) (1.09) -- 12.82 2005 11.47 0.20 1.26 1.46 (0.19) -- (0.19) $0.00(b) 12.74 2004 10.51 0.21 0.97 1.18 (0.22) -- (0.22) 0.00(b) 11.47 CLASS A 2008 $12.63 $0.18 $(1.18) $(1.00) $(0.19) $(0.93) $(1.12) -- $10.51 2007 12.87 0.19 1.36 1.55 (0.18) (1.61) (1.79) -- 12.63 2006 12.74 0.19 0.95 1.14 (0.16) (0.85) (1.01) -- 12.87 2005 11.44 0.17 1.26 1.43 (0.13) -- (0.13) $0.00(b) 12.74 2004 10.48 0.18 0.97 1.15 (0.19) -- (0.19) 0.00(b) 11.44 CLASS B 2008 $12.72 $0.13 $(1.20) $(1.07) $(0.12) $(0.93) $(1.05) -- $10.60 2007 12.95 0.13 1.37 1.50 (0.12) (1.61) (1.73) -- 12.72 2006 12.76 0.13 0.95 1.08 (0.04) (0.85) (0.89) -- 12.95 2005 11.43 0.11 1.26 1.37 (0.04) -- (0.04) $0.00(b) 12.76 2004 10.48 0.13 0.96 1.09 (0.14) -- (0.14) 0.00(b) 11.43 CLASS C 2008 $12.74 $0.12 $(1.19) $(1.07) $(0.13) $(0.93) $(1.06) -- $10.61 2007 12.97 0.13 1.37 1.50 (0.12) (1.61) (1.73) -- 12.74 2006 12.78 0.13 0.95 1.08 (0.04) (0.85) (0.89) -- 12.97 2005 11.45 0.11 1.26 1.37 (0.04) -- (0.04) $0.00(b) 12.78 2004 10.49 0.13 0.97 1.10 (0.14) -- (0.14) 0.00(b) 11.45 CLASS I 2008(c) $11.33 $0.17 $(0.87) $(0.70) $(0.17) -- $(0.17) -- $10.46 RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA ---------------------------------------------------------- OPERATING NET ASSETS, EXPENSES END OF NET NET OF PORTFOLIO PERIOD ENDED TOTAL PERIOD INVESTMENT OPERATING CUSTODIAN TURNOVER SEPTEMBER 30 RETURN+ (IN 000'S) INCOME EXPENSES FEE CREDITS RATE++ - ------------ ------- ----------- ---------- --------- ----------- --------- BALANCED FUND CLASS AAA 2008 (8.4)% $138,174 1.83% 1.23% 1.21% 60% 2007 13.6 152,185 1.76 1.27 1.19 46 2006 9.8 145,028 1.78 1.32 1.27 68 2005 12.8 144,572 1.67 1.25 1.22 56 2004 11.3 136,400 1.92 1.23 1.22 41 CLASS A 2008 (8.7)% $ 5,639 1.56% 1.48% 1.46% 60% 2007 13.3 5,519 1.51 1.52 1.44 46 2006 9.5 5,596 1.53 1.57 1.52 68 2005 12.6 5,658 1.42 1.50 1.47 56 2004 11.0 5,298 1.66 1.48 1.47 41 CLASS B 2008 (9.1)% $ 125 1.10% 1.98% 1.96% 60% 2007 12.7 194 1.02 2.02 1.94 46 2006 9.0 141 1.02 2.07 2.02 68 2005 12.0 138 0.93 2.00 1.97 56 2004 10.4 163 1.18 1.98 1.97 41 CLASS C 2008 (9.1)% $ 1,389 1.05% 1.98% 1.96% 60% 2007 12.7 1,003 1.01 2.02 1.94 46 2006 9.0 946 1.02 2.07 2.02 68 2005 12.0 982 0.92 2.00 1.97 56 2004 10.5 846 1.19 1.98 1.97 41 CLASS I 2008(c) (6.2)% $ 1,490 2.14%(d) 0.98%(d) 0.96%(d) 60% - ---------- + 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 to include cash due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the fiscal year ended September 30, 2005 would have been 55%. The portfolio turnover rate for the fiscal years ended 2007, 2006, and 2004 would have been as shown. (a) Per share data is calculated using the average shares outstanding method. (b) Amount represents less than $0.005 per share. (c) From the commencement of offering Class I Shares on January 11, 2008 through September 30, 2008. (d) Annualized. See accompanying notes to financial statements. 34 GAMCO WESTWOOD FUNDS FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period: OPERATING PERFORMANCE DISTRIBUTIONS TO SHAREHOLDERS ------------------------------------- -------------------------------------- NET NET ASSET REALIZED AND NET NET VALUE, NET UNREALIZED TOTAL FROM NET REALIZED ASSET VALUE, PERIOD ENDED BEGINNING INVESTMENT GAIN(LOSS) ON INVESTMENT INVESTMENT GAIN ON TOTAL REDEMPTION END OF SEPTEMBER 30 OF PERIOD INCOME(a) INVESTMENTS OPERATIONS INCOME INVESTMENTS DISTRIBUTIONS FEES(A) PERIOD - ------------ --------- ---------- ------------- ---------- ---------- ----------- ------------- ---------- ------------ INTERMEDIATE BOND FUND CLASS AAA 2008 $10.80 $0.36 $ 0.04 $0.40 $(0.36) -- $(0.36) -- $10.84 2007 10.81 0.40 0.00(c) 0.40 (0.41) -- (0.41) -- 10.80 2006 10.93 0.39 (0.11) 0.28 (0.39) $(0.01) (0.40) -- 10.81 2005 11.18 0.34 (0.16) 0.18 (0.34) (0.09) (0.43) $(0.00)(c) 10.93 2004 11.31 0.33 (0.12) 0.21 (0.33) (0.01) (0.34) 0.00(c) 11.18 CLASS A 2008 $10.80 $0.34 $ 0.05 $0.39 $(0.35) -- $(0.35) -- $10.84 2007 10.81 0.39 0.00(c) 0.39 (0.40) -- (0.40) -- 10.80 2006 10.93 0.39 (0.12) 0.27 (0.38) $(0.01) (0.39) -- 10.81 2005 11.18 0.33 (0.16) 0.17 (0.33) (0.09) (0.42) $(0.00)(c) 10.93 2004 11.31 0.32 (0.12) 0.20 (0.32) (0.01) (0.33) 0.00(c) 11.18 CLASS B 2008 $10.80 $0.28 $ 0.03 $0.31 $(0.27) -- $(0.27) -- $10.84 2007 10.81 0.32 0.00(c) 0.32 (0.33) -- (0.33) -- 10.80 2006 10.93 0.31 (0.11) 0.20 (0.31) $(0.01) (0.32) -- 10.81 2005 11.18 0.26 (0.16) 0.10 (0.26) (0.09) (0.35) $(0.00)(c) 10.93 2004 11.30 0.25 (0.11) 0.14 (0.25) (0.01) (0.26) 0.00(c) 11.18 CLASS C 2008 $10.28 $0.24 $ 0.05 $0.29 $(0.26) -- $(0.26) -- $10.31 2007 10.31 0.40 0.09 0.49 (0.52) -- (0.52) -- 10.28 2006 10.82 0.32 (0.36) (0.04) (0.46) $(0.01) (0.47) -- 10.31 2005 11.17 0.27 (0.12) 0.15 (0.41) (0.09) (0.50) $(0.00)(c) 10.82 2004 11.30 0.25 (0.09) 0.16 (0.28) (0.01) (0.29) 0.00(c) 11.17 CLASS I 2008(d) $11.09 $0.28 ($0.25) $0.03 $(0.27) -- $(0.27) -- $10.85 RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA ------------------------------------------------------------------------ OPERATING OPERATING EXPENSES EXPENSES OPERATING NET OF NET OF EXPENSES WAIVERS/ WAIVERS/ NET ASSETS, NET OF REIMBURSE- REIMBURSE- END OF NET WAIVERS/ MENTS/ MENTS/ PORTFOLIO PERIOD ENDED TOTAL PERIOD INVESTMENT REIMBURSE- CUSTODIAN CUSTODIAN TURNOVER SEPTEMBER 30 RETURN+ (IN 000'S) INCOME MENTS FEE CREDITS FEE CREDITS RATE++ - ------------ ------- ----------- ---------- ---------- ----------- ----------- --------- INTERMEDIATE BOND FUND CLASS AAA 2008 3.7% $10,498 3.23% 1.07% 1.00% 1.76% 32% 2007 3.7 9,413 3.73 1.10 1.00 1.64 20 2006 2.7 9,917 3.65 1.06 1.00 1.53 35 2005 1.7 10,272 3.10 1.04 1.00 1.79 33 2004 2.0 9,553 2.97 1.02 1.00 1.76 32 CLASS A 2008 3.6% $ 101 3.09% 1.17% 1.10% 1.86% 32% 2007 3.7 69 3.64 1.20 1.10 1.74 20 2006 2.6 92 3.59 1.16 1.10 1.63 35 2005 1.6 58 3.00 1.14 1.10 1.88 33 2004 1.8 75 2.88 1.12 1.10 1.86 32 CLASS B 2008 2.9% $ 48 2.53% 1.82% 1.75% 2.51% 32% 2007 3.0 93 2.97 1.85 1.75 2.39 20 2006 2.0 282 2.87 1.81 1.75 2.28 35 2005 0.9 381 2.34 1.79 1.75 2.53 33 2004 1.3 456 2.23 1.77 1.75 2.51 32 CLASS C 2008 2.8% $ 478 2.29% 1.82% 1.75% 2.51% 32% 2007 4.8 15 3.96 1.85 1.75 2.39 20 2006 (0.3) 0.1 3.08 1.81 1.75 2.28 35 2005 1.4 0.1 2.50 1.79 1.75 2.90 33 2004 1.5 0 2.21 1.77 1.75 2.51 32 CLASS I 2008(d) 0.2% $ 363 3.57%(e) 0.84%(e) 0.75%(e) 1.53%(e) 32% - ---------- + 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 to include cash due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the fiscal years ended September 30, 2007, 2006, 2005, and 2004 would have been as shown. (a) Per share data is calculated using the average shares outstanding method. (b) During the period, fees and expenses were voluntarily reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratio would have been as shown. (c) Amount represents less than $0.005 per share. (d) From the commencement of offering Class I Shares on January 11, 2008 through September 30, 2008. (e) Annualized. See accompanying notes to financial statements. 35 GAMCO WESTWOOD FUNDS FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period: DISTRIBUTIONS TO OPERATING PERFORMANCE SHAREHOLDERS ----------------------------------- ------------------------- NET REALIZED AND NET ASSET NET UNREALIZED TOTAL VALUE, INVESTMENT GAIN FROM NET PERIOD ENDED BEGINNING INCOME (LOSS) ON INVESTMENT INVESTMENT TOTAL SEPTEMBER 30 OF PERIOD (LOSS)(a) INVESTMENTS OPERATIONS INCOME DISTRIBUTIONS - ------------ --------- ---------- ----------- ---------- ---------- ------------- SMALLCAP EQUITY FUND CLASS AAA 2008 $14.99 $(0.03) $(2.97) $(3.00) -- -- 2007 12.51 (0.04) 2.68 2.64 $(0.16) $(0.16) 2006 11.29 0.14 1.08 1.22 -- -- 2005 9.08 (0.01) 2.22 2.21 -- -- 2004 8.18 (0.10) 1.00 0.90 -- -- CLASS A 2008 $14.89 $(0.06) $(2.95) $(3.01) -- -- 2007 12.45 (0.09) 2.67 2.58 $(0.14) $(0.14) 2006 11.25 0.13 1.07 1.20 -- -- 2005 9.07 (0.04) 2.22 2.18 -- -- 2004 8.18 (0.12) 1.01 0.89 -- -- CLASS B 2008 $14.44 $(0.12) $(2.86) $(2.98) -- -- 2007 12.03 (0.15) 2.60 2.45 $(0.04) $(0.04) 2006 10.93 0.05 1.05 1.10 -- -- 2005 8.86 (0.08) 2.15 2.07 -- -- 2004 8.03 (0.17) 1.00 0.83 -- -- CLASS C 2008 $14.31 $(0.12) $(2.83) $(2.95) -- -- 2007 11.97 (0.14) 2.57 2.43 $(0.09) $(0.09) 2006 10.87 0.09 1.01 1.10 -- -- 2005 8.99 (0.13) 2.01 1.88 -- -- 2004 8.15 (0.17) 1.01 0.84 -- -- CLASS I 2008(f) $12.92 $(0.01) $(0.91) $(0.92) -- -- RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA ------------------------------------------------------------------------------ OPERATING OPERATING EXPENSES EXPENSES NET OF BEFORE NET NET WAIVERS/ WAIVERS/ ASSET ASSETS, NET OPERATING REIMBURSE- REIMBURSE- VALUE, END OF INVESTMENT EXPENSES NET MENTS/ MENTS/ PORTFOLIO PERIOD ENDED REDEMPTION END OF TOTAL PERIOD INCOME OF WAIVERS/ CUSTODIAN CUSTODIAN TURNOVER SEPTEMBER 30 FEES(a) PERIOD RETURN+ (IN 000'S) (LOSS) REIMBURSEMENTS FEE CREDITS FEE CREDITS(b) RATE++ - ------------ ---------- ------- ------- ---------- ---------- -------------- ----------- -------------- --------- SMALLCAP EQUITY FUND CLASS AAA 2008 -- $11.99 (20.0)% $ 8,491 (0.23)% 1.58% 1.51%(c) 2.62% 123% 2007 -- 14.99 21.2 8,672 (0.28) 1.71 1.50 2.24 90 2006 -- 12.51 10.8 8,717 1.16 1.71 1.50 2.02 81 2005 $(0.00)(d) 11.29 24.3 8,702 (0.10) 1.56 1.50 2.37 108 2004 0.00(d) 9.08 11.0(e) 12,106 (1.11) 1.51 1.50 2.12 260 CLASS A 2008 -- $11.88 (20.2)% $ 703 (0.49)% 1.83% 1.76%(c) 2.87% 123% 2007 -- 14.89 20.9 778 (0.62) 1.96 1.75 2.49 90 2006 -- 12.45 10.7 403 1.04 1.96 1.75 2.27 81 2005 $(0.00)(d) 11.25 24.0 131 (0.35) 1.81 1.75 2.69 108 2004 0.00(d) 9.07 10.9(e) 140 (1.31) 1.76 1.75 2.37 260 CLASS B 2008 -- $11.46 (20.6)% $ 5 (0.97)% 2.33% 2.26%(c) 3.37% 123% 2007 -- 14.44 20.4 7 (1.05) 2.46 2.25 2.99 90 2006 -- 12.03 10.1 6 0.44 2.46 2.25 2.77 81 2005 $(0.00)(d) 10.93 23.4 10 (0.81) 2.31 2.25 3.17 108 2004 0.00(d) 8.86 10.3(e) 20 (1.93) 2.26 2.25 2.87 260 CLASS C 2008 -- $11.36 (20.6)% $ 196 (0.94)% 2.33% 2.26%(c) 3.37% 123% 2007 -- 14.31 20.4 298 (1.04) 2.46 2.25 2.99 90 2006 -- 11.97 10.1 238 0.74 2.46 2.25 2.77 81 2005 $(0.00)(d) 10.87 20.9 0.1 (1.40) 2.31 2.25 2.73 108 2004 0.00(d) 8.99 10.3(e) 10 (1.98) 2.26 2.25 2.87 260 CLASS I 2008(f) -- $12.00 (7.1)% $ 165 (0.06)%(g) 1.36%(g) 1.26%(c)(g) 2.40%(g) 123% - ---------- + 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 to include cash due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the fiscal years ended September 30, 2007, 2006, 2005, and 2004 would have been as shown. (a) Per share data is calculated using the average shares outstanding method. (b) During the period, fees and expenses were voluntarily reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratio would have been as shown. (c) The Fund incurred interest expense of $682 during the fiscal year ended September 30, 2008. A portion of this interest expense was paid for by prior year custodian fee credits. The impact to the ratios of operating expenses to the average net assets was minimal. If interest expense had not been incurred, the ratio of operating expenses to the average net assets would have been 1.50% (Class AAA), 1.75% (Class A), 2.25% (Class B and Class C), and 1.25% (Class I), respectively. (d) Amount represents less than $0.005 per share. (e) Total return excluding the effect of the reimbursement from the Fund's Adviser of $51,180 for the year ended September 30, 2004 was 10.6%, 10.5%, 10.0%, and 9.9% for Class AAA, Class A, Class B, and Class C, respectively. The Adviser fully reimbursed the Fund for a loss on a transaction exceeding the Fund's investment restrictions, which otherwise would have reduced total return by 0.4%, 0.4%, 0.3%, and 0.4% for Class AAA, Class A, Class B, and Class C, respectively. (f) From the commencement of offering Class I Shares on January 11, 2008 through September 30, 2008. (g) Annualized. See accompanying notes to financial statements. 36 GAMCO WESTWOOD FUNDS FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period: OPERATING PERFORMANCE DISTRIBUTIONS TO SHAREHOLDERS -------------------------------------- ----------------------------------------------- NET REALIZED NET ASSET AND TOTAL NET VALUE, NET UNREALIZED FROM NET REALIZED RETURN PERIOD ENDED BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT INVESTMENT GAIN ON OF TOTAL SEPTEMBER 30 OF PERIOD INCOME(a) ON INVESTMENTS OPERATIONS INCOME INVESTMENTS CAPITAL DISTRIBUTIONS - ------------ --------- ---------- -------------- ---------- ---------- ----------- ------- ------------- INCOME FUND CLASS AAA 2008 $10.21 $0.26 $(2.05) $(1.79) $(0.34) $(0.21) $(0.02) $(0.57) 2007 12.04 0.50 0.59 1.09 (0.47) (2.45) -- (2.92) 2006 16.53 0.55 (0.31) 0.24 (0.40) (4.33) -- (4.73) 2005 14.12 0.28 3.12 3.40 (0.27) (0.73) -- (1.00) 2004 11.87 0.33 2.30 2.63 (0.33) (0.05) -- (0.38) CLASS A 2008 $10.54 $0.24 $(2.11) $(1.87) $(0.32) $(0.21) $(0.02) $(0.55) 2007 12.34 0.50 0.59 1.09 (0.44) (2.45) -- (2.89) 2006 16.76 0.54 (0.32) 0.22 (0.31) (4.33) -- (4.64) 2005 14.33 0.29 3.13 3.42 (0.26) (0.73) -- (0.99) 2004 12.00 0.51 2.12 2.63 (0.26) (0.04) -- (0.30) CLASS B 2008 $10.77 $0.22 $(2.27) $(2.05) $(0.23) $(0.21) $(0.01) $(0.45) 2007 12.56 0.47 0.57 1.04 (0.38) (2.45) -- (2.83) 2006 16.86 0.48 (0.31) 0.17 (0.14) (4.33) -- (4.47) 2005 14.33 0.18 3.16 3.34 (0.08) (0.73) -- (0.81) 2004 12.04 0.25 2.35 2.60 (0.27) (0.04) -- (0.31) CLASS C 2008 $11.22 $0.20 $(2.26) $(2.06) $(0.28) $(0.21) $(0.02) $(0.51) 2007 12.98 0.38 0.71 1.09 (0.40) (2.45) -- (2.85) 2006 17.26 0.50 (0.32) 0.18 (0.13) (4.33) -- (4.46) 2005 14.66 0.25 3.17 3.42 (0.09) (0.73) -- (0.82) 2004 12.32 0.24 2.41 2.65 (0.27) (0.04) -- (0.31) CLASS I 2008(e) $ 9.14 $0.18 $(1.18) $(1.00) $(0.27) -- $(0.02) $(0.29) RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA -------------------------------------------------------------------------- OPERATING OPERATING EXPENSES EXPENSES OPERATING NET OF BEFORE NET NET EXPENSES WAIVERS/ WAIVERS/ ASSET ASSETS, NET OF REIMBURSE- REIMBURSE- VALUE, END OF NET WAIVERS/ MENTS/ MENTS/ PORTFOLIO PERIOD ENDED REDEMPTION END OF TOTAL PERIOD INVESTMENT REIMBURSE- CUSTODIAN CUSTODIAN TURNOVER SEPTEMBER 30 FEES(a) PERIOD RETURN+ (IN 000'S) INCOME MENTS FEE CREDITS FEE CREDITS(b) RATE++ - ------------ ---------- ------ ------- ---------- ---------- ---------- ----------- -------------- --------- INCOME FUND CLASS AAA 2008 -- $ 7.85 (18.2)% $ 7,285 2.83% 1.58% 1.51%(c) 2.48% 28% 2007 -- 10.21 10.0 17,871 4.65 1.76 1.50 2.20 64 2006 -- 12.04 3.4 12,054 4.36 1.65 1.50 2.02 141 2005 $0.01 16.53 24.9 16,182 1.83 1.62 1.50 2.40 58 2004 0.00(d) 14.12 22.5 16,472 2.51 1.54 1.50 1.85 28 CLASS A 2008 -- $ 8.12 (18.3)% $ 51 2.53% 1.83% 1.76%(c) 2.73% 28% 2007 -- 10.54 9.7 80 4.45 2.01 1.75 2.45 64 2006 -- 12.34 3.2 97 4.21 1.90 1.75 2.27 141 2005 $0.00(d) 16.76 24.6 93 1.87 1.87 1.75 3.03 58 2004 0.00(d) 14.33 22.2 5 3.96 1.79 1.75 2.10 28 CLASS B 2008 -- $ 8.27 (19.5)% $ 0.1 2.16% 2.33% 2.26%(c) 3.23% 28% 2007 -- 10.77 9.0 2 4.16 2.51 2.25 2.94 64 2006 -- 12.56 2.7 2 3.72 2.40 2.25 2.77 141 2005 $0.00(d) 16.86 23.9 2 1.14 2.37 2.25 3.18 58 2004 0.00(d) 14.33 21.8 2 1.86 2.29 2.25 2.60 28 CLASS C 2008 -- $ 8.65 (18.8)% $ 319 1.99% 2.33% 2.26%(c) 3.23% 28% 2007 -- 11.22 9.1 397 3.35 2.51 2.25 2.94 64 2006 -- 12.98 2.8 16 3.71 2.40 2.25 2.77 141 2005 $0.00(d) 17.26 23.9 16 1.56 2.37 2.25 3.41 58 2004 0.00(d) 14.66 21.7 5 1.79 2.29 2.25 2.60 28 CLASS I 2008(e) -- $ 7.85 (11.2)% $ 118 2.82%(f) 1.36%(f) 1.26%(c)(f) 2.26%(f) 28% - ---------- + 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 to include cash due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the fiscal years ended September 30, 2007, 2006, 2005, and 2004 would have been as shown. (a) Per share data is calculated using the average shares outstanding method. (b) During the period, fees and expenses were voluntarily reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratio would have been as shown. (c) The Fund incurred interest expense of $4,188 during the fiscal year ended September 30, 2008. A portion of this interest expense was paid for by prior year custodian fee credits. This would impact the ratios of operating expenses to the average net assets by .03% for all Classes. If interest expense had not been incurred, the ratio of operating expenses to the average net assets would have been 1.50% (Class AAA), 1.75% (Class A), 2.25% (Class B and Class C), and 1.25% (Class I), respectively. (d) Amount represents less than $0.005 per share. (e) From the commencement of offering Class I Shares on January 11, 2008 through September 30, 2008. (f) Annualized. See accompanying notes to financial statements. 37 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION. The GAMCO Westwood Funds (the "Trust") was organized as a Massachusetts business trust on June 12, 1986. The Trust is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified open-end management investment company and currently consists of six active separate investment portfolios: GAMCO Westwood Mighty Mites(SM) Fund ("Mighty Mites(SM) Fund"), GAMCO Westwood Equity Fund ("Equity Fund"), GAMCO Westwood Balanced Fund ("Balanced Fund"), GAMCO Westwood Intermediate Bond Fund ("Intermediate Bond Fund"), GAMCO Westwood SmallCap Equity Fund ("SmallCap Equity Fund"), and GAMCO Westwood Income Fund ("Income Fund") (individually, a "Fund" and collectively, the "Funds"), each with five classes of shares outstanding. Each class of shares outstanding bears the same voting, dividend, liquidation, and other rights and conditions, except that the expenses incurred in the distribution and marketing of such shares are different for each class. The investment objectives of each Fund are as follows: - - Mighty Mites(SM) Fund seeks to provide long-term capital appreciation by investing primarily in micro-capitalization equity securities. - - Equity Fund seeks to provide capital appreciation. The Fund's secondary goal is to produce current income. - - Balanced Fund seeks to provide capital appreciation and current income resulting in a high total investment return consistent with prudent investment risk and a balanced investment approach. - - Intermediate Bond Fund seeks to maximize total return, while maintaining a level of current income consistent with the maintenance of principal and liquidity. - - SmallCap Equity Fund seeks to provide long-term capital appreciation by investing primarily in smaller capitalization equity securities. - - Income Fund seeks to provide a high level of current income as well as long-term capital appreciation by investing primarily in income producing equity and fixed income securities. 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 Funds in the preparation of their 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 Teton Advisors, Inc. (the "Adviser"), formerly known as Gabelli Advisers, Inc. 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. 38 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) Statement of Financial Accounting Standard No. 157, "Fair Value Measurements" ("SFAS 157") 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. As of September 30, 2008, the Funds do not believe the adoption of SFAS 157 will impact the amounts reported in the financial statements. 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 Funds' financial statement disclosures. ACCOUNTING FOR REAL ESTATE INVESTMENT TRUSTS. The Funds may own shares of Real Estate Investment Trusts ("REITs") which report information on the source of their distributions annually. Distributions received from REITs during the year which represent a return of capital are recorded as a reduction to the cost of the individual REIT and distributions which represent a capital gain dividend are recorded as a realized long-term capital gain on investments. As of September 30, 2008, none of the Funds held investments in REITs. SECURITIES SOLD SHORT. The Mighty Mites(SM) 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 Mighty Mites(SM) 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 Mighty Mites(SM) Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Mighty Mites(SM) 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 Mighty Mites(SM) Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The Mighty Mites(SM) Fund did not hold any short positions as of September 30, 2008. FOREIGN CURRENCY TRANSLATIONS. The books and records of the Funds 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 Funds 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 Funds 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 Funds may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Funds will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest. RESTRICTED AND ILLIQUID SECURITIES. Each Fund may invest up to 10% (except for the Mighty Mites(SM) Fund, SmallCap Equity Fund, and Income Fund which may invest up to 15%) of its net assets in restricted securities issued under Section 4(2) of the Securities Act of 1933, as amended. 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. Rule 144A securities freely saleable among qualified institutional 39 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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. INVESTMENTS IN OTHER INVESTMENT COMPANIES. All Funds may invest, from time to time, in shares of other investment companies (the "Acquired Funds") in accordance with the 1940 Act and related rules. Shareholders in these Funds would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund's expenses. For the fiscal year ended September 30, 2008, the Equity, Balanced, and Intermediate Bond Fund's pro rata portion of the periodic expenses charged by the Acquired Funds was less than one basis point. For the fiscal year ended September 30, 2008, the Mighty Mites(SM) Fund's pro rata portion of the periodic expenses charged by the Acquired Funds was five basis points. 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 Funds are 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 a Fund's custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under each custody arrangement are included in custodian fees in the Statements of Operations with the corresponding expense offset, if any, shown as "custodian fee credits." When cash balances are overdrawn, a Fund is charged an overdraft fee equal to 90% of the current Treasury Bill rate on outstanding balances. This amount, if any, is shown as "interest expense" in the Statements of Operations. For the year ended September 30, 2008 interest expense of $69 and $2,649 for SmallCap Equity and Income Funds, respectively, and custodian expense of $31,657, $27,844, $2,810, $6,584, and $4,469 for Equity, Balanced, Intermediate Bond, SmallCap Equity, and Income Funds, respectively, currently included in the Statement of Operations, was paid for by prior year custodian fee credits. DISTRIBUTIONS TO SHAREHOLDERS. Distributions from net investment income are declared and paid annually for the Mighty Mites(SM), Equity, and SmallCap Equity Funds, and quarterly for the Balanced and Income Funds. The Intermediate Bond Fund declares dividends daily and pays those dividends monthly. Distributions of net realized gain on investments are normally declared and paid at least annually by each Fund. 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 Funds, timing differences, and differing characterizations of distributions made by the Funds. 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 Funds. For the fiscal year ended September 30, 2008, the following reclassifications were made to increase/decrease such amounts with offsetting adjustments to paid-in-capital. These reclassifications were primarily the recharacterization of shareholders distributions, distributions from paydowns, partnership interests, REITs, and net operating losses. ACCUMULATED UNDISTRIBUTED ACCUMULATED NET REALIZED NET INVESTMENT INCOME GAIN (LOSS) ON (LOSS) INVESTMENTS PAID-IN CAPITAL ------------------------- ------------------------ --------------- Mighty Mites(SM) Fund .... $ 48,149 $(48,149) -- Equity Fund .............. (8,377) 8,377 -- Balanced Fund ............ 110 (110) -- Intermediate Bond Fund ... (841) 841 -- SmallCap Equity Fund ..... 25,678 30,307 $(55,985) Income Fund .............. (76,577) 71,692 4,885 40 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) The tax character of distributions paid during the fiscal years ended September 30, 2008 and September 30, 2007 was as follows: MIGHTY MITES(SM) FUND EQUITY FUND BALANCED FUND ------------------------ ------------------------ ------------------------ YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, ------------------------ ------------------------ ------------------------ 2008 2007 2008 2007 2008 2007 ---------- ------------ ----------- ----------- ----------- ----------- Ordinary Income (inclusive of short-term capital gains) ... $ 309,345 -- $ 7,333,641 $ 2,016,357 $ 6,145,203 $ 6,207,247 Net long-term capital gains .................. 4,969,687 $ 5,310,690 17,646,407 27,327,666 8,300,427 15,509,989 ---------- ------------ ----------- ----------- ----------- ----------- Total distributions paid ..................... $5,279,032 $ 5,310,690 $24,980,048 $29,344,023 $14,445,630 $21,717,236 ========== ============ =========== =========== =========== =========== INTERMEDIATE BOND FUND SMALLCAP EQUITY FUND INCOME FUND ------------------------ ------------------------ ------------------------ YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, ------------------------ ------------------------ ------------------------ 2008 2007 2008 2007 2008 2007 ---------- ------------ ----------- ----------- ----------- ----------- Ordinary Income (inclusive of short-term capital gains) ... $ 365,893 $ 358,042 -- $ 112,313 $ 430,203 $ 612,849 Net long-term capital gains .................. -- -- -- -- 252,683 2,316,417 Return of capital ............................ -- -- -- -- 28,589 -- ---------- ------------ ----------- ----------- ----------- ----------- Total distributions paid ..................... $ 365,893 $ 358,042 -- $ 112,313 $ 711,475 $ 2,929,266 ========== ============ =========== =========== =========== =========== PROVISION FOR INCOME TAXES. The Funds intend to continue to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). It is the policy of the Funds to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of the Funds' net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required. At September 30, 2008, the components of accumulated earnings/losses on a tax basis were as follows: MIGHTY EQUITY BALANCED INTERMEDIATE SMALLCAP INCOME MITES(SM) FUND FUND FUND BOND FUND EQUITY FUND FUND -------------- ----------- --------- ------------ ----------- ----------- Undistributed ordinary income/(loss) ......... $ 197,333 $ 1,065,429 -- $ 7,399 -- -- Undistributed long-term capital gain ......... 1,370,728 -- $ 724,604 6,563 -- -- Accumulated capital loss carryforward ........ -- -- -- -- $(6,816,570) -- Unrealized appreciation/(depreciation) ....... 2,929,710 (2,479,284) (758,765) (83,568) (505,900) $(1,220,900) Post-October losses .......................... (1,211) (145,177) -- -- (202,892) (986,462) Distributions payable ........................ -- -- -- (8,705) -- -- Other temporary differences* ................. -- -- -- -- -- (9,531) -------------- ----------- --------- -------- ----------- ----------- Total accumulated earnings ................... $ 4,496,560 $(1,559,032) $ (34,161) $(78,311) $(7,525,362) $(2,216,893) ============== =========== ========= ======== =========== =========== - ---------- * Other temporary differences are primarily due to basis adjustments to hybrid income. At September 30, 2008, the difference between book and tax basis unrealized appreciation/depreciation is primarily attributable to the tax basis deferral of losses on wash sales. Additionally, the Equity and Balanced Funds have basis adjustments due to investments in publicly traded partnerships. The following summarizes capital loss carryforwards and expiration dates for each Fund at September 30, 2008: MIGHTY EQUITY BALANCED INTERMEDIATE SMALLCAP INCOME EXPIRING IN FISCAL YEAR MITES(SM) FUND FUND FUND BOND FUND EQUITY FUND FUND - ----------------------- -------------- ------ -------- ------------ ----------- ------ 2010 .................. -- -- -- -- $1,970,874 -- 2011 .................. -- -- -- -- 4,845,486 -- 2012 .................. -- -- -- -- -- -- 2013 .................. -- -- -- -- -- -- 2014 .................. -- -- -- -- -- -- 2015 .................. -- -- -- -- -- -- 2016 .................. -- -- -- -- 210 -- These capital loss carryforwards are available to reduce future required distributions of net capital gains to shareholders. During the fiscal year ended September 30, 2008, the Intermediate Bond Fund utilized capital loss carryforwards of $16,921. Under the current tax law, capital losses related to securities realized after October 31 and prior to the Funds' fiscal year end may be treated as occurring on the first day of the following year. For the fiscal year ended September 30, 2008, the Equity, SmallCap Equity, and Income Funds deferred capital losses of $145,177, $202,892, and $986,462, respectively, and the Mighty Mites(SM) Fund deferred currency losses of $1,211. 41 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) The following summarizes the tax cost of investments and the related unrealized appreciation/depreciation at September 30, 2008: MIGHTY EQUITY BALANCED INTERMEDIATE SMALLCAP INCOME MITES(SM) FUND FUND FUND BOND FUND EQUITY FUND FUND -------------- ------------ ------------ ------------ ----------- ----------- Aggregate cost of investments ......... $ 67,593,949 $179,396,268 $146,698,505 $12,087,429 $10,019,882 $ 9,358,861 ============ ============ ============ =========== =========== =========== Gross unrealized appreciation ......... $ 10,399,070 $ 10,694,429 $ 6,243,306 $ 177,279 $ 550,437 $ 152,033 Gross unrealized depreciation ......... (7,469,755) (13,173,713) (7,002,071) (260,874) (1,056,337) (1,372,933) ------------ ------------ ------------ ----------- ----------- ----------- Net unrealized appreciation/ (depreciation) ..................... $ 2,929,315 $ (2,479,284) $ (758,765) $ (83,595) $ (505,900) $(1,220,900) ============ ============ ============ =========== =========== =========== The Funds have adopted FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the "more-likely-than-not" threshold are recorded as a tax benefit or expense in the current year. The adoption of FIN 48 did not result in the recording of any tax benefit or expense in the current period. As of and during the year ended September 30, 2008, the Funds did not have any liabilities for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the Funds did not incur any interest or penalties. Each of the tax years in the three-year period ended September 30, 2008, remains subject to examination by the Internal Revenue Service and state tax authorities. Management's determination regarding FIN 48 may be subject to review and adjustment at a later date based on factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. 3. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS. The Funds have investment advisory agreements (the "Advisory Agreements") with the Adviser which provide that the Funds will pay the Adviser a fee, computed daily and paid monthly, at the annual rate of 1.00% for the Mighty Mites(SM), Equity, SmallCap Equity, and Income Funds, 0.75% for the Balanced Fund, and 0.60% for the Intermediate Bond Fund, of the value of the Fund's average daily net assets. In accordance with the Advisory Agreements, the Adviser provides a continuous investment program for the Funds' portfolios, oversees the administration of all aspects of the Funds' business and affairs, and pays the compensation of all Officers and Trustees of the Funds who are affiliated persons of the Adviser. The Adviser has contractually agreed to waive investment advisory fees and/or to reimburse expenses to the Intermediate Bond, SmallCap Equity, and Income Funds in the event annual expenses of such Funds exceed certain prescribed limits. Such fee waiver/reimbursement arrangement will continue until at least January 31, 2010. For the fiscal year ended September 30, 2008, the Adviser waived fees or reimbursed expenses in the amounts of $80,804, $92,150, and $100,688 for the Intermediate Bond, SmallCap Equity, and Income Funds, respectively. The Intermediate Bond, SmallCap Equity, and Income Funds are obliged to repay the Adviser for a period of two fiscal years following the fiscal year in which the Adviser reimbursed the Funds only to the extent that the operating expenses of the Funds fall below the applicable expense limitation for Class AAA of 1.00%, 1.50%, and 1.50%, respectively, and for Class A of 1.10%, 1.75%, and 1.75%, respectively, and for Class B and Class C of 1.75%, 2.25%, and 2.25%, respectively and for Class I of 0.75%, 1.25%, and 1.25%, respectively of average daily net assets, the annual limitation under the Advisory Agreements. As of September 30, 2008, the cumulative unreimbursed amounts which may be recovered by the Adviser within the next two fiscal years are $131,615, $145,030, and $163,545 for the Intermediate Bond, SmallCap Equity, and Income Funds, respectively. Prior to July 1, 2007, the Adviser had a Subadvisory Agreement with Westwood Management Corp. (the "Subadviser") for all Funds except the Mighty Mites(SM) Fund, for which there was not a Subadvisory agreement. The Adviser paid the Subadviser out of its advisory fees with respect to the Funds (except the Mighty Mites(SM) Fund) a fee computed daily and payable monthly, in an amount equal on an annualized basis to the greater of (i) $150,000 per year on an aggregate basis for all applicable Funds or (ii) 35% of the net revenues to the Adviser from the applicable Funds. Effective July 1, 2007, the Adviser assumed all of the duties and responsibilities with respect to the SmallCap Equity Fund and the Income Fund that had been delegated to the Subadviser. The Subadviser continues to serve as such to the Equity Fund, the Balanced Fund, and the Intermediate Bond Fund. For the fiscal year ended September 30, 2008, the Adviser informed the Funds that it paid collectively to the Subadviser fees of $817,338 for the Equity, Balanced, and Intermediate Bond Funds. Teton Advisors, Inc. remains as the investment adviser to the Mighty Mites(SM) Fund, SmallCap Equity Fund, and the Income Fund. 42 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) The Trust pays each Trustee who 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. All Board committee members receive $500 per meeting attended and the Chairman of the Audit Committee and the Lead Trustee each receives 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 Funds. 4. DISTRIBUTION PLAN. The Trust's Board has adopted a distribution plan (the "Plan") for each class of shares except 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 Funds. 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%, 0.50% (for the Intermediate Bond Fund's Class A Shares at an annual rate of 0.35%), 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 September 30, 2008, other than short-term securities, are as follows: PURCHASES SALES PURCHASES SALES (EXCLUDING U.S. (EXCLUDING U.S. OF U.S. OF U.S. GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT SECURITIES) SECURITIES) SECURITIES SECURITIES --------------- --------------- ----------- ------------ Mighty Mites(SM) Fund ........... $ 16,795,978 $ 6,552,899 $10,872,592 $ 1,675,000 Equity Fund ..................... 149,669,064 132,260,785 -- -- Balanced Fund ................... 77,895,410 68,548,786 7,892,737 16,949,060 Intermediate Bond Fund .......... 977,991 1,237,836 2,975,008 1,967,807 SmallCap Equity Fund ............ 13,341,316 10,569,853 -- -- Income Fund ..................... 2,676,460 6,898,785 409,177 3,439,726 6. TRANSACTIONS WITH AFFILIATES. During the fiscal year ended September 30, 2008, the Mighty Mites(SM) Fund, the SmallCap Equity Fund, and the Income Fund paid brokerage commissions on security trades of $20,630, $338, and $10,660, respectively, to Gabelli & Company. Additionally, Gabelli & Company informed the Trust that it received $27,447 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares. The cost of calculating each Fund's NAV per share is a Fund expense pursuant to the Advisory Agreement between each Fund and the Adviser. During the fiscal year ended September 30, 2008, the Mighty Mites(SM), Equity, and Balanced Funds each paid or accrued $45,000 to the Adviser in connection with the cost of computing these Funds' NAVs. A reimbursement was not sought during the fiscal year ended September 30, 2008 for the Intermediate Bond, SmallCap Equity, and Income Funds. 7. SHARES OF BENEFICIAL INTEREST. The Funds offer five classes of shares - Class AAA Shares, Class A Shares, Class B Shares, Class C Shares, and Class I Shares. Class AAA 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 4.00%. 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, which percentage is 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. Only the Mighty Mites(SM) 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 Mighty Mites(SM) Fund. The redemption fees retained by the Mighty Mites(SM) Fund during the fiscal years ended September 30, 2008 and September 30, 2007 amounted to $1,648 and $131, 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 Mighty Mites(SM) Fund, (iii) the shares were purchased through programs that collect the redemption fee at the program level and remit them to the Mighty Mites(SM) 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. 43 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) Transactions in shares of beneficial interest were as follows: YEAR ENDED YEAR ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, --------------------- ----------------------- ----------------------- 2008 2007 2008 2007 2008 2007 ---------- -------- ---------- ---------- ---------- ---------- MIGHTY MITES(SM) FUND EQUITY FUND BALANCED FUND --------------------- ----------------------- ----------------------- CLASS AAA Shares sold.......................................... 2,166,550 783,276 5,414,384 3,159,294 3,119,951 2,267,326 Shares issued upon reinvestment of distributions..... 278,799 309,929 2,161,815 2,471,688 1,161,782 1,709,223 Shares redeemed...................................... (1,112,323) (565,605) (4,365,986) (4,141,576) (3,187,808) (3,184,984) ---------- -------- ---------- ---------- ---------- ---------- Net increase in Class AAA Shares.................. 1,333,026 527,600 3,210,213 1,489,406 1,093,925 791,565 ========== ======== ========== ========== ========== ========== CLASS A Shares sold.......................................... 512,592 133,030 687,378 47,697 121,163 31,137 Shares issued upon reinvestment of distributions..... 29,244 37 56,338 40,525 38,218 58,360 Shares redeemed...................................... (211,974) (687) (466,916) (30,804) (60,036) (87,393) ---------- -------- ---------- ---------- ---------- ---------- Net increase in Class A Shares.................... 329,862 132,380 276,800 57,418 99,345 2,104 ========== ======== ========== ========== ========== ========== CLASS B Shares sold.......................................... -- -- -- -- -- 3,276 Shares issued upon reinvestment of distributions..... 2,672 4,999 183 355 923 1,354 Shares redeemed...................................... (15,293) (8,267) (613) (1,070) (4,320) (248) ---------- -------- ---------- ---------- ---------- ---------- Net increase/(decrease) in Class B Shares......... (12,621) (3,268) (430) (715) (3,397) 4,382 ========== ======== ========== ========== ========== ========== CLASS C Shares sold.......................................... 273,898 114,117 68,244 1,532 68,632 13,769 Shares issued upon reinvestment of distributions..... 13,882 3,195 4,010 4,708 5,962 9,197 Shares redeemed...................................... (42,079) (11,032) (15,903) (6,067) (22,434) (17,216) ---------- -------- ---------- ---------- ---------- ---------- Net increase in Class C Shares.................... 245,701 106,280 56,351 173 52,160 5,750 ========== ======== ========== ========== ========== ========== CLASS I* Shares sold.......................................... 69,523 93,718 144,924 Shares issued upon reinvestment of distributions..... -- -- 1,528 Shares redeemed...................................... (3,118) (7,404) (4,022) ---------- ---------- ---------- Net increase in Class I Shares.................... 66,405 86,314 142,430 ========== ========== ========== INTERMEDIATE BOND FUND SMALLCAP EQUITY FUND INCOME FUND --------------------- ----------------------- ----------------------- CLASS AAA Shares sold.......................................... 330,244 120,020 388,615 251,401 250,721 1,290,924 Shares issued upon reinvestment of distributions..... 21,484 25,233 -- 5,666 72,035 269,742 Shares redeemed...................................... (254,620) (190,997) (258,998) (375,125) (1,145,352) (810,836) ---------- -------- ---------- ---------- ---------- ---------- Net increase/(decrease) in Class AAA Shares....... 97,108 (45,744) 129,617 (118,058) (822,596) 749,830 ========== ======== ========== ========== ========== ========== CLASS A Shares sold.......................................... 14,161 836 48,394 26,209 4,279 7,402 Shares issued upon reinvestment of distributions..... 142 230 -- 363 485 2,100 Shares redeemed...................................... (11,382) (3,161) (41,501) (6,710) (5,979) (9,794) ---------- -------- ---------- ---------- ---------- ---------- Net increase/(decrease) in Class A Shares......... 2,921 (2,095) 6,893 19,862 (1,215) (292) ========== ======== ========== ========== ========== ========== CLASS B Shares issued upon reinvestment of distributions..... 21 81 -- 2 -- 43 Shares redeemed...................................... (4,207) (17,619) (49) (5) (202) -- ---------- -------- ---------- ---------- ---------- ---------- Net increase/(decrease) in Class B Shares......... (4,186) (17,538) (49) (3) (202) 43 ========== ======== ========== ========== ========== ========== CLASS C Shares sold.......................................... 315,668 8,938 1,724 2,746 12,578 33,760 Shares issued upon reinvestment of distributions..... 2,007 1 -- 142 1,699 700 Shares redeemed...................................... (272,816) (7,485) (5,253) (2,001) (12,793) (268) ---------- -------- ---------- ---------- ---------- ---------- Net increase/(decrease) in Class C Shares......... 44,859 1,454 (3,529) 887 1,484 34,192 ========== ======== ========== ========== ========== ========== CLASS I* Shares sold.......................................... 35,870 16,978 15,310 Shares issued upon reinvestment of distributions..... 436 -- 373 Shares redeemed...................................... (2,784) (3,225) (703) ---------- ---------- ---------- Net increase in Class I Shares.................... 33,522 13,753 14,980 ========== ========== ========== - ---------- * From the commencement of offering Class I Shares on January 11, 2008. 44 GAMCO WESTWOOD FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. INDEMNIFICATIONS. The Funds enter into contracts that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. 9. OTHER MATTERS. On April 24, 2008, an affiliate of the Adviser, Gabelli Funds, LLC, 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 Gabelli Funds, LLC 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, Gabelli Funds, LLC, 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 Gabelli Funds, LLC 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 Gabelli Funds, LLC, 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 including the Funds. The officer denies the allegations and is continuing in his positions with Gabelli Funds, LLC and the funds. Gabelli Funds, LLC currently expects that any resolution of the action against the officer will not have a material adverse impact on Gabelli Funds, LLC or its ability to fulfill its obligations under the Advisory Agreement. In a separate matter, in August 2008, Gabelli Funds, LLC, while neither admitting nor denying the SEC's findings and allegations, 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 Gabelli Funds, LLC. 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. Gabelli Funds, LLC 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 Gabelli Funds, LLC 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. 10. SUBSEQUENT EVENT. On November 3, 2008, The Bjurman, Barry Funds announced that it has entered into a letter of intent with GAMCO Investors, Inc. (NYSE: GBL), an affiliate to the Adviser, for the reorganization of the Bjurman, Barry Micro-Cap Growth Fund (the "Fund") into the GAMCO Westwood Mighty Mites(SM) Fund. As of November 3, 2008, the Fund had net assets of approximately $93 million. The transaction is expected to close in the first quarter of 2009. 45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of The GAMCO Westwood Funds: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of GAMCO Westwood Mighty Mites(SM) Fund, GAMCO Westwood Equity Fund, GAMCO Westwood Balanced Fund, GAMCO Westwood Intermediate Bond Fund, GAMCO Westwood SmallCap Equity Fund, and GAMCO Westwood Income Fund (constituting The GAMCO Westwood Funds, hereafter referred to as the "Funds") at September 30, 2008, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP NEW YORK, NY NOVEMBER 26, 2008 46 2008 TAX NOTICE TO SHAREHOLDERS (UNAUDITED) U.S. GOVERNMENT INCOME: - The percentage of the ordinary income dividend paid by the Mighty Mites(SM) Fund, Equity Fund, Balanced Fund, Intermediate Bond Fund, and Income Fund (collectively, the "Funds") during fiscal year 2008 which was derived from U.S. Treasury securities was 10.05%, 3.12%, 11.67%, 24.51%, and 2.67%, respectively. 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 Funds did not meet this strict requirement in 2008. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser for the applicability of the information provided as to your specific situation. MIGHTY MITES(SM) FUND - For the fiscal year ended September 30, 2008, the Fund paid to shareholders ordinary income dividends (comprised of net investment income and short-term capital gains) totaling $0.09, $0.10, $0.03, and $0.05 per share for Class AAA, Class A, Class B, and Class C Shares, respectively, and long-term capital gains totaling $4,969,687. The distributions of long-term capital gains have been designated as Capital Gain Dividends by the Funds' Board of Trustees. For the fiscal year ended September 30, 2008, 80.20% of the ordinary income dividend qualifies for the dividends received deductions available to corporations. The Fund designates 68.96% of the ordinary income distribution as qualified dividend income, pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 48.44% of the ordinary income distribution as qualified interest income, and 100% of the ordinary income distribution as qualified short-term gain, pursuant to the American Jobs Creation Act of 2004. EQUITY FUND - For the fiscal year ended September 30, 2008, the Fund paid to shareholders ordinary income dividends (comprised of net investment income and short-term capital gains) totaling $0.48, $0.47, $0.43, and $0.43 per share for Class AAA, Class A, Class B, and Class C Shares, respectively, and long-term capital gains totaling $17,646,407. The distributions of long-term capital gains have been designated as Capital Gain Dividends by the Funds' Board of Trustees. For the fiscal year ended September 30, 2008, 53.28% of the ordinary income dividend qualifies for the dividends received deductions available to corporations. The Fund designates 53.71% of the ordinary income distribution as qualified dividend income, pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 12.08% of the ordinary income distribution as qualified interest income, and 100% of the ordinary income distribution as qualified short-term gain, pursuant to the American Jobs Creation Act of 2004. BALANCED FUND - For the fiscal year ended September 30, 2008, the Fund paid to shareholders ordinary income dividends (comprised of net investment income and short-term capital gains) totaling $0.46, $0.42, $0.44, $0.32, and $0.17 per share for Class AAA, Class A, Class B, Class C, and Class I Shares, respectively, and long-term capital gains totaling $8,300,427. The distributions of long-term capital gains have been designated as Capital Gain Dividends by the Funds' Board of Trustees. For the fiscal year ended September 30, 2008, 47.87% of the ordinary income dividend qualifies for the dividends received deductions available to corporations. The Fund designates 46.23% of the ordinary income distribution as qualified dividend income, pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 58.34% of the ordinary income distribution as qualified interest income, and 100% of the ordinary income distribution as qualified short-term gain, pursuant to the American Jobs Creation Act of 2004. INTERMEDIATE BOND FUND - For the fiscal year ended September 30, 2008, the Fund paid to shareholders ordinary income dividends (comprised of net investment income) totaling $0.36, $0.35, $0.27, $0.26, and $0.27 per share for Class AAA, Class A, Class B, Class C, and Class I Shares, respectively. For the fiscal year ended September 30, 2008, the Fund designates 100% of the ordinary income distribution as qualified interest income. INCOME FUND - For the fiscal year ended September 30, 2008, the Fund paid to shareholders ordinary income dividends (comprised of net investment income and short-term capital gains) totaling $0.36, $0.32, $0.19, $0.30, and $0.28 per share for Class AAA, Class A, Class B, Class C, and Class I Shares, respectively, and long-term capital gains totaling $252,683. The distributions of long-term capital gains have been designated as Capital Gain Dividends by the Funds' Board of Trustees. For the fiscal year ended September 30, 2008, 66.52% of the ordinary income dividend qualifies for the dividends received deductions available to corporations. The Fund designates 73.53% of the ordinary income distribution as qualified dividend income, pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 18.63% of the ordinary income distribution as qualified interest income, and 100% of the ordinary income distribution as qualified short-term gain, pursuant to the American Jobs Creation Act of 2004. 47 GAMCO WESTWOOD FUNDS BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS (UNAUDITED) In determining whether to approve the continuance of each of the Agreements, the Board considered the following information: 1)THE NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY THE ADVISER AND THE SUB-ADVISER. The Board reviewed in detail the nature and extent of the services provided by the Adviser and the Sub-Adviser under the Agreements and the quality of those services over the past year. The Board noted that these services included managing the investment program of the Funds, including the purchase and sale of portfolio securities, as well as the provision of general corporate services. The Board considered that the Adviser also provided, at its expense, office facilities for use by the Funds and supervisory personnel responsible for supervising the performance of administrative, accounting, and related services including, for each Fund, net asset value determinations, yield calculations, and monitoring to assure compliance with stated investment policies and restrictions under the 1940 Act and related securities regulations. The Board noted that, in addition to managing the investment program for the Funds, the Adviser provided certain non-advisory and compliance services, including services under the Funds' Rule 38a-1 compliance program. The Board also considered that the Adviser and Sub-Adviser paid for all compensation of officers and Board Members of the Funds that were affiliated with the Adviser or Sub-Adviser and that the Adviser further provided a substantial level of services to shareholders of the Funds who had invested through various programs offered by third party financial intermediaries ("Participating Organizations"). The Board evaluated these factors based on its direct experience with the Adviser and Sub-Adviser and in consultation with Fund Counsel. The Board noted that the Adviser had engaged, at its expense, PNC Global Investment Servicing ("PNC") to assist it in performing certain of its administrative functions. The Board concluded that the nature and extent of the services provided was reasonable and appropriate in relation to the advisory fee, that the level of services provided by the Adviser, either directly or through PNC, and by the Sub-Adviser, had not diminished over the past year and that the quality of service continued to be high. The Board reviewed the personnel responsible for providing services to the Funds and concluded, based on their experience and interaction with the Adviser and Sub-Adviser, that (i) the Adviser and Sub-Adviser were able to retain quality personnel, (ii) the Adviser, Sub-Adviser, and their agents exhibited a high level of diligence and attention to detail in carrying out their advisory and administrative responsibilities under the Agreements, (iii) the Adviser and Sub-Adviser were responsive to requests of the Board, (iv) the scope and depth of the Adviser's and Sub-Adviser's resources were adequate, and (v) the Adviser and Sub-Adviser had kept the Board apprised of developments relating to each Fund and the industry in general. The Board also focused on the Adviser's reputation and long standing relationship with the Funds. The Board also believed that the Adviser had devoted substantial resources and made substantial commitments to address new regulatory compliance requirements applicable to the Funds. 2)THE PERFORMANCE OF THE FUNDS, THE ADVISER, AND THE SUB-ADVISER. The Board reviewed the investment performance of each Fund, on an absolute basis, as compared with its Lipper peer group, and against each Fund's broad based securities market benchmarks as reflected in each Fund's prospectus and annual report. The Board also considered rankings and ratings of the Funds issued by Lipper over the short, intermediate, and long-term. The Board considered each Fund's one, three, five, and, where available, ten year average annual total return for the periods ended June 30, 2008, but placed greatest emphasis on a Fund's longer term performance. The peer groups considered by the Board were developed by Lipper and were comprised of funds of comparable size within the same Lipper peer group category (the "Peer Group"), regardless of asset size or primary channel of distribution. Each Fund's performance against the performance Peer Group (the "Performance Peer Group") was considered by the Board as providing an objective comparative benchmark against which each Fund's performance could be assessed. In general, the Board considered these comparisons helpful in their assessment as to whether the Adviser was obtaining for the Funds' shareholders the total return performance that was available in the marketplace, given each Fund's investment objectives, strategies, limitations, and restrictions. In reviewing the Funds' performance, the Board noted that each Fund's performance was generally acceptable, noting that on occasion Funds have underperformed and on other occasions Funds have outperformed certain of these Performance Peer Groups. In connection with its assessment of the performance of the Adviser and the Sub-Adviser, the Board considered the Adviser's and Sub-Adviser's financial condition and whether they had the resources necessary to continue to carry out their responsibilities under the Agreements. The Board concluded that the Adviser and Sub-Adviser had the financial resources necessary to continue to perform their obligations under the Agreements and to continue to provide the high quality services that they have provided to the Funds to date. 48 3) THE COST OF THE ADVISORY SERVICES AND THE PROFITS TO THE ADVISER AND SUB-ADVISER AND THEIR AFFILIATES FROM THE RELATIONSHIP WITH THE FUNDS. In connection with the Board's consideration of the cost of the advisory and sub-advisory services and the profits to the Adviser, Sub-Adviser, and their affiliates from their relationships with the Fund, the Board considered a number of factors. First, the Board compared the level of the advisory fee for each Fund against comparative Lipper expense peer groups ("Expense Peer Group"). The Board also considered comparative non-management fee expenses and comparative total fund expenses of the Funds and each Expense Peer Group. The Board considered this information as useful in assessing whether the Adviser and Sub-Adviser were providing services at a cost that was competitive with other similar funds. In assessing this information, the Board considered both the comparative contract rates as well as the level of the advisory fees after waivers and/or reimbursements. The Board noted that three of the Funds operated pursuant to a Waiver and Expense Reimbursement Agreement with the Adviser wherein the Adviser had agreed to waive a portion of its fee or reimburse a Fund for a portion of its expenses necessary to limit the Fund's total operating expenses to the level set forth in the respective Fund's prospectus. The Board considered that despite the fact that the GAMCO Westwood Equity Fund, the GAMCO Westwood Balanced Fund, and the GAMCO Westwood Mighty Mites(SM) Fund's advisory fees and operating expenses were above the range of fees charged by their respective Peer Group, the expenses were reasonable in light of the fact that these Funds each outperformed most of the funds in their respective Peer Group over various time periods. The Board also noted that while the GAMCO Westwood Income Fund outperformed most of the funds in its Peer Group for the three and five year periods, it underperformed most of the Funds in its Peer Group for the one year period. The Board considered the fact that the GAMCO Westwood Income Fund's investment objective was changed recently, and as a result, performance information with respect to the new investment objective was less meaningful than performance information for a fund that had maintained the same investment objective over a longer period of time. The Board concluded that it would continue to monitor the situation. The Board Members also reviewed the fees charged by the Adviser and Sub-Adviser to provide similar advisory services to other registered investment companies with similar investment objectives and to separate accounts, noting that in some cases the fees charged by the Adviser or Sub-Adviser were higher and, in other cases lower, than the fees charged to the Funds. In evaluating this information, the Board considered the difference in services provided by the Adviser and Sub-Adviser to these other accounts. In particular, the Board considered the differences in risks involved in managing separate accounts and the Funds from a compliance and regulatory perspective. The Board also considered an analysis prepared by the Adviser of the estimated profitability to the Adviser of its relationship with the Funds and reviewed with the Adviser its cost allocation methodology in connection with its profitability. In this regard, the Board reviewed Pro-forma Income Statements of the Adviser for the year ended December 31, 2007. The Board considered one analysis for the Adviser as a whole and a second analysis for the Adviser with respect to each of the Funds. With respect to the Fund analysis, the Board received an analysis based on each Fund's average net assets during the period as well as a pro-forma analysis of profitability at higher and lower asset levels. The Board concluded that the profitability of the Funds to the Adviser under either analysis was not excessive. 4) THE EXTENT TO WHICH ECONOMIES OF SCALE WILL BE REALIZED AS THE FUNDS GROW AND WHETHER FEE LEVELS REFLECT THOSE ECONOMIES OF SCALE. With respect to the Board's consideration of economies of scale, the Board discussed whether economies of scale would be realized by the Funds at higher asset levels. The Board also reviewed data from the Expense Peer Group to assess whether the Expense Peer Group funds had advisory fee breakpoints and, if so, at what asset levels. The Board also assessed whether certain of the Adviser's costs would increase if asset levels rise. The Board concluded that under foreseeable conditions, they were unable to assess at this time whether economies of scale would be realized if the Funds were to experience significant asset growth. In the event there was to be significant asset growth in the Funds, the Board determined to reassess whether the advisory fee appropriately took into account any economies of scale that had been realized as a result of that growth. 5) OTHER FACTORS. In addition to the above factors, the Board also discussed other benefits received by the Adviser and Sub-Adviser from their management of the Funds. The Board considered that the Adviser and Sub-Adviser did not use soft dollars in connection with their management of the Funds. Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that each Fund's advisory fee and, with respect to the GAMCO Westwood Equity Fund, the GAMCO Westwood Balanced Fund, and the GAMCO Westwood Intermediate Bond Fund, the sub-advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of each Fund's advisory agreement and, with respect to the GAMCO Westwood Equity Fund, the GAMCO Westwood Balanced Fund, and the GAMCO Westwood Intermediate Bond Fund, the sub-advisory agreements. The Board based its decision on evaluations of all these factors as a whole and did not consider any one factor as all-important or controlling. 49 GAMCO WESTWOOD FUNDS ADDITIONAL FUND INFORMATION (UNAUDITED) The business and affairs of the Trust are managed under the direction of its Board of Trustees. Information pertaining to the Trustees and officers of the Trust is set forth below. The Trust's Statement of Additional Information includes additional information about the GAMCO Westwood Funds' Trustees and is available, without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to the GAMCO Westwood Funds at One Corporate Center, Rye, NY 10580-1422. TERM OF OFFICE AND NUMBER OF NAME, POSITION(S), LENGTH OF FUNDS IN FUND ADDRESS(1) TIME COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS AND AGE SERVED(2) BY TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE(3) - ------------------------ ---------- ---------------- ---------------------------------------- ----------------------- INDEPENDENT TRUSTEES(4): ANTHONY J. COLAVITA Since 1994 37 Partner in the law firm of -- Trustee Anthony J. Colavita, P.C. Age: 72 JAMES P. CONN Since 1994 18 Former Managing Director and Chief -- Trustee Investment Officer of Financial Security Age: 70 Assurance Holdings Ltd. (1992-1998) WERNER J. ROEDER, Since 1994 23 Medical Director of Lawrence Hospital -- M.D. and practicing private physician Trustee Age: 68 SALVATORE J. ZIZZA Since 2004 28 Chairman of Zizza & Company, Ltd. Director of Hollis-Eden Trustee (consulting) Pharmaceuticals Age: 62 (biotechnology); Director of Earl Scheib, Inc. (automotive services) OFFICERS: BRUCE N. ALPERT Since 1994 -- Executive Vice President and Chief -- President and Operating Officer of Gabelli Funds, LLC Secretary since 1988 and an officer of all of the Age: 56 registered investment companies in the Gabelli/GAMCO Funds complex; Director and President of Teton Advisors, Inc., (formerly known as Gabelli Advisers, Inc.), since 1998 AGNES MULLADY Since 2006 -- Vice President of Gabelli Funds, LLC -- Treasurer since 2007; Officer of all of the Age: 50 registered investment companies in the Gabelli/GAMCO Funds complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer and Chief Financial Officer of Excelsior Funds from 2004 through 2005; Chief Financial Officer of AMIC Distribution Partners from 2002 through 2004 PETER D. GOLDSTEIN Since 2004 -- Director of Regulatory Affairs at GAMCO -- Chief Compliance Officer Investors, Inc. since 2004; Chief Age: 55 Compliance Officer of all of the registered investment companies in the Gabelli/GAMCO 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 Trustee will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Trustee and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Trustee resigns or retires, or a Trustee is removed by the Board of Trustees or shareholders, in accordance with the Trust's Amended By-Laws and Amended and Restated Declaration of Trust. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. (3) 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 Investment Company Act of 1940. (4) Trustees who are not interested persons are considered "Independent" Trustees. 50 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 GAMCO 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 GAMCO 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) PORTFOLIO MANAGER: NICHOLAS F. GALLUCCIO 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 (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 GAMCO 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 average market 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 GAMCO 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 GAMCO WESTWOOD INCOME FUND Seeks to provide a high level of current income as well as long-term capital appreciation by investing in income producing equity and fixed income securities. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA 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 GABELLI SRI FUND Seeks to invest in common and preferred stocks of companies that meet the Fund's guidelines for social responsibility at the time of investment, looking to avoid companies in tobacco, alcohol, and gaming, defense/weapons contractors, and manufacturers of abortifacients. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: CHRISTOPHER C. DESMARAIS 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 worldwide 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 GABELLI ENTERPRISE MERGERS AND ACQUISITIONS FUND Seeks to invest in securities believed to be likely acquisition targets within 12-18 months or in arbitrage transactions of publicly announced mergers or other corporate reorganizations. The Fund's primary objective is capital appreciation. (MULTICLASS) 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 GAMCO 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) CO-PORTFOLIO MANAGERS: JUDITH A. RANERI RONALD S. EAKER 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 WESTWOOD FUNDS GAMCO WESTWOOD MIGHTY MITES(SM) FUND GAMCO WESTWOOD EQUITY FUND GAMCO WESTWOOD BALANCED FUND GAMCO WESTWOOD INTERMEDIATE BOND FUND GAMCO WESTWOOD SMALLCAP EQUITY FUND GAMCO WESTWOOD INCOME FUND One Corporate Center Rye, New York 10580-1422 GENERAL AND ACCOUNT INFORMATION: 800-GABELLI [800-422-3554] fax: 914-921-5118 website: www.gabelli.com e-mail: info@gabelli.com Board of Trustees ANTHONY J. COLAVITA ATTORNEY-AT-LAW ANTHONY J. COLAVITA, P.C. JAMES P. CONN FORMER CHIEF INVESTMENT OFFICER FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. WERNER J. ROEDER, MD MEDICAL DIRECTOR LAWRENCE HOSPITAL SALVATORE J. ZIZZA CHAIRMAN ZIZZA & CO., LTD. Officers BRUCE N. ALPERT PRESIDENT AND SECRETARY PETER D. GOLDSTEIN CHIEF COMPLIANCE OFFICER AGNES MULLADY TREASURER INVESTMENT ADVISER Teton Advisors, Inc. DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN The Bank of New York Mellon LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP We have separated the portfolio managers' 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 managers' 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. - -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of the GAMCO Westwood Funds. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. - -------------------------------------------------------------------------------- GABWWQ308AR 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 James P. Conn is qualified to serve as an audit committee financial expert serving on its audit committee and that he is "independent." 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 $174,300 in 2007 and $162,550 in 2008. AUDIT-RELATED FEES (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 in 2007 and $0 in 2008. 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 $34,000 in 2007 and $26,000 in 2008. Tax fees represent tax compliance services provided in connection with the review of the Registrant's tax returns. ALL OTHER FEES (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 in 2007 and $0 in 2008. (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 Advisers, Inc., and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides services to the registrant (a "Covered Services Provider") if the 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) 0% (c) 100% (d) 0% (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 $0 in 2007 and $0 in 2008. (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. 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) 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) The GAMCO Westwood Funds -------------------------------------------------------------------- By (Signature and Title)* /s/ Bruce N. Alpert ------------------------------------------------------- Bruce N. Alpert, Principal Executive Officer Date 12/2/08 ---------------------------------------------------------------------------- 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 12/2/08 ---------------------------------------------------------------------------- By (Signature and Title)* /s/ Agnes Mullady ------------------------------------------------------- Agnes Mullady, Principal Financial Officer and Treasurer Date 12/2/08 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.