----The----
Westwood
---Funds---
WESTWOOD EQUITY FUND
WESTWOOD INTERMEDIATE BOND FUND
WESTWOOD BALANCED FUND
Semi-Annual Report
- --------------------------------------------------------------------------------
March 31, 1996
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<PAGE>
The Westwood Funds
==================
Westwood Balanced Fund o Westwood Equity Fund o Westwood Intermediate Bond Fund
Semi-Annual Report
March 31, 1996
Dear Fellow Shareholders:
We are pleased to provide the March 31, 1996, semi-annual report for the
Westwood Funds. Covered in these remarks are the Westwood Balanced Fund, the
Westwood Equity Fund and the Westwood Intermediate Bond Fund.
Economic Commentary
Both stocks and bonds continued to rally over the last quarter of 1995 and
into the first quarter of 1996. Much of the rally was supported by record-level
investments in mutual funds over the six month period. It was not until we
received an unexpectedly strong jobs report that both stock and bond markets
began several volatile trading sessions, ultimately leaving bond yields at
higher levels (and lower prices) not seen since last summer. Stocks, on the
other hand, benefited as massive amounts of cash were put to work in mostly
large cap and very liquid stocks.
A look at the economy continues to show a mixed bag of information.
Although we saw a strong jobs report for the month of February, the economy as a
whole seems to be maintaining a slow but steady pace with brief episodes of
strength often followed by signs of weakness.
Westwood Balanced Fund
The Balanced Fund Retail Class returned 12.6% and the Service Class earned
12.5% for the six month period ending March 31, 1996. For the most recent
quarter, the Westwood Balanced Fund Retail Class and Service Class both posted
returns of 5.1%. According to Lipper Analytical Services, the average return for
all 262 balanced mutual funds was 2.5% during the same period. During March
1996, some exceptional gains were realized among selected equity holdings.
Additionally, our investment analysis pointed to intermediate bonds as offering
a compelling value. As such, the asset allocation shifted in March as the Fund
increased its commitment to fixed income by 3%, bringing the asset level to 39%,
while the equity portion declined equally to 59% leaving 2% in cash. The Fund's
asset allocation at the end of September 1995 had approximately 62% invested in
equities and 36% invested in bonds.
The average annual return of the Balanced Fund Retail Class for the one
year period ended March 31, 1996 was 30.3% and the Service Class returned 30.1%.
The average balanced mutual fund returned 21.1% over the same period, according
to Lipper.
The Balanced Fund Retail Class and Service Class achieved total returns
since their respective
<PAGE>
inceptions on October 1, 1991, and April 6, 1993, through March 31, 1996, of
82.6% and 53.4%, which equate to average annual returns of 14.3% and 15.4%,
respectively.
The average annual returns of the Balanced Fund Service Class for the one
year period and since inception through March 31, 1996, including the effect of
the Fund's 4% front-end sales charge, were 24.8% and 13.8%, respectively.
The Westwood Balanced Fund, which has maintained its 5-Star (5 stars)
rating from Morningstar Inc.,(1) among 2,630 funds based on three-year
risk-adjusted performance, was the #1 Balanced Fund among 139 balanced funds for
the three year period and was #4 among 279 for the one year period ended March
31, 1996. Lipper Analytical Services also ranked the Fund #4 among a 262 fund
universe for the trailing twelve month period. During the last six months strong
performance has been noted by several publications including Dallas Morning
News' syndicated columnist Scott Burns and mutual fund ranking scorecards
consistently seen in the Wall Street Journal, Investor's Business Daily and the
Dallas Morning News. Strategies for the equity and fixed income funds which are
discussed below apply to their respective components in the Balanced Fund.
Westwood Equity Fund
For the six month period ended March 31, 1996, the 4-Star (4 stars)
rated(1),(2) Equity Fund Retail Class posted a return of 18.1% and the Service
Class posted a return of 17.8%. For the three months ended March 31, 1996, the
Equity Fund Retail Class posted a return of 9.2% while the Equity Fund Service
Class earned 9.0%. For the same period, the Fund was ranked in the top 12% of
the 203 Capital Appreciation funds currently followed by Lipper Analytical
Services.
The average annual return of the Equity Fund Retail Class for the one year
period ended March 31, 1996 was 39.8% and the Service Class returned 39.2%. The
average capital appreciation mutual fund returned 28.7% over the same period,
according to Lipper. The Equity Fund Retail Class had a total return of 108.3%
for the five years through March 31, 1996, which equates to an average annual
return of 15.8%.
The Equity Fund Retail Class and Service Class achieved total returns since
their respective inceptions on January 2, 1987 and January 28, 1994, through
March 31, 1996, of 232.7% and 46.5%, which equate to average annual returns of
13.9% and 19.2%, respectively.
The average annual returns of the Equity Fund Service Class for the one
year period and since
- ---------------
(1) Past performance does not guarantee future results. Morningstar proprietary
ratings reflect historical risk-adjusted performance as of 3/31/96. The ratings
are subject to change every month. Morningstar ratings are calculated from the
Funds' 3- and 5-year average annual returns in excess of 90-day T-bill returns
with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-Bill returns. 10% of the funds in an investment
category receive 5 stars and 22.5% receive 4 stars.
(2) As of March 31, 1996, the Westwood Equity Fund Retail Class received an
overall rating of 4 stars (4 stars) from Morningstar. The Fund was rated 5 stars
for the 3-year period and 4 stars for the 5-year period ended March 31, 1996
among 1,469 and 970 equity funds, respectively.
2
<PAGE>
inception through March 31, 1996, including the effect of the Fund's 4%
front-end sales charge, were 33.7% and 17.0%, respectively.
The top performing market sectors included Finance, Healthcare, Energy,
Capital Goods, and Basic Materials. Our exposure to Real Estate Investment
Trusts (REITs), a sector that we discussed in our last letter as one that
offered compelling value relative to some of our technology related names,
contributed to performance over the prior six month period. In addition to our
overweighting in REITs, the Equity Fund's performance was enhanced by
overweighted positions and excellent stock selection among the Basic Materials,
Capital Goods, Consumer Cyclicals, Technology and Transportation sectors. As the
market continued to reach new highs, we began adding conservative and
well-seasoned energy stocks to the portfolio. Top performing stocks for the
prior six months included Computer Associates, Sterling Software, Deere &
Company, Nautica Enterprises and Tiffany & Company. Boeing and Lockheed
contributed to performance as well, and were two stocks suggested by us in Money
Magazine's April issue. The article was a follow-up to an earlier piece which
asked us to pick two stocks with the potential of doubling in value over five
years.
Westwood Intermediate Bond Fund
The fixed income markets experienced a volatile six month period. The final
three months of 1995 seemed to suggest that the economy was slowing. The bond
market had begun to price in further easing (lowering interest rates) by the
Federal Reserve. The first three months of 1996, however, reversed this
likelihood, as stronger economic data and a very strong jobs report sent
interest rates higher. The prospect of a stronger economy combined with rising
commodity prices heightened inflationary concerns in the market.
For the six month period ending March 31, 1996, the Westwood Intermediate
Bond Fund earned 1.6% net of fees and expenses. The average annual return of the
Intermediate Bond Fund for the one year period ended March 31, 1996 was 8.9%.
The average taxable bond mutual fund returned 9.7% over the same period,
according to Lipper Analytical Services. Since inception on October 1, 1991,
through March 31, 1996, the Intermediate Bond Fund had a total return of 31.7%,
which equates to an average annual return of 6.3%.
During the previous six months, the Fund benefited from an overweighting in
asset-backed securities; the best performing sector in the Lehman Brothers
Government/Corporate Bond Index, and exposure to intermediate corporate bonds.
The top performing securities were EQCC Home Equity and Premier Auto Trust; both
are AAA-rated securities backed by home equity and auto floor dealer loans
respectively. Additionally, intermediate maturity corporate bonds issued by
Lockheed Martin Corp., News American Holdings Inc. and American Home Products
contributed to performance.
During the last six months we increased the Fund's exposure to longer
maturity securities as a result of our capital markets analysis. As volatility
increased in the first quarter of 1996, we began to take a more conservative
stance in the Fund by lowering the overall duration, a measure of price
sensitivity, and adding bonds with intermediate maturities. Although we do not
believe we are seeing indications for a stronger economy with the possibility
for inflation, we do believe the Federal Reserve will maintain its neutral
stance with regard to interest rates and not ease over the near term.
3
<PAGE>
Capital Market Outlook:
Although the government reported a surprising surge in new jobs in
February, we expect slow growth over the next six months. While it does appear
that personal consumption is firming, it is by no means robust. We believe the
economy is capable of growing approximately 2.5% for 1996 without experiencing
undue inflationary pressures. Our scenario continues to indicate a slow but
steady picture with growth accelerating in the second quarter of 1996, as low
inventories necessitate increases in production and government spending resumes.
Over the past year, the Westwood Funds have been featured in several
publications including Barron's, Fortune and Money as well as having been the
subject of interviews on both the Nightly Business Report and CNBC. As a result
of this increased awareness, we have seen an increase in the level of new
investors into the funds and we are truly grateful for your confidence in our
investment abilities. We believe we appeal to the conservative investor whose
primary objectives are capital appreciation and preservation of principal. If
you are interested in obtaining any of the articles or video presentations,
please contact me. Additionally, I welcome your comments and encourage you to
write directly to me at our offices or on the Internet. We will continue to work
hard to meet your investment objectives.
Sincerely,
/s/ Susan M. Byrne
Susan M. Byrne
President and Chief Investment Officer
[email protected]
April 19, 1996
- --------------------------------------------------------------------------------
Minimum Initial Investment -- $1,000
The Funds' minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent minimums. No initial minimum is
required for those establishing an Automatic Investment Plan.
Gabelli U.S. Treasury Money Market Fund
Shareholders of any of the Gabelli/Westwood Funds may invest in The Gabelli
U.S. Treasury Money Market Fund with an initial investment of $3,000 or more.
The Fund provides checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most attractive U.S.
Treasury-only money market funds. With dividends that are exempt from state and
local income taxes in all states, the Fund is an excellent vehicle in which to
store idle cash. An investment in The Gabelli U.S. Treasury Money Market Fund is
neither insured nor guaranteed by the U.S. Government and there can be no
assurance that the Fund will maintain a stable $1 per share net asset value.
Call us at 1-800-GABELLI (1-800-422-3554) for a prospectus which gives a more
complete description of the Fund, including management fees and expenses. Read
it carefully before you invest or send money.
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4
<PAGE>
Westwood Equity Fund
Portfolio of Investments -- March 31, 1996 (unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 89.8%
AIRLINES -- 1.3%
9,000 Southwest Airlines Co.......... $ 224,195 $ 266,625
---------- ----------
APPAREL -- 1.3%
5,900 Nautica Enterprises, Inc.*..... 116,488 281,725
---------- ----------
AUTO RELATED -- 5.1%
8,600 Chrysler Corporation........... 444,977 535,350
8,900 Eaton Corp..................... 468,163 536,225
---------- ----------
913,140 1,071,575
---------- ----------
CAPITAL GOODS -- 9.3%
6,300 Boeing Co...................... 317,233 545,737
7,400 Fluke Corp..................... 235,959 282,125
7,900 Fluor Corporation.............. 392,994 539,175
7,394 Lockheed Martin Corp........... 460,249 561,020
---------- ----------
1,406,435 1,928,057
---------- ----------
CHEMICALS -- 2.6%
14,700 IMC Global Inc................. 597,899 536,550
---------- ----------
COMPUTER EQUIPMENT -- 2.7%
16,600 Dell Computer Corp............. 487,875 556,100
---------- ----------
COMPUTER SOFTWARE -- 5.1%
18,000 DataWorks Corp.*............... 200,078 178,500
2,200 JDA Software Group Inc......... 28,538 26,125
9,200 Sterling Commerce Inc.*........ 220,800 282,900
8,100 Sterling Software, Inc.*....... 382,352 571,050
---------- ----------
831,768 1,058,575
---------- ----------
ELECTRIC EQUIPMENT -- 1.3%
11,800 Berg Electronics Corp.*........ 266,340 277,300
---------- ----------
ENERGY -- 7.7%
7,400 Amoco Corporation.............. 463,531 534,650
4,600 Mobil Corporation.............. 511,835 533,025
6,100 Texaco Inc..................... 406,086 524,600
---------- ----------
1,381,452 1,592,275
---------- ----------
FOREST PRODUCTS & PAPER -- 2.6%
12,900 Boise Cascade Corp............. 443,332 541,800
---------- ----------
HEALTH CARE -- 2.6%
25,800 Tenet Healthcare Corp.*........ 455,837 541,800
---------- ----------
HOTEL/RESTAURANT MANAGEMENT -- 2.5%
11,100 Marriott International......... 396,467 527,250
---------- ----------
INSURANCE -- 2.5%
4,600 CIGNA Corp..................... 471,891 525,550
---------- ----------
MACHINERY -- 3.9%
12,600 Deere & Company................ 359,202 526,050
8,000 Greenfield Industries, Inc..... 200,665 277,000
---------- ----------
559,867 803,050
---------- ----------
PHARMACEUTICALS -- 5.2%
5,000 American Home Products......... 390,375 541,875
10,600 SmithKline Beecham plc-ADR..... 587,284 545,900
---------- ----------
977,659 1,087,775
---------- ----------
Principal/ Market
Shares Cost Value
------ ---- -----
RAW MATERIALS -- 5.2%
8,500 Aluminum Company
of America................... $ 362,679 $ 532,312
6,600 E.I. duPont de Nemours
& Company.................... 471,507 547,800
---------- ----------
834,186 1,080,112
---------- ----------
REAL ESTATE INVESTMENT TRUSTS -- 6.2%
16,600 Crescent Real Estate Equities,
Inc.......................... 530,260 558,175
11,300 Duke Realty Investments........ 329,816 340,412
8,100 Highwoods Properties........... 198,509 225,787
7,800 Security Capital Pacific Trust. 139,925 171,600
---------- ----------
1,198,510 1,295,974
---------- ----------
RETAIL -- 3.9%
16,500 Federated Department Stores*... 395,513 532,125
4,800 Tiffany & Co................... 215,599 272,400
---------- ----------
611,112 804,525
---------- ----------
SHELTER -- 2.5%
10,800 PPG Industries, Inc............ 421,457 527,850
---------- ----------
TECHNOLOGY -- 6.5%
5,700 Avnet, Inc..................... 232,610 275,025
7,550 Computer Associates
International, Inc........... 307,691 540,769
4,800 International Business
Machines Corporation......... 443,681 533,400
---------- ----------
983,982 1,349,194
---------- ----------
TELECOMMUNICATIONS -- 2.1%
7,000 AT&T Corp...................... 362,665 428,750
---------- ----------
TRANSPORTATION -- 2.5%
11,500 CSX Corporation................ 447,079 524,688
---------- ----------
UTILITIES -- 5.2%
12,700 GTE Corporation................ 447,368 557,213
23,800 Houston Industries
Incorporated................. 494,779 514,675
---------- ----------
942,147 1,071,888
---------- ----------
TOTAL COMMON STOCKS 15,331,783 18,678,988
---------- ----------
CORPORATE BONDS
BROADCASTING -- 2.7%
575,000 Heritage Media Corporation,
8.75% 2/15/2006.............. 571,406 561,344
---------- ----------
U.S. TREASURY OBLIGATIONS -- 4.6%
1,000,000 U.S. Treasury Notes, 5.00%,
2/15/1999.................... 975,296 976,460
---------- ----------
TOTAL INVESTMENTS --
97.1% $16,878,485** 20,216,792
========== ==========
Assets in excess of
liabilities -- 2.9% 593,452
----------
NET ASSETS -- 100.0% $20,810,244
==========
* Non-Income producing.
** The cost of securities for Federal income tax purposes is $16,882,409.
ADR - Amerian Depository Receipts.
See accompanying notes to financial statements.
5
<PAGE>
Westwood Intermediate Bond Fund
Portfolio of Investments -- March 31, 1996 (unaudited)
================================================================================
Market
Principal Cost Value
--------- ---- -----
ASSET BACKED SECURITIES -- 6.7%
$ 78,865 EQCC Home Equity 93-2a,
5.15%, 4/15/2008............. $ 78,779 $ 75,218
100,000 Ford Credit Auto Loan Master Trust,
6.50%, 8/15/2002............. 99,609 100,125
116,190 GMAC Grantor Trust, 7.15%,
3/15/2000.................... 116,153 117,787
50,000 Premier Auto Trust 1994-4,
6.45%, 5/02/1998............. 49,100 50,306
--------- ---------
Total Asset Backed Securities.. 343,641 343,436
--------- ---------
CORPORATE OBLIGATIONS -- 36.6%
AUTO RELATED -- 1.1%
50,000 Eaton Corp., 8.90%,
8/15/2006.................... 56,771 57,595
--------- ---------
BROADCASTING -- 2.4%
125,000 Heritage Media Corporation,
8.75% 2/15/2006.............. 124,219 122,031
--------- ---------
CAPITAL GOODS -- 3.4%
125,000 Boeing Co., 8.75%, 9/15/2031... 147,950 146,563
25,000 Lockheed Martin Corp.,
5.875%, 3/15/1998............ 25,076 24,906
--------- ---------
173,026 171,469
--------- ---------
ENTERTAINMENT -- 2.5%
125,000 Time Warner Inc., 7.95%,
2/01/2000.................... 131,492 129,531
--------- ---------
FINANCIAL SERVICES -- 9.2%
120,000 Ford Motor Credit Corp., 9.75%,
5/06/1996.................... 120,404 120,404
95,000 Ford Capital 9.50% 6/01/2010... 120,028 113,335
125,000 General Motors Acceptance Corp.,
6.625%, 10/01/2002........... 124,775 124,000
100,000 Lehman Brothers Holdings Inc.,
8.50%, 5/01/2007............. 113,569 108,625
--------- ---------
478,776 466,364
--------- ---------
FOREST PRODUCTS & PAPER -- 2.3%
100,000 Boise Cascade Corp.,9.45%,
11/01/2009................... 107,038 115,300
--------- ---------
HEALTHCARE -- 2.6%
140,000 Healthcare Properties Investors
Inc., 6.50% 2/15/2006........ 138,946 132,125
--------- ---------
INDUSTRIAL GOODS -- 5.1%
150,000 ITT Corp., 6.25% 11/15/2000.... 149,490 147,938
100,000 News American Holdings
Inc.,12.00%, 12/15/2001...... 111,729 109,875
--------- ---------
261,219 257,813
--------- ---------
PHARMACEUTICALS -- 4.2%
200,000 American Home Products, 7.90%,
2/15/2005.................... 199,610 214,860
--------- ---------
RETAIL STORES -- 2.1%
100,000 Federated Department Stores,
10.00%, 2/15/2001............ 107,990 107,500
--------- ---------
TECHNOLOGY -- 1.7%
95,000 International Business Machines
Corporation, 7.00%,
10/30/2025................... 94,563 90,250
--------- ---------
Total Corporate Obligations.... 1,873,650 1,864,838
--------- ---------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 6.2%
125,000 Federal National Mortgage
Association, 7.20%, 7/25/2025 126,622 126,094
190,000 Tennessee Valley Authority,
6.00%, 11/01/2000............ 194,537 188,100
--------- ---------
Total U.S. Government Agency
Obligations................. 321,159 314,194
--------- ---------
U.S. TREASURY OBLIGATIONS -- 48.7%
35,000 Bonds, 8.75%, 5/15/2017........ 36,772 42,296
55,000 Bonds, 8.125%, 8/15/2019....... 54,220 62,934
315,000 Bonds, 7.625% 2/15/2025........ 366,341 346,582
70,000 Bonds, 6.875%, 8/15/2025....... 76,987 71,061
140,000 Notes, 7.375%, 5/15/1996....... 140,411 140,411
115,000 Notes, 6.125%, 5/31/1997....... 115,325 115,653
110,000 Notes, 7.25%, 2/15/1998........ 111,830 112,761
215,000 Notes, 5.875%, 8/15/1998....... 214,730 215,052
400,000 Notes, 5.00%, 2/15/1999........ 390,050 390,584
125,000 Notes, 7.75%, 11/30/1999....... 127,284 131,790
190,000 Notes, 7.125%, 2/29/2000....... 202,542 196,737
25,000 Notes, 7.875%, 8/15/2001....... 25,096 26,917
185,000 Notes, 6.25%, 2/15/2003........ 189,329 184,458
85,000 Notes, 7.25%, 5/15/2004........ 84,153 89,569
75,000 Notes, 6.50%, 5/15/2005........ 77,457 75,406
100,000 Notes, 6.50%, 8/15/2005........ 103,394 100,625
185,000 Notes, 5.875%, 11/15/2005...... 188,036 178,225
--------- ---------
Total U.S. Treasury Obligations 2,503,957 2,481,061
--------- ---------
Total Investments -- 98.2% $5,042,407* 5,003,529
--------- ---------
Other assets less liabilities -- 1.8% 90,030
---------
Net Assets -- 100.0% $5,093,559
=========
* The cost of securities for Federal income tax purposes is $5,048,634.
See accompanying notes to financial statements.
6
<PAGE>
Westwood Balanced Fund
Portfolio of Investments -- March 31, 1996 (unaudited)
================================================================================
Principal/ Market
Shares Cost Value
------ ---- -----
ASSET BACKED SECURITIES -- 1.7%
$ 26,288 EQCC Home Equity 93-2a,
5.15%, 9/15/2008............. $ 26,260 $ 25,073
130,000 Ford Credit Auto Loan Master
Trust, 6.50%, 8/15/2002...... 129,492 130,163
174,285 GMAC Grantor Trust, 7.15%,
3/15/2000.................... 174,230 176,681
100,000 Premier Auto Trust 1994-4,
6.45%, 5/02/1998............. 98,201 100,612
---------- ----------
Total Asset Backed Securities.. 428,183 432,529
---------- ----------
COMMON STOCKS -- 57.3%
AIRLINES -- 0.8%
6,500 Southwest Airlines Co.......... 161,410 192,563
---------- ----------
APPAREL -- 0.8%
4,050 Nautica Enterprises, Inc.*..... 88,150 193,388
---------- ----------
AUTO RELATED -- 3.3%
6,500 Chrysler Corporation........... 337,302 404,625
6,800 Eaton Corp..................... 352,121 409,700
---------- ----------
689,423 814,325
---------- ----------
CAPITAL GOODS -- 5.9%
4,700 Boeing Co...................... 236,928 407,137
5,700 Fluke Corp..................... 180,965 217,313
5,700 Fluor Corporation.............. 276,827 389,025
5,727 Lockheed Martin Corp........... 285,530 434,536
---------- ----------
980,250 1,448,011
---------- ----------
CHEMICALS -- 1.7%
11,400 IMC Global Inc................. 464,825 416,100
---------- ----------
COMPUTER EQUIPMENT -- 1.7%
12,800 Dell Computer Corp.*........... 385,850 428,800
---------- ----------
COMPUTER SOFTWARE -- 3.2%
11,000 DataWorks Corp.*............... 135,688 127,500
1,700 JDA Software Group Inc......... 22,056 20,188
7,100 Sterling Commerce Inc.*........ 170,400 218,325
6,200 Sterling Software, Inc.*....... 294,907 437,100
---------- ----------
623,051 803,113
---------- ----------
ELECTRIC EQUIPMENT -- 1.0%
10,000 Berg Electronics Corp.*........ 226,274 235,000
---------- ----------
ENERGY -- 5.0%
5,600 Amoco Corporation.............. 354,064 404,600
3,600 Mobil Corporation.............. 399,888 417,150
4,700 Texaco Inc..................... 319,627 404,200
---------- ----------
1,073,579 1,225,950
---------- ----------
FOREST PRODUCTS & PAPER -- 1.7%
10,100 Boise Cascade Corp............. 350,288 424,200
---------- ----------
HEALTH CARE -- 1.7%
20,000 Tenet Healthcare Corp.*........ 353,410 420,000
---------- ----------
Market
Shares Cost Value
------ ---- -----
HOTEL/RESTAURANT MANAGEMENT -- 1.5%
8,100 Marriott International Inc..... $ 289,079 $ 384,750
---------- ----------
INSURANCE -- 1.7%
3,600 CIGNA Corp..................... 372,555 411,300
---------- ----------
MACHINERY -- 2.5%
9,600 Deere & Company................ 275,902 400,800
6,200 Greenfield Industries, Inc..... 151,432 214,675
---------- ----------
427,334 615,475
---------- ----------
PHARMACEUTICALS -- 3.3%
3,800 American Home Products......... 312,164 411,825
8,300 SmithKline Beecham
plc-ADR...................... 458,449 427,450
---------- ----------
770,613 839,275
---------- ----------
RAW MATERIALS -- 3.3%
6,400 Aluminum Company of
America...................... 271,335 400,800
5,000 E.I. du Pont de Nemours &
Company...................... 366,350 415,000
---------- ----------
637,685 815,800
---------- ----------
REAL ESTATE INVESTMENT TRUSTS -- 3.8%
12,700 Crescent Real Estate Equities,
Inc.......................... 411,054 427,037
8,000 Duke Realty Investments........ 235,527 241,000
5,300 Highwoods Properties .......... 130,148 147,737
5,300 Security Capital Pacific Trust. 97,479 116,600
---------- ----------
874,208 932,374
---------- ----------
RETAIL -- 2.5%
12,700 Federated Department Stores*... 302,963 409,575
3,700 Tiffany & Co................... 160,031 209,975
---------- ----------
462,994 619,550
---------- ----------
SHELTER -- 1.5%
7,700 PPG Industries, Inc............ 306,395 376,337
---------- ----------
TECHNOLOGY -- 4.2%
4,400 Avnet, Inc..................... 175,583 212,300
6,050 Computer Associates
International, Inc........... 268,708 433,331
3,600 International Business
Machines Corporation......... 337,679 400,050
---------- ----------
781,970 1,045,681
---------- ----------
TELECOMMUNICATIONS -- 1.1%
4,800 AT&T Corp...................... 249,912 294,000
---------- ----------
TRANSPORTATION -- 1.7%
9,100 CSX Corporation................ 364,324 415,187
---------- ----------
UTILITIES -- 3.4%
9,800 GTE Corporation................ 355,017 429,975
18,500 Houston Industries Incorporated 386,346 400,063
---------- ----------
741,363 830,038
---------- ----------
Total Common Stocks............ 11,674,942 14,181,217
---------- ----------
See accompanying notes to financial statements.
7
<PAGE>
Westwood Balanced Fund
Portfolio of Investments -- March 31, 1996 (unaudited)
================================================================================
Market
Principal Cost Value
--------- ---- -----
CORPORATE OBLIGATIONS -- 11.1%
AUTO RELATED -- 0.2%
$ 50,000 Eaton Corp., 8.90%, 8/15/2006.. $ 56,771 $ 57,595
---------- ----------
BROADCASTING -- 1.2%
300,000 Heritage Media Corporation,
8.75%, 2/15/2006............. 298,125 292,875
---------- ----------
CAPITAL GOODS -- 1.7%
250,000 Boeing Co., 8.75%, 9/15/2031... 295,900 293,125
125,000 Lockheed Martin Corp,. 5.875%,
3/15/1998.................... 123,439 124,531
---------- ----------
419,339 417,656
---------- ----------
ENTERTAINMENT -- 0.9%
225,000 Time Warner Inc., 7.95%,
2/01/2000.................... 236,685 233,156
---------- ----------
FINANCIAL SERVICES -- 2.0%
140,000 Ford Capital, 9.50%,
6/01/2010.................... 176,884 167,020
145,000 General Motors Acceptance
Corporation, 6.625%,
10/01/2002................... 144,739 143,840
170,000 Lehman Brothers Holdings Inc.,
8.50%, 5/01/2007............. 193,066 184,663
---------- ----------
514,689 495,523
---------- ----------
FOREST PRODUCTS & PAPERS -- 0.5%
100,000 Boise Cascade Corp., 9.45%,
11/01/2009................... 107,038 115,300
---------- ----------
HEALTHCARE -- 0.8%
200,000 Healthcare Properties Investors
Inc., 6.50% 2/15/2006........ 198,494 188,750
---------- ----------
INDUSTRIAL GOODS -- 1.4%
64,000 General Motors Corporation,
9.75%, 5/15/1999............. 65,273 64,320
175,000 ITT Corp., 6.25% 11/15/2000.... 174,405 172,594
100,000 Texaco Capital, 9.00%,
11/15/1997................... 103,916 104,500
---------- ----------
343,594 341,414
---------- ----------
PHARMACEUTICALS -- 0.8%
175,000 American Home Products,
7.90%, 2/15/2005............. 174,659 188,002
---------- ----------
RETAIL -- 0.4%
100,000 Federated Department Stores,
10.00%, 2/15/2001............ 107,990 107,500
---------- ----------
TECHNOLOGY -- 0.4%
115,000 International Business Machines
Corporation, 7.00%,
10/30/2025................... 114,471 109,250
---------- ----------
TEXTILES -- 0.8%
200,000 V.F. Corp., 6.625%, 3/15/2003.. 185,895 193,000
---------- ----------
Total Corporate Obligations.... 2,757,750 2,740,021
---------- ----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 1.8%
130,000 Federal National Mortgage
Association, 7.20%,
7/25/2025.................... 131,687 131,138
300,000 Tennessee Valley Authority,
6.00%, 11/01/2000............ 307,163 297,000
---------- ----------
Total U.S. Government
Agency Obligations........... 438,850 428,138
---------- ----------
U.S. TREASURY OBLIGATIONS -- 25.9%
500,000 Bills, 4/18/1996............... 498,775 498,775
125,000 Bonds, 8.75%, 5/15/2017........ 131,329 151,059
420,000 Bonds, 7.625%, 2/15/2025....... 487,957 462,109
155,000 Bonds, 6.875%, 8/15/2025....... 170,188 157,348
480,000 Notes, 7.375%, 5/15/1996....... 481,333 481,333
125,000 Notes, 6.875%, 2/28/1997....... 125,156 126,537
155,000 Notes, 6.125%, 5/31/1997....... 155,474 155,891
275,000 Notes, 7.25%, 2/15/1998........ 281,748 281,903
540,000 Notes, 5.875%, 8/15/1998....... 546,077 540,130
800,000 Notes, 5.00%, 2/15/1999........ 780,146 781,168
430,000 Notes, 7.125%, 2/29/2000....... 453,360 445,248
500,000 Notes, 5.625%, 2/28/2001....... 489,451 490,120
625,000 Notes, 6.25%, 2/15/2003........ 640,765 623,169
125,000 Notes, 7.25%, 5/15/2004........ 123,098 131,719
200,000 Notes, 7.50%, 2/15/2005........ 224,917 214,432
275,000 Notes, 6.50%, 8/15/2005........ 286,975 276,719
600,000 Notes, 5.875%, 11/15/2005...... 591,422 578,026
---------- ----------
Total U.S. Treasury Obligations 6,468,171 6,395,686
---------- ----------
Total Investments -- 97.8% $21,767,896** 24,177,591
---------- ----------
Other assets less liabilities -- 2.2% 550,655
----------
Net Assets -- 100.0% $24,728,246
==========
* Non-Income producing.
** The cost of securities for Federal income tax purposes is $21,804,577.
ADR- American Depository Receipts.
See accompanying notes to financial statements.
8
<PAGE>
THE WESTWOOD FUNDS
Statement of Assets and Liabilities
March 31, 1996 (unaudited)
================================================================================
<TABLE>
<CAPTION>
Equity Intermediate Balanced
Fund Bond Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments in securities at value (cost $16,878,485, $5,042,407 and
$21,767,896, respectively) ....................................... $ 20,216,792 $ 5,003,529 $ 24,177,591
Cash ............................................................... 549,421 8,880 362,262
Receivable for investments sold .................................... 228,338 -- 124,583
Dividends and interest receivable .................................. 38,813 72,660 144,937
Unamortized organization expenses (Note 2f) ........................ -- 4,172 4,089
Receivable for fund shares sold .................................... 30,916 -- 332,399
Prepaid Expenses ................................................... 134 96 71
Receivable from Advisor (Note 3) ................................... -- 14,955 --
------------ ------------ ------------
Total Assets ................................................... 21,064,414 5,104,292 25,145,932
------------ ------------ ------------
LIABILITIES
Payable for fund shares redeemed ................................... -- -- 25,000
Payable for securities purchased ................................... 163,538 -- 333,085
Advisory fee payable (Note 3) ...................................... 53,713 -- 29,854
Distribution expense payable (Note 3) .............................. 7,764 2,031 7,995
Other accrued expenses ............................................. 29,155 8,702 21,752
------------ ------------ ------------
Total Liabilities .............................................. 254,170 10,733 417,686
------------ ------------ ------------
NET ASSETS ......................................................... $ 20,810,244 $ 5,093,559 $ 24,728,246
============ ============ ============
Net Assets Consist of:
Capital Stock ...................................................... $ 2,912 $ 516 $ 2,661
Additional paid-in capital ......................................... 15,778,447 5,738,837 21,411,284
Accumulated undistributed (overdistributed) net investment income .. 43,593 -- (73)
Accumulated undistributed realized gain (loss) on investments ...... 1,646,985 (606,916) 904,679
Unrealized appreciation (depreciation) on investments .............. 3,338,307 (38,878) 2,409,695
------------ ------------ ------------
Net Assets ......................................................... $ 20,810,244 $ 5,093,559 $ 24,728,246
============ ============ ============
SHARES OF BENEFICIAL INTEREST
Retail Class:
Shares of beneficial interest outstanding .......................... 2,900,590 515,648 1,601,205
============ ============ ============
Net Asset Value and redemption price per share ..................... $ 7.15 $ 9.88 $ 9.30
============ ============ ============
Service Class:
Shares of beneficial interest outstanding .......................... 11,455 1,059,298
============ ============
Net Asset Value and redemption price per share ..................... $ 7.17 $ 9.28
============ ============
Maximum offering price per share ($7.17/.96
and $9.28/.96, respectively) ..................................... $ 7.47 $ 9.67
============ ============
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
THE WESTWOOD FUNDS
Statement of Operations
For the six months ended March 31, 1996 (unaudited)
================================================================================
<TABLE>
<CAPTION>
Equity Intermediate Balanced
Fund Bond Fund Fund
----------- ----------- -----------
<S> <C> <C> <C>
Investment Income:
Interest ...................................................... $ 46,486 $ 156,225 $ 214,196
Dividends ..................................................... 180,328 -- 123,050
----------- ----------- -----------
226,814 156,225 337,246
----------- ----------- -----------
Expenses:
Advisory (Note 3) ............................................. 86,678 14,714 67,418
Audit & Tax ................................................... 16,500 5,322 15,000
Shareholder services .......................................... 13,031 6,791 15,328
Legal ......................................................... 8,704 3,304 9,819
Custody ....................................................... 7,124 3,493 7,490
Reports to shareholders ....................................... 1,530 900 2,340
Registration .................................................. 9,202 6,292 6,377
Insurance ..................................................... 223 143 215
Trustee ....................................................... 2,163 2,110 2,158
Distribution-- Retail class (Note 3) .......................... 21,583 6,089 12,000
Distribution-- Service class (Note 3) ......................... 159 -- 18,732
Amortization of organizational expenses ....................... -- 4,136 4,069
Miscellaneous ................................................. 3,153 3,693 6,034
----------- ----------- -----------
Total expenses before waivers ............................... 170,050 56,987 166,980
Less expenses waived/reimbursed by Adviser .................. (32,965) (29,669) (37,564)
----------- ----------- -----------
Net expenses ................................................ 137,085 27,318 129,416
----------- ----------- -----------
Net investment income ........................................... 89,729 128,907 207,830
----------- ----------- -----------
Realized gain on investments .................................... 1,651,289 81,229 1,063,252
Change in unrealized appreciation (depreciation) of investments . 1,181,964 (143,652) 829,556
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments .......... 2,833,253 (62,423) 1,892,808
----------- ----------- -----------
Net increase in net assets resulting from operations ............ $ 2,922,982 $ 66,484 $ 2,100,638
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
THE WESTWOOD FUNDS
Westwood Equity Fund
Statement of Changes in Net Assets (unaudited)
================================================================================
<TABLE>
<CAPTION>
For the For the
Six Months Year ended
ended March 31, September 30,
1996 1995
--------------- -------------
<S> <C> <C>
Operations:
Net investment income ................................................... $ 89,729 $ 90,652
Net realized gain on investments ........................................ 1,651,289 1,225,125
Change in unrealized appreciation (depreciation) of investments ......... 1,181,964 1,610,313
------------ ------------
Net increase in net assets resulting from operations .......................... 2,922,982 2,926,090
------------ ------------
Dividends to shareholders from net investment income:
Retail Class ............................................................ (136,789) (110,241)
Service Class ........................................................... -- (1,473)
------------ ------------
(136,789) (111,714)
------------ ------------
Distributions to shareholders from realized gain on investments:
Retail Class ............................................................ (1,203,822) (364,338)
Service Class ........................................................... (4,738) (6,782)
------------ ------------
(1,208,560) (371,120)
------------ ------------
Decrease in net assets resulting from distributions to shareholders ..... (1,345,349) (482,834)
------------ ------------
Capital Share Transactions:
Proceeds from sales of shares:
Retail Class ............................................................ 4,079,641 4,912,943
Service Class ........................................................... 20,939 56,081
------------ ------------
4,100,580 4,969,024
------------ ------------
Net asset value of shares issued to shareholders upon reinvestment of dividends
and distributions:
Retail Class ............................................................ 1,328,734 464,553
Service Class ........................................................... 4,738 8,255
------------ ------------
1,333,472 472,808
------------ ------------
Net asset value of shares redeemed:
Retail Class ............................................................ (1,154,271) (1,534,515)
Service Class ........................................................... (18,250) (270,255)
------------ ------------
(1,172,521) (1,804,770)
------------ ------------
Net increase in net assets from capital share transactions .............. 4,261,531 3,637,062
------------ ------------
Total increase in net assets .................................................. 5,839,164 6,080,318
Net Assets:
Beginning of period ..................................................... 14,971,080 8,890,762
------------ ------------
End of period (including undistributed net investment
income of $43,593 and $90,652 respectively) ........................... $ 20,810,244 $ 14,971,080
============ ============
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
THE WESTWOOD FUNDS
Westwood Intermediate Bond Fund
Statement of Changes in Net Assets (unaudited)
================================================================================
<TABLE>
<CAPTION>
For the For the
Six Months Year ended
ended March 31, September 30,
1996 1995
--------------- -------------
<S> <C> <C>
Operations:
Net investment income ................................................... $ 128,907 $ 254,052
Net realized gain (loss) on investments ................................. 81,229 (136,574)
Change in unrealized appreciation (depreciation) of investments ......... (143,652) 347,515
----------- -----------
Net increase (decrease) in net assets resulting from operations ............... 66,484 464,993
----------- -----------
Dividends to shareholders from net investment income:
Retail Class ............................................................ (128,907) (253,798)
Service Class ........................................................... -- (254)
----------- -----------
(128,907) (254,052)
----------- -----------
Capital Share Transactions:
Proceeds from sales of shares:
Retail Class ............................................................ 786,075 1,686,246
Service Class ........................................................... -- 77
----------- -----------
786,075 1,686,323
----------- -----------
Net asset value of shares issued to shareholders upon reinvestment of dividends
and distributions:
Retail Class ............................................................ 87,487 213,072
Service Class ........................................................... -- 254
----------- -----------
87,487 213,326
----------- -----------
Net asset value of shares redeemed:
Retail Class ............................................................ (446,867) (4,720,785)
Service Class ........................................................... -- (75,949)
----------- -----------
(446,867) (4,796,734)
----------- -----------
Net increase (decrease) in net assets from capital share transactions ... 426,695 (2,897,085)
----------- -----------
Total increase (decrease) in net assets ....................................... 364,272 (2,686,144)
Net Assets:
Beginning of period ..................................................... 4,729,287 7,415,431
----------- -----------
End of period ........................................................... $ 5,093,559 $ 4,729,287
=========== ===========
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
THE WESTWOOD FUNDS
Westwood Balanced Fund
Statement of Changes in Net Assets (unaudited)
================================================================================
<TABLE>
<CAPTION>
For the For the
Six Months Year ended
ended March 31, September 30,
1996 1995
--------------- -------------
<S> <C> <C>
Operations:
Net investment income ................................................. $ 207,830 $ 302,189
Net realized gain (loss) on investments ............................... 1,063,252 765,282
Change in unrealized appreciation (depreciation) of investments ....... 829,556 1,452,907
------------ ------------
Net increase (decrease) in net assets resulting from operations ............. 2,100,638 2,520,378
------------ ------------
Dividends to shareholders from net investment income:
Retail Class .......................................................... (126,857) (127,208)
Service Class ......................................................... (81,046) (174,988)
------------ ------------
(207,903) (302,196)
------------ ------------
Distributions to shareholders from realized gain on investments:
Retail Class .......................................................... (136,634) --
Service Class ......................................................... (108,437) --
------------ ------------
(245,071) --
------------ ------------
Decrease in net assets resulting from distributions to shareholders ... (452,974) (302,196)
------------ ------------
Capital Share Transactions:
Proceeds from sales of shares:
Retail Class .......................................................... 7,402,903 3,974,656
Service Class ......................................................... 2,368,280 382,695
------------ ------------
9,771,183 4,357,351
------------ ------------
Net asset value of shares issued to shareholders in reinvestment of dividends
and distributions:
Retail Class .......................................................... 254,130 117,015
Service Class ......................................................... 171,593 157,008
------------ ------------
425,723 274,023
------------ ------------
Net asset value of shares redeemed:
Retail Class .......................................................... (583,273) (1,156,706)
Service Class ......................................................... (657,481) (5,459,031)
------------ ------------
(1,240,754) (6,615,737)
------------ ------------
Net increase (decrease) in net assets from capital share transactions ....... 8,956,152 (1,984,363)
------------ ------------
Total increase in net assets ................................................ 10,603,816 233,819
Net Assets:
Beginning of period ................................................... 14,124,430 13,890,611
------------ ------------
End of period (including undistributed net investment
income of ($73) and $645, respectively) ............................. $ 24,728,246 $ 14,124,430
============ ============
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
THE WESTWOOD FUNDS
Notes to Financial Statements (unaudited)
================================================================================
Note 1 -- Description. The Westwood Funds (the "Trust") is registered under
the Investment Company Act of 1940, as amended, as an open-end diversified
management investment company and currently consists of four separate investment
portfolios: Westwood Equity Fund, Westwood Intermediate Bond Fund, Westwood
Balanced Fund (collectively, the "Funds") and Westwood Cash Management Fund,
each with two (2) classes of shares known as the Service Class and the Retail
Class (formerly the "Institutional Class"). Westwood Cash Management Fund has
not commenced operations as of March 31, 1996. 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 with the exception of the Cash Management
Fund. Effective November 8, 1994, all shares in the Service Class of
Intermediate Bond Fund were redeemed. No such shares were outstanding at March
31, 1996, although such shares are available for sale.
Note 2 -- Significant Accounting Policies. The following is a summary of
the significant accounting policies followed by the Funds.
(a) Portfolio Valuation. Investments in securities (including options and
financial futures) are valued at the last sale price on the securities
exchange on which such securities are primarily traded or, if there are no
trades, at the current bid price as of 4:15 p.m. eastern time.
Over-the-counter securities, or securities for which there were no
transactions, are valued at the bid price. Bonds and other fixed income
securities are valued by using market quotations, and may be valued on the
basis of prices provided by a pricing service. Securities for which market
quotations are not readily available are valued at fair value as determined
in good faith by or at the direction of the Board of Trustees. Short-term
securities which mature in 60 days or less are valued at amortized cost, if
their terms to maturity at purchase were 60 days or less, or by amortizing
their value on the 61st day prior to maturity, if their original term to
maturity at purchase exceeded 60 days.
(b) Securities transactions and investment income. Securities transactions
are recorded on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income,
including, where applicable, amortization of premium and accretion of
discount on investments, is accrued daily.
(c) Distributions to shareholders. Dividends from net investment income are
declared and paid annually for the Equity Fund and quarterly for the
Balanced Fund. The Intermediate Bond Fund declares dividends of such income
daily and pays those dividends monthly. Distributions of net realized gains
are normally declared and paid at least annually by each Fund.
Distributions are recorded on the ex-dividend date. The amount of dividends
and distributions from net investment income and net realized capital gains
are determined in accordance with federal income tax regulations which may
differ with generally accepted accounting principles. These "book/tax"
differences are either temporary or permanent in nature. To the extent
these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their tax-basis treatment; temporary
differences do not require a reclassification.
(d) Federal income taxes. It is the policy of each of the Funds to qualify
as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying, the Funds will not be
subject to Federal income taxes to the extent that they distribute all of
their taxable income for the fiscal year.
(e) Organizational expenses. Costs incurred in connection with the
organization and initial registration of the Funds have been deferred and
are being amortized on a straight line basis over sixty months beginning
with each Fund's commencement of operations. In the event any of the
initial shares of any of the Funds, which were purchased by Furman Selz,
are redeemed, the appropriate Fund will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares
redeemed bears to the number of initial shares held at the time of
redemption.
14
<PAGE>
THE WESTWOOD FUNDS
Notes to Financial Statements (unaudited) (continued)
================================================================================
(f) Determination of net asset value and calculation of expenses. Expenses
directly attributable to a Fund are charged to that Fund. Other expenses
are allocated proportionately among each Fund within the Trust in relation
to the net assets of each Fund or on another reasonable basis. In
calculating net asset value per share of each class, investment income,
realized and unrealized gains and losses 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 solely borne by the Class incurring the expense.
(g) Use of Estimates. Estimates and assumptions are required to be made
regarding assets, liabilities, and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ from these amounts.
Note 3 -- Investment Advisory, Administrative and Other Transactions with
Affiliates. Pursuant to an agreement with Westwood Management Corp.
("Westwood"), the adviser to the Funds from their inception through October 6,
1994, Westwood and Gabelli Funds, Inc. ("Gabelli") have formed a new limited
liability company, Teton Advisers LLC (the "Adviser") which has entered into a
new advisory agreement with the Trust and a sub-advisory agreement with Westwood
and the Trust whereby Westwood (the "Sub-Adviser") serves as sub-adviser to the
Funds. The Investment Advisory Agreement was approved by the Fund's shareholders
on September 30, 1994 and was effective October 6, 1994. The Adviser oversees
the administration of each Fund's business affairs and in this connection is
responsible for maintaining certain of the Funds' books and records and
providing other administrative services.
As compensation for its services and related expenses, the Trust pays the
Adviser a fee computed daily and payable monthly in an amount equal on an
annualized basis to 1.00% for the Equity Fund, .60% for the Intermediate Bond
Fund and .75% for the Balanced Fund of each Fund's daily average net asset
value. For the six months ended March 31, 1996, the adviser was entitled to fees
of $86,678, $14,714, $67,418 for the Equity, Intermediate Bond and Balanced
Funds, respectively. For the six months ended March 31, 1996, the adviser waived
fees of $32,965, $14,714 and $37,564, respectively. Additionally, the Adviser
has voluntarily agreed to reimburse the Funds in the event the Funds' annual
expenses exceed certain prescribed limits. As of March 31, 1996, the Adviser
expects to reimburse the Intermediate Bond Fund in the amount of $14,955.
Gabelli & Company, an indirect subsidiary of Gabelli Funds, Inc. serves as
distributor of the Funds. On September 30, 1994 the Funds' shareholders approved
a Plan of Distribution (the "Plan") for the Retail Class of shares pursuant to
Rule 12b-1. The Plan authorizes payment by the Funds in connection with the
distribution of its Retail Class shares at an annual rate of up to .25% of the
average daily net assets. For the six months ended March 31, 1996, the Fund
incurred distribution expenses in the amounts of $21,583, $6,089, $12,000 for
the Retail Class of the Equity, Intermediate Bond and Balanced Funds,
respectively. Under the Distribution Plan and Agreement (the "Plan") for the
Service Class, each Fund may reimburse Gabelli & Company on a monthly basis for
cost and expenses in connection with the distribution and marketing of Service
Class shares. This distribution expense is subject to a maximum limit of 0.35%
per annum of the average daily net assets of the Service Class of the
Intermediate Bond Fund and 0.50% per annum of the Service Class of the Equity
and Balanced Funds. The Funds, with respect to the Service Class, incurred
distribution costs and expenses of $159 in the Equity Fund and $18,732 in the
Balanced Fund, for the six months ended March 31, 1996. Subject to Board of
Trustees approval, distribution expenses incurred by Gabelli & Company, Inc.,
totalling $35,243 for the Equity Fund, $6,455 for the Intermediate Bond Fund and
$198,724 for the Balanced Fund, which are in excess of the Retail Class .25%
limitation may be recovered from the Funds in future periods.
15
<PAGE>
THE WESTWOOD FUNDS
Notes to Financial Statements (unaudited) (continued)
================================================================================
Note 4 -- Securities Transactions.
(a) Purchase and sale transactions. The aggregate amount of purchases and
sales of investment securities, other than short-term securities, for the six
months ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Common Stocks & Bonds U.S. Government Obligations
--------------------- ---------------------------
Purchases Sales Purchases Sales
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Equity Fund............................ $12,175,309 $8,941,218 $ 974,953 $ --
Intermediate Bond Fund................. 2,115,496 1,702,198 2,581,402 2,205,638
Balanced Fund.......................... 12,986,152 8,293,271 5,242,216 1,856,894
</TABLE>
(b) Federal income tax basis. Gross unrealized appreciation and
depreciation on investment securities at March 31, 1996 based on cost for
Federal income tax purposes, is as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation/Depreciation
------------ ------------ -------------------------
<S> <C> <C> <C>
Equity Fund................. $3,471,169 $(136,786) $3,334,383
Intermediate Bond Fund...... 49,561 (94,666) (45,105)
Balanced Fund............... 2,628,112 (255,098) 2,373,014
</TABLE>
Note 5 -- Capital Share Transactions. The Trust is authorized to issue an
unlimited number of shares of beneficial interest with a par value of $0.001
each. Transactions in shares of the Funds are as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996 Year Ended September 30, 1995
------------------------------- -----------------------------
Equity Intermediate Balanced Equity Intermediate Balanced
Fund Bond Fund Fund Fund Bond Fund Fund
---- --------- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Retail Class
Shares sold ................................... 605,171 77,479 821,000 858,260 175,874 521,381
Shares issued in reinvestment of net investment
income and capital gain distributions ....... 204,420 8,661 28,367 89,682 22,119 15,004
Shares redeemed ............................... (168,701) (44,159) (64,202) (257,845) (498,753) (152,905)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in shares ............. 640,890 41,981 785,165 690,097 (300,760) 383,480
======== ======== ======== ======== ======== ========
Service Class
Shares sold ................................... 3,033 -- 260,681 10,462 8 52,541
Shares issued in reinvestment of net investment
income and capital gain distributions ....... 725 -- 19,255 1,596 27 20,705
Shares redeemed ............................... (2,737) -- (74,465) (47,926) (8,102) (742,089)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in shares ............. 1,021 -- 205,471 (35,868) (8,067) (668,843)
======== ======== ======== ======== ======== ========
</TABLE>
16
<PAGE>
THE WESTWOOD FUNDS
Selected Per Share Data and Ratios
For a share outstanding throughout each period(a)
================================================================================
<TABLE>
<CAPTION>
Equity Fund
---------------------------------------------------------------------------------
Six Months Ended Year Ended Year Ended
March 31, 1996 September 30, 1995 September 30, 1994 Year Ended September 30,
-------------- ------------------ ------------------ ------------------------
1993 1992 1991
Retail Service Retail Service Retail Service ------ ------ ------
Class Class Class Class Class Class* Retail Class
------- ------ ------- ------ ------ ------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......... $6.59 $6.57 $5.50 $5.48 $9.91 $5.53 $14.19 $14.23 $12.62
----- ----- ----- ----- ----- ----- ------ ------ ------
Income from Investment Operations:
Net investment income ....................... 0.03 0.02 0.04 0.04 0.10 0.06 0.05 0.27 0.46
Net realized and unrealized gain (loss) on
investments ............................... 1.11 1.10 1.31 1.29 0.64 (0.11) 2.12 0.34 1.92
----- ----- ----- ----- ----- ----- ------ ------ ------
Total from Investment Operations ............ 1.14 1.12 1.35 1.33 0.74 (0.05) 2.17 0.61 2.38
----- ----- ----- ----- ----- ----- ------ ------ ------
Less Distributions:
Dividends from net investment income ........ (0.06) -- (0.06) (0.04) (0.07) -- (0.55) (0.51) (0.61)
Distributions from net realized capital gains (0.52) (0.52) (0.20) (0.20) (5.08) -- (5.90) (0.14) (0.16)
----- ----- ----- ----- ----- ----- ------ ------ ------
Total Distributions ......................... (0.58) (0.52) (0.26) (0.24) (5.15) -- (6.45) (0.65) (0.77)
----- ----- ----- ----- ----- ----- ------ ------ ------
Net Asset Value, End of Period ................ $7.15 $7.17 $6.59 $6.57 $5.50 $5.48 $9.91 $14.19 $14.23
===== ===== ===== ===== ===== ===== ====== ====== ======
Total Return (not reflecting sales load) ...... 18.13% 17.79% 25.85% 25.54% 9.14% (0.90)% 20.16% 4.16% 19.61%
Net Assets End of Period (in thousands) .......$20,728 $ 82 $14,903 $ 68 $8,637 $ 254 $5,172 $13,161 $52,884
Ratios to average net assets of:
Net Investment Income ....................... 0.52% 0.37% 0.77% 0.64% 1.63% 1.64%** 0.40% 1.85% 3.06%
Expenses net of waivers/reimbursements+ ..... 1.49% 1.74% 1.61% 1.85% 0.71% 1.04%** 1.95% 1.40% 1.29%
Expenses before waivers/reimbursements+ ..... 1.95% 2.28% 2.29% 2.63% 1.94% 2.29%** 2.32% 1.54% 1.29%
Portfolio Turnover Rate ..................... 56% 56% 107% 107% 137% 137% 102% 75% 143%
</TABLE>
<TABLE>
<CAPTION>
Intermediate Bond Fund
---------------------------------------------------------------------------
Six Months Year Ended Year Ended Year Ended Year Ended
Ended March 31, September 30, September 30, September 30, September 30,
--------------- -------------- ---------------------------- -------------
1996 1995 1994 1993 1992
--------------- -------------- --------------- ------ ------
Retail Retail Service Retail Service
Class Class Class(b) Class Class* Retail Class
----- ----- ----- ------ ------ -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................... $9.98 $9.48 $9.48 $10.73 $10.51 $10.65 $10.00
----- ----- ----- ------ ------ ------ ------
Income from Investment Operations:
Net investment income ................................ 0.27 0.52 0.05 0.48 0.41 0.39 0.51
Net realized and unrealized gain (loss) on investments (0.10) 0.50 (0.14) (1.04) (1.03) 0.62 0.65
----- ----- ----- ------ ------ ------ ------
Total from Investment Operations ..................... 0.17 1.02 (0.09) (0.56) (0.62) 1.01 1.16
----- ----- ----- ------ ------ ------ ------
Less Distributions:
Dividends from net investment income ................. (0.27) (0.52) (0.05) (0.48) (0.41) (0.39) (0.51)
Distributions from net realized capital gains ........ -- -- -- (0.21) -- (0.54) --
----- ----- ----- ------ ------ ------ ------
Total Distributions .................................. (0.27) (0.52) (0.05) (0.69) (0.41) (0.93) (0.51)
----- ----- ----- ------ ------ ------ ------
Net Asset Value, End of Period ......................... $9.88 $9.98 $9.34 $9.48 $9.48 $10.73 $10.65
===== ===== ===== ====== ====== ====== ======
Total Return (not reflecting sales load) ............... 1.63% 11.13% (0.95)% (5.46)% (6.81)% 10.24% 11.87%
Net Assets End of Period (in thousands) ................ $5,094 $4,729 $ 0 $7,339 $ 76 $2,849 $3,153
Ratios to Average Net Assets of:
Net Investment Income ................................ 5.26% 5.38% 4.85% 4.86% 6.05%** 3.74% 5.25%
Expenses net of waivers/reimbursements+ .............. 1.00% 1.17% 1.45% 0.92% 1.34%** 2.40% 1.94%
Expenses before waivers/reimbursements+ .............. 2.32% 2.47% 4.07% 1.75% 2.37%** 3.46% 3.40%
Portfolio Turnover Rate .............................. 90% 165% 70% 203% 203% 222% 198%
</TABLE>
- ----------
(a) Per share based on the average number of shares outstanding during the
period.
(b) On November 8, 1994, all shares of the Service Class were redeemed and
there have been no further shares issued in this class since that date.
Accordingly, the NAV per share of $9.34 represents the net asset value on
November 8, 1994.
* Prior to January 31, 1994, no shares of the Service Class were issued.
** Annualized.
+ See footnote on page 18.
See accompanying notes to financial statements
17
<PAGE>
THE WESTWOOD FUNDS
Selected Per Share Data and Ratios
For a share outstanding throughout each period(a)
================================================================================
<TABLE>
<CAPTION>
Balanced Fund
----------------------------------------------------------------------------------
Six Months Ended Year Ended Year Ended Year Ended Year Ended
March 31, September 30, September 30, September 30, September 30,
1996 1995 1994 1993 1992
--------------- --------------- --------------- --------------- -----------
Retail Service Retail Service Retail Service Retail Service Retail
Class Class Class Class Class Class* Class Class* Class
----- ----- ----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............ $8.47 $8.45 $7.12 $7.10 $10.89 $10.88 $10.45 $10.24 $10.00
----- ----- ----- ----- ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income ....................... 0.10 0.09 0.19 0.17 0.12 0.15 0.20 0.19 0.31
Net realized and unrealized gain
on investments ............................ 0.96 0.96 1.35 1.35 0.42 0.36 1.44 0.52 0.49
----- ----- ----- ----- ------ ------ ------ ------ ------
Total from Investment Operations ............ 1.06 1.05 1.54 1.52 0.54 0.51 1.64 0.71 0.80
----- ----- ----- ----- ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income ........ (0.10) (0.09) (0.19) (0.17) (0.13) (0.11) (0.24) (0.07) (0.31)
Distributions from net realized capital gains (0.13) (0.13) -- -- (4.18) (4.18) (0.96) -- (0.04)
----- ----- ----- ----- ------ ------ ------ ------ ------
Total Distributions ......................... (0.23) (0.22) (0.19) (0.17) (4.31) (4.29) (1.20) (0.07) (0.35)
----- ----- ----- ----- ------ ------ ------ ------ ------
Net Asset Value, End of Period .................. $9.30 $9.28 $8.47 $8.45 $7.12 $7.10 $10.89 $10.88 $10.45
===== ===== ===== ===== ====== ====== ====== ====== ======
Total Return (not reflecting sales load) ........ 12.65% 12.54% 21.98% 21.67% 5.30% 4.67% 17.60% 6.96% 7.32%
Net Assets End of Period (in thousands) .........$14,896 $9,832 $6,912 $7,212 $3,081 $10,810 $1,583 $ 114 $3,716
Ratios to average net assets of:
Net Investment Income ....................... 2.42% 2.16% 2.47% 2.26% 1.55% 2.15% 1.90% 1.76%** 3.13%
Expenses net of waivers/reimbursements+ ..... 1.24% 1.49% 1.35% 1.62% 1.68% 1.17% 1.82% 2.07% 1.44%
Expenses before waivers/reimbursements+ ..... 1.70% 2.04% 1.86% 2.24% 2.36% 2.11% 2.97% 3.14%** 2.38%
Portfolio Turnover Rate ..................... 60% 60% 133% 133% 168% 168% 192% 192% 178%
</TABLE>
- ----------
(a) Per share based on the average number of shares outstanding during the
period.
* Prior to April 6, 1993, no shares of the Service Class were issued.
** Annualized.
+ The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits, the expense ratios would be 1.49% and 1.74% for Equity Retail
and Service Class, respectively, net of waivers and 1.87% and 2.12% for
Equity Retail and Service Class before waivers. For Intermediate Bond Fund:
1.00% and 2.21%. For the Balanced Fund: expenses net of waivers would be
1.24% and 1.49% for the Retail and Service Class, respectively, and 1.66%
and 1.91% before waivers for the Retail and Service Class, respectively.
See accompanying notes to financial statements
18
<PAGE>
The Westwood Funds
==================
WESTWOOD EQUITY FUND
WESTWOOD INTERMEDIATE BOND FUND
WESTWOOD BALANCED FUND
(unaudited)
Average Annual Returns -- March 31, 1996 (a)
Retail Class Shares 1 yr 5 yr Life of Fund Inception Date
- ------------------- ---- ---- ------------ --------------
Equity................. 39.8% 15.8% 13.9% 1/02/87
Intermediate Bond...... 8.9 -- 6.3 10/01/91
Balanced............... 30.3 -- 14.3 10/01/91
Service Class Shares (b) 1 yr Life of Fund Inception Date
- ------------------------ ---- ------------ --------------
Equity................. 33.7% 17.0% 1/28/94
Balanced............... 24.8 13.8 4/06/93
(a) Average annual and total returns reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of
the Fund is reduced on the ex-dividend (payment) date by the amount of the
dividend paid. Of course, the returns represent past performance and do not
guarantee future results. Investment returns and the principal value of an
investment will fluctuate. When shares are redeemed that may be worth more
or less than their original cost.
(b) Adjusted for the maximum 4.0% sales charge.
- --------------------------------------------------------------------------------
Board of Trustees
SUSAN M. BYRNE JAMES P. CONN
President and Managing Director and
Chief Investment Officer Chief Investment Officer
Financial Security Assurance
ANTHONY J. COLAVITA
Attorney-at-Law DR. WERNER J. ROEDER
Anthony J. Colavita, P.C. Director of Surgery
Lawrence Hospital
- --------------------------------------------------------------------------------
Officers
SUSAN M. BYRNE GORDON M. FORRESTER
President and Assistant Treasurer
Chief Investment Officer
BRUCE N. ALPERT JOAN V. FIORE
Vice President Assistant Secretary
JOHN J. PILEGGI SHERYL HIRSCHFELD
Treasurer Assistant Secretary
JAMES E. McKEE
Secretary
19
<PAGE>
The Westwood Funds
One Corporate Center
Rye, NY 10580
General and Account Information:
1-(800) GABELLI (422-3554) (all continental states)
Investment Adviser
Teton Advisers LLC
One Corporate Center
Rye, NY 10580
Investment Sub-Advisor
Westwood Management Corporation
885 Third Avenue
New York, NY 10022
Distributor
Gabelli & Company, Inc.
One Corporate Center
Rye, NY 10580
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Legal Counsel
Baker & McKenzie
805 Third Avenue
New York, NY 10022
- --------------------------------------------------------------------------------
This report is for the information of the shareholders of The Westwood Funds.
Its use in connection with any offering of the Trust's shares is authorized only
in case of a concurrent or prior delivery of the Trust's current prospectus.
- --------------------------------------------------------------------------------
