[PHOTO OMITTED]
THE
GABELLI
GROWTH
FUND
FIRST QUARTER REPORT
MARCH 31, 2000
<PAGE>
THE GABELLI GROWTH FUND
FIRST QUARTER REPORT
MARCH 31, 2000 [PHOTO OMITTED]
* * * * *
MORNINGSTAR RATED [trademark] GABELLI GROWTH FUND 5 STARS OVERALL AND FOR
THE THREE, FIVE AND TEN-YEAR PERIODS ENDED 3/31/00 AMONG 3571, 2283 AND 786
DOMESTIC EQUITY FUNDS, RESPECTIVELY.
TO OUR SHAREHOLDERS,
James Bond, Agent 007, likes to frequent posh casinos in glamorous
locales. He dresses in black tie, drinks his signature vodka martini shaken, not
stirred, and flirts with members of the opposite sex while frustrating his
antagonist with his gaming skills. Bond must be very good at these games of
chance because he always wins in the end. More than a few investors seem to view
the stock market as a game of chance these days. Indeed, there are seasoned pros
that have defected to the "growth at any price" momentum party, blaming their
poor results on their textbook valuation disciplines. As you may have read, some
high profile mutual fund and hedge fund managers simply closed up shop or
retired, echoing the "no mas" comments of the colorful boxer Roberto Duran, as
he was being badly beaten by Sugar Ray Leonard.
Is it possible that the newcomers to the momentum party do not realize
their predicament now that they have decided to gamble, instead of invest, their
clients' assets? On the one hand, if the stock market really is a game of
chance, then unlike James Bond, they will most likely lose. They may be the
greater fools. On the other hand, if the stock market is not a game of chance,
then having abandoned their valuation disciplines, they will lose as money
gravitates to the cheap old economy stocks they recently sold. To be sure, these
are unusual times and there are many questions that need to be addressed. It is
a good time to assess the outlook for growth stocks from my perspective as the
portfolio manager of The Gabelli Growth Fund.
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PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of March 31, 2000 and
are subject to change every month. Morningstar ratings are calculated from a
Fund's three, five and ten-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. The top 10% of the funds in a
broad asset class receive five stars, the next 22.5% receive four stars, the
next 35% receive three stars, the next 22.5% receive two stars and the bottom
10% receive one star.
<PAGE>
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
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QUARTER
-----------------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C>
2000: Net Asset Value ........ $50.10 -- -- -- --
Total Return ........... 7.7% -- -- -- --
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1999: Net Asset Value ........ $38.53 $41.38 $41.07 $46.51 $46.51
Total Return ........... 8.8% 7.4% (0.8)% 26.1% 46.3%
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1998: Net Asset Value ........ $32.32 $33.37 $28.54 $35.40 $35.40
Total Return ........... 12.9% 3.2% (14.5)% 30.2% 29.8%
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1997: Net Asset Value ........ $24.50 $29.25 $33.41 $28.63 $28.63
Total Return ........... 1.5% 19.4% 14.2% 3.1% 42.6%
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1996: Net Asset Value ........ $23.75 $24.34 $25.35 $24.14 $24.14
Total Return ........... 7.2% 2.5% 4.1% 4.4% 19.4%
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1995: Net Asset Value ........ $20.86 $22.99 $24.91 $22.16 $22.16
Total Return ........... 6.0% 10.2% 8.4% 4.9% 32.7%
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1994: Net Asset Value ........ $21.90 $21.23 $22.58 $19.68 $19.68
Total Return ........... (5.8)% (3.1)% 6.4% (0.5)% (3.4)%
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1993: Net Asset Value ........ $21.71 $21.84 $23.43 $23.26 $23.26
Total Return ........... 0.6% 0.6% 7.3% 2.5% 11.3%
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1992: Net Asset Value ........ $20.27 $19.72 $20.50 $21.59 $21.59
Total Return ........... (4.7)% (2.7)% 4.0% 8.5% 4.5%
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1991: Net Asset Value ........ $18.18 $18.02 $19.51 $21.28 $21.28
Total Return ........... 11.7% (0.9)% 8.3% 12.0% 34.3%
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1990: Net Asset Value ........ $16.74 $17.80 $15.75 $16.27 $16.27
Total Return ........... (1.9)% 6.3% (11.5)% 6.2% (2.0)%
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1989: Net Asset Value ........ $13.99 $15.73 $17.46 $17.07 $17.07
Total Return ........... 10.6% 12.4% 11.0% 1.5% 40.1%
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1988: Net Asset Value ........ $10.87 $12.40 $12.71 $12.65 $12.65
Total Return ........... 16.1% 14.1% 2.5% 2.5% 39.2%
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1987: Net Asset Value ........ -- $10.84 $11.28 $9.51 $9.51
Total Return ........... -- 8.4%(b) 4.1% (15.7)% (4.9)%(b)
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</TABLE>
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AVERAGE ANNUAL RETURNS - MARCH 31, 2000 (A)
1 Year ....................................... 44.75%
5 Year ....................................... 34.25%
10 Year ....................................... 21.43%
Life of Fund (b) .............................. 21.60%
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DIVIDEND HISTORY
PAYMENT (EX) DATE RATE PER SHARE REINVESTMENT PRICE
December 27, 1999 $5.160 $45.59
December 28, 1998 $1.745 $35.15
December 30, 1997 $5.790 $28.58
December 31, 1996 $2.324 $24.14
December 29, 1995 $3.960 $22.16
December 30, 1994 $2.790 $19.68
December 31, 1993 $0.760 $23.26
December 31, 1992 $0.646 $21.59
December 31, 1991 $0.573 $21.28
December 31, 1990 $0.460 $16.27
December 29, 1989 $0.654 $17.07
December 30, 1988 $0.377 $12.65
January 4, 1988 $0.152 $9.58
(a) Total returns and average annual 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, 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 they may be worth more or less than their
original cost. (b) From commencement of investment operations on April 10, 1987.
- --------------------------------------------------------------------------------
2
<PAGE>
In the course of reviewing our outlook we will look at the economy, the
stock and bond markets in general and some of our holdings in particular. We
will update you on some of the changes we have made in the portfolio. Before
embarking down this journey on the murky and dangerous Pundit River, let me warn
you about the current state of Wall Street punditry. I know it is a bull market,
but when it comes to pundits trying desperately to defend the valuations
accorded the so-called "new economy" stocks, I have never, ever, heard so much
bull in my life.
I would like to clarify a few issues before moving on. First, it is
possible to be a growth stock investor without succumbing to the fatal
attraction of momentum investing. Second, some growth stocks serve double duty
as value stocks, and vice versa. Third, some stocks are neither growth nor
value. Rather, they are stylistic orphans that do not belong in either
discipline. Finally, there is a fundamental difference between investing and
speculating. Most day traders are speculators. In due course most will fail. We
are investors and we believe operating earnings and valuations matter. It may
surprise some of you but being a growth stock investor does not mean you ignore
valuations. Investors with no price discipline have exaggerated returns in both
directions. Few have the stomach for the periodic plunges of the priciest
stocks.
INVESTMENT PERFORMANCE
For the first quarter ended March 31, 2000, The Gabelli Growth Fund's (the
"Fund") total return was 7.72%. The Standard and Poor's ("S&P") 500 Index and
the Lipper Large-Cap Growth Fund Average had total returns of 2.29% and 8.49%,
respectively, over the same period. The S&P 500 Index is an unmanaged indicator
of stock market performance, while the Lipper Average reflects the average
performance of mutual funds classified in this particular category. The Fund was
up 44.75% over the twelve months ended March 31, 2000. The S&P 500 Index and
Lipper Large-Cap Growth Fund Average rose 17.93% and 38.08%, respectively, over
the same twelve-month period.
For the ten-year period ended March 31, 2000, the Fund's total return
averaged 21.43% annually, versus average annual total returns of 18.82% and
20.07% for the S&P 500 Index and Lipper Large-Cap Growth Fund Average,
respectively. Since inception on April 10, 1987 through March 31, 2000, the Fund
had a cumulative total return of 1,167.07%, which equates to an average annual
total return of 21.60%. Our direct shareholders total 78,274 and net assets are
$3.7 billion as of March 31, 2000.
ECONOMIC BACKGROUND
You do not need me to tell you the economy is strong. You found that out
when you wanted to remodel the powder room. Perhaps you tried to book a vacation
at a popular spot. Have you noticed neighborhood real estate prices rising?
During the last week in March, jobless claims fell to their lowest level since
1973. In last year's fourth quarter, "real" Gross Domestic Product (GDP) grew at
a 7.3% annual rate, the highest level since the 9.0% rate in the first quarter
of 1984. Oil prices hit 9-year highs during the first quarter, although this can
be explained by OPEC's reduction in supply.
3
<PAGE>
As you know, Federal Reserve Chairman Alan Greenspan wants to slow the
economy to a more "sustainable" rate. Therefore, he has now raised short-term
interest rates 5 times in the last 9 months. Growth stocks have typically not
done well during periods of strong economic growth. Historically, strong GDP was
associated with robust cyclical profit gains and the "cyclicals" performed
smartly. This may well happen but it has not yet. It may be due to the notion
that economic growth is being driven by the information technology sector of the
economy. While housing, autos and retail sales remain important, they may have
taken a back seat to technology-related spending. The narrowness of the stock
market advance, until recently, would be consistent with just such an economy.
It also explains why growth stock investors that shun technology have struggled.
Outside of the sweet spot of the economy, encompassing technology,
telecommunications and media, there has been little to cheer about.
A broadening of economic growth would seem to have positive implications
for a broadening of the stock market rally. This is not necessarily a positive
for growth stock investors. They are exposed to high valuations in technology
stocks and are largely absent from the more cyclical sectors of the market. From
my vantagepoint, the ideal outcome has Alan Greenspan successfully slowing the
economy to a sub 4% rate in terms of real GDP, encouraging investors to stay the
course. While some money may depart the highest expectation stocks, most growth
issues, including pharmaceuticals, media, telecommunications, financial services
and technology, should prosper.
THE STOCK MARKET
Alan Greenspan has soft-pedaled his desire to lower stock prices, while
targeting his rhetoric against the so-called "wealth effect" associated with
rising share prices. Most investors ignored him until recently as over $100
billion flowed into equity mutual funds in the first quarter, including a record
$53 billion in February. Many believe you can easily earn a return in excess of
potential bond returns, about 6%, with no need to fret over the possibility of a
major stock market correction. They have been rewarded for buying the "dips" and
like smart hamsters, they continue to act accordingly. With every dip they
bought more of the same stocks, driving their prices to irrational levels. The
hamsters saw their investments soar in value. Unfortunately, many hamsters
started acting pig-like, consuming ever more quantities of those tasty tech
stocks with borrowed funds. Of course, when you combine unseasoned investors
with leverage and speculative stocks you get a cocktail for chaos. The ultimate
lesson for the hamsters, the pigs and the market technicians that egged them on,
is that earnings and valuations really do matter. Ignore them at your peril.
While it is true that many "value" stocks did not participate in the
market's advance over the last year to the same degree as the tech favorites, it
is also true that many growth stocks were neglected as well. This includes most
of the drug and financial services stocks as well as some traditional media and
retailing issues. Not all "growth" stocks became expensive. At the same time,
many of the "new economy" stocks were and are expensive. Furthermore, many new
public companies that have captured the imaginations of investors are highly
speculative venture capital class companies. Many investors do not appreciate
the difference in the risk profile between a stock selling at 600 times
REVENUES, like Red Hat
4
<PAGE>
did last quarter, and IBM, which sells at 24 times EARNINGS. In the long run,
the market does a good job of rationalizing stock prices. Investors who make
little, if any, attempt to understand the mathematical logic of stock valuations
become frighteningly lost in a bear market environment.
You may recall an analysis we shared with you 12 months ago on America
Online, otherwise known as AOL. We were trying to make the point that AOL was
already an expensive stock and would not be the best use of your investment
dollars at that time. AOL had a market value of $140 billion. I argued that
buying The Home Depot and Sun Microsystems for the same price made more sense.
If you wanted additional diversification, I argued you should buy Merrill Lynch,
CBS, McGraw-Hill, The New York Times, Tiffany's, Northern Trust, Marsh &
McLennan and Gannett. For $140 billion you had three distinct choices. Had you
picked AOL, your $140 billion was worth $138 billion as of April 13. The Home
Depot and Sun Microsystems investment grew from $140 billion to $270 billion. If
you bought the package of 8 old economy companies your $140 billion grew to $170
billion. We also argued that Charles Schwab stock, which we had just sold at
over 100 times earnings, was over priced relative to Merrill Lynch, which sold
for 15 times earnings. Over the last year, Schwab's stock is down 34% while
Merrill's is up 20%. We also poked fun at the $17 billion value accorded
Priceline, whose value declined by $7 billion in the past year. We prefer to
invest in growth stocks where the growth in earnings is likely to be accompanied
by an expanding, not contracting, price earnings multiple.
PORTFOLIO HIGHLIGHTS
Given our preference for growth stocks with defensible valuations, the
unprecedented rise in technology stocks during the last six months moved us to
taking profits during the first few months of the year. During the first quarter
we reduced our investment in a number of companies including Texas Instruments
(up 65% during the quarter), Corning (up 50%), Cisco Systems (up 44%), and Sun
Microsystems (up 21%). These were big winners in 1999 as well. Other stocks
trimmed during the first quarter included Qualcomm, EMC, Amgen and The Home
Depot. Time Warner, which is being acquired by AOL, was also trimmed. To be
frank, I never thought in my wildest dreams that I would see stocks soar to such
levels with such speed. Taking profits was an easy decision. I appreciate the
desire to avoid capital gains taxes and I am pleased that roughly 80% of all
realized gains this year are long term.
Proceeds from the sales were invested in stocks with better risk/reward
profiles. We added to financial services companies such as Mellon, State Street
and Marsh & McLennan. We increased our investment in drug stocks such as Eli
Lilly, Schering-Plough, Johnson & Johnson, Merck, Bristol-Myers and Abbott Labs.
We bought back Gillette at about one half the price we sold it for last Spring.
We bought back some Disney. We bought undervalued telecommunications stocks such
as Bell Atlantic, BellSouth, Sprint and US West. We even bought some of the less
expensive technology stocks such as Dell Computer, Apple Computer and Tellabs.
Some mega deals were completed during the first quarter and others
surfaced involving our holdings. These are large strategic deals. Pfizer won the
battle for Warner-Lambert, which has been one of our major holdings for several
years (we also own Pfizer), creating arguably the best drug
5
<PAGE>
company in the world. Vodafone, which we own, won the battle for Mannesmann,
giving birth to the largest wireless telephone operator in the world by a wide
margin. Time Warner shareholders, like us, benefited from the pending AOL
takeover. As Tribune shareholders, we applaud the company's move to acquire
Times Mirror and build a national media powerhouse. As US West shareholders we
support their acquisition by Qwest and are excited about their combined
prospects.
LOOKING AHEAD
Our mission remains the same. We seek to build a diversified portfolio of
America's greatest established growth companies using our valuation discipline
to reduce price risk. Market volatility, whether good or not, is unavoidable. At
the risk of crying wolf, I ask you again to keep your expectations down for this
year. While we can be optimistic regarding the relatively strong profit outlook
for the balance of the year, we can't predict with certainty how the stock
market drama unfolds. In the short run, profits and stock prices can move in
opposite directions. Since we will not engage in the loser's game of market
timing, we expect the Fund to move in the same direction as the overall market,
be it up or down. Fasten your seat belts.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
CISCO SYSTEMS INC. (CSCO - $77.3125 - NASDAQ) is the leading supplier of data
networking equipment such as routers and ATM switches for use in Local Area
Networks, Wide Area Networks and the Internet. As an integral provider of
infrastructure for the Internet, the company is a major beneficiary of the Net's
explosive growth. We forecast strong earnings growth for this year and next.
CLEAR CHANNEL COMMUNICATIONS INC. (CCU - $69.0625 - NYSE) is one of the top two
radio broadcasters along with Infinity Broadcasting (80% owned by CBS). The
company is also a leader in outdoor advertising. Both markets are strong,
reflecting the growing national economy and heavy advertising by new Internet
companies as they strive to develop brand awareness. Radio ad rates are low
compared to other media such as television and newspapers, which gives radio
operators some pricing protection.
EMC CORP. (EMC - $125.00 - NYSE) is the leading provider of enterprise wide data
storage products. Storage has become a high growth market in today's information
based economy. Electronic commerce requires massive amounts of storage, which
has given EMC a tremendous business opportunity. We believe EMC is the
technology leader in enterprise storage (competitors are IBM, Hitachi and Sun
Microsystems) and is leading the field in introducing Storage Area Networks
("SANs"). EMC is the vendor of choice for Internet Service Providers, just as
Cisco is for routers and Sun Microsystems is for Client Servers. We expect
continued strong earnings growth in the foreseeable future.
6
<PAGE>
HOME DEPOT INC. (HD - $64.50 - NYSE) continues to increase market share in the
home improvement retailing segment, in which it is the leader by a wide margin.
HD does not rest on its laurels. The company is testing a smaller format store
known as Villager's Hardware, which competes with small hardware stores. The
company continues to roll out Expo Design Centers and is expanding into
institutional facilities maintenance. Finally, the company is developing an
Internet sales facility, which will leverage the company's brand beyond
traditional retail outlets.
INTEL CORP. (INTC - $131.9375 - NASDAQ) is the dominant supplier of
microprocessors for the personal computer industry with an 80% market share. The
company is developing new lines of business in semiconductors for the
communications equipment market and "server farms" for managing the electronic
commerce needs of other companies. We expect earnings to continue growing based
on continued mid-teen growth in personal computer shipments. The company is an
integral member of the information revolution.
INTERNATIONAL BUSINESS MACHINES CORP. (IBM - $118.00 - NYSE) is a leading
supplier of hardware, software and outsourcing services for the computer
industry. Over 60% of the company's revenues now come from relatively higher
margin software and service businesses. The company is well positioned as an
electronic commerce solutions provider, which also provides a platform to
cross-sell the company's many products. With Y2K behind it, we expect the
company to continue to grow earnings per share going forward.
MARSH & MCLENNAN COMPANIES INC. (MMC - $110.3125 - NYSE) is the world's largest
insurance brokerage and one of the leading asset managers through its ownership
of The Putnam Funds. MMC is also a leader in employee benefit consulting with
its ownership of the Mercer Group. The company's growth rate has accelerated in
recent years due primarily to the success of Putnam. We expect solid overall
growth based on continued strong results at Putnam, albeit slower than last
year, and some modest improvement in the company's traditional insurance
brokerage business.
MELLON FINANCIAL CORP. (MEL - $29.50 - NYSE) is one of the largest asset
managers in the country. In addition to the bank's asset gathering arm, their
Dreyfus and Boston Company subsidiaries continue to grow and prosper. New
management is shedding non-core assets to focus on the company's highest margin
and best growth opportunities. Fees represent over 60% of revenues and that
number will grow as the year progresses. The bank prefers to remain independent
but it is an attractive property to all the financial services companies seeking
to boost their asset management businesses.
NORTHERN TRUST CORP. (NTRS - $67.5625 - NASDAQ) is one of an elite group of
institutions with a major presence in the wealth management market for high net
worth individuals and families. The company has established a network of offices
in the primary wealth markets across the country (Palm Beach, Beverly Hills,
etc...) and continues to build its fee income in a methodical way. We believe
earnings will continue to grow, powered by growth in assets under management,
which exceed $200 billion. We regard NTRS as a trophy property within the
banking sector.
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STATE STREET CORP. (STT - $96.875 - NYSE) is a leading provider of financial
services to mutual funds and other institutional investors. The company is the
third largest custodian of assets in the world, with $6 trillion under custody.
Additionally, the company is a major asset manager itself with $574 billion
under management. The company is focused on these two business lines and
recently exited the corporate lending business altogether. We believe this
enhances the company's growth prospects and valuation. Management believes the
company has strong growth prospects overseas and growing this part of their
business is a strategic priority, as is having a greater presence directly with
retail investors.
TEXAS INSTRUMENTS INC. (TXN - $160.00 - NYSE) is the largest provider of digital
signal processors ("DSPs"), a critical component for digital communication
devices, including wireless phones and digital signal lines ("DSLs"). Having
restructured the company in recent years, its valuation is no longer hostage to
the memory chip ("DRAM") cycle and defense businesses. We believe the DSP chip
business, in which TXN is the leader, will grow at a rate in excess of 20% in
the foreseeable future.
WARNER-LAMBERT CO. (WLA - $97.50 - NYSE) is a diversified consumer products and
pharmaceutical company. Pfizer, also held by the Fund, won the battle to acquire
Warner, besting American Home Products and Procter & Gamble. The combined
company will have a research budget in excess of $3 billion. Business trends are
strong and we expect the new enterprise to grow earnings significantly going
forward.
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. No initial
minimum is required for those establishing an Automatic Investment Plan.
INTERNET
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Asset Management Inc.,
the Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and
other current news. You can send us e-mail at [email protected].
IN CONCLUSION
So how do we summarize the state of the stock market in general and growth
stocks in particular? I believe we have witnessed a speculative stock market
bubble of historic proportions. The bubble was largely concentrated in Internet,
technology and biotechnology related stocks. Many individual stocks in both the
growth and value camps did not participate in this "new economy" celebration and
are good investment values. We avoided the speculative "dot.com" stocks in favor
of established growth companies with real earnings, liquidity and defensible
valuations. When their valuations became excessive we sold, taking over $400
million of profits early in the year, the vast
8
<PAGE>
majority of which, about 80%, are long term gains for tax purposes. Proceeds
were reinvested in large established growth companies with valuations we can
mathematically defend.
The outlook for our companies' earnings has rarely, if ever, been better.
We should not forget that weakness in the market's "new economy" darlings should
temper Alan Greenspan's appetite for tightening monetary policy further. Indeed,
the overall stock market may need to see the destruction of the "dot.coms"
before resuming its historical trajectory, which is tied to rising earnings.
Experience tells us that difficult stock market environments create exceptional
opportunities for long term investors. Stay the course.
The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's Nasdaq symbol is GABGX. Please call us during the
business day for further information.
Sincerely,
/s/ SIGNATURE
HOWARD F. WARD
HOWARD F. WARD, CFA
Portfolio Manager
April 14, 2000
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TOP TEN HOLDINGS
MARCH 31, 2000
----------------
Intel Corp. Mellon Financial Corp.
State Street Corp. Warner-Lambert Co.
International Business Machines Corp. Tellabs Inc.
Home Depot Inc. Texas Instruments Inc.
Marsh & McLennan Companies Inc. US West Inc.
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. The manager's views
are subject to change at any time based on market and other conditions.
9
<PAGE>
THE GABELLI GROWTH FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -----
COMMON STOCKS -- 98.8%
BROADCASTING -- 3.8%
1,110,600 CBS Corp.+ ......................... $ 62,887,725
1,141,600 Clear Channel Communications Inc.+ 78,841,750
-------------
141,729,475
-------------
BUSINESS SERVICES -- 4.3%
1,205,000 Automatic Data Processing Inc. ..... 58,141,250
1,438,100 Interpublic Group of Companies Inc. 67,950,225
372,000 Omnicom Group Inc. ................. 34,758,750
-------------
160,850,225
-------------
CABLE -- 0.8%
640,000 Comcast Corp., Cl. A, Special ...... 27,760,000
-------------
COMMUNICATIONS EQUIPMENT-- 11.9%
861,000 Cisco Systems Inc.+ ................ 66,566,062
240,000 Corning Inc. ....................... 46,560,000
900,000 Lucent Technologies Inc. ........... 54,675,000
600,000 Motorola Inc. ...................... 85,425,000
360,000 Nokia Corp., Cl. A, ADR ............ 78,210,000
88,000 Qualcomm Inc.+ ..................... 13,139,500
1,570,000 Tellabs Inc.+ ...................... 98,885,469
-------------
443,461,031
-------------
COMPUTER HARDWARE -- 9.7%
625,000 Apple Computer Inc.+ ............... 84,882,812
1,190,000 Dell Computer Corp.+ ............... 64,185,625
320,000 Hewlett-Packard Co. ................ 42,420,000
1,140,000 International Business Machines Corp. 134,520,000
390,000 Sun Microsystems Inc.+ ............. 36,544,219
-------------
362,552,656
-------------
COMPUTER SOFTWARE AND SERVICES-- 2.4%
300,600 Computer Sciences Corp.+ ........... 23,784,975
340,000 EMC Corp.+ ......................... 42,500,000
205,000 Microsoft Corp.+ ................... 21,781,250
-------------
88,066,225
-------------
CONSUMER PRODUCTS -- 0.8%
750,000 Gillette Co. ....................... 28,265,625
-------------
ELECTRONICS -- 6.7%
1,170,000 Intel Corp. ........................ 154,366,875
603,000 Texas Instruments Inc. ............. 96,480,000
-------------
250,846,875
-------------
ENTERTAINMENT -- 2.8%
700,000 Disney (Walt) Co. .................. 28,962,500
695,000 Time Warner Inc. ................... 69,500,000
90,000 Viacom Inc., Cl. B+ ................ 4,747,500
-------------
103,210,000
-------------
FINANCIAL SERVICES-- 14.3%
1,153,500 Marsh & McLennan Companies Inc. .... 127,245,469
3,881,000 Mellon Financial Corp. ............. 114,489,500
445,000 Merrill Lynch & Co. Inc. ........... 46,725,000
1,359,900 Northern Trust Corp. ............... 91,878,244
1,464,400 State Street Corp. ................. 141,863,750
253,500 T. Rowe Price Associates Inc. ...... 10,013,250
-------------
532,215,213
-------------
HEALTH CARE -- 14.0%
910,000 Abbott Laboratories ................ 32,020,625
648,000 Amgen Inc.+ ........................ 39,771,000
MARKET
SHARES VALUE
------- -----
942,000 Baxter International Inc. .......... $ 59,051,625
834,000 Bristol-Myers Squibb Co. ........... 48,163,500
677,000 Johnson & Johnson .................. 47,432,312
880,000 Lilly (Eli) & Co. .................. 55,440,000
871,000 Merck & Co. Inc. ................... 54,110,875
1,069,000 Pfizer Inc. ........................ 39,085,312
1,045,000 Schering-Plough Corp. .............. 38,403,750
1,094,000 Warner-Lambert Co. ................. 106,665,000
-------------
520,143,999
-------------
PUBLISHING -- 6.4%
711,000 Dow Jones & Co. Inc. ............... 51,058,688
690,000 Gannett Co. Inc. ................... 48,558,750
500,000 Knight-Ridder Inc. ................. 25,468,750
884,000 McGraw-Hill Companies Inc. ......... 40,222,000
958,000 New York Times Co., Cl. A .......... 41,134,125
875,000 Tribune Co. ........................ 31,992,188
-------------
238,434,501
-------------
RETAIL -- 7.0%
2,001,577 Home Depot Inc. .................... 129,101,717
1,054,000 Lowe's Companies Inc. .............. 61,527,250
844,200 Tiffany & Co. ...................... 70,596,225
-------------
261,225,192
-------------
SATELLITE -- 1.7%
500,000 General Motors Corp., Cl. H+ ....... 62,250,000
-------------
SPECIALTY CHEMICALS-- 1.3%
920,000 Monsanto Co. ....................... 47,380,000
-------------
TELECOMMUNICATIONS-- 9.6%
790,000 Bell Atlantic Corp. ................ 48,288,750
880,000 BellSouth Corp. .................... 41,360,000
1,780,000 MCI WorldCom Inc.+ ................. 80,656,250
900,000 SBC Communications Inc. ............ 37,800,000
895,000 Sprint Corp. ....................... 56,385,000
1,285,000 US West Inc. ....................... 93,323,125
-------------
357,813,125
-------------
WIRELESS COMMUNICATIONS -- 1.3%
840,000 Vodafone AirTouch plc, ADR ......... 46,672,500
-------------
TOTAL COMMON STOCKS ................ 3,672,876,642
-------------
PRINCIPAL
AMOUNT
------
U.S. GOVERNMENT OBLIGATIONS -- 1.4%
$52,850,000 U.S. Treasury Bills,
5.86% to 6.03%++,
due 04/20/00 to 04/27/00 ........ 52,639,032
-------------
TOTAL INVESTMENTS -- 100.2%
(Cost $2,687,873,114) ........... 3,725,515,674
OTHER ASSETS AND
LIABILITIES (NET)-- (0.2)% ...... (5,595,057)
--------------
NET ASSETS -- 100.0%
(74,248,109 shares outstanding) $3,719,920,617
==============
------------------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt.
10
<PAGE>
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. (NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI 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. (NO-LOAD)
PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GABELLI WESTWOOD EQUITY FUND ------------------------
Seeks to invest primarily in the common stock of seasoned companies believed to
have proven records and above average historical earnings growth. The Fund's
primary objective is capital appreciation. (NO-LOAD)
PORTFOLIO MANAGER: SUSAN M. BYRNE
GABELLI SMALL CAP GROWTH FUND ------------------------
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $500 million) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(NO-LOAD)
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 well-established, high quality companies that have market
capitalizations of greater than $5 billion. (NO-LOAD)
PORTFOLIO MANAGER: BARBARA MARCIN, CFA
GABELLI WESTWOOD SMALLCAP EQUITY FUND ------------------------
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $1 billion or less. The Fund's primary objective is long-term capital
appreciation. (NO-LOAD)
PORTFOLIO MANAGER: LYNDA CALKIN, CFA
GABELLI WESTWOOD INTERMEDIATE BOND FUND ------------------------
Seeks to invest in a diversified portfolio of bonds with various maturities.
The Fund's primary objective is total return. (NO-LOAD)
PORTFOLIO MANAGER: PATRICIA FRAZE
GABELLI EQUITY INCOME FUND ------------------------
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays quarterly dividends and seeks a high level of total return with an
emphasis on income. (NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI 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. (NO-LOAD)
PORTFOLIO MANAGERS: SUSAN M. BYRNE & PATRICIA FRAZE
GABELLI 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. (NO-LOAD)
TEAM MANAGED: MARIO J. GABELLI, CFA,
MARC J. GABELLI, LAURA K. LINEHAN AND
WALTER K. WALSH
GABELLI VALUE FUND ------------------------
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation.
MAX. SALES CHARGE: 51/2%
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI UTILITIES FUND ------------------------
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (NO-LOAD)
PORTFOLIO MANAGER: TIMOTHY O'BRIEN, CFA
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 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
GABELLI U.S. TREASURY MONEY MARKET FUND ------------------------
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
GABELLI CASH MANAGEMENT SHARES OF
THE TREASURER'S FUND ------------------------
Three money market portfolios designed to generate superior returns without
compromising portfolio safety. U.S. Treasury Money Market seeks to invest in
U.S. Treasury bills, notes and bonds. Tax Exempt Money Market seeks to
invest in municipal securities. Domestic Prime Money Market seeks to invest in
prime quality, domestic money market instruments. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
GLOBAL SERIES
GABELLI 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. (NO-LOAD)
TEAM MANAGED: MARIO J. GABELLI, CFA, MARC J. GABELLI AND IVAN ARTEAGA, CFA
GABELLI 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. (NO-LOAD)
PORTFOLIO MANAGER: HART WOODSON
GABELLI 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. (NO-LOAD)
PORTFOLIO MANAGER: MARC J. GABELLI
GABELLI 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.
(NO-LOAD)
PORTFOLIO MANAGERS: MARC J. GABELLI AND CAESAR BRYAN
GABELLI GOLD FUND ------------------------
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of world-wide economic, financial and political factors. (NO-LOAD)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI 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. (NO-LOAD)
PORTFOLIO MANAGER: CAESAR BRYAN
THE SIX FUNDS ABOVE INVEST IN FOREIGN SECURITIES WHICH INVOLVES RISKS NOT
ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY
FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE FUNDS LISTED ABOVE ARE
DISTRIBUTED BY GABELLI & COMPANY, INC.
- --------------------------------------------------------------------------------
TO RECEIVE A PROSPECTUS, CALL 1-800-GABELLI (422-3554). THE PROSPECTUS GIVES A
MORE COMPLETE DESCRIPTION OF THE FUND, INCLUDING FEES AND EXPENSES. READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
VISIT OUR WEBSITE AT:
WWW.GABELLI.COM
OR, CALL:
1-800-GABELLI
1-800-422-3554 (BULLET) 914-921-5100 (BULLET) FAX: 914-921-5118
(BULLET) [email protected]
ONE CORPORATE CENTER, RYE, NEW YORK 10580
<PAGE>
THE GABELLI GROWTH FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Karl Otto Pohl
CHAIRMAN AND CHIEF FORMER PRESIDENT
INVESTMENT OFFICER DEUTSCHE BUNDESBANK
GABELLI ASSET MANAGEMENT INC.
Felix J. Christiana Anthony R. Pustorino
FORMER SENIOR VICE PRESIDENT CERTIFIED PUBLIC ACCOUNTANT
DOLLAR DRY DOCK SAVINGS BANK PROFESSOR, PACE UNIVERSITY
Anthony J. Colavita Anthony Torna
ATTORNEY-AT-LAW HERZOG, HEINE &GEDULD, INC.
ANTHONY J. COLAVITA, P.C.
James P. Conn Anthonie C. van Ekris
FORMER CHIEF INVESTMENT OFFICER MANAGING DIRECTOR
FINANCIAL SECURITY ASSURANCE BALMAC INTERNATIONAL, INC.
HOLDINGS LTD.
John D. Gabelli
SENIOR VICE PRESIDENT
GABELLI & COMPANY, INC.
OFFICERS AND PORTFOLIO MANAGERS
Bruce N. Alpert Howard F. Ward, CFA
PRESIDENT AND TREASURER PORTFOLIO MANAGER
James E. McKee
SECRETARY
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Growth Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB406Q100SR
