The Gabelli Small Cap Growth Fund
THIRD QUARTER REPORT
JUNE 30, 1999(A)
TO OUR SHAREHOLDERS,
Small cap stocks excelled in the second quarter of 1999. The Russell 2000
handily beat the Dow Jones Industrial Average and outdistanced the S&P 500. This
was a broad based rally, with both growth and value sectors participating. While
it is premature to proclaim a major change in market leadership from large cap
to small cap stocks, there appears to be a marked shift in investor sentiment
from "big is beautiful" to "great things come in small packages".
INVESTMENT PERFORMANCE
For the quarter ended June 30, 1999, The Gabelli Small Cap Growth Fund's
(the "Fund") total return was 17.1%. The Value Line Composite and Russell 2000
Indices had returns of 17.3% and 15.6%, respectively, over the same period. Each
index is an unmanaged indicator of stock market performance. The Fund declined
0.1% over the trailing twelve-month period. The Value Line Composite and Russell
2000 rose 10.4% and 1.5%, respectively, over the same twelve-month period.
For the five-year period ended June 30, 1999, the Fund's total return
averaged 16.6% annually versus average annual total returns of 19.1% and 15.4%
for the Value Line Composite and Russell 2000, respectively. Since inception on
October 22, 1991 through June 30, 1999, the Fund had a cumulative total return
of 267.7%, which equates to an average annual total return of 18.4%.
WHAT WE DO
We view the small capitalization stock market as a research driven stock
picker's paradise. Unlike the large cap market, where most companies are closely
followed by dozens of Wall Street analysts, the small cap market is largely
unclaimed territory. Our analysts put on their hiking shoes, strap on their
backpacks and hit the trails looking for little companies Wall Street does not
know or care about. They are seeking a particular type of company, which we
would describe generally as a dominant market share, niche franchise in a
growing and/or consolidating industry.
[picture ommitted]
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(a) The Fund's fiscal year ends September 30.
<PAGE>
INVESTMENT RESULTS (a)(c)
<TABLE>
<CAPTION>
Calendar Quarter
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<S> <C> <C> <C> <C> <C> <C>
1st 2nd 3rd 4th Year
1999: Net Asset Value $19.59 $22.94 __ __ __
Total Return (6.8)% 17.1% __ __ __
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1998: Net Asset Value $23.93 $23.59 $18.81 $21.01 $21.01
Total Return 10.9% (1.4)% (20.3)% 14.7% 0.0%
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1997: Net Asset Value $19.11 $22.23 $25.42 $21.58 $21.58
Total Return 3.1% 16.3% 14.7% (0.8)% 36.5%
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1996: Net Asset Value $19.65 $20.68 $20.02 $18.53 $18.53
Total Return 6.2% 5.2% (3.2)% 3.4% 11.9%
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1995: Net Asset Value $17.03 $17.88 $19.34 $18.50 $18.50
Total Return 7.4% 5.0% 8.2% 2.6% 25.2%
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1994: Net Asset Value $16.76 $16.33 $17.24 $15.85 $15.85
Total Return (3.6)% (2.6)% 5.6% (2.1)% (2.9)%
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1993: Net Asset Value $15.46 $15.74 $16.90 $17.38 $17.38
Total Return 6.6% 1.8% 7.4% 5.3% 22.8%
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1992: Net Asset Value $13.42 $13.41 $13.10 $14.50 $14.50
Total Return 9.9% (0.1)% (2.3)% 12.1% 20.3%
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1991: Net Asset Value __ __ __ $12.21 $12.21
Total Return __ __ __ 22.9%(b) 22.9%(b)
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</TABLE>
Average Annual Returns - June 30, 1999 (a)
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1 Year (0.1)%
5 Year 16.6%
Life of Fund (b) 18.4%
Dividend History
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Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
December 21, 1998 $0.534 $19.80
December 29, 1997 $3.590 $21.29
September 30, 1997 $0.070 $25.42
December 27, 1996 $2.160 $18.46
December 29, 1995 $1.340 $18.50
December 30, 1994 $1.030 $15.85
December 31, 1993 $0.420 $17.38
December 31, 1992 $0.185 $14.50
December 31, 1991 $0.080 $12.21
(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 October 22,
1991. (c) The Fund's fiscal year ends September 30. Note: Investing in small
capitalization securities involves special challenges because these securities
may trade less frequently and experience more abrupt price movements than large
capitalization securities.
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Our analysts are guided by specific investment principles that include:
experienced management, healthy balance sheets and rising free cash flow and
earnings. They also live by certain value parameters--their goal is to find
great companies trading at reasonable valuations relative to "real world"
economic worth. These are the kinds of companies we can feel comfortable owning
long term, rather than trading like so many small cap investors are prone to do.
COMMENTARY
THE ECONOMY: DUELING DATA ON INFLATION
Inflation played "peek-a-boo" with investors in the second quarter of 1999.
A jump in April's Consumer Price Index ("CPI") rattled the bond market and had
equity investors holding their breath. Inflation all but disappeared again in
the May CPI numbers. The bond market stabilized and stocks regained momentum.
Then, citing the emergence of "incipient ingredients" for inflation and the long
lead time of monetary policy, the Federal Reserve decided to hike the Federal
Funds rate by 25 basis points on June 30, in what Chairman Alan Greenspan
characterized as a "preemptive action" against inflation. This sparked a flurry
of observers to question whether this single modest rate hike would be an
effective vaccination against inflation or just the first in a series of shots
that will eventually take the froth out of the economy and financial markets.
We are not optimistic on inflation. The inflationary threat comes partially
from rising commodities prices, (most notably oil), which are recovering from
severely depressed levels following the Asian economic meltdown, and from the
prospect of wage inflation in fully employed America. Thus far, technology
driven productivity gains have offset rising wages. Along with Fed Chairman
Greenspan, we are not sure how much longer this can continue in an America with
help wanted signs in an increasing number of corporate windows.
AMERICAN CONSUMERS: WILL THE ENGINE OF GLOBAL ECONOMIC GROWTH CONTINUE STEAMING
ALONG?
We want to echo again the question we asked in our September 30, 1998
report: Will the American consumer continue to carry the rest of the world, or
will the consumer eventually run low on confidence and/or the resources required
to nourish the global economy? Put another way, can the U.S. continue to run
enormous balance of payment deficits that provide hope and sustenance for the
other economies of the world as they attempt to emerge from their economic
malaise?
Full employment, higher wages, the wealth effect associated with rising
home values and a vibrant stock market have emboldened consumers, who continue
to spend quite liberally. If rising interest rates discourage consumers from
financing their spending spree, or we see a meaningful correction in the stock
market dent consumer confidence, the engine that has been driving global
economic growth may sputter. Equally important, if the U.S. consumer continues
to be the sole driver of global economic
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activity, the U.S. balance of payments deficit will exceed even our dire
forecast of a $250 billion run rate. The value of the U.S. dollar is a wild card
in the mix of elements that will determine the direction of the overall U.S.
economy and the stock market.
THE MARKET: EARNINGS AND INTEREST RATES
In our first quarter 1999 letter to shareholders, we also opined that
earnings and interest rates would call the market tune for the balance of the
year. In general, first quarter earnings met consensus estimates and second
quarter earnings should be stronger than anticipated, with particularly good
comparisons to 1998's second quarter, when General Motor's strike and the plunge
in energy prices crimped reported results. However, interest rates are higher,
and until we see convincing evidence that inflation is firmly under control,
rates are not likely to trend much lower. With the S&P 500's gains already
approximating 1999 earnings growth forecasts, we see an inadequate "margin of
safety" in the stock market. Money flowing into the markets, particularly from
deal activity, is the fuel powering a market that still favors stocks. However,
money is no longer pouring into equity mutual funds at the rates we have seen in
previous years. All this conjecture leads us to the opinion that stock
selectivity remains crucial over the next twelve months.
SMALL CAP STOCKS: BETTER EARNINGS PROSPECTS AND LOWER P/ES
We believe small cap stocks present much better fundamental value than
large caps, and going forward, could outperform in an up or down market. In view
of strong earnings prospects relative to large cap stocks, the multiples of
small cap stocks still have room to expand if interest rates stabilize.
After five years of underperformance for small cap stocks, it is easy to
forget that over the 25 years from 1973 through 1998, small cap stocks
materially outperformed their large cap counterparts. Outperformance and
underperformance has run in cycles, with large cap and small cap stocks often
taking extended turns in the lead. We believe that fundamentals currently favor
a significant period of small cap outperformance in the coming years.
LOTS OF WINNERS AND A FEW LOSERS
We are quite pleased that more than 75% of our portfolio holdings finished
the second quarter of 1999 with positive returns. Although we have benefited
from the tailwind of a strong small cap stock market, we have added value as
well, as evidenced by the Fund's outperformance of its Russell 2000 benchmark.
As is usually the case, our biggest winners came from a variety of industry
groups including entertainment (TCI Music), coffee (Chock Full o'Nuts), gaming
(Aztar Corp.), trading cards and confection (Topps Co.), and broadcasting (Price
Communications). The underlying theme on this quarter's leader board was deep
value. Many of this quarter's best performers were market laggards that had
become incredible fundamental bargains.
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Correspondingly, many of our worst performing stocks this quarter had been
among our biggest winners in previous years. Stocks such as Centennial Cellular,
Data Broadcasting Corp., Western Wireless and @Home Corp., have been terrific
investments for the Fund. Did we stay too long at the table with such stocks? We
don't think so. We buy what we perceive to be great companies, and rather than
trade them on price swings, we hope to hold them until they live up to their
full potential. We are willing to tolerate short term retreats, if we have faith
in the potential for long term advances.
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.
CARTER-WALLACE INC. (CAR - $18.1875 - NYSE) manufactures and sells consumer
health care products including toiletries, pharmaceuticals, diagnostic
specialties, proprietary drugs and pet products. Such recognized brand names as
Arrid deodorant, Nair hair remover and Pearl Drops toothpaste are Carter-Wallace
products. Astelin, in its second year on the market, remains the only
prescription antihistamine nasal spray in the U.S.
CELESTIAL SEASONINGS INC. (CTEA - $21.50 - NASDAQ), based in Boulder, Colorado,
developed and popularized the herb tea category in the U.S. as a flavorful,
non-caffeinated alternative to other hot beverages. With over 40 tea varieties
under the Celestial Seasonings brand, CTEA is the largest manufacturer of herb
teas with an estimated 50% market share. The company is expected to maintain its
dominant position in the herb tea market. Celestial Seasonings is positioned to
leverage its excellent brand name into dietary herbal supplements, green tea and
wellness tea.
CLARCOR INC. (CLC - $19.1875 - NYSE) is a U.S.-based manufacturer and
distributor of engine/mobile and industrial/environmental filtration products
and consumer packaging products. Filtration products include air, fuel and
hydraulic filters for heavy duty trucks, buses, cars and boats, as well as air
and anti-microbial filters for factories, hospitals and clean rooms. CLARCOR's
consumer packaging segment operates in two markets, custom-decorated metal
containers and plastic closures, producing such products as Band-Aid containers,
Rayovac battery shells and Kodak film canisters. Substantial cost savings and
productivity improvements are expected through the end of the decade. The
company has a history of bringing acquisitions profitably into the fold and is
entering into strategic alliances in European and other markets.
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COMMONWEALTH TELEPHONE ENTERPRISES INC. (CTCO - $40.4375 - NASDAQ; CTCOB -
$40.75 - NASDAQ), located in Dallas, Pennsylvania, provides local, long distance
and other telecommunications services in rural areas of Pennsylvania. CTCO was
formed as the result of a restructuring of C-Tec Corp. in 1997. The company
currently has over 300,000 access lines and is expanding into competitive local
exchange carrier ("CLEC") businesses.
LIBERTY CORP. (LC - $54.50 - NYSE), headquartered in Greenville, S.C., is a
holding company with operations in broadcasting and insurance. Liberty's Cosmos
Broadcasting owns and operates eleven network affiliated television stations in
the Southeast and Midwest. Six stations are affiliated with NBC, three with ABC
and two with CBS. These stations serve more than four million households. The
purchase of WWAY, the ABC affiliate in Wilmington, NC, for $34 million was
completed at year end. Liberty Life is a regional insurer, with North Carolina,
South Carolina and Louisiana accounting for more than 50% of its premium volume.
The insurance segment specializes in providing agency (home service) and
mortgage protection, life and health insurance. Former affiliate Pierce National
Life Insurance Co. was sold to Fortis Inc. for $180 million. In March 1998,
Liberty Corp. repurchased 2.4 million shares in a tender offer at $52 per share.
In February 1999, Liberty hired an investment banker and began a strategic
review which may result in a spinoff.
KAMAN CORP. (KAMNA - $15.6875 - NASDAQ), founded in 1945, is a pioneer in the
helicopter industry. Aircraft manufacturing remains the core of the business.
Kaman services both commercial and government markets with helicopters and
aircraft components. The company also produces specialized, high-value niche
market products and services which tend to be technological leaders in their
markets. Kaman is a major, national distributor of original equipment, repair
and replacement products and value-added services to nearly every sector of
North American industry. The company also manufactures and distributes musical
instruments (Ovation guitars) and accessories to independent retailers.
MEDIA GENERAL INC. (MEG'A - $51.00 - AMEX) is a Richmond, Virginia-based
communications company, publishing newspapers throughout the Southeast with
daily circulation of nearly 250,000. Media General operates thirteen network
television stations in Southeastern markets, including Tampa and Jacksonville,
Florida. The relaxation of broadcast station ownership restrictions provided by
the Telecommunications Reform Act of 1996 is driving industry consolidation and
is increasing the franchise values of strong, well-positioned media properties
such as those owned by Media General. The company produces newsprint from
recycled newspapers at its Garden State Paper Co. In April, MEG'A announced the
sale of its Virginia cable franchises to Cox Communications for $1.4 billion. In
June, MEG'A sold its equity interest in the DENVER POST to Media News Group and
redeemed its preferred stock for a total of $92 million.
NORTEK INC. (NTK - $31.3125 - NYSE) is a leading manufacturer and distributor of
high-quality, competitively-priced products and systems for use in building and
remodeling homes and businesses. Headquartered in Providence, Rhode Island, the
company's products include range hoods and other spot
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ventilation products, heating and air conditioning systems, wood and vinyl
windows and doors, vinyl siding products, indoor air quality systems and
specialty electronic products. In April, Nortek announced it had agreed to
acquire three businesses from Caradon plc: Peachtree Doors and Windows,
Thermal-Gard and Caradon Windows and Doors Canada.
ORANGE & ROCKLAND UTILITIES INC. (ORU - $58.4375 - NYSE) has agreed to be
acquired by Consolidated Edison (ED - $45.25 - NYSE) for $1.15 billion in cash
and assumed debt, allowing Con Edison to boost its power transmission business
in a growing part of the New York City area. Orange & Rockland is a small
utility, with most of its customers in New York's northern suburbs. Con Edison
is to pay $58.50 per share for all of Orange & Rockland's 13.5 million
outstanding shares. Orange & Rockland shareholders approved the merger on August
20, 1998 and the companies have filed all necessary regulatory applications. The
transaction is expected to be completed once all state and federal regulatory
approvals are obtained which is expected during the third quarter of 1999. In
addition to the $58.50 per share, we will also receive Orange & Rockland's
$0.645 quarterly dividend.
PENTON MEDIA INC. (PME - $24.25 - NYSE), spun-off from Pittway Corp. in
mid-1998, is a diversified business media company. Penton is a publisher of
authoritative trade magazines, producer of important trade show/conference
events, provider of electronic media and communication tools, a source for
reliable direct mail lists and research services and creators of custom
publications. Considered a primary business resource, Penton Media provides
marketing and media solutions in an important cross section of industries:
design/engineering, electronics, food/hospitality, government/compliance,
Internet/IT, leisure, management, manufacturing, mechanical systems and
construction, and supply chain aviation.
PITTWAY CORP. (PRY - $33.3125 - NYSE) has completed the tax-free spin-off of
Penton Media. Each Pittway shareholder received one share of Penton common stock
for each share of Pittway stock held. This action leaves Pittway with its core
business manufacturing and distributing burglar and commercial fire alarm
equipment. Pittway's ADI distribution unit is the largest supplier of alarm
system components in the U.S. Pittway is also involved in real estate and other
promising ventures, including a 34% interest in Cylink, a leading manufacturer
of encryption equipment. The company has sold one million of its 3.8 million
shares of U.S. Satellite Broadcasting, a direct-to-the-home ("DTH") satellite
broadcast company. Its remaining shares will be sold if Hughes Electronics'
acquisition of USSB (USSB - $18.00 - Nasdaq) is completed.
SOUTHWEST GAS CORP. (SWX - $28.625 - NYSE) is a natural gas utility based in Las
Vegas, providing natural gas service to over 1.2 million residential, commercial
and industrial customers in one of the most economically vibrant areas of the
United States: Arizona, Nevada and parts of northeastern and southeastern
California. The company added more than 58,000 customers during 1998. Southwest
is the nation's fastest growing natural gas distribution company. Southwest Gas'
board of directors has
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approved a revised offer from Oneok Inc. (OKE - $31.75 - NYSE) to purchase all
outstanding SWX shares for $30.00 per share in cash, valuing Southwest Gas at
approximately $1.8 billion, including assumed debt. Regulatory approvals from
the Nevada PUC and the Arizona ACC have been obtained.
UNITED TELEVISION INC. (UTVI - $104.875 - NASDAQ), headquartered in Beverly
Hills, California, is a television broadcasting group which owns and operates
seven of the stations (one ABC, one NBC and five UPN affiliates) that comprise
Chris-Craft's (CCN - $47.125 - NYSE) television division. In January 1998, UTVI
purchased WHSW in Baltimore for $80 million. The station began broadcasting as
WUTB, a UPN affiliate, immediately following completion of the acquisition. The
$60 million purchase of WRBW, a UPN affiliate in Orlando (the country's 22nd
largest and the fastest growing television market over the past decade), closed
on July 7, 1999. UTVI stations cover approximately nine percent of the U.S.
population. UTVI is 59%-owned by BHC Communications (BHC - $130.00 - AMEX).
Strong advertising demand, prospects for favorable regulatory changes in the
industry and corporate cost control enhance EBITDA prospects.
USA NETWORKS INC. (USAI - $40.125 - NASDAQ), through its subsidiaries, engages
in diversified media and electronic commerce businesses that include: electronic
retailing, ticketing operations and television broadcasting. Chairman and CEO
Barry Diller has brought together under one umbrella: the USA Network, the
Sci-Fi Channel, USA Networks Studios, USA Broadcasting, The Home Shopping
Network and the Ticketmaster Group. The plan is to integrate these assets,
leveraging programming, production capabilities and electronic commerce across
this strong distribution platform.
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.
Additionally, The Gabelli Small Cap Growth Fund and other Gabelli Funds are
available through the no-transaction fee programs at many major discount
brokerage firms.
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].
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IN CONCLUSION
After an extended and fitful nap, small cap stocks jumped off the couch in
the second quarter of 1999. We believe small cap stocks are well rested for an
extended period of superior performance relative to the large caps that have
been leading the market for five years. We continue to find what we believe to
be exceptional values in the small cap arena. We are confident that we will
fully participate in what may prove to be a small cap stock renaissance.
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 GABSX. Please call us during the
business day for further information.
Sincerely,
/s/ Mario J. Gabelli, CFA
-------------------------
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
July 30, 1999
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TOP TEN HOLDINGS
JUNE 30, 1999
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Liberty Corp. CLARCOR Inc.
USA Networks Inc. Celestial Seasonings Inc.
United Television Inc. Carter-Wallace Inc.
Pittway Corp. Penton Media Inc.
Kaman Corp. Nortek Inc.
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NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end ofthe period stated in this report. The manager's views are
subject to change at any time based on market and other conditions.
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THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 1999 (UNAUDITED)
MARKET
SHARES VALUE
------ ------
COMMON STOCKS -- 98.4%
AGRICULTURE -- 0.0%
6,500 Cadiz Inc.+ $ 61,344
-----------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 5.3%
100,000 Acktion Co.+ ....................................... 847,945
68,000 GenCorp Inc. ....................................... 1,717,000
10,000 Lund International Holdings Inc.+ .................. 62,500
20,000 Meritor Automotive Inc. ............................ 510,000
125,000 Modine Manufacturing Co. ........................... 4,070,312
5,250 Monro Muffler Brake Inc.+ .......................... 42,000
45,000 Redlaw Industries Inc.+ ............................ 10,013
1,000 SPX Corp.+ ......................................... 83,500
151,000 Standard Motor Products Inc. ....................... 3,699,499
17,000 Strattec Security Corp.+ ........................... 573,750
46,600 Superior Industries International Inc............... 1,272,763
122,000 TransPro Inc. ...................................... 640,500
190,000 Wynn's International Inc. .......................... 3,503,125
-----------
17,032,907
-----------
AVIATION: PARTS AND SERVICES-- 4.3%
15,000 AAR Corp. .......................................... 340,313
10,000 Aviall Inc.+ ....................................... 188,125
6,300 Barnes Group Inc. .................................. 137,025
50,000 Coltec Industries Inc.+ ............................ 1,084,375
56,000 Curtiss-Wright Corp. ............................... 2,177,000
7,500 Ducommun Inc.+ ..................................... 89,531
152,425 Fairchild Corp., Cl. A+ ............................ 1,943,419
26,500 Hi-Shear Industries Inc.+ .......................... 68,320
320,000 Kaman Corp., Cl. A ................................. 5,020,000
80,000 Moog Inc., Cl. A+ .................................. 2,749,999
---------
13,798,107
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BROADCASTING -- 7.3%
200,000 Ackerley Group Inc. ................................ 3,637,500
20,000 Granite Broadcasting Corp.+ ........................ 156,250
32,000 Gray Communications Systems Inc. ................... 640,000
48,000 Gray Communications Systems Inc., Cl. B ............ 678,000
55,000 Hearst-Argyle Television Inc.+ ..................... 1,320,000
167,000 Liberty Corp. ...................................... 9,101,499
100,000 Paxson Communications Corp.+ ....................... 1,350,000
60,000 Price Communications Corp.+ ........................ 900,000
52,800 United Television Inc. ............................. 5,537,400
3,000 Young Broadcasting Inc., Cl. A+ .................... 127,688
---------
23,448,337
----------
BUILDING AND CONSTRUCTION-- 2.0%
16,000 Florida Rock Industries Inc. ....................... 728,000
14,000 Morgan Products Ltd.+ .............................. 53,375
130,000 Nortek Inc.+ ....................................... 4,070,625
8,000 Oakwood Homes Corp. ................................ 105,000
75,000 Republic Group Inc. ................................ 1,350,000
---------
6,307,000
BUSINESS SERVICES -- 2.9%
24,000 Amway Asia Pacific Ltd.+ ........................... 279,000
35,641 Amway Japan Ltd., ADR .............................. 178,205
40,000 Berlitz International Inc.+ ........................ 735,000
22,000 Borg-Warner Security Corp.+ ........................ 446,875
610,400 Career Blazers Inc.+ ............................... 297,875
6,000 Carlisle Holdings Ltd.+ ............................ 87,000
12,000 Data Broadcasting Corp.+ ........................... 126,750
3,000 Data Transmission Network Corp.+ ................... 84,375
2,000 Gartner Group Inc.+ ................................ 41,000
13,000 Hach Co. ........................................... 235,625
20,000 Hach Co., Cl. A .................................... 352,500
30,000 Industrial Distribution Group Inc.+ ................ 151,875
10,000 Landauer Inc. ...................................... 295,000
5,000 MDC Communications Corp., Cl. A+ ................... 60,625
100,000 Nashua Corp.+ ...................................... 987,500
110,000 Paxar Corp.+ ....................................... 990,000
15,000 Pittston Brink's Group ............................. 401,250
18,000 Princeton Video Image Inc.+ ........................ 81,563
12,000 PubliCard Inc.+ .................................... 122,250
40,000 R. H. Donnelley Corp. .............................. 782,500
50,000 Rental Services Corp.+ ............................. 1,431,250
87,000 Trans-Lux Corp. (b) ................................ 717,750
8,000 Wackenhut Corp., Cl. A ............................. 238,000
6,187 Wackenhut Corp., Cl. B ............................. 148,488
----------
9,272,256
----------
CABLE -- 1.4%
20,000 Cablevision Systems Corp., Cl. A+ .................. 1,400,000
2,000 TCA Cable TV Inc. .................................. 111,000
45,000 United International Holdings Inc., Cl. A+ ......... 3,043,125
----------
4,554,125
----------
COMMUNICATIONS EQUIPMENT-- 0.3%
100,000 Allen Telecom Inc.+ ................................ 1,075,000
----------
COMPUTER SOFTWARE AND SERVICES-- 1.8%
1,000 @Home Corp., Ser. A+ ............................... 53,938
3,000 Anacomp Inc.+ ...................................... 51,000
92,500 Bull Run Corp.+ .................................... 387,344
10,000 CDnow Inc.+ ........................................ 176,250
3,000 Checkfree Holdings Corp.+ .......................... 82,688
3,000 Cylink Corp.+ ...................................... 11,250
20,000 Internet.com Corp.+ ................................ 251,250
200 Macromedia Inc.+ ................................... 7,050
75,000 Phoenix Technologies Ltd.+ ......................... 1,340,625
30,000 QuadraMed Corp.+ ................................... 243,750
440,000 Tyler Technologies Inc.+ ........................... 3,024,999
----------
5,630,144
----------
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THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS -- 4.8%
3,000 Action Performance Companies Inc.+ ................. $ 99,000
20,000 Adams Golf Inc.+ ................................... 51,250
250,000 Carter-Wallace Inc. ................................ 4,546,874
33,000 Church & Dwight Co. Inc. ........................... 1,435,500
12,000 Coachmen Industries Inc. ........................... 279,000
3,000 Department 56 Inc.+ ................................ 80,625
8,000 French Fragrances Inc.+ ............................ 58,500
68,000 General Cigar Holdings Inc.+ ....................... 531,250
133,500 General Cigar Holdings Inc., Cl. B+ (a) ............ 1,042,969
100,000 General Housewares Corp. ........................... 1,943,750
62,000 Genlyte Group Inc.+ ................................ 1,391,125
2,000 Harley-Davidson Inc. ............................... 108,750
120,000 Hartmarx Corp.+ .................................... 502,500
10,000 Madden (Steven) Ltd.+ .............................. 135,625
25,000 National Presto Industries Inc. .................... 956,250
14,000 Nature's Sunshine Products Inc. .................... 147,000
4,000 Scotts Co., Cl. A+ ................................. 190,500
10,000 Skyline Corp. ...................................... 293,125
14,000 Stewart Enterprises Inc., Cl. A .................... 203,875
110,000 Weider Nutrition International Inc. ................ 453,750
70,000 Wolverine World Wide Inc. .......................... 980,000
----------
15,431,218
-----------
CONSUMER SERVICES -- 1.0%
15,000 Bowlin Outdoor Advertising &
Travel Centers Inc.+ ............................... 90,000
100,000 Loewen Group Inc. .................................. 56,250
18,000 Response USA Inc.+ ................................. 3,188
162,000 Rollins Inc. ....................................... 2,581,875
25,000 Travel Services International Inc.+ ................ 300,000
---------
3,061,313
---------
COUNTRY AND CLOSED END FUNDS-- 1.3%
45,000 Central European Equity Fund Inc. .................. 587,813
78,000 Dresdner RCM Europe Fund Inc. ...................... 983,580
45,000 France Growth Fund Inc. ............................ 618,750
32,000 Germany Fund Inc. .................................. 452,000
40,000 Italy Fund Inc. .................................... 585,000
65,000 New Germany Fund Inc. .............................. 792,187
11,000 Spain Fund Inc. .................................... 165,000
---------
4,184,330
---------
DIVERSIFIED INDUSTRIAL-- 5.9%
99,500 Ampco-Pittsburgh Corp. ............................. 1,274,844
8,000 Anixter International Inc.+ ........................ 146,000
60,000 Crane Co. .......................................... 1,886,250
37,500 Gardner Denver Machinery Corp.+ .................... 604,688
15,000 GATX Corp. ......................................... 570,938
70,000 GenTek Inc. ........................................ 971,250
36,000 Katy Industries Inc. ............................... 468,000
450,000 Lamson & Sessions Co.+ ............................. 2,699,999
75,000 Lindsay Manufacturing Co. .......................... 1,317,188
45,000 MagneTek Inc.+ ..................................... 475,313
16,000 Myers Industries Inc. .............................. 320,000
610,400 Noel Group Inc.+ ................................... 400,575
20,000 O'Sullivan Corp. ................................... 243,750
40,000 Oil-Dri Corporation of America ..................... 640,000
115,000 Park-Ohio Holdings Corp.+ .......................... 1,947,812
22,000 Standex International Corp. ........................ 602,250
5,500 Thermo Power Corp.+ ................................ 64,109
190,000 Thomas Industries Inc. ............................. 3,894,999
60,000 WHX Corp.+ ......................................... 393,750
---------
18,921,715
---------
EDUCATION -- 0.0%
22,000 Whitman Education Group Inc.+ ...................... 132,000
---------
ELECTRONICS -- 0.9%
642,500 Oak Technology Inc.+ ............................... 2,329,063
22,000 Watkins-Johnson Co. ................................ 649,000
---------
2,978,063
-----------
ENERGY AND UTILITIES-- 4.9%
26,000 AGL Resources Inc. ................................. 479,375
5,000 Aquarion Co. ....................................... 173,750
6,000 Basin Exploration Inc.+ ............................ 120,375
20,000 Central Hudson Gas & Electric Corp. ................ 840,000
81,660 Citizens Utilities Co., Cl. A+ ..................... 908,467
1,500 Connecticut Water Service Inc. ..................... 40,500
18,000 Eastern Enterprises ................................ 715,500
5,000 Fall River Gas Co. ................................. 95,000
42,000 Florida Public Utilities Co. ....................... 792,750
10,000 Forcenergy Inc.+ ................................... 9,375
130,000 Kaneb Services Inc.+ ............................... 552,500
60,000 Orange & Rockland Utilities Inc. ................... 3,506,249
15,000 Petroleum Geo-Services ASA+ ........................ 223,125
300,000 RPC Inc. ........................................... 2,625,000
110,000 Southwest Gas Corp. ................................ 3,148,750
15,000 Tesoro Petroleum Corp.+ ............................ 239,063
5,000 TransMontaigne Oil Co.+ ............................ 62,813
38,500 United Water Resources Inc. ........................ 873,469
15,000 Wicor Inc. ......................................... 419,063
---------
15,825,124
---------
<PAGE>
ENTERTAINMENT -- 6.7%
105,000 Ascent Entertainment Group Inc.+ ................... 1,483,125
15,000 Dover Downs Entertainment Inc. ..................... 265,313
43,000 Fisher Companies Inc. .............................. 2,709,000
125,000 Florida Panthers Holdings Inc.+ .................... 1,335,938
55,000 GC Companies Inc.+ ................................. 1,966,250
3,000 International Speedway Corp. ....................... 144,000
4,000 Loews Cineplex Entertainment Corp.+ ................ 43,500
3,000 Metromedia International Group Inc.+ ............... 22,500
11
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
10,000 TCI Music Inc.+ .................................... $ 353,750
172,100 Topps Co. Inc.+ .................................... 1,253,103
107,500 TV Guide Inc.+ ..................................... 3,937,187
195,000 USA Networks Inc.+ ................................. 7,824,374
---------
21,338,040
---------
ENVIRONMENTAL SERVICES-- 0.0%
40,000 EnviroSource Inc.+ ................................. 85,000
---------
EQUIPMENT AND SUPPLIES-- 13.9%
42,000 AFC Cable Systems Inc.+ ............................ 1,483,125
15,000 Alltrista Corp.+ ................................... 495,000
145,000 AMETEK Inc. ........................................ 3,335,000
20,500 Amphenol Corp., Cl. A+ ............................. 814,875
320,000 Baldwin Technology Co. Inc., Cl. A+ ................ 940,000
20,000 Belden Inc. ........................................ 478,750
4,000 Bway Corp.+ ........................................ 57,000
20,000 C&D Technologies Inc. .............................. 612,500
259,900 CLARCOR Inc. ....................................... 4,986,830
5,000 Commercial Intertech Corp. ......................... 79,688
60,000 Core Materials Corp.+ .............................. 187,500
35,000 CTS Corp. .......................................... 2,450,000
59,000 Cuno Inc.+ ......................................... 1,128,375
257,600 Fedders Corp. ...................................... 1,722,700
100,000 Flowserve Corp. .................................... 1,893,750
40,000 General Magnaplate Corp. ........................... 137,500
70,000 Gerber Scientific Inc. ............................. 1,544,375
40,000 Global Industrial Technologies Inc.+ ............... 482,500
145,000 Hussmann International Inc. ........................ 2,401,563
34,650 Johnston Industries Inc.+ .......................... 75,797
10,000 K-Tron International Inc.+ ......................... 176,250
113,000 Kollmorgen Corp. ................................... 1,695,000
10,000 Littelfuse Inc.+ ................................... 192,500
22,000 Lufkin Industries Inc. ............................. 440,000
30,000 Mark IV Industries Inc. ............................ 633,750
115,000 Material Sciences Corp.+ ........................... 1,725,000
20,000 Met-Pro Corp. ...................................... 250,000
160,000 Pittway Corp. ...................................... 5,329,999
2,000 Plantronics Inc.+ .................................. 130,250
26,000 Raytech Corp.+ ..................................... 107,250
5,000 Sames Corp.+ ....................................... 99,375
3,147 Schawk Inc. ........................................ 28,126
40,000 Sequa Corp., Cl. A+ ................................ 2,800,000
12,500 Sequa Corp., Cl. B+ ................................ 893,750
47,000 SL Industries Inc. ................................. 605,125
1,000 Smith (A.O.) Corp. ................................. 28,000
9,000 Smith (A.O.) Corp., Cl. A .......................... 247,500
74,000 SPS Technologies Inc.+ ............................. 2,775,000
5,000 Teleflex Inc. ...................................... 217,188
15,000 Tennant Co. ........................................ 480,000
5,000 Valmont Industries Inc. ............................ 85,156
7,875 Watsco Inc., Cl. B ................................. 128,707
---------
44,374,754
---------
FINANCIAL SERVICES -- 3.0%
30,000 Argonaut Group Inc. ................................ 720,000
68,000 Berliner Bank Aktiengesellschaft ................... 936,190
45,000 Danielson Holding Corp.+ ........................... 258,750
1,000 Federal Agricultural Mortgage Corp., Cl. C+ ........ 68,625
39,000 Gainsco Inc. ....................................... 229,125
18,000 Hibernia Corp. ..................................... 282,375
3,000 Landamerica Financial Group ........................ 86,250
15,916 Metris Companies Inc. .............................. 648,577
105,000 Midland Co. ........................................ 2,572,500
1,500 Net.B@nk Inc.+ ..................................... 57,000
223,000 Pioneer Group Inc.+ ................................ 3,846,750
---------
9,706,142
---------
FOOD AND BEVERAGE -- 4.4%
12,000 Advantica Restaurant Group Inc.+ ................... 41,250
34,863 Buenos Aires Embotelladora SA+ (a) ................. 0
218,000 Celestial Seasonings Inc.+ ......................... 4,686,999
6,000 Cheesecake Factory Inc.+ ........................... 183,000
226,100 Chock Full o'Nuts Corp.+ ........................... 2,359,919
125,000 Eskimo Pie Corp. ................................... 1,078,125
1,000 Farmer Brothers Co. ................................ 202,500
20,000 Genesee Corp., Cl. B ............................... 530,000
10,000 International Multifoods Corp. ..................... 225,625
4,000 Irwin Naturals/4Health Inc.+ ....................... 7,500
15,000 J & J Snack Foods Corp.+ ........................... 360,000
8,000 Midwest Grain Products Inc.+ ....................... 89,000
1,000 Mondavi (Robert) Corp.+ ............................ 36,375
1,000 Northland Cranberries Inc., Cl. A .................. 8,438
130,000 Pepsi-Cola Puerto Rico Bottling Co.+ ............... 715,000
40,000 Ralcorp Holdings Inc.+ ............................. 642,500
5,000 Sylvan Food Holdings Inc.+ ......................... 58,125
31,658 Tootsie Roll Industries Inc. ....................... 1,222,790
88,000 Twinlab Corp.+ ..................................... 756,250
48,000 Whitman Corp. ...................................... 864,000
---------
14,067,396
---------
HEALTH CARE -- 1.0%
15,000 Inamed Corp.+ ...................................... 222,188
140,000 IVAX Corp.+ ........................................ 1,977,500
6,100 Life Technologies Inc. ............................. 220,363
48,000 Penwest Pharmaceuticals Co.+ ....................... 383,999
3,620 U.S. Physical Therapy Inc.+ ........................ 30,770
20,000 Women First HealthCare Inc.+ ....................... 265,000
---------
3,099,820
---------
12
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
HOME FURNISHINGS -- 1.1%
7,000 Bassett Furniture Industries Inc. .................. $ 160,125
2,000 Bed Bath & Beyond Inc.+ ............................ 77,000
17,000 Foamex International Inc. .......................... 94,563
30,000 La-Z-Boy Chair Co. ................................. 690,000
50,000 Mikasa Inc. ........................................ 565,625
70,000 Oneida Ltd. ........................................ 1,968,750
---------
3,556,063
---------
HOTELS AND GAMING -- 3.9%
410,000 Aztar Corp.+ ....................................... 3,766,875
15,000 Boyd Gaming Corp.+ ................................. 105,000
20,000 Churchill Downs Inc. ............................... 690,000
60,000 Extended Stay America Inc.+ ........................ 720,000
94,000 Gaylord Entertainment Co. .......................... 2,820,000
140,000 Jackpot Enterprises Inc.+ .......................... 1,190,000
5,000 Jurys Hotel Group plc .............................. 39,704
30,000 Lakes Gaming Inc.+ ................................. 328,125
52,000 Mirage Resorts Inc.+ ............................... 871,000
100,000 Park Place Entertainment Corp.+ .................... 968,750
22,000 Penn National Gaming Inc.+ ......................... 203,500
10,000 Station Casinos Inc.+ .............................. 203,750
110,000 Trump Hotels & Casino Resorts Inc.+ ................ 501,875
---------
12,408,579
---------
METALS AND MINING -- 0.4%
199,000 Echo Bay Mines Ltd.+ ............................... 286,063
190,000 Royal Oak Mines Inc.+ .............................. 8,344
28,000 Stillwater Mining Co.+ ............................. 915,250
5,000 Toreador Royalty Corp.+ ............................ 15,000
100,000 TVX Gold Inc.+ ..................................... 100,000
---------
1,324,657
---------
PAPER AND FOREST PRODUCTS-- 1.0%
123,000 Greif Bros. Corp.+ ................................. 3,136,500
---------
PUBLISHING -- 4.4%
121,278 Independent News & Media plc ....................... 581,579
2,000 Lee Enterprises Inc. ............................... 61,000
40,000 McClatchy Newspapers Inc., Cl. A ................... 1,325,000
52,000 Media General Inc., Cl. A .......................... 2,652,000
23,000 Meredith Corp. ..................................... 796,375
175,000 Penton Media Inc. .................................. 4,243,750
45,000 Pulitzer Inc. ...................................... 2,185,313
195,000 Thomas Nelson Inc. ................................. 2,169,375
12,000 Wiley (John) & Sons Inc., Cl. B .................... 223,500
---------
14,237,892
---------
PUMPS AND VALVES -- 2.6%
55,000 Franklin Electric Co. .............................. 3,575,000
17,775 Gorman-Rupp Co. .................................... 293,288
17,000 Graco Inc. ......................................... 499,375
70,000 IDEX Corp. ......................................... 2,301,250
10,000 Robbins & Myers Inc. ............................... 223,125
30,000 Roper Industries Inc. .............................. 960,000
22,000 Watts Industries Inc. .............................. 422,125
---------
8,274,163
---------
REAL ESTATE -- 1.2%
150,000 Catellus Development Corp.+ ........................ 2,325,000
118,000 Griffin Land & Nurseries Inc.+ ..................... 1,401,250
9,000 Gyrodyne Company of America Inc.+ .................. 153,000
---------
3,879,250
---------
RETAIL -- 4.2%
60,000 Aaron Rents Inc. ................................... 1,335,000
46,000 Aaron Rents Inc., Cl. A ............................ 828,000
10,000 Borders Group Inc.+ ................................ 158,125
110,000 Burlington Coat Factory Warehouse Corp. ............ 2,124,375
25,000 Coldwater Creek Inc.+ .............................. 487,500
10,000 Gerald Stevens Inc.+ ............................... 120,000
115,000 Ingles Markets Inc., Cl. A ......................... 1,753,750
210,000 Lillian Vernon Corp. ............................... 2,730,000
2,500 Midas Inc. ......................................... 70,938
33,500 Mott's Holdings Inc.+ (a) .......................... 201,000
95,000 Neiman Marcus Group Inc.+ .......................... 2,440,313
190,000 Scheib (Earl) Inc.+ ................................ 902,500
100,000 Sports Authority Inc.+ ............................. 443,750
---------
13,595,251
-----------
SATELLITE -- 0.5%
38,000 COMSAT Corp. ....................................... 1,235,000
5,000 Pegasus Communications Corp.+ ...................... 197,188
40,000 TCI Satellite Entertainment+ ....................... 117,500
------------
1,549,688
------------
SPECIALTY CHEMICALS-- 1.7%
31,000 Airgas Inc.+ ....................................... 379,750
15,000 Bush Boake Allen Inc.+ ............................. 438,750
38,000 Dexter Corp. ....................................... 1,550,875
75,000 Ferro Corp. ........................................ 2,062,500
70,000 General Chemical Group Inc. ........................ 218,750
600 MacDermid Inc. ..................................... 27,900
32,000 Penford Corp. ...................................... 520,000
11,000 Sybron Chemicals Inc.+ ............................. 195,250
-----------
5,393,775
-----------
<PAGE>
TELECOMMUNICATIONS -- 2.4%
23,000 ARC International Corp.+ ........................... 30,188
9,200 Atlantic Tele-Network Inc. ......................... 96,600
47,300 Commonwealth Telephone
Enterprises Inc.+ .................................. 1,912,693
20,000 Commonwealth Telephone
Enterprises Inc., Cl. B+ ........................... 815,000
100,000 Communications Systems Inc. ........................ 1,237,500
105,000 GST Telecommunications Inc.+ ....................... 1,384,688
13
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
10,000 RCN Corp.+ ......................................... $ 416,250
40,000 Rogers Communications Inc., Cl. B+ ................. 647,500
20,000 Viatel Inc.+ ....................................... 1,122,500
-----------
7,662,919
-----------
TRANSPORTATION -- 0.0%
2,000 Irish Continental Group plc ........................ 17,222
50,000 OMI Corp.+ ......................................... 103,125
-----------
120,347
-----------
WIRELESS COMMUNICATIONS -- 1.9%
70,000 Aerial Communications Inc.+ ........................ 945,000
8,000 Associated Group Inc., Cl. A+ ...................... 521,000
24,000 Cellular Communications of
Puerto Rico Inc.+ .................................. 684,000
1,000 Centennial Cellular Corp.+ ......................... 35,625
35,000 CommNet Cellular Inc.+ ............................. 918,750
22,000 Corecomm Ltd.+ ..................................... 1,061,500
10,000 Rural Cellular Corp., Cl. A+ ....................... 200,000
8,000 Teligent Inc., Cl. A+ .............................. 478,500
20,000 VoiceStream Wireless Corp.+ ........................ 568,750
20,000 Western Wireless Corp., Cl. A+ ..................... 540,000
-----------
5,953,125
-----------
TOTAL COMMON STOCKS
PRINCIPAL
AMOUNT
- ---------
315,476,344
-----------
CORPORATE BONDS -- 0.0%
EQUIPMENT AND SUPPLIES-- 0.0%
$ 500 MacNeal-Schwendler Corp.,
Sub. Deb. Cv.
7.88%, 08/18/04 .................................... 419
-----------
U.S. GOVERNMENT OBLIGATIONS -- 2.1%
6,905,000 U.S. Treasury Bills,
4.47% to 4.69% ++,
due 07/29/99 to 09/23/99 ........................... 6,845,687
-----------
TOTAL INVESTMENTS -- 100.5%
(Cost $233,911,229) ............................... $322,322,450
OTHER ASSETS AND
LIABILITIES (NET) -- (0.5)% ..................... (1,687,338)
-----------
NET ASSETS -- 100.0%
(13,979,720 shares outstanding) ................... $320,635,112
===========
NET ASSET VALUE,
OFFERING AND REDEMPTION
PRICE PER SHARE ................................... $22.94
=======
- --------------------
(a) Security fair valued as determined by the Board of Directors.
(b) Security considered an affiliated holding because the Fund owns at least 5%
of the outstanding shares.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt.
14
<PAGE>
Gabelli Family of Funds
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 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 MITESSM 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 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 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
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 are 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 Manager: Mario J. Gabelli, 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 INTERACTIVE COUCH POTATO(R) FUND
Seeks to invest in securities of companies involved with communications,
creativity and copyright. The Fund also seeks to invest in companies
participating in emerging technological advances in interactive services
and products. 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 & 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.
1-800-GABELLI
(1-800-422-3554) o FAX: 1-914-921-5118 o WWW.GABELLI.COM o [email protected]
ONE CORPORATE CENTER, RYE, NEW YORK 10580
<PAGE>
Gabelli Equity Series Funds, Inc.
THE GABELLI SMALL CAP 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 DIRECTORS
Mario J. Gabelli, CFA Robert J. Morrissey
CHAIRMAN AND CHIEF ATTORNEY-AT-LAW
INVESTMENT OFFICER MORRISSEY, HAWKINS & LYNCH
GABELLI ASSET MANAGEMENT INC.
Felix J. Christiana Karl Otto Pshl
FORMER SENIOR VICE PRESIDENT FORMER PRESIDENT
DOLLAR DRY DOCK SAVINGS BANK DEUTSCHE BUNDESBANK
Anthony J. Colavita Anthony R. Pustorino
ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT
ANTHONY J. COLAVITA, P.C. PROFESSOR, PACE UNIVERSITY
Vincent D. Enright Anthonie C. van Ekris
FORMER SENIOR VICE PRESIDENT MANAGING DIRECTOR
AND CHIEF FINANCIAL OFFICER BALMAC INTERNATIONAL, INC.
KEYSPAN ENERGY CORP.
John D. Gabelli
SENIOR VICE PRESIDENT
GABELLI & COMPANY, INC.
OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
PRESIDENT AND CHIEF VICE PRESIDENT AND TREASURER
INVESTMENT OFFICER
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
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This report is submitted for the general information of the shareholders of The
Gabelli Small Cap Growth Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
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GAB443Q299SR
[picture ommitted]
THE
GABELLI
SMALL CAP
GROWTH
FUND
THIRD QUARTER REPORT
JUNE 30, 1999
