THE GABELLI SMALL CAP GROWTH FUND
THIRD QUARTER REPORT
JUNE 30, 2000(A)
TO OUR SHAREHOLDERS,
In the second quarter of 2000, small cap stocks demonstrated surprising
resilience, only modestly underperforming large cap equities in a declining
market. Due to its 7.08% first quarter performance, the Russell 2000 was the
only leading market index to post a gain in the first half of 2000, rising
3.04%.
High-octane technology stocks, which fueled first quarter returns, ran out
of gas in the second quarter and, despite getting back on the road to recovery
in the last five weeks of this reporting period, closed well below their March
highs.
INVESTMENT PERFORMANCE
For the quarter ended June 30, 2000, The Gabelli Small Cap Growth Fund
(the "Fund"), bolstered by takeovers in our portfolio, increased 2.38%. The
Value Line Composite and Russell 2000 Indices declined 0.41% and 3.78%,
respectively, over the same period. Each index is an unmanaged indicator of
stock market performance. For the six-month period ended June 30, 2000, the
Fund's total return was 6.25%, versus gains of 3.60% and 3.04% for the Value
Line Composite and Russell 2000 Indices, respectively. The Fund was up 11.15%
over the trailing twelve-month period. The Value Line Composite and Russell 2000
Indices rose 1.47% and 14.32%, respectively, over the same twelve-month period.
For the five-year period ended June 30, 2000, the Fund's total return
averaged 15.50% annually, versus average annual returns of 15.33% and 14.27% for
the Value Line Composite and Russell 2000 Indices, respectively. Since inception
on October 22, 1991 through June 30, 2000, the Fund had a cumulative total
return of 308.70%, which equates to an average annual total return of 17.57%.
--------------------------------------------------------------------------------
(a) The Fund's fiscal year ends September 30.
<PAGE>
INVESTMENT RESULTS (a)(c)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Calendar Quarter
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C>
2000: Net Asset Value ...................... $22.24 $22.27 -- -- --
Total Return ......................... 3.8% 2.4% -- -- --
--------------------------------------------------------------------------------------------------------------
1999: Net Asset Value ...................... $19.59 $22.94 $21.84 $21.43 $21.43
Total Return ......................... (6.8)% 17.1% (4.8)% 9.9% 14.2%
--------------------------------------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------------------------------------
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)%
--------------------------------------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------------------------------------
1991: Net Asset Value ...................... __ __ __ $12.21 $12.21
Total Return ......................... __ __ __ 22.9%(b) 22.9%(b)
--------------------------------------------------------------------------------------------------------------
</TABLE>
Dividend History
-------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
December 20, 1999 $2.462 $20.55
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
----------------------------------------------------------
Average Annual Returns - June 30, 2000 (a)
------------------------------------------
1 Year ..................................... 11.15%
5 Year ..................................... 15.50%
Life of Fund (b) ........................... 17.57%
----------------------------------------------------------
(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.
--------------------------------------------------------------------------------
2
<PAGE>
COMMENTARY
"WHAT, ME WORRY?"
The labor market remains tight and the threat of wage-driven inflation is
quite real. Despite six Federal Reserve interest rate hikes over the last
eighteen months, the economy is still growing at a pace that troubles the
monetary authorities. This is also an election year. While the campaign has been
a relatively quiet one, the rhetoric is sure to heat up as we approach November.
Political posturing on economic issues, principally how to re-allocate the
growing budget surplus, may rattle the financial markets. Finally, while there
are large pockets of attractive fundamental values in the equity markets, the
overall market, as measured by the S&P 500 Index, is still rather richly priced
relative to historic norms.
[Graphic of pyramid omitted]
[Pyramid text as follows:]
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
Of concern to us is the soaring trade deficit. Thus far, the world has
been happy to finance this deficit by buying U.S. stocks and bonds. This has
worked out well for all concerned. However, if we see inflation continue to
trend higher and if the U.S. financial markets sputter, international investors
may seek opportunities elsewhere. Reduced global demand for U.S. financial
assets may have a greater impact on stocks and bonds than the aforementioned
economic, political, and market issues. If international demand dries up, the
favorable supply/demand dynamics that the U.S. financial markets have enjoyed
over the last decade may be disrupted. In addition, the Federal Reserve may have
to pump up interest rates even further, and at the wrong time, to defend the
dollar.
That is the dark side. The bright side is that we are finally seeing
evidence of economic deceleration. Housing starts and home sales are down
substantially, and with the exception of oil, commodity prices have stabilized.
The most recently released employment numbers were relatively benign and there
are indications that consumer confidence has been dented. For the time being,
the Federal Reserve has spared us an additional rate hike. We just may be
returning to a "Goldilocks" economy - not too hot, not too cool, but just right
- that will help propel stocks higher. We have labeled this rosy economic
scenario "Soft Landing Part II". Ideally, we will see a much broader market
advance in which companies in a wider range of industries participate.
Companies that are represented in business mixes, which have mobility or
product availability that are "considered" small cap by the stock market remain
attractive.
[BULLET] Earnings for Russell 2000 companies are expected to outpace the
gains for S&P 500 companies by a wide margin in both 2000 and
2001.
3
<PAGE>
-------------------------------------------------------------------------
2000 EST. 2001 EST.
S&P Earnings (operating)
Growth Rate(a) 9.9% 7.1%
Russell Earnings (reported)
Growth Rate(b) 43.6% 36.0%
-------------------------------------------------------------------------
Price / Earnings Ratio
S&P(a) 26.3 24.6
Price / Earnings Ratio
Russell(b) 31.2 22.9
-------------------------------------------------------------------------
Source: (a) Goldman Sachs
(b) Merrill Lynch
[BULLET] Multiples are lower.
[BULLET] Takeovers and financial engineering are unfolding at a rapid
rate.
We think our portfolio remains well positioned to benefit.
WE THOUGHT WE WOULD SHARE WITH YOU AN ARTICLE WE PREPARED ON SMALL CAP
INVESTING WHICH APPEARED IN THE JUNE 2000 ISSUE OF CIGAR AFFICIANADO:
LITTLE COMPANIES, BIG RETURNS
Micro-cap stocks are proof that great investment gifts can come in small
packages.
Micro-cap stocks (generally defined by Wall Street as publicly traded
companies with market capitalizations of $300 million or less) represent the
last frontier in the equities markets. With minimal Wall Street research
coverage, the micro-cap offers exceptional opportunity for investors.
Micro-cap stocks do not fit into any single category. They include young
entrepreneurial companies in the forefront of technology and other fast-growth
industries, established companies in more mature businesses, and niche companies
serving smaller geographic regions and markets.
There are approximately 15,000 micro-cap stocks, divided among the
following broad industry group classifications: technology, 40 percent;
manufacturing, 15 percent; banking and finance, 10 percent; mining and
construction, 10 percent; utilities and transportation, 10 percent; and
agriculture, real estate and insurance, 5 percent each. In other words, there is
a little something that can turn into a big something for all kinds of
investors. This is the "space" where we believe the next Microsoft or Berkshire
Hathaway resides.
4
<PAGE>
THE RESEARCH VACUUM
Wall Street pays scant attention to micro-cap stocks. This is not a
reflection of their investment merit, but rather simple "sell side" economics.
Micro-cap companies have small floats (shares outstanding) and therefore do not
offer much in the way of trading commissions to the major brokerage firms. In
addition, micro-cap companies are not likely to be raising large sums of capital
in the near future. So, there is limited potential for investment banking fees.
The end result is a research vacuum. Even the dullest S&P 500 company can have
hundreds of Wall Street analysts following its every move, while the most
dynamic micro-cap stock attracts little or no professional scrutiny.
In the micro-cap arena, investors willing to do some digging can be the
first to hit pay dirt. You often have to be patient. However, if you do uncover
something truly special, it will eventually attract the attention of Wall Street
and institutional investors, or a corporate buyer. When this happens, you can
expect windfall profits.
Of course, there is also risk. Some micro-cap companies are dependent on
just one product or serve a very narrow market. Others lack management depth -
if something goes wrong, there is often little to fall back on. Liquidity is
also an issue. Owning a piece of a micro-cap company provides exceptional upside
potential when things go right and everyone wants in. However, when things go
wrong and everyone heads to the exits at the same time, you can get trampled.
Risk/reward factors duly noted, micro-caps have outperformed every other
equity capitalization sector over the 27-year period (1973-1999) in which
micro-cap stock performance data is available, as the accompanying chart
illustrates.
[Chart for U.S. EQUITY PERFORMANCE BY SIZE omitted. Plot points as follows.]
Source: Merrill Lynch
Micro Small Mid Large
Dec-73 1.00 1.00 1.00 1.00
Jan-74 1.20 1.08 1.03 0.98
Feb-74 1.19 1.10 1.04 0.97
Mar-74 1.21 1.07 1.01 0.95
Apr-74 1.13 1.00 0.94 0.92
May-74 1.04 0.93 0.89 0.90
Jun-74 1.01 0.89 0.86 0.88
Jul-74 0.96 0.85 0.82 0.81
Aug-74 0.89 0.77 0.73 0.74
Sep-74 0.82 0.71 0.68 0.65
Oct-74 0.88 0.79 0.79 0.77
Nov-74 0.82 0.76 0.77 0.73
Dec-74 0.74 0.71 0.75 0.72
Jan-75 1.05 0.89 0.89 0.79
Feb-75 1.07 0.94 0.94 0.85
Mar-75 1.21 1.00 0.97 0.86
Apr-75 1.22 1.04 1.02 0.91
May-75 1.31 1.11 1.07 0.96
Jun-75 1.44 1.19 1.16 1.00
Jul-75 1.45 1.14 1.09 0.93
Aug-75 1.35 1.10 1.07 0.92
Sep-75 1.29 1.06 1.03 0.88
Oct-75 1.30 1.11 1.08 0.94
Nov-75 1.33 1.14 1.12 0.97
Dec-75 1.32 1.14 1.12 0.95
Jan-76 1.69 1.34 1.27 1.06
Feb-76 1.96 1.43 1.30 1.04
Mar-76 1.96 1.45 1.31 1.08
Apr-76 1.90 1.43 1.30 1.07
May-76 1.83 1.41 1.29 1.06
Jun-76 1.89 1.48 1.36 1.11
Jul-76 1.88 1.48 1.35 1.10
Aug-76 1.84 1.46 1.34 1.10
Sep-76 1.87 1.49 1.36 1.13
Oct-76 1.82 1.46 1.34 1.10
Nov-76 1.86 1.51 1.36 1.09
Dec-76 2.09 1.65 1.46 1.15
Jan-77 2.20 1.65 1.41 1.09
Feb-77 2.19 1.62 1.38 1.07
Mar-77 2.22 1.63 1.38 1.05
Apr-77 2.24 1.66 1.40 1.05
May-77 2.25 1.65 1.39 1.03
Jun-77 2.40 1.75 1.46 1.09
Jul-77 2.41 1.74 1.43 1.07
Aug-77 2.37 1.71 1.40 1.06
Sep-77 2.40 1.72 1.40 1.06
Oct-77 2.32 1.68 1.35 1.01
Nov-77 2.58 1.81 1.42 1.05
Dec-77 2.62 1.82 1.44 1.05
Jan-78 2.62 1.75 1.36 0.99
Feb-78 2.71 1.77 1.34 0.97
Mar-78 2.95 1.88 1.40 0.99
Apr-78 3.19 2.01 1.50 1.08
May-78 3.45 2.10 1.54 1.09
Jun-78 3.46 2.10 1.53 1.07
Jul-78 3.63 2.23 1.62 1.13
Aug-78 4.05 2.38 1.68 1.16
Sep-78 4.03 2.35 1.67 1.16
Oct-78 3.14 1.97 1.48 1.07
Nov-78 3.34 2.06 1.53 1.10
Dec-78 3.35 2.09 1.54 1.12
Jan-79 3.74 2.25 1.63 1.16
Feb-79 3.66 2.19 1.58 1.13
Mar-79 4.01 2.39 1.70 1.19
Apr-79 4.13 2.44 1.71 1.20
May-79 4.11 2.41 1.70 1.18
Jun-79 4.31 2.55 1.80 1.23
Jul-79 4.38 2.62 1.85 1.23
Aug-79 4.72 2.82 1.97 1.31
Sep-79 4.68 2.81 1.97 1.31
Oct-79 4.19 2.55 1.81 1.23
Nov-79 4.50 2.74 1.92 1.29
Dec-79 4.80 2.86 1.99 1.31
Jan-80 5.31 3.05 2.11 1.40
Feb-80 5.19 2.98 2.05 1.43
Mar-80 4.24 2.54 1.83 1.29
Apr-80 4.47 2.70 1.94 1.35
May-80 4.80 2.91 2.08 1.41
Jun-80 5.00 3.03 2.18 1.46
Jul-80 5.53 3.32 2.35 1.54
Aug-80 5.93 3.47 2.40 1.56
Sep-80 6.13 3.57 2.46 1.60
Oct-80 6.34 3.63 2.49 1.63
Nov-80 6.56 3.86 2.65 1.82
Dec-80 6.35 3.76 2.62 1.77
Jan-81 6.55 3.72 2.54 1.65
Feb-81 6.63 3.78 2.58 1.68
Mar-81 7.20 4.09 2.80 1.69
Apr-81 7.45 4.14 2.79 1.62
May-81 7.69 4.24 2.85 1.60
Jun-81 7.74 4.18 2.80 1.61
Jul-81 7.49 4.07 2.78 1.65
Aug-81 6.95 3.83 2.64 1.55
Sep-81 6.41 3.58 2.50 1.44
Oct-81 6.90 3.81 2.66 1.53
Nov-81 7.07 3.95 2.79 1.61
Dec-81 6.93 3.88 2.70 1.56
Jan-82 6.91 3.74 2.61 1.52
Feb-82 6.66 3.58 2.49 1.43
Mar-82 6.62 3.55 2.46 1.41
Apr-82 6.88 3.73 2.57 1.47
May-82 6.75 3.61 2.46 1.45
Jun-82 6.58 3.52 2.38 1.41
Jul-82 6.54 3.46 2.32 1.36
Aug-82 6.98 3.85 2.62 1.53
Sep-82 7.21 3.93 2.66 1.54
Oct-82 8.20 4.48 3.00 1.69
Nov-82 9.09 4.76 3.14 1.73
Dec-82 9.26 4.82 3.19 1.78
Jan-83 10.15 5.05 3.29 1.83
Feb-83 10.70 5.30 3.39 1.88
Mar-83 11.29 5.53 3.49 1.95
Apr-83 12.14 5.89 3.71 2.11
May-83 13.46 6.20 3.83 2.08
Jun-83 13.95 6.45 3.94 2.17
Jul-83 13.78 6.30 3.81 2.10
Aug-83 13.41 6.18 3.83 2.15
Sep-83 13.44 6.35 3.92 2.18
Oct-83 12.73 6.06 3.82 2.16
Nov-83 13.41 6.37 3.95 2.20
Dec-83 13.19 6.27 3.90 2.20
Jan-84 13.38 6.09 3.81 2.19
Feb-84 12.51 5.77 3.61 2.09
Mar-84 12.55 5.82 3.68 2.12
Apr-84 12.17 5.78 3.64 2.15
May-84 11.50 5.49 3.43 2.05
Jun-84 11.65 5.67 3.52 2.09
Jul-84 11.02 5.43 3.40 2.07
Aug-84 12.15 6.09 3.83 2.30
Sep-84 12.19 6.06 3.86 2.30
Oct-84 11.80 6.02 3.85 2.30
Nov-84 11.22 5.93 3.83 2.28
Dec-84 11.22 6.04 3.94 2.33
Jan-85 12.93 6.77 4.30 2.49
Feb-85 13.45 6.89 4.37 2.53
Mar-85 13.20 6.77 4.37 2.54
Apr-85 12.91 6.71 4.35 2.54
May-85 13.12 6.98 4.61 2.68
Jun-85 13.07 7.10 4.70 2.72
Jul-85 13.43 7.25 4.70 2.71
Aug-85 13.32 7.19 4.67 2.70
Sep-85 12.50 6.81 4.42 2.62
Oct-85 12.75 7.04 4.64 2.73
Nov-85 13.35 7.51 4.95 2.92
Dec-85 13.78 7.79 5.14 3.04
Jan-86 14.34 7.92 5.25 3.05
Feb-86 15.22 8.48 5.63 3.27
Mar-86 15.81 8.88 5.92 3.44
Apr-86 16.13 9.01 5.88 3.41
May-86 16.57 9.35 6.16 3.58
Jun-86 16.66 9.38 6.21 3.63
Jul-86 15.37 8.60 5.80 3.44
Aug-86 15.47 8.93 6.24 3.71
Sep-86 14.61 8.42 5.85 3.43
Oct-86 14.91 8.68 6.10 3.60
Nov-86 14.75 8.65 6.13 3.68
Dec-86 14.26 8.48 5.96 3.59
Jan-87 15.82 9.44 6.72 4.06
Feb-87 17.09 10.16 7.12 4.20
Mar-87 17.66 10.37 7.22 4.33
Apr-87 17.21 10.04 7.03 4.26
May-87 17.16 10.01 7.05 4.30
Jun-87 17.39 10.30 7.33 4.52
Jul-87 17.84 10.62 7.66 4.72
Aug-87 18.01 10.98 7.93 4.90
Sep-87 17.93 10.76 7.76 4.79
Oct-87 12.88 7.91 5.90 3.89
Nov-87 12.15 7.54 5.63 3.57
Dec-87 12.29 8.06 6.07 3.80
Jan-88 13.40 8.44 6.33 3.95
Feb-88 14.40 9.10 6.83 4.12
Mar-88 15.09 9.43 6.91 3.98
Apr-88 15.21 9.59 6.94 4.02
May-88 14.80 9.39 6.91 4.05
Jun-88 15.54 10.02 7.36 4.23
Jul-88 15.49 9.93 7.24 4.21
Aug-88 15.26 9.68 7.10 4.08
Sep-88 15.44 9.91 7.31 4.25
Oct-88 15.23 9.85 7.34 4.36
Nov-88 14.77 9.59 7.19 4.30
Dec-88 15.08 9.88 7.35 4.38
Jan-89 15.81 10.36 7.78 4.67
Feb-89 15.97 10.42 7.78 4.55
Mar-89 16.29 10.64 7.88 4.66
Apr-89 17.16 11.07 8.24 4.89
May-89 17.51 11.47 8.56 5.07
Jun-89 17.31 11.33 8.53 5.05
Jul-89 17.59 11.77 9.01 5.49
Aug-89 17.91 12.09 9.26 5.59
Sep-89 18.05 12.11 9.18 5.57
Oct-89 17.06 11.44 8.73 5.47
Nov-89 16.75 11.47 8.85 5.57
Dec-89 16.3 11.42 8.96 5.71
Jan-90 15.49 10.51 8.27 5.33
Feb-90 15.55 10.77 8.44 5.39
Mar-90 15.75 11.12 8.68 5.52
Apr-90 15.35 10.73 8.29 5.38
May-90 15.77 11.37 9.01 5.88
Jun-90 15.79 11.39 8.95 5.84
Jul-90 15.10 10.99 8.75 5.83
Aug-90 13.25 9.65 7.88 5.33
Sep-90 12.18 8.76 7.32 5.09
Oct-90 11.39 8.27 7.04 5.07
Nov-90 11.69 8.88 7.65 5.41
Dec-90 11.48 9.15 7.96 5.55
Jan-91 12.65 9.84 8.50 5.77
Feb-91 14.66 10.96 9.26 6.16
Mar-91 16.05 11.61 9.58 6.28
Apr-91 16.54 11.68 9.66 6.29
May-91 16.87 12.12 10.11 6.52
Jun-91 16.16 11.67 9.66 6.24
Jul-91 17.33 12.11 10.12 6.52
Aug-91 17.57 12.49 10.36 6.67
Sep-91 17.70 12.47 10.26 6.59
Oct-91 18.11 12.67 10.44 6.68
Nov-91 17.62 12.14 10.04 6.44
Dec-91 18.08 13.01 11.01 7.09
Jan-92 21.50 13.95 11.28 6.93
Feb-92 22.95 14.30 11.50 6.98
Mar-92 22.88 13.82 11.17 6.84
Apr-92 22.13 13.36 11.17 7.02
May-92 22.37 13.45 11.26 7.08
Jun-92 21.43 12.96 10.98 6.97
Jul-92 22.01 13.38 11.45 7.26
Aug-92 21.55 13.02 11.13 7.15
Sep-92 21.91 13.21 11.28 7.21
Oct-92 22.13 13.58 11.56 7.23
Nov-92 23.52 14.62 12.12 7.44
Dec-92 24.70 15.01 12.47 7.49
Jan-93 26.96 15.51 12.70 7.54
Feb-93 26.65 15.17 12.63 7.62
Mar-93 27.74 15.55 13.09 7.78
Apr-93 27.20 15.07 12.76 7.57
May-93 27.92 15.70 13.25 7.78
Jun-93 28.40 15.73 13.36 7.78
Jul-93 28.95 15.92 13.39 7.69
Aug-93 29.99 16.58 13.92 7.98
Sep-93 31.09 16.92 13.99 7.91
Oct-93 32.99 17.41 14.18 8.12
Nov-93 32.19 16.93 13.87 8.08
Dec-93 32.43 17.40 14.46 8.16
Jan-94 34.26 17.98 14.83 8.42
Feb-94 34.06 17.84 14.66 8.17
Mar-94 32.82 16.88 13.99 7.81
Apr-94 32.18 16.77 14.07 7.90
May-94 32.20 16.63 14.00 8.04
Jun-94 31.73 16.13 13.57 7.83
Jul-94 32.01 16.37 14.02 8.11
Aug-94 32.73 17.25 14.78 8.43
Sep-94 33.38 17.29 14.53 8.24
Oct-94 33.47 17.19 14.56 8.43
Nov-94 32.26 16.53 13.92 8.15
Dec-94 33.02 16.61 14.12 8.26
Jan-95 34.13 16.60 14.21 8.35
Feb-95 34.72 17.18 14.90 8.52
Mar-95 35.09 17.54 15.26 8.68
Apr-95 35.95 17.96 15.51 9.04
May-95 36.66 18.32 15.83 9.26
Jun-95 38.51 19.12 16.38 9.34
Jul-95 40.69 20.22 17.28 9.79
Aug-95 42.21 20.71 17.52 9.76
Sep-95 43.36 21.16 17.89 10.09
Oct-95 41.90 20.16 17.42 10.12
Nov-95 42.31 20.97 18.18 10.48
Dec-95 43.16 21.53 18.26 10.67
Jan-96 44.26 21.64 18.44 11.04
Feb-96 45.67 22.31 18.86 11.19
Mar-96 46.63 22.82 19.25 11.27
Apr-96 49.37 24.30 20.07 11.45
May-96 53.69 25.46 20.41 11.75
Jun-96 51.43 24.48 19.90 11.79
Jul-96 46.69 22.31 18.59 11.27
Aug-96 48.46 23.58 19.59 11.52
Sep-96 49.47 24.52 20.49 12.18
Oct-96 48.46 24.08 20.42 12.47
Nov-96 48.96 24.73 21.54 13.42
Dec-96 49.14 25.33 21.62 13.17
Jan-97 51.74 26.23 22.09 14.01
Feb-97 50.82 25.53 21.78 14.08
Mar-97 48.08 24.19 20.78 13.46
Apr-97 46.11 23.75 21.04 14.26
May-97 50.72 26.49 22.95 15.15
Jun-97 53.45 28.05 23.95 15.81
Jul-97 56.77 29.51 25.48 17.13
Aug-97 59.05 30.66 25.78 16.33
Sep-97 64.62 33.33 27.63 17.30
Oct-97 62.27 32.40 26.62 16.94
Nov-97 61.26 32.17 27.09 17.82
Dec-97 60.81 33.30 27.96 18.29
Jan-98 60.41 33.64 27.94 18.61
Feb-98 64.12 36.54 30.51 20.06
Mar-98 67.26 38.76 32.23 21.26
Apr-98 68.55 39.00 32.39 21.53
May-98 65.10 36.83 31.16 21.13
Jun-98 63.70 36.97 31.47 22.07
Jul-98 59.64 34.16 29.85 21.87
Aug-98 47.18 27.53 24.48 18.66
Sep-98 49.47 29.58 26.18 19.85
Oct-98 50.66 30.72 27.95 21.44
Nov-98 54.74 32.40 29.30 22.80
Dec-98 57.08 34.32 31.22 24.28
Jan-99 59.88 34.48 31.06 25.41
Feb-99 55.99 31.86 29.65 24.60
Mar-99 54.97 32.53 30.46 25.67
Apr-99 60.47 35.65 33.40 26.62
May-99 61.64 35.99 33.47 25.98
Jun-99 65.36 38.35 35.02 27.30
Jul-99 65.23 37.67 34.32 26.41
Aug-99 63.82 36.63 33.42 26.23
Sep-99 63.45 36.69 32.73 25.52
Oct-99 62.89 37.32 34.25 27.28
Nov-99 69.44 39.91 36.41 27.91
Dec-99 79.93 44.80 41.52 29.61
Jan-00 84.31 43.96 39.77 28.35
5
<PAGE>
RESEARCH, RESEARCH, RESEARCH
It is said that the key to successful real estate investing is "location,
location, location". The key to successful micro-cap investing is research,
research, research. As aforementioned, Wall Street doesn't provide much help. We
at Gabelli Funds get micro-cap ideas from trade journals, annual reports,
industry contacts, and even the management of larger companies that we follow in
similar or related businesses.
Regardless of the source of ideas, we always do our own digging. We
believe in sitting down with the management of most companies we consider
investing in - we call it "going belly to belly with Gabelli." It is a
particularly critical facet of our micro-cap stock research. Annual reports,
10Ks and 10Qs can do a good job detailing what is, but meeting with
small-company management and discussing their business plan and reviewing their
business model is the best way to assess what is likely to be.
FINDING CHEAP STOCKS
In the micro-cap sector, growth and value are not mutually exclusive
investment concepts. Because of the research vacuum, you can find dynamic young
micro-cap companies in fast-growth industries (including technology) trading at
very reasonable valuations relative to their large-cap peers. You can also
uncover wonderful companies in less glamorous businesses trading at just a
fraction of their intrinsic value. Obviously, finding the next Microsoft is a
potentially rewarding experience. But, let's not forget that Warren Buffett
created enormous wealth for Berkshire Hathaway shareholders through
opportunistically priced purchases of cash-generating businesses in industries
such as newspaper publishing, candy and furniture retailing.
When analyzing established micro-cap companies in more mature industries,
we employ traditional valuation criteria. Our focus is generally on free cash
flow (earnings before interest, taxes, depreciation and amortization, or
"EBITDA," minus necessary capital expenditures), which we believe to be the best
barometer of a company's "real world" economic value. We also look at asset
value not simply subtracting liabilities from assets (stated book value), but
breaking down and recasting the balance sheet to provide a more accurate
appraisal of on- and off-balance-sheet assets. When we find a good micro-cap
company trading at a low multiple to free cash flow or well below asset value,
we look for a potential catalyst - something happening in the target company's
industry or indigenous to the company itself that will attract investor
attention and surface value. Two of the most powerful catalysts in the micro-cap
sector are deregulation and industry consolidation. This explains why our small
cap fund is scouring the market for small utilities and community bank stocks.
When analyzing younger companies in rapidly evolving industries like
technology, we take a different approach, focusing on things like proprietary
products and services, market size and growth rates, revenue growth, operating
margins, "cash burn" (how fast the company is going through the cash required to
finance growth) and prospective competition. Value is not generally as readily
quantifiable, but we are still attempting to identify stocks trading at
reasonable valuations relative to their growth prospects.
6
<PAGE>
Our common characteristic of micro-cap companies is that management
typically owns significant equities positions. So, whether management hopes to
become rich by growing the company or by selling it, they should have a
propensity to surface shareholder value.
Leap Wireless International (NASDAQ, LWIN) is a good example of a dynamic
little growth company with a big future. A spin-off from Qualcomm, Leap Wireless
is a communications carrier that owns and operates domestic and international
CDMA (Code Division Multiple Access) networks. Leap offers flat-fee unlimited
local calling plans in its domestic markets. Price and quality make this a
competitive alternative to traditional wireline local phone service. As Leap
continues to build out its networks and increase market share, rapid growth in
customers, revenues and operating profits should attract more investor
attention. Leap is no longer a secret - sorry, we got there first. But even
after its exceptional performance in 1999, Leap is still trading at a
significant valuation discount to its wireless industry peers.
GATOR BAIT?
Changes in federal and state regulations are opening the utilities
industry to future competition, and thereby forcing utilities companies to
reduce their costs. The easiest way to accomplish this is by buying other
utilities to create economies of scale. This has spawned rapid consolidation in
the industry.
Florida Public Utilities (Amex, FPU) is an electric, gas and water
utilities company with operations in Palm Beach, mid-Florida, Marianna and
Fernandina Beach. These are fast-growing markets, which we believe would be
attractive to larger utilities companies in Florida and throughout the
Southeast. At a price of $18 per share, FPU is trading well below the price we
believe it would fetch from an acquirer. In addition the stock is yielding close
to four percent, providing a financial incentive to own it pending future
developments.
BANKING ON IT
The banking industry is also undergoing consolidation, with bigger banks
swallowing smaller ones throughout the industry. So, there is some takeover
flavor to bank stocks big and small. In addition, due to rising interest rates,
bank stocks are currently out of favor. This has created some exceptional
fundamental bargains.
Vail Banks Inc. (NASDAQ, VAIL) operates 23 retail offices, located
primarily in the western slope region of Colorado. The company posted impressive
gains in cash earnings (earnings excluding the amortization of intangible
assets) in the fourth quarter and for the full year of 1999. At a recent $9.50
per share, Vail Banks trades at just 12 times earnings and at only 98 percent of
book value. We are banking that investors will reward good earnings growth or a
larger bank will spot this fundamentally appealing business bargain.
(Graphic of 5 stars omitted)
7
<PAGE>
DEALS...DEALS...AND MORE DEALS
A component of our investment methodology is to identify industry and
sector trends and themes ahead of the curve and position ourselves to take
advantage of these developments. Industry consolidation is one such trend. As we
have discussed in previous letters, the continued high level of activity in
mergers and acquisitions contributed significantly to the solid performance of
the Small Cap Growth Fund. The accompanying table illustrates how deal activity
surfaced value in a small sample of the portfolio holdings.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
2000 COMPLETED DEALS
NUMBER AVERAGE COST CLOSING
FUND HOLDING OF SHARES (a) PER SHARE (b) PRICE (c) CLOSING DATE %RETURN (d)
---------------------------------------------------------------------------------------------------------------
FIRST QUARTER 2000 ANNOUNCED DEALS
----------------------------------
<S> <C> <C> <C> <C> <C>
CommNet Cellular Inc. 40,000 $13.54 $32.38 01/07/00 139.14%
Associated Group Inc., Cl. A 8,000 26.07 87.88 01/17/00 237.09%
Watkins-Johnson Co. 70,000 30.94 41.00 02/01/00 32.51%
Pittway Corp. 130,000 10.14 45.50 02/04/00 348.72%
Ascent Entertainment Group Inc. 350,000 12.34 15.25 03/28/00 23.58%
SECOND QUARTER 2000 ANNOUNCED DEALS
-----------------------------------
WICOR Inc. 30,000 27.17 31.50 04/26/00 15.94%
General Cigar Holdings Inc. 170,600 11.57 15.25 05/09/00 31.81%
General Cigar Holdings Inc., Cl. B 133,500 8.07 15.25 05/09/00 88.97%
Ben & Jerry's Homemade Inc., Cl. A 22,000 26.90 43.60 05/15/00 62.08%
Celestial Seasonings Inc. 80,000 14.03 38.50 05/30/00 174.41%
Mirage Resorts Inc. 69,000 8.91 20.94 06/01/00 135.02%
Hussmann International Inc. 170,000 15.95 29.00 06/14/00 81.82%
Kollmorgen Corp. 116,000 11.51 23.00 06/15/00 99.83%
Wynn's International Inc. 205,000 6.87 22.88 07/21/00 233.04%
</TABLE>
-------------------------------------------------------------------------------
(a) Number of shares held by the Fund on the final day of trading for the
issuer.
(b) Average purchase price of issuer's shares held by the Fund on the final
day of trading for the issuer.
(c) Closing price on the final day of trading for the issuer or the tender
price on the closing date of the tender offer.
(d) Represents average estimated return based on average cost per share and
closing price per share.
NOTE: SEE THE PORTFOLIO OF INVESTMENTS FOR A COMPLETE LISTING OF HOLDINGS.
--------------------------------------------------------------------------------
WINNERS AND LOSERS
This quarter, two of our Top Ten performers, Pioneer Group and Wynn's
International, were boosted by sizeable takeover premiums. Pioneer Group started
the quarter at $23.25. On May 15, UniCredito Groupe agreed to purchase all of
the outstanding shares of Pioneer for $43.50 per share. Wynn's International
began the quarter at $13.81, and on June 13, Parker Hannifin announced that it
would purchase all of Wynn's outstanding shares at a price of $23.00 per share.
Two deals that closed during the quarter were also particularly beneficial to
Fund performance. On June 13, we tendered all shares of Hussman International in
a deal with Ingersoll Rand that valued our Hussman shares at $29.00 per share,
an 82% premium to our average purchase price. Also, on June 14, we tendered our
Kollmorgen shares in
8
<PAGE>
a deal with Danaher that valued our Kollmorgen shares at $23.00 per share, a
100% premium to our average purchase price.
Another Fund holding, Bush Boake Allen, hired an investment banker to
investigate restructuring options including the sale of the company, and while
nothing has been announced, the stock appreciated about 50%. As usual, the rest
of our biggest winners come from a wide range of industry groups including
international telecom battery supplier C&D Technologies, retailer Coldwater
Creek, IVAX Corp, Block Drug, Moog and SPS Technologies.
Our biggest disappointments came from an equally eclectic group of
industries including auto parts (Standard Motor Products), entertainment (TV
Guide), mining (TVX Gold and Royal Oak Mines) and telecommunications (GST
Telecommunications).
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. The share prices of the following holdings are stated in U.S. dollar
equivalent terms as of June 30, 2000.
AZTAR CORP. (AZR - $15.50 - NYSE) is a gaming company that owns and operates
three casino hotels: Tropicana Casino and Resort in Atlantic City; Tropicana
Resort and Casino in Las Vegas; and Ramada Express Hotel and Casino in Laughlin,
Nevada. Aztar also operates riverboats in Caruthersville, Missouri and
Evansville, Indiana.
CARTER-WALLACE INC. (CAR - $20.125 - NYSE), founded in 1880 as the Carter
Medicine Company marketing a single product called Carter Little Liver Pills,
now manufactures and sells a diversified line of consumer health care products
including toiletries, pharmaceuticals, diagnostic specialties, proprietary drugs
and pet supplies. Such brands as Arrid deodorant, Nair hair remover and Pearl
Drops toothpaste are Carter-Wallace products. The company also sells certain
products exclusively in international markets.
CLARCOR INC. (CLC - $19.875 - NYSE), founded in 1904, is a U.S.- based
manufacturer and marketer of engine-mobile filtration products,
industrial/environmental filtration products and consumer packaging products.
CLARCOR markets a full line of oil, air, fuel, coolant and hydraulic fluid
filters that are used in a wide variety of applications, including engines and
industrial equipment. The company markets commercial and industrial air filters
and systems, electrostatic contamination control equipment, and electrostatic
high precision spraying equipment. The air filters and systems remove
contaminants from recirculated indoor air and from processed air that is
exhausted outdoors. Containers and plastic closures manufactured by the company
are used in packaging a wide variety of dry and paste form products, such as
food specialties, beverages and juices, cosmetics and toiletries, drugs and
pharmaceuticals, and chemical specialties. Last September, CLARCOR agreed to
purchase three filtration businesses, including Purolator Products Air
Filtration Company, for approximately $136 million.
9
<PAGE>
GAYLORD ENTERTAINMENT CO. (GET - $21.50 - NYSE) is a diversified entertainment
company operating principally in three segments: hospitality and attractions,
creative content, and interactive media. The company's hospitality and
attractions group consists of an interrelated group of businesses including the
Opryland Hotel Nashville, the Inn at Opryland, the General Jackson (an
entertainment showboat), and other related businesses. The creative content
group consists primarily of the Grand Ole Opry, the Ryman Auditorium, the
Wildhorse Saloon, Acuff-Rose Music Publishing, Word Entertainment, and other
related businesses. The interactive media group consists of Gaylord Digital,
three radio stations, CMT International, and Z Music.
LAMSON & SESSIONS CO. (LMS - $15.3125 - NYSE), based in Cleveland, Ohio, is a
diversified manufacturer and distributor of a broad line of thermoplastic
electrical, consumer, telecommunications and fluid drainage products for major
domestic markets. The company also distributes a wide variety of consumer
electrical wiring devices, home security devices, wireless electrical and other
wireless products. Lamson's thermoplastic electrical products compete with and
serve as substitutes for similar metallic products. The company's engineered
sewer pipe products compete with and serve as substitutes for clay, concrete,
ductile iron, asbestos cement, and polyethylene products.
LIBERTY CORP. (LC - $42.00 - 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.
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. In June, Liberty announced it would sell its
insurance operations to Royal Bank of Canada for $650 million, refocusing the
company on its broadcasting operations. The company's Cosmos Broadcasting unit
is also buying Civic Communications for $204 million, bringing the number of
television stations to 15.
MARK IV INDUSTRIES INC. (IV - $20.875 - NYSE) is a diversified manufacturer of a
broad range of proprietary and other power and fluid transfer products and
systems that primarily serve industrial and automotive markets. The company
classifies its operations into two business segments. Mark IV Industrial
includes the design, manufacture and distribution of power and fluid management
systems and components for industrial original equipment manufacturers ("OEM")
and distribution markets worldwide. Mark IV Automotive includes the design,
manufacture and distribution of power transmission, fuel, and fluid handling
systems and components, and filters and filtration systems, for the global
automotive aftermarket and OEM market. BC Partners, a leading European private
equity firm, has reached an agreement providing for the acquisition of Mark IV
for $23.00 cash per share.
10
<PAGE>
OAK TECHNOLOGY INC. (OAKT - $21.5625 - NASDAQ), founded in 1987, designs,
develops and markets high performance integrated semiconductors, software and
platform solutions to original equipment manufacturers (OEMs) worldwide that
serve the optical storage, consumer electronics and digital imaging equipment
markets. The company's products consist primarily of integrated circuits and
supporting software and firmware, all designed to store and distribute digital
content. OAKT contracts with independent foundries to manufacture all its
products. Currently, the company's three target markets include optical storage,
consumer electronics and digital imaging equipment.
PIONEER GROUP INC. (PIOG - $42.375 - NASDAQ) conducts its business through three
strategic units: Pioneer Investment Management, Pioneer International Financial
Services, and Pioneer Global Investments. Pioneer Investment Management includes
the U.S. registered mutual funds, the offshore funds registered in Ireland and
private institutional accounts. Pioneer International Financial Services
includes investment management and financial services operations in different
parts of the world. Pioneer Global Investments includes the company's
diversified strategic businesses of international venture capital management and
investing, real estate management and advisory services, and timber harvesting
and development. UniCredito Italiano SpA (UC.MI - $4.78 - Milan Stock Exchange)
has entered into a definitive agreement to acquire Pioneer Group for $43.50 per
share in a transaction valued at about $1.2 billion.
PULITZER INC. (PTZ - $42.1875 - NYSE) is engaged in newspaper publishing and
related new media businesses. The company's newspaper operations consist of the
St. Louis Post-Dispatch, the only major daily newspaper serving the St. Louis
metropolitan area, and The Arizona Daily Star, serving the Tucson metropolitan
area. Each of these publications also operates electronic news, information and
communication Websites on the Internet. In addition, the company's Pulitzer
Community Newspaper Group (the PCN Group) includes 12 dailies that serve smaller
markets, primarily in the West and Midwest, as well as a number of weekly and
bi-weekly publications. Pulitzer is consolidating its position in St. Louis with
the purchase of an additional 45% interest in the St. Louis Post Dispatch and
the purchase of Suburban Newspapers of greater St. Louis.
TV GUIDE INC. (TVGIA - $34.25 - NASDAQ), formerly United Video Satellite Group,
publishes TV Guide, the best-selling weekly magazine in the U.S. The company's
other operations include the TV Guide Channel (an on-screen programming guide
formerly called the Prevue Channel) and 40% of Superstar/Netlink Group, which
sends programming from such providers as CNN, ESPN, and HBO to home satellite
dishes. Other services include SpaceCom (satellite transmission services for
radio programming, paging, and news services) and UVTV (distribution of
superstations, such as Chicago's WGN, to cable television systems). News Corp.
(NWS - $54.50 - NYSE) and AT&T's Liberty Media Group (LMG'A - $24.25 - NYSE)
each hold about 49% of TV Guide's voting power and 44% of its equity.
11
<PAGE>
UNITED TELEVISION INC. (UTVI - $128.75 - 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 - $66.0625 - NYSE) television division. UTVI stations cover
approximately nine percent of the U.S. population. UTVI is 58%-owned by BHC
Communications (BHC - $152.00 - AMEX). United Television is a beneficiary of the
recent FCC ruling allowing television duopoly, or ownership of two stations in a
single market. On August 14, News Corp. (NWS - $54.50 - NYSE)announced that it
would purchase United Television (along with Chris-Craft and BHC) in a deal
worth $5.35 billion.
WHITMAN CORP. (WH - $12.375 - NYSE), through its principal operating company,
Pepsi-Cola General Bottlers Inc., manufactures, packages, sells and distributes
carbonated and non-carbonated Pepsi-Cola beverages, as well as a variety of
other non-alcoholic beverages, in the United States and Central Europe. Pepsi
General serves a significant portion of a ten state region, primarily in the
Midwest, with a population of approximately 35 million people. In addition,
Pepsi General serves territories in Poland, Hungary, the Czech Republic and the
Republic of Slovakia. Pepsi General's three largest brands in terms of volume
are Pepsi-Cola, Diet Pepsi and Mountain Dew.
WYNN'S INTERNATIONAL INC. (WN - $22.6875 - NYSE), founded in 1939, is a
worldwide supplier of automotive and industrial components and specialty
chemical products. The Automotive and Industrial Components Division includes
Wynn's-Precision Inc. and the Goshen Rubber Companies Inc. These two companies
are leaders in sealing products and technology, serving more than 1,000
customers in 14 industrial markets around the world. Robert Skeels & Company is
a regional wholesale distributor of builders' hardware products. The Specialty
Chemicals Division is comprised of Wynn Oil Company and its subsidiaries, a
worldwide manufacturer and marketer of specialty chemicals, equipment and
related programs for automotive and industrial markets in over 100 countries. On
June 13th, Parker Hannifin and Wynn's International entered into an agreement
for Parker to acquire Wynn's for $23.00 per share cash. The deal closed on July
21.
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for regular accounts is $1,000.
There are no subsequent investment minimums. No initial minimum is required for
those establishing an Automatic Investment Plan. Additionally, the Fund and
other Gabelli Funds are available through the no-transaction fee programs at
many major brokerage firms.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage 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].
12
<PAGE>
IN CONCLUSION
Small cap stocks appear to have attracted a more loyal audience. They
outperformed their larger brethren in a rising market in the first quarter and,
surprisingly, held up better than large caps during a declining market in the
second quarter. All eyes are still focused on technology stocks, which have
undergone a dizzying round trip in 2000. If tech stocks fail to live up to
increasingly optimistic earnings expectations, stocks in other growth industries
will likely get more favorable attention.
Reflecting our stock specific discipline and well-diversified portfolio,
the Fund has had a much smoother ride than many of its competitors. We believe
this low anxiety approach to small cap investing will continue to satisfactorily
reward shareholders.
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/ SIGNATURE
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
August 14, 2000
-------------------------------------------------------------
TOP TEN HOLDINGS
JUNE 30, 2000
----------------
Oak Technology Inc. Carter-Wallace Inc.
Lamson & Sessions Co. TV Guide Inc.
Liberty Corp. CLARCOR Inc.
Aztar Corp. USA Networks Inc.
United Television Inc. Wynn's International 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.
13
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS -- 93.2%
AGRICULTURE -- 0.0%
9,000 Cadiz Inc.+ ...................................... $ 72,000
5,000 Sylvan Inc. ...................................... 46,250
----------
118,250
----------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 4.8%
100,000 Acktion Co.+ ..................................... 777,027
14,000 Borg-Warner Automotive Inc. ...................... 491,750
205,000 GenCorp Inc. ..................................... 1,640,000
8,000 Lund International Holdings Inc.+ ................ 38,000
24,000 Meritor Automotive Inc. .......................... 264,000
35,000 Midas Inc. ....................................... 700,000
125,000 Modine Manufacturing Co. ......................... 3,375,000
5,250 Monro Muffler Brake Inc.+ ........................ 48,234
190,000 Scheib (Earl) Inc.+ .............................. 611,562
151,000 Standard Motor Products Inc. ..................... 1,283,500
17,000 Strattec Security Corp.+ ......................... 552,500
55,000 Superior Industries International Inc. ........... 1,416,250
155,000 TransPro Inc. .................................... 784,687
205,000 Wynn's International Inc. ........................ 4,650,937
----------
16,633,447
----------
AVIATION: PARTS AND SERVICES -- 2.6%
17,000 AAR Corp. ........................................ 204,000
45,000 Aviall Inc.+ ..................................... 222,187
20,000 Barnes Group Inc. ................................ 326,250
58,000 Curtiss-Wright Corp. ............................. 2,156,875
7,500 Ducommun Inc. .................................... 89,531
115,000 Fairchild Corp., Cl. A+ .......................... 560,625
26,500 Hi-Shear Industries Inc. ......................... 67,906
300,000 Kaman Corp., Cl. A ............................... 3,206,250
80,000 Moog Inc., Cl. A+ ................................ 2,110,000
----------
8,943,624
----------
BROADCASTING -- 6.9%
195,500 Ackerley Group Inc. .............................. 2,297,125
20,000 Acme Communications Inc.+ ........................ 365,000
5,000 Crown Media Holdings Inc., Cl. A+ ................ 76,562
246,000 Granite Broadcasting Corp.+ ...................... 1,814,250
40,000 Gray Communications Systems Inc. ................. 392,500
55,000 Gray Communications Systems Inc., Cl. B .......... 536,250
53,000 Hearst-Argyle Television Inc.+ ................... 1,033,500
167,000 Liberty Corp. .................................... 7,014,000
15,000 On Command Corp. ................................. 213,750
200,000 Paxson Communications Corp., Cl. A+ .............. 1,700,000
75,000 Salem Communications Corp., Cl. A+ ............... 696,094
20,000 Sinclair Broadcast Group Inc.+ ................... 220,000
10,000 Spanish Broadcasting System Inc., Cl. A+ ......... 205,625
3,000 TiVo Inc.+ ....................................... 105,000
48,500 United Television Inc. ........................... 6,244,375
MARKET
SHARES VALUE
------ ------
1,500 Wink Communications Inc.+ ........................ $ 45,750
37,000 Young Broadcasting Inc., Cl. A+ .................. 950,437
----------
23,910,218
----------
BUILDING AND CONSTRUCTION -- 1.1%
13,000 Florida Rock Industries Inc. ..................... 463,125
14,444 Huttig Building Products Inc.+ ................... 59,581
100,000 Nortek Inc.+ ..................................... 1,975,000
75,000 Republic Group Inc. .............................. 675,000
33,000 Universal Forest Products Inc. ................... 453,750
----------
3,626,456
----------
BUSINESS SERVICES -- 2.7%
72,000 Berlitz International Inc.+ ...................... 648,000
50,000 Burns International Services Corp. ............... 625,000
610,400 Career Blazers Inc. .............................. 107,125
6,000 Carlisle Holdings Ltd.+ .......................... 44,062
1,500 CheckFree Holdings Corp.+ ........................ 77,344
20,000 Data Broadcasting Corp.+ ......................... 126,250
40,000 Donnelley (R.H.) Corp. ........................... 775,000
24,000 Industrial Distribution Group Inc.+ .............. 60,000
13,000 Landauer Inc. .................................... 202,312
5,000 MDC Communications Corp., Cl. A+ ................. 44,062
37,500 Nashua Corp.+ .................................... 309,375
113,300 National Processing Inc.+ ........................ 1,416,250
105,000 Paxar Corp.+ ..................................... 1,253,437
20,000 Pittson Brink's Group ............................ 273,750
70,000 Primark Corp. .................................... 2,607,500
8,000 Princeton Video Image Inc.+ ...................... 46,000
10,000 PubliCard Inc.+ .................................. 32,812
87,000 Trans-Lux Corp. (a) .............................. 380,625
8,000 Wackenhut Corp., Cl. A ........................... 103,500
6,187 Wackenhut Corp., Cl. B ........................... 58,003
----------
9,190,407
----------
CABLE -- 1.2%
85,000 UnitedGlobalCom Inc., Cl. A+ ..................... 3,973,750
----------
CLOSED-END FUNDS -- 1.4%
45,000 Central European Equity Fund Inc. ................ 663,750
78,000 Dresdner RCM Europe Fund Inc. .................... 1,279,980
45,000 France Growth Fund Inc. .......................... 675,000
32,000 Germany Fund Inc. ................................ 452,000
40,000 Italy Fund Inc. .................................. 725,000
65,000 New Germany Fund Inc. ............................ 901,875
11,000 Spain Fund Inc. .................................. 140,250
----------
COMMUNICATIONS EQUIPMENT -- 1.0%
110,000 Allen Telecom Inc.+ .............................. 1,945,625
100,000 Communications Systems Inc. ...................... 1,525,000
----------
3,470,625
----------
14
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE AND SERVICES -- 1.1%
1,000 @Home Corp., Ser. A+ ......................... $ 20,750
6,000 Anacomp Inc. ................................. 18,000
95,000 Bull Run Corp.+ .............................. 195,937
3,000 Cylink Corp. ................................. 50,250
30,924 Global Sources Ltd.+ ......................... 784,696
42,000 Internet.com Corp.+ .......................... 826,875
200 Macromedia Inc.+ ............................. 19,337
52,000 Phoenix Technologies Ltd.+ ................... 848,250
10,000 QuadraMed Corp.+ ............................. 25,000
415,000 Tyler Technologies Inc. ...................... 1,063,437
-----------
3,852,532
-----------
CONSUMER PRODUCTS -- 3.5%
3,000 Action Performance Companies Inc.+ ........... 21,750
20,000 Adams Golf Inc.+ ............................. 27,500
40,000 Ashworth Inc.+ ............................... 178,750
300,000 Carter-Wallace Inc. .......................... 6,037,500
45,000 Church & Dwight Co. Inc. ..................... 810,000
12,000 Coachmen Industries Inc. ..................... 138,000
25,000 Department 56 Inc.+ .......................... 275,000
8,000 French Fragrances Inc.+ ...................... 65,500
60,000 Genlyte Group Inc.+ .......................... 1,263,750
4,000 Harley-Davidson Inc. ......................... 154,000
150,000 Hartmarx Corp.+ .............................. 384,375
12,000 Madden (Steven) Ltd. ......................... 78,750
33,000 National Presto Industries Inc. .............. 1,014,750
12,000 Nature's Sunshine Products Inc. .............. 84,000
3,000 Scotts Co., Cl. A+ ........................... 109,500
8,000 Skyline Corp. ................................ 172,000
14,000 Stewart Enterprises Inc., Cl. A .............. 49,437
140,000 Weider Nutrition International Inc. .......... 420,000
70,000 Wolverine World Wide Inc. .................... 691,250
-----------
11,975,812
-----------
CONSUMER SERVICES -- 0.9%
30,000 Bowlin Outdoor Advertising &
Travel Centers Inc.+ ....................... 191,250
11,000 Collectors Universe Inc. ..................... 32,312
40,000 Loewen Group Inc. ............................ 21,200
4,000 Martha Stewart Living Inc., Cl. A+ ........... 88,000
50,000 Ogden Corp. .................................. 450,000
18,000 Response USA Inc.+ ........................... 7,875
165,000 Rollins Inc. ................................. 2,454,375
-----------
3,245,012
-----------
DIVERSIFIED INDUSTRIAL -- 6.6%
99,500 Ampco-Pittsburgh Corp. ....................... 1,106,937
8,000 Anixter International Inc.+ .................. 212,000
MARKET
SHARES VALUE
------ ------
19,000 Baldor Electric Co. .......................... $ 353,875
50,000 Crane Co. .................................... 1,215,625
4,500 Denison International plc, ADR+ .............. 56,813
70,000 Gardner Denver Machinery Corp.+ .............. 1,251,250
15,000 GATX Corp. ................................... 510,000
117,000 GenTek Inc. .................................. 1,308,937
39,000 Katy Industries Inc. ......................... 458,250
480,000 Lamson & Sessions Co.+ ....................... 7,350,000
75,000 Lindsay Manufacturing Co. .................... 1,471,875
60,000 MagneTek Inc. ................................ 480,000
1,000 Matthews International Corp., Cl. A .......... 29,000
42,000 Myers Industries Inc. ........................ 451,500
610,400 Noel Group Inc.+ ............................. 301,421
42,000 Oil-Dri Corporation of America ............... 378,000
135,000 Park-Ohio Holdings Corp.+ .................... 1,164,375
42,000 Standex International Corp. .................. 666,750
5,000 Tech/Ops Sevcon Inc. ......................... 43,750
206,000 Thomas Industries Inc. ....................... 3,643,625
60,000 WHX Corp.+ ................................... 330,000
-----------
22,783,983
-----------
EDUCATIONAL SERVICES -- 0.0%
43,500 Whitman Education Group Inc.+ ................ 65,250
-----------
ELECTRONICS -- 3.6%
50,000 Thomas & Betts Corp. ......................... 956,250
525,001 Oak Technology Inc.+ ......................... 11,320,323
-----------
12,276,573
-----------
ENERGY AND UTILITIES -- 5.0%
40,000 AGL Resources Inc. ........................... 637,500
6,000 Basin Exploration Inc.+ ...................... 107,250
7,000 Birmingham Utilities Inc. .................... 87,500
20,000 CH Energy Group Inc. ......................... 678,750
10,000 Chesapeake Utilities Corp. ................... 177,500
8,000 Connecticut Water Service Inc. ............... 214,000
28,000 Eastern Enterprises .......................... 1,764,000
28,000 E'Town Corp. ................................. 1,860,250
18,000 Fall River Gas Co. ........................... 396,000
50,000 Florida Public Utilities Co. ................. 781,250
150,000 Kaneb Services Inc.+ ......................... 600,000
15,000 Petroleum Geo-Services ASA+ .................. 255,937
2,000 PetroQuest Energy Inc.+ ...................... 5,750
295,000 RPC Inc. ..................................... 3,115,937
7,000 SJW Corp ..................................... 832,125
110,000 Southwest Gas Corp. .......................... 1,925,000
15,000 Tesoro Petroleum Corp. ....................... 151,875
5,000 Toreador Resources Corp.+ .................... 26,250
5,000 TransMontaigne Oil Co. ....................... 30,625
60,000 United Water Resources Inc. .................. 2,092,500
15
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
30,000 Waterlink Inc. ..................................... $ 75,000
100,000 Western Resources Inc. ............................. 1,550,000
----------
17,364,999
----------
ENTERTAINMENT -- 4.9%
18,000 Dover Downs Entertainment Inc.+ .................... 252,000
44,000 Fisher Companies Inc. .............................. 3,366,000
55,000 GC Companies Inc.+ ................................. 1,230,625
2,500 International Speedway Corp. ....................... 103,750
10,000 Liberty Digital Inc.+ .............................. 300,000
19,312 Liberty Media Group, Cl. A+ ........................ 468,316
4,000 Loews Cineplex Entertainment Corp.+ ................ 12,750
3,000 Metromedia International Group Inc.+ ............... 14,250
45,000 Topps Co. Inc.+ .................................... 517,500
170,000 TV Guide Inc., Cl. A+ .............................. 5,822,500
225,000 USA Networks Inc.+ ................................. 4,865,625
1,500 World Wrestling Federation Entertainment Inc.+ ..... 31,219
----------
16,984,535
----------
ENVIRONMENTAL SERVICES -- 0.3%
75,000 Republic Services Inc.+ ............................ 1,200,000
----------
EQUIPMENT AND SUPPLIES -- 13.0%
14,000 Alltrista Corp.+ ................................... 299,250
147,000 AMETEK Inc. ........................................ 2,572,500
6,500 Amphenol Corp., Cl. A+ ............................. 430,219
336,000 Baldwin Technology Co. Inc., Cl. A+ ................ 714,000
60,000 Belden Inc. ........................................ 1,537,500
6,000 Bway Corp.+ ........................................ 39,750
1,500 C&D Technologies Inc. .............................. 84,750
100,000 CIRCOR International Inc.+ ......................... 818,750
260,000 CLARCOR Inc. ....................................... 5,167,500
65,000 Core Materials Corp. ............................... 130,000
15,000 CTS Corp. .......................................... 675,000
76,000 Cuno Inc.+ ......................................... 1,757,500
9,000 Danaher Corp. ...................................... 444,938
35,000 DONCASTERS plc, ADR+ ............................... 380,625
257,600 Fedders Corp. ...................................... 1,497,300
125,000 Flowserve Corp. .................................... 1,882,813
55,500 Franklin Electric Co. .............................. 3,760,125
40,000 General Magnaplate Corp. ........................... 117,500
71,000 Gerber Scientific Inc. ............................. 816,500
17,775 Gorman-Rupp Co. .................................... 279,956
17,000 Graco Inc. ......................................... 552,500
45,000 Hughes Supply Inc. ................................. 888,750
50,000 IDEX Corp. ......................................... 1,578,125
25,000 Interpump Group SpA ................................ 110,990
10,000 K-Tron International Inc.+ ......................... 157,188
10,000 Littelfuse Inc.+ ................................... 490,000
25,000 Lufkin Industries Inc. ............................. 396,875
MARKET
SHARES VALUE
------ ------
150,000 Mark IV Industries Inc. ............................ $3,131,250
20,000 Met-Pro Corp. ...................................... 180,000
1,500 Plantronics Inc.+ .................................. 173,250
56,000 Raytech Corp.+ ..................................... 182,000
10,000 Robbins & Myers Inc. ............................... 228,125
38,000 Roper Industries Inc. .............................. 973,750
3,500 Sames Corp. ........................................ 55,125
40,000 Sequa Corp., Cl. A+ ................................ 1,527,500
16,500 Sequa Corp., Cl. B+ ................................ 953,906
62,000 SL Industries Inc. ................................. 604,500
1,000 Smith (A.O.) Corp. ................................. 20,938
9,000 Smith (A.O.) Corp., Cl. A .......................... 181,125
74,000 SPS Technologies Inc.+ ............................. 3,038,625
5,000 Teleflex Inc. ...................................... 178,750
38,800 Tennant Co. ........................................ 1,455,000
180,000 UCAR International Inc.+ ........................... 2,351,250
5,000 Valmont Industries Inc. ............................ 99,375
7,875 Watsco Inc., Cl. B ................................. 100,406
145,000 Watts Industries Inc., Cl. A ....................... 1,830,625
----------
44,846,404
----------
FINANCIAL SERVICES -- 2.9%
32,000 Argonaut Group Inc. ................................ 548,000
68,000 Berliner Bank Aktiengesellschaft ................... 986,829
35,101 BKF Capital Group Inc. ............................. 557,223
150,000 CNA Surety Corp. ................................... 1,790,625
45,000 Danielson Holding Corp.+ ........................... 219,375
3,000 Federal Agricultural Mortgage Corp., Cl. C+ ........ 43,688
45,000 Gainsco Inc. ....................................... 225,000
18,000 Hibernia Corp., Cl. A .............................. 195,750
3,000 LandAmerica Financial Group ........................ 68,813
22,500 Metris Companies Inc. .............................. 565,313
105,000 Midland Co. ........................................ 2,572,500
1,500 Net.B@nk Inc.+ ..................................... 18,656
55,000 Pioneer Group Inc.+ ................................ 2,330,625
----------
10,122,397
----------
FOOD AND BEVERAGE -- 3.1%
20,000 Advantica Restaurant Group Inc.+ ................... 19,375
9,000 Cheesecake Factory Inc.+ ........................... 247,500
1,900 Farmer Brothers Co. ................................ 332,500
20,000 Genesee Corp., Cl. B ............................... 372,500
42,000 Hain Celestial Group Inc.+ ......................... 1,540,875
10,000 International Multifoods Corp. ..................... 173,125
73,000 J & J Snack Foods Corp.+ ........................... 1,304,875
10,000 Midwest Grain Products Inc. ........................ 83,125
7,000 Mondavi (Robert) Corp.+ ............................ 214,813
1,000 Northland Cranberries Inc., Cl. A .................. 3,875
2,000 Omni Nutraceuticals Inc ............................ 7,625
700,000 PepsiAmericas Inc.+ ................................ 2,100,000
70,000 Ralcorp Holdings Inc.+ ............................. 857,500
16
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE (CONTINUED)
40,000 Smucker (J.M.) Co., Cl. A ........................ $ 770,000
8,000 Smucker (J.M.) Co., Cl. B ........................ 150,000
32,607 Tootsie Roll Industries Inc. ..................... 1,141,245
109,608 Twinlab Corp.+ ................................... 698,753
48,000 Whitman Corp. .................................... 594,000
----------
10,611,686
----------
HEALTH CARE -- 2.8%
43,500 Block Drug Co. Inc., Cl. A ....................... 1,840,594
50,000 Del Global Technologies Corp.+ ................... 485,938
91,500 Inamed Corp.+ .................................... 3,351,188
5,000 IVAX Corp.+ ...................................... 207,500
34,000 Life Technologies Inc. ........................... 1,734,000
15,000 Nabi+ ............................................ 109,688
48,000 Penwest Pharmaceuticals Co. ...................... 483,000
150,000 STERIS Corp.+ .................................... 1,331,250
3,620 U.S. Physical Therapy Inc.+ ...................... 38,915
100,000 Women First HealthCare Inc.+ ..................... 125,000
----------
9,707,073
----------
HOME FURNISHINGS -- 0.7%
7,000 Bassett Furniture Industries Inc. ................ 88,375
2,000 Bed Bath & Beyond Inc.+ .......................... 72,500
187,550 Carlyle Industries Inc.+ ......................... 96,705
17,000 Foamex International Inc. ........................ 103,063
30,000 La-Z-Boy Chair Co. ............................... 420,000
52,000 Mikasa Inc. ...................................... 572,000
70,000 Oneida Ltd. ...................................... 1,242,500
----------
2,595,143
----------
HOTELS AND GAMING -- 5.1%
440,000 Aztar Corp.+ ..................................... 6,820,000
115,000 Boca Resorts Inc., Cl. A+ ........................ 1,135,625
15,000 Boyd Gaming Corp.+ ............................... 83,438
20,000 Churchill Downs Inc. ............................. 467,500
55,000 Extended Stay America Inc.+ ...................... 508,750
96,000 Gaylord Entertainment Co. ........................ 2,064,000
200,000 Jackpot Enterprises Inc. ......................... 2,525,000
5,000 Jurys Hotel Group plc ............................ 29,955
50,000 Lakes Gaming Inc.+ ............................... 443,750
1,000 Magna Entertainment Corp., Cl. A + ............... 6,516
90,000 Park Place Entertainment Corp.+ .................. 1,096,875
25,000 Penn National Gaming Inc.+ ....................... 340,625
2,000 Station Casinos Inc.+ ............................ 50,000
85,000 Sun International Hotels Ltd.+ ................... 1,700,000
85,000 Trump Hotels & Casino Resorts Inc.+ .............. 239,063
22,000 Youbet.com Inc.+ ................................. 70,125
----------
17,581,222
----------
MARKET
SHARES VALUE
------ ------
METALS AND MINING -- 0.4%
250,000 Echo Bay Mines Ltd.+ ............................. $ 250,000
190,000 Royal Oak Mines Inc.+ ............................ 950
28,000 Stillwater Mining Co.+ ........................... 780,500
545,000 TVX Gold Inc.+ ................................... 340,625
----------
1,372,075
----------
PAPER AND FOREST PRODUCTS -- 1.2%
133,000 Greif Bros. Corp., Cl. A ......................... 4,089,750
----------
PUBLISHING -- 4.1%
121,278 Independent News & Media plc, Dublin ............. 445,792
121,278 Independent News & Media plc, Dublin,
New Shares ..................................... 445,792
12,000 Lee Enterprises Inc. ............................. 279,750
40,000 McClatchy Newspapers Inc., Cl. A ................. 1,325,000
60,000 Media General Inc., Cl. A ........................ 2,913,750
23,000 Meredith Corp. ................................... 776,250
120,000 Penton Media Inc. ................................ 4,200,000
45,000 Pulitzer Inc. .................................... 1,898,438
200,000 Thomas Nelson Inc. ............................... 1,712,500
12,000 Wiley (John) & Sons Inc., Cl. B .................. 282,000
----------
14,279,272
----------
REAL ESTATE -- 1.8%
160,000 Catellus Development Corp.+ ...................... 2,400,000
118,000 Griffin Land & Nurseries Inc.+ ................... 1,452,875
9,000 Gyrodyne Company of America Inc.+ ................ 157,500
3,000 Malan Realty Investors Inc. ...................... 41,813
550,000 Meditrust Companies .............................. 2,062,500
----------
RETAIL -- 3.0%
60,000 Aaron Rents Inc. ................................. 753,750
56,000 Aaron Rents Inc., Cl. A .......................... 875,000
3,000 Borders Group Inc.+ .............................. 46,688
105,000 Burlington Coat Factory Warehouse Corp. .......... 1,135,313
23,000 Coldwater Creek Inc.+ ............................ 692,875
125,000 Ingles Markets Inc., Cl. A ....................... 1,304,688
210,000 Lillian Vernon Corp. ............................. 2,205,000
95,000 Neiman Marcus Group Inc.+ ........................ 2,808,438
5,000 Neiman Marcus Group Inc., Cl. B+ ................. 138,750
120,000 Sports Authority Inc.+ ........................... 135,000
8,500 Weis Markets Inc. ................................ 278,375
----------
10,373,877
----------
SATELLITE -- 0.3%
8,000 Pegasus Communications Corp.+ .................... 392,500
60,000 TCI Satellite Entertainment Inc., Cl. A+ ......... 521,250
----------
913,750
----------
17
<PAGE>
THE GABELLI SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
SPECIALTY CHEMICALS -- 4.2%
45,000 Airgas Inc. ................................. $ 255,938
78,000 Bush Boake Allen Inc.+ ...................... 3,412,500
55,000 Dexter Corp. ................................ 2,640,000
116,000 Ferro Corp. ................................. 2,436,000
7,000 Fuller (H.B.) Co. ........................... 318,938
100,000 General Chemical Group Inc. ................. 68,750
600 MacDermid Inc. .............................. 14,100
120,000 Material Sciences Corp.+ .................... 1,200,000
134,000 McWhorter Technologies Inc.+ ................ 2,604,625
75,000 Omnova Solutions Inc. ....................... 468,750
35,000 Penford Corp ................................ 752,500
11,000 Sybron Chemicals Inc.+ ...................... 240,625
-------------
14,412,726
-------------
TELECOMMUNICATIONS -- 2.1%
10,000 ARC International Corp. ..................... 2,500
9,200 Atlantic Tele-Network Inc. .................. 86,825
75,000 Citizens Communications Co. ................. 1,293,750
47,300 Commonwealth Telephone Enterprises Inc.+ .... 2,226,056
20,000 Commonwealth Telephone
Enterprises Inc., Cl. B+ .................. 950,000
60,000 CoreComm Ltd.+ .............................. 1,170,000
55,000 GST Telecommunications Inc.+ ................ 52,422
6,000 RCN Corp.+ .................................. 152,250
32,000 Rogers Communications Inc., Cl. B, ADR+ ..... 912,000
20,000 Viatel Inc.+ ................................ 571,250
-------------
7,417,053
-------------
TRANSPORTATION -- 0.1%
2,000 Irish Continental Group plc ................. 16,756
50,000 OMI Corp. ................................... 271,875
-------------
288,631
-------------
WIRELESS COMMUNICATIONS -- 0.8%
10,000 Centennial Cellular Corp., Cl. A+ ........... 137,500
100,000 Price Communications Corp.+ ................. 2,356,250
1,500 Rural Cellular Corp., Cl. A+ ................ 114,844
7,000 Teligent Inc., Cl. A ........................ 165,375
100 Tritel Inc., Cl. A+ ......................... 2,969
500 Western Wireless Corp., Cl. A+ .............. 27,250
-------------
2,804,188
-------------
TOTAL COMMON STOCKS ......................... 321,983,263
-------------
MARKET
SHARES VALUE
------ ------
PREFERRED STOCKS -- 0.3%
DIVERSIFIED INDUSTRIAL -- 0.3%
47,000 WHX Corp.,
$3.75 Cv. Pfd., Ser. B .................... $ 810,750
6,000 WHX Corp.,
6.50% Cv. Pfd., Ser. A .................... 129,750
-------------
940,500
-------------
TOTAL PREFERRED STOCKS ...................... 940,500
-------------
PRINCIPAL
AMOUNT
----------
CONVERTIBLE BONDS -- 0.0%
COMPUTER SOFTWARE AND SERVICES -- 0.0%
$ 500 MSC.Software Corp., Sub. Deb. Cv.
7.88%, 08/18/04 ........................... 430
-------------
U.S. GOVERNMENT OBLIGATIONS -- 7.0%
24,537,000 U.S. Treasury Bills,
5.60% to 6.02%++,
due 07/06/00 to 09/28/00 .................. 24,307,456
-------------
TOTAL INVESTMENTS -- 100.5%
(Cost $282,931,231) ....................... 347,231,649
OTHER ASSETS AND
LIABILITIES (NET) -- (0.5%) ............... (1,808,442)
-------------
NET ASSETS -- 100.0%
(15,171,063 shares outstanding) ........... $ 345,423,207
=============
------------------------
(a) Security considered an affiliated holding because the Fund owns at least
5%
of the outstanding shares.
+ Non-income producing security.
++ Represents annualized yield at the date of purchase.
ADR - American Depositary Receipt.
18
<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 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 [SERVICE MARK] 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
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>
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 Pohl
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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GAB443Q200SR
[Photo of Mario J. Gabelli omitted]
THE
GABELLI
SMALL CAP
GROWTH
FUND
THIRD QUARTER REPORT
JUNE 30, 2000
