[PHOTO OMITTED]
Gabelli
International
Growth
Fund,
Inc.
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
[GRAPHIC OMITTED]
Gabelli International Growth Fund, Inc.
Semi-Annual Report - June 30, 1999
* * * *
Morningstar Rated(TM) Gabelli International Growth Fund 4 stars
overall and for the three-year period ended 6/30/99 among 987
international equity funds.
[PHOTO OMITTED]
Caesar Bryan
To Our Shareholders,
Most international markets performed well during the second quarter of
1999. The largest equity market outside the United States, namely Japan, did
quite well, appreciating by 8.4% and bringing its year to date return to 21.2%.
Gains made by most European markets were reduced considerably by the continued
strength of the U.S. dollar. For example, the Dutch market rose by 5.9% in local
currency terms during the quarter. But the strength of the dollar lowered this
to 1.1% in U.S. dollar terms. Among the larger European markets, France has
performed well, rising roughly 5.0%. The United Kingdom, the largest European
market, declined by 0.1% during the quarter. In aggregate, European markets rose
by 0.2% for the second quarter and have fallen by 1.3% for the first six months
of 1999. Emerging markets continued their strong performance. Hong Kong
appreciated by 26.8% and Mexico rose by 16.7%.
Investment Performance
For the second quarter ended June 30, 1999, The Gabelli International
Growth Fund's (the "Fund") total return was 2.8%. The Lipper International Fund
Average and Morgan Stanley Capital International EAFE Index of international
markets had returns of 5.6% and 2.6% respectively, over the same period. The
Morgan Stanley EAFE index is an unmanaged indicator of stock market performance,
while the Lipper Average reflects the average performance of mutual funds
classified in this particular category. The Fund was up 0.8% over the trailing
twelve-month period. The Lipper International Fund Average and Morgan Stanley
EAFE Index rose 4.8% and 7.9%, respectively, over the same twelve-month period.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results. Morningstar proprietary
ratings reflect historical risk adjusted performance as of June 30, 1999 and are
subject to change every month. Morningstar ratings are calculated from a Fund's
three, five and ten-year average annual returns in excess of 90-day T-Bill
returns with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-Bill returns. The top 10% of the funds in a broad
asset class receive five stars, the next 22.5% receive four stars, the next 35%
receive three stars, the next 22.5% receive two stars and the bottom 10% receive
one star.
<PAGE>
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
Quarter
-----------------------------------
1st 2nd 3rd 4th Year
1999: Net Asset Value....... $15.94 $16.38 -- -- --
Total Return.......... 2.0% 2.8% -- -- --
------------------------------------------------------------------------------
1998: Net Asset Value....... $17.03 $17.58 $14.74 $15.63 $15.63
Total Return.......... 18.3% 3.2% (16.2)% 14.7% 17.4%
------------------------------------------------------------------------------
1997: Net Asset Value....... $13.51 $14.67 $15.31 $14.40 $14.40
Total Return.......... 0.7% 8.6% 4.4% (5.9)% 7.3%
------------------------------------------------------------------------------
1996: Net Asset Value....... $11.71 $12.55 $12.53 $13.42 $13.42
Total Return.......... 6.6% 7.2% (0.2)% 7.1% 22.2%
------------------------------------------------------------------------------
1995: Net Asset Value....... -- -- $10.57 $10.98 $10.98
Total Return.......... -- -- 5.7%(b) 3.9% 9.8%(b)
------------------------------------------------------------------------------
--------------------------------------------------------
Average Annual Returns - June 30, 1999 (a)
1 Year .......................................... 0.8%
3 Year .......................................... 12.2%
Life of Fund (b) ................................ 15.3%
--------------------------------------------------------
Dividend History
------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
December 28, 1998 $1.260 $15.49
(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 June 30, 1995.
Note: Investing in foreign securities involves risks not ordinarily associated
with investments in domestic issues, including currency fluctuation, economic
and political risks.
- --------------------------------------------------------------------------------
For the three-year period ended June 30, 1999, the Fund's total return
averaged 12.2% annually versus average annual total returns of 9.5% and 9.1% for
the Lipper International Fund Average and Morgan Stanley EAFE Index,
respectively. Since inception June 30, 1995 through June 30, 1999, the Fund had
a cumulative total return of 77.1%, which equates to an average annual return of
15.3%.
2
<PAGE>
Our Approach
We purchase attractively valued companies, which we believe have the
opportunity to grow earnings more rapidly than the average in that company's
local market. We pay close attention to a company's market position, management
and balance sheet, with particular emphasis on the ability of the company to
finance its growth. Generally, we value a company relative to its local market
but, where appropriate, will attempt to benefit from valuation discrepancies
between markets. Our primary focus is on security selection and not country
allocation, but the Fund will remain well-diversified by sector and geography.
Country allocation is likely to reflect broad economic, financial and currency
trends as well as the relative size of the market.
International Allocation
The accompanying chart presents the Fund's holdings by geographic region
as of June 30, 1999. The geographic allocation will change based on current
global market conditions. Countries and/or regions represented in the chart and
below may or may not be included in the Fund's future portfolio.
HOLDINGS BY GEOGRAPHIC REGION - 6/30/99
[GRAPHIC OMITTED]
[The following table was depicted in a pie chart]
Other Europe 24.0%
United Kingdom 22.4%
Japan 19.4%
Switzerland 13.4%
France 9.2%
Australia 8.5%
Canada 2.3%
United States 1.5%
South Africa 1.3%
COMMENTARY
Investors have concluded that the financial crisis of last fall is over.
One consequence of this conclusion has been the increase in money flowing to
emerging markets, particularly those located in Asia. Following the economic
turmoil that began in July of 1997, most of these countries reacted rapidly.
Domestic demand collapsed, capital investments stopped on a dime and,
consequently, imports dried up. Even though exports did not grow, the trade
balances became surpluses, which in turn liquefied the economies. Eventually
capital flowed in, helping to strengthen the currencies. Confidence improved
and, in time, domestic demand returned.
The improved outlook for emerging market economies was a contributing
factor in improving the outlook for the global economy, which in turn led to a
significant outperformance by cyclical sectors in most international equity
markets. Of course, there were additional reasons behind the move into cyclical
stocks. Foremost was the decision of the European Central Bank to reduce
Euroland interest rates by 0.5%, to 2.5%, at the start of April. This signaled
the determination of the European Central Bank to encourage growth in Euroland.
Also, many of the cyclical sectors of the equity market were priced to
3
<PAGE>
reflect the probability of deflation. Indeed, as the quarter progressed,
investors' fears of deflation increasingly turned to concerns about inflation.
This led to the Federal Reserve Board raising short term U.S. interest rates by
0.25%, to 5.0%, at the end of June.
The biggest economic surprise of the quarter has to have been the report,
announced on June 10, that the Japanese economy grew 1.9% during the first
quarter of 1999, which equates to an annualized rate of 8.0%. These figures were
totally unexpected and the equity markets responded positively to the news.
Looking behind the numbers, much of the rise can be explained by the quarterly
jump of 10.3% in public sector investment reflecting government pump priming.
However, private consumption, which represents about three-fifths of the
economy, rose 1.2% quarter over quarter. This may not sound like much from this
side of the Pacific, but it was the first positive number since the first
quarter of 1998, and certainly a surprise with regard to the rise in
unemployment and the fall in wages.
We believe that the conditions are in place for a sustained upward
movement in the Japanese equity market. Corporations now appear to be embracing
the need to restructure. "Risutora" (re-structuring) will result in improved
profitability for corporate Japan and we believe the agreement between Hitachi
and NEC to merge their "DRAM" operations was a watershed event. These long time
rivals decided to seek profits over market share.
Another bullish signal is that foreign companies are buying Japanese
companies. One example of this was the purchase of International Digital
Communications, a privately held communications company, by Cable & Wireless of
the U.K. Cable & Wireless was the successful acquirer as it outbid NTT. We
anticipate that corporate activity in Japan will accelerate sharply in the
coming year. The ability of companies to offer stock to the shareholders of an
acquired company will serve as one major catalyst for this increased corporate
activity. This basic corporate finance tool is currently not permitted in Japan,
but analysts anticipate that the commercial code will be changed in the near
future to permit paper transactions.
Of course, there are risks to this more optimistic outlook. First, the
economy could continue to deteriorate and the corporate sector could slow their
efforts to improve profitability. However, two recent events have reassured
investors that the authorities remain committed to engineering an economic
turnaround. First, the authorities appear determined to prevent the yen from
strengthening below 120 yen per dollar through intervention. Secondly, the head
of the Bank of Japan has made it clear that interest rates will remain near zero
for the rest of the year. During the quarter, the fund added to its Japanese
weighting which represented nearly 20% of the portfolio by the end of June.
As we have previously mentioned, European markets performed poorly during
the quarter. For example, Italy and Switzerland both fell by more than 5% during
the quarter. The euro was weak,
4
<PAGE>
reflecting sluggish economic growth, turmoil at the European Commission and the
war in Kosovo. However, we believe that the negative influences have run their
course and expect our European equity holdings to rebound in the second half of
the year.
We have outlined the reasons for our enthusiasm regarding European
equities on many occasions in the past. In short, we believe that Europe is
undergoing a transformation brought about by the single market and the single
currency. Merger activity remains robust and 1999 is on target to be a record
year for merger and acquisition activity.
The largest European takeover in history was concluded during the quarter
when Olivetti acquired Telecom Italia. Two of the Fund's four top performing
holdings for the quarter were European companies that were acquired. Safra
Republic Holdings, the Swiss private bank, was bid for by HSBC Holdings and rose
56% for the quarter. Pathe, the French entertainment company, agreed to be
purchased by Vivendi, another portfolio holding, and appreciated 47% during the
quarter. The other two top performers were Japanese stocks. Nintendo rose by 63%
following news of new products and Kadokawa Shoten Publishing appreciated by
53%.
On the other hand, the Fund's performance was adversely affected by its
exposure to a number of pharmaceutical and consumer non-durable companies. For
example, Glaxo Wellcome, AstraZeneca and Roche Holding fell by between 15% and
17%. Other poor performers included media holdings Granada Group and Pearson,
which both retreated by more than 10%. We believe that all of these companies
possess sound fundamentals and retain the characteristics that we seek in
investment candidates and we expect that these qualities will be recognized in
the second half of the year.
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, 1999.
AstraZeneca plc (AZN.L - $38.93 - London Stock Exchange) is a newly formed
company created from the merger of two medium sized pharmaceutical companies,
Astra in Sweden and Zeneca based in the U.K. The combined company is one of the
largest pharmaceutical companies in the world with a particularly strong
position in gastrointestinal, oncology and cardiovascular therapeutic areas.
Following the merger, non-core activities such as specialty chemicals will be
divested.
Compagnie Financiere Richemont AG (RIFZ.S - $1,923.34 - Zurich Stock Exchange)
is one of the world's leading luxury goods companies, with such brand names as
Cartier, Piaget, Montblanc, Karl Lagerfeld
5
<PAGE>
and Alfred Dunhill. The company also has major investments in tobacco and pay
television. Richemont recently swapped its tobacco business, Rothmans
International, in exchange for a 25% stake in British American Tobacco, the
world's second largest tobacco company. Similarly, Richemont has also exchanged
their pay television assets for a 15% stake in Canal +, the French media
company. We believe that these were excellent transactions and show management's
ability to create value.
CRH plc (CRH.L - $17.74 - London Stock Exchange) is a Dublin, Ireland-based
international building materials company. CRH is a leading producer and
distributor of a wide range of building products and materials. CRH's diversity
in its product line and geographic reach keep this company well protected
against a slow down in any one particular product segment or country. This
global presence will contribute to CRH's continued organic growth.
Glaxo Wellcome plc (GLX.L - $27.79 - London Stock Exchange) is one of the
world's premier health care companies. The company has a five percent share of
the global pharmaceutical market with leadership positions in gastrointestinal,
respiratory and viral infection therapies. Glaxo's best-known product, Zantac,
has recently lost patent protection but other drugs are experiencing rapid
growth. One of the company's strengths is the effectiveness of their research
and development effort and Glaxo remains on track to bring three significant
medicines to the market per year from the year 2000 onwards.
Granada Group plc (GAA.L - $18.55 - London Stock Exchange) is a dominant media
and hospitality company in the U.K. The company is focusing its efforts on
building leading brands that offer a full range of products and services in
their markets. Granada's strong management continues to lead an innovative
marketing, positioning and pricing plan which has resulted in strong performance
despite the weaker U.K. economy.
Nestle SA (NESZ.S - $90.09 - Zurich Stock Exchange), based in Switzerland, is
one of the world's leading food companies. Its major business groups include
beverages, milk products, prepared dishes and confectionery. Nestle invented
instant coffee and its brand Nescafe is the world's leading instant coffee.
Other well known brands that Nestle controls include Perrier, Carnation,
Stouffer's, Alcon and L'Oreal. Nestle's sales are spread over the different
regions of the world with particularly strong positions in developing countries
which, we believe, will contribute increasingly to revenues in the future. For
example, twelve of fifteen factories opened in the past three years were located
in emerging markets. We expect fairly strong profit growth in the medium term
after a few years of lackluster performance.
Novartis AG (NOVZN.S - $1,460.19 - Zurich Stock Exchange) is a global leader in
the Life Sciences, operating in over 140 countries. The company's three
divisions consist of health care, agribusiness and consumer health. The health
care division maintains a strong portfolio that is growing through new product
launches. Novartis' agribusiness division has been able to flourish in a
difficult environment by
6
<PAGE>
offering an innovative range of products and services. The Medical Nutrition and
Infant and Baby Nutrition units have driven the consumer health division. As the
integration of Ciba Specialty Chemicals continues, Novartis should continue to
grow profits through innovation as well as realize further cost savings.
Pathe SA (PATP.PA - $120.04 - Paris Stock Exchange) produces films in both
French and English for distribution to theaters around the world. The company
holds interests in distribution companies and operates a chain of over 41 movie
theaters in France and the Netherlands. Pathe also offers pay television
services in the United Kingdom, Ireland and France through its interests in B
Sky B and Canalsatellite. The company has recently agreed to be acquired by
another French firm, Vivendi.
Pearson plc (PSON.L - $20.32 - London Stock Exchange) is a leading global
publisher with many strong brands. The company has tripled the size of its
educational publishing unit through the Simon & Schuster acquisition as well as
seen its Financial Times Group flourish both in print and electronically.
Pearson will continue to grow as the company positions itself ahead of the
trends that are shaping the industry. The company's television business
continues to grow and its Internet content is strengthening.
Roche Holding AG (ROCZg.S - $10,279.25 - Zurich Stock Exchange) is one of the
world's leading health care companies. Apart from the pharmaceuticals, the
company has major positions in vitamins, diagnostics, fragrances and flavors and
orthopedics. The company has recently completed the purchase of Corange for
approximately $11 billion, which we believe will be additive to earnings. This
acquisition will make Roche the largest diagnostic company. We expect Roche to
introduce a number of new drugs during the next few years, which should result
in stronger earnings growth.
Vodafone AirTouch plc (VOD - $197.00 - NYSE) has created a dominant global
mobile communications service provider through the completion of its recent
acquisition of AirTouch in the United States. The company has grown its customer
base by over two million subscribers over the past year to command upwards of
37% of the wireless market, with nearly half of those subscribers outside of the
United Kingdom. Vodafone has engaged in 47 new roaming agreements in ten
countries around the world, bringing its global reach to 91 countries. The
company continues to benefit from the increased usage of wireless networks and
the economies of scale of a larger network.
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 International Growth Fund and other Gabelli Funds are
available through the no-transaction fee programs at many major discount
brokerage firms.
7
<PAGE>
Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Asset Management Inc.,
the Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and
other current news. You can send us e-mail at [email protected].
In Conclusion
We continue to look for well-established companies that operate in
businesses that are fairly stable and have a high barrier to entry. These
companies should have strong balance sheets, generate or have the potential to
generate free cash flow and have managements that are shareholder sensitive.
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 GIGRX. Please call us during the
business day for further information.
Sincerely,
/s/ Caesar Bryan
Caesar Bryan
President and Portfolio Manager
July 15, 1999
---------------------------------------------------------------------
Top Ten Holdings
June 30, 1999
Compagnie Financiere Richemont Pathe SA
Vodafone AirTouch plc Glaxo Wellcome plc
Novartis AG Nestle SA
CRH plc Roche Holding AG
Granada Group plc Pearson plc
---------------------------------------------------------------------
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.
8
<PAGE>
Gabelli International Growth Fund, Inc.
Portfolio of Investments -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 100.8%
Broadcasting -- 8.8%
6,000 Audiofina........................... $ 258,683 $ 288,035
36,000 Granada Group plc................... 536,822 667,910
1,650 NRJ SA.............................. 241,087 371,460
5,400 Pathe SA............................ 402,104 648,217
40,000 Publishing and Broadcasting Ltd..... 179,460 263,974
29,000 Tokyo Broadcasting System Inc....... 329,674 419,296
----------- -----------
1,947,830 2,658,892
----------- -----------
Building and Construction -- 3.7%
45,000 CRH plc............................. 581,567 798,206
30,500 Sekisui House Ltd................... 323,034 329,100
----------- -----------
904,601 1,127,306
----------- -----------
Business Services -- 4.0%
10,000 Asatsu-DK Inc....................... 267,837 264,384
5,833 Reuters Holdings plc, ADR .......... 434,245 461,565
6,000 Vivendi............................. 510,693 486,039
----------- -----------
1,212,775 1,211,988
----------- -----------
Cable -- 2.1%
3,500 NTL Inc.+........................... 294,583 301,656
75,000 Telewest Communications plc+ ....... 225,967 336,343
----------- -----------
520,550 637,999
----------- -----------
Communications Equipment -- 2.1%
10,500 Ericsson (L.M.) Telephone Co. ....... 286,419 336,548
2,000 Mannesmann AG........................ 267,224 298,451
----------- -----------
553,643 634,999
----------- -----------
Computer Software and Services -- 1.8%
2,000 Obic Co. Ltd......................... 310,895 546,944
----------- -----------
Consumer Products - 11.6%
2,500 Christian Dior SA.................... 375,174 407,353
520 Compagnie Financiere Richemont AG.... 729,380 1,000,136
14,000 KAO Corp............................. 287,579 393,271
38,000 Mizuno Corp.......................... 152,438 143,792
4,000 Nintendo Co. Ltd..................... 282,942 562,146
8,000 Sanofi SA............................ 390,237 339,495
550 Swatch Group AG...................... 334,134 370,066
31,071 Unilever plc......................... 322,368 276,476
----------- -----------
2,874,252 3,492,735
----------- -----------
Diversified Industrial -- 1.3%
2,500 Oerlikon-Buhrle Holding AG........... 460,989 379,522
----------- -----------
Electronics -- 1.3%
20,000 Matsushita Electronic
Industrial Co. Ltd. ............... 370,816 388,314
----------- -----------
Energy and Utilities -- 2.3%
23,000 BP Amoco plc......................... 337,165 412,219
48,000 ENI SpA.............................. 324,228 286,611
----------- -----------
661,393 698,830
----------- -----------
Entertainment -- 1.9%
6,000 Daiichikosho Co. Ltd................. 162,815 169,536
50,000 EMI Group plc........................ 815,703 401,168
----------- -----------
978,518 570,704
----------- -----------
Equipment and Supplies -- 2.5%
21,000 Kanamoto Co. Ltd..................... 158,772 162,571
10,500 THK Co. Ltd.......................... 213,345 242,903
16,000 Toyo Seikan Kaisha Ltd............... 308,053 359,562
----------- -----------
680,170 765,036
----------- -----------
Financial Services -- 13.7%
50,000 Banca Commerciale Italiana........... 280,176 365,380
16,003 Bank of Ireland...................... 272,771 267,338
25,000 Bank of Scotland..................... 269,806 331,023
24,000 CGU plc.............................. 369,073 346,723
89,492 Colonial Ltd......................... 278,959 316,916
8,888 Invik & Co. AB, B Free .............. 427,980 522,194
3,000 Jafco Co. Ltd........................ 152,430 198,288
18,000 Prudential Corp. plc................. 271,520 265,008
7,000 Safra Republic Holdings SA .......... 338,000 462,000
15,000 Schroders plc........................ 438,989 306,433
6,500 SCOR SA.............................. 393,641 322,428
23,000 Skandia Forsakrings AB .............. 174,411 430,146
----------- -----------
3,667,756 4,133,877
----------- -----------
Food and Beverage -- 4.4%
170,000 Foster's Brewing Group Ltd........... 338,126 479,139
800 Groupe Danone........................ 196,268 206,255
7,000 Nestle SA, ADR....................... 491,469 630,616
----------- -----------
1,025,863 1,316,010
----------- -----------
Health Care -- 10.5%
14,126 AstraZeneca plc, London ............. 544,796 549,970
500 AstraZeneca plc, Stockholm........... 19,222 19,341
23,000 Glaxo Wellcome plc................... 495,769 639,174
10,000 Kyorin Pharmaceutical Co. Ltd........ 238,127 248,686
550 Novartis AG.......................... 693,834 803,105
60 Roche Holding AG..................... 605,516 616,755
20,000 SmithKline Beecham plc .............. 299,557 259,932
----------- -----------
2,896,821 3,136,963
----------- -----------
See accompanying notes to financial statements.
9
<PAGE>
Gabelli International Growth Fund, Inc.
Portfolio of Investments (Continued) -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
Metals and Mining -- 3.5%
6,500 Anglogold Ltd....................... $ 185,657 $ 172,130
31,081 Antofagasta Holding plc ............ 179,741 142,570
6,500 Barrick Gold Corp................... 134,888 125,938
37,500 Harmony Gold Mining Ltd............. 181,434 176,490
7,500 Harmony Gold Mining Ltd., ADR....... 46,406 36,328
225,000 Orogen Minerals Ltd................. 285,175 244,248
13,000 Placer Dome Inc..................... 186,399 153,563
----------- -----------
1,199,700 1,051,267
----------- -----------
Publishing -- 9.2%
30,000 Arnoldo Mondadori Editore SpA....... 305,467 519,762
91,573 Independent News & Media plc........ 497,518 439,131
1,700 Kadokawa Shoten Publishing Co. Ltd.. 195,072 346,921
60,037 News Corp. Ltd.+.................... 352,016 512,246
30,000 Pearson plc......................... 416,954 609,555
30,000 Schibsted ASA....................... 538,173 337,261
----------- -----------
2,305,200 2,764,876
----------- -----------
Retail -- 1.1%
5,000 Ito Yokado Co. Ltd.................. 315,133 334,611
----------- -----------
Telecommunications -- 10.1%
37,000 Cable & Wireless plc. .............. 451,794 471,542
2,000 Global Telesystems Group Inc........ 155,125 162,000
15 Japan Telecom Co. Ltd. ............. 232,073 213,159
50 Nippon Telegraph & Telephone Corp... 403,895 582,471
25,000 Rogers Communications Inc., Cl. B+.. 465,336 401,563
700 Swisscom AG+........................ 176,938 263,414
49,300 Telecom Italia SpA.................. 409,829 512,485
5,590 Telefonica de Espana................ 255,432 269,275
30,000 Telstra Corp. Ltd................... 161,380 171,908
----------- -----------
2,711,802 3,047,817
----------- -----------
Transportation -- 0.9%
15,637 MIF Ltd.+........................... 188,903 270,143
----------- -----------
Wireless Communications -- 4.0%
60,000 Telecom Italia Mobile SpA .......... 271,587 358,264
4,335 Vodafone AirTouch plc, ADR.......... 249,423 853,995
----------- -----------
521,010 1,212,259
----------- -----------
TOTAL COMMON STOCKS................. 26,308,620 30,381,092
----------- -----------
OPTIONS -- 0.0%
Metals and Mining -- 0.0%
16,000 Durban Roodepoort Deep Ltd.+........ 62,700 3,580
----------- -----------
TOTAL
INVESTMENTS--100.8%............... $26,371,320 30,384,672
===========
Other Assets and
Liabilities (Net)-- (0.8)% ...... (243,221)
-----------
NET ASSETS -- 100.0%
(1,840,108 shares outstanding) ... $30,141,451
===========
NET ASSET VALUE,
Offering and Redemption
Price Per Share................... $16.38
======
For Federal tax purposes:
Aggregate cost....... $26,371,320
-----------
Gross unrealized appreciation $5,507,586
Gross unrealized depreciation (1,494,234)
-----------
Net unrealized appreciation $4,013,352
===========
Net
Unrealized
Principal Settlement Appreciation/
Amount Date (Depreciation)
------ ---- --------------
FORWARD FOREIGN EXCHANGE CONTRACTS
475,145(a) Sold Australian Dollars
in exchange for USD 314,509........ 07/02/99 $(2,766)
61,814(b) Sold British Pounds
in exchange for USD 97,440......... 07/06/99 (185)
18,913(c) Sold Euros
in exchange for USD 19,505......... 07/02/99 32
19,207,433(d) Deliver Japanese Yen
in exchange for USD 158,692........ 07/01/99 5
-------
TOTAL FORWARD FOREIGN
EXCHANGE CONTRACTS ................ $(2,914)
=======
- ----------
(a) -- Principal amount denoted in Austrialian Dollars.
(b) -- Principal amount denoted in British Pounds.
(c) -- Principal amount denoted in Euros.
(d) -- Principal amount denoted in Japanese Yen.
+ -- Non-income producing security.
ADR -- American Depositary Receipt.
USD -- U.S. Dollars.
% of
Market Market
Geographic Diversification Value Value
- -------------------------- ----- -----
Europe 69.0% $20,957,038
Japan 19.4% 5,905,954
Asia/Pacific Rim 6.5% 1,988,432
North America 3.8% 1,144,719
South Africa 1.3% 388,529
------ -----------
100.0% $30,384,672
====== ===========
See accompanying notes to financial statements.
10
<PAGE>
Gabelli International Growth Fund, Inc.
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
================================================================================
Assets:
Investments, at value (Cost $26,371,320) .................. $30,384,672
Foreign currency, at value (Cost $184,997) ................ 183,827
Dividends, interest and reclaims receivable ............... 44,665
Receivable for investments sold ........................... 798,483
Receivable for Fund shares sold ........................... 177,449
Deferred organizational expenses .......................... 19,535
-----------
Total Assets .............................................. 31,608,631
-----------
Liabilities:
Payable for investments purchased ......................... 840,718
Payable for Fund shares redeemed .......................... 3,632
Payable for investment advisory fees ...................... 24,432
Payable for distribution fees ............................. 6,084
Payable to custodian ...................................... 535,912
Other accrued expenses and liabilities .................... 53,488
Net unrealized depreciation on forward
foreign exchange contracts .............................. 2,914
-----------
Total Liabilities ......................................... 1,467,180
-----------
Net Assets applicable to 1,840,108
shares outstanding ...................................... $30,141,451
===========
Net Assets consist of:
Capital stock, at par value ............................... $ 1,840
Additional paid-in capital ................................ 25,113,435
Accumulated net investment income ......................... 16,804
Accumulated net realized gain on investments
and foreign currency transactions ....................... 998,198
Net unrealized appreciation on investments
and foreign currency transactions ....................... 4,011,174
-----------
Total Net Assets .......................................... $30,141,451
===========
Net Asset Value, offering and redemption
price per share ($30,141,451/1,840,108
shares outstanding; 1,000,000,000 shares
authorized of $0.001 par value) ......................... $16.38
======
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
================================================================================
Investment Income:
Dividends (net of foreign taxes of $31,162) ................ $ 299,126
Interest ................................................... 57
----------
Total Investment Income .................................... 299,183
----------
Expenses:
Investment advisory fees ................................... 140,697
Distribution fees .......................................... 35,174
Legal and audit fees ....................................... 21,193
Custodian fees ............................................. 20,825
Shareholder services fees .................................. 16,994
Shareholder report expenses ................................ 12,160
Registration fees .......................................... 10,333
Organizational expenses .................................... 9,769
Interest expense ........................................... 5,976
Directors' fees ............................................ 5,445
Miscellaneous expenses ..................................... 4,120
----------
Total Expenses ............................................. 282,686
----------
Net Investment Income ...................................... 16,497
----------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments and
foreign currency transactions ............................ 1,023,186
Net change in unrealized appreciation
on investments and foreign currency
transactions ............................................. 293,129
----------
Net realized and unrealized gain
on investments and foreign
currency transactions .................................... 1,316,315
----------
Net increase in net assets resulting
from operations .......................................... $1,332,812
==========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
----------- ------------
<S> <C> <C>
Operations:
Net investment income / (loss) ................................... $ 16,497 $ (39,965)
Net realized gain on investments and foreign currency transactions 1,023,186 2,058,312
Net change in unrealized appreciation on investments and
foreign currency transactions .................................. 293,129 749,979
----------- ------------
Net increase in net assets resulting from operations ............. 1,332,812 2,768,326
----------- ------------
Distributions to shareholders:
In excess of net investment income ............................... -- (54,801)
Net realized gain on investments ................................. -- (1,976,054)
----------- ------------
Total distributions to shareholders .............................. -- (2,030,855)
----------- ------------
Capital share transactions:
Net increase in net assets from capital share transactions ....... 2,017,831 7,920,259
----------- ------------
Net increase in net assets ....................................... 3,350,643 8,657,730
Net Assets:
Beginning of period .............................................. 26,790,808 18,133,078
----------- ------------
End of period .................................................... $30,141,451 $ 26,790,808
=========== ============
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
Gabelli International Growth Fund, Inc.
Notes to Financial Statements (Unaudited)
================================================================================
1. Organization. The Gabelli International Growth Fund, Inc. (the "Fund") was
organized on May 25, 1994 as a Maryland corporation. The Fund is a diversified,
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Fund's primary objective is long
term capital appreciation. The Fund commenced investment operations on June 30,
1995.
2. Significant Accounting Policies. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day, except for open short positions, which are
valued at the last asked price). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by Gabelli Funds, LLC
(the successor to Gabelli Funds, Inc. as investment adviser) (the "Adviser").
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board of Directors.
Short term debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Directors determine such does not reflect
the securities' fair value, in which case these securities will be valued at
their fair value as determined by the Directors. Debt instruments having a
greater maturity are valued at the highest bid price obtained from a dealer
maintaining an active market in those securities. Options are valued at the last
sale price on the exchange on which they are listed. If no sales of such options
have taken place that day, they will be valued at the mean between their closing
bid and asked prices.
Repurchase Agreements. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Bank of
New York, with member banks of the Federal Reserve System or with other brokers
or dealers that meet credit guidelines established by the Directors. Under the
terms of a typical repurchase agreement, the Fund takes possession of an
underlying debt obligation subject to an obligation of the seller to repurchase,
and the Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. The Fund will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Fund in each agreement. The Fund will make payment for such securities
only upon physical delivery or upon evidence of book entry transfer of the
collateral to the account of the custodian. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to maintain the adequacy of the collateral. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
12
<PAGE>
Gabelli International Growth Fund, Inc.
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
Forward Foreign Exchange Contracts. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency transactions. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
Foreign Currency Translation. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Fund
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
Securities Transactions and Investment Income. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
Provision for Income Taxes. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
13
<PAGE>
Gabelli International Growth Fund, Inc.
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties. If the value of more than 50%
of the Fund's total assets at the close of any taxable year consists of stocks
or securities of non-U.S. corporations, the Fund is permitted and may elect to
treat any non-U.S. taxes paid by it as paid by its shareholders.
3. Investment Advisory Agreement. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Directors of the Fund who are its affiliates.
4. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 1999, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $35,174, or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly.
5. Organizational Expenses. The organizational expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
6. Portfolio Securities. Purchases and sales of securities for the six months
ended June 30, 1999, other than short term securities, aggregated $10,468,988
and $8,038,987, respectively.
7. Transactions with Affiliates. During the six months ended June 30, 1999, the
Fund paid brokerage commissions of $100 to Gabelli & Company, Inc. and its
affiliates.
8. Line of Credit. The Fund has access to an unsecured line of credit from the
custodian for temporary borrowing purposes. Borrowings under this arrangement
bear interest at 0.75% above the Federal Funds rate on outstanding balances.
There were no borrowings outstanding at June 30, 1999.
The average daily amount of borrowings outstanding during the six months ended
June 30, 1999, was $854,267, with a related weighted average interest rate of
5.60%. The maximum amount borrowed at any time during the six months ended June
30, 1999 was $1,700,000.
9. Capital Stock Transactions. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
----------------------- ------------------------
Shares Amount Shares Amount
-------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................... 908,984 $ 14,512,436 2,674,592 $ 45,153,618
Shares issued upon reinvestment of dividends .. -- -- 126,101 1,953,306
Shares redeemed ............................... (782,809) (12,494,605) (2,345,920) (39,186,665)
-------- ------------ ---------- ------------
Net increase ................................ 126,175 $ 2,017,831 454,773 $ 7,920,259
======== ============ ========== ============
</TABLE>
14
<PAGE>
Gabelli International Growth Fund, Inc.
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 ---------------------------------------------------
(Unaudited) 1998 1997 1996 1995+
---------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period ............ $ 15.63 $ 14.40 $ 13.42 $ 10.98 $ 10.00
---------- ---------- ---------- ---------- ----------
Net investment income / (loss) .................. 0.01 (0.02) (0.13) (0.15)(a) (0.03)(a)
Net realized and unrealized gain
on investments ................................ 0.74 2.51 1.11 2.59 1.01
---------- ---------- ---------- ---------- ----------
Total from investment operations ................ 0.75 2.49 0.98 2.44 0.98
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
In excess of net investment income .............. -- (0.03) -- -- --
Net realized gain on investments ................ -- (1.23) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions ............................. -- (1.26) -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .................. $ 16.38 $ 15.63 $ 14.40 $ 13.42 $ 10.98
========== ========== ========== ========== ==========
Total return++ .................................. 4.8% 17.4% 7.3% 22.2% 9.8%
========== ========== ========== ========== ==========
Ratios to average net assets and supplemental data:
Net assets, end of period (in 000's) ............ $ 30,141 $ 26,791 $ 18,133 $ 12,815 $ 2,096
Ratio of net investment income / (loss)
to average net assets (c) ..................... 0.12%(b) (0.14)% (0.82)% (1.21)% (1.19)%(b)
Ratio of operating expenses
to average net assets (c) ..................... 2.01%(b) 1.98% 2.46% 2.72% 2.75%(b)
Portfolio turnover rate ......................... 28% 52% 63% 55% 30%
</TABLE>
- ----------
+ From commencement of operations on June 30, 1995.
++ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the
period including reinvestment of dividends. Total return for the period of
less than one year is not annualized.
(a) Based on average month-end shares outstanding.
(b) Annualized.
(c) The Fund incurred interest expense for the periods ended June 30, 1999,
December 31, 1998 and December 31, 1997. If interest expense had not been
incurred, the ratios of operating expenses to average net assets would
have been 1.97%, 1.96% and 2.44%, respectively. Before reimbursement of
Fund expenses by the Adviser, the ratios of operating expenses and net
investment loss to average net assets would have been 3.62% and (2.12)%
for 1996 and 8.10% and (6.54)% for 1995 (annualized), respectively.
See accompanying notes to financial statements.
15
<PAGE>
Gabelli International Growth Fund, Inc.
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 Werner J. Roeder, MD
Chairman and Chief Medical Director
Investment Officer Lawrence Hospital
Gabelli Asset Management Inc.
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International, Inc.
Karl Otto Pohl
Former President
Deutsche Bundesbank
Officers and Portfolio Managers
Caesar Bryan Bruce N. Alpert
President and Vice President
Portfolio Manager and Treasurer
James E. McKee
Secretary
Distributor
Gabelli & Company, Inc.
Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company
Legal Counsel
Willkie Farr & Gallagher
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of
Gabelli International Growth Fund, Inc. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB009Q299SR
