N-CSR 1 global_ncsr1205.txt GAMCO GLOBAL SERIES 12-31-05 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07896 ------------- GAMCO Global Series Funds, Inc. ------------------------------------------------------- (Exact name of registrant as specified in charter) One Corporate Center Rye, New York 10580-1422 ------------------------------------------------------- (Address of principal executive offices) (Zip code) Bruce N. Alpert Gabelli Funds, LLC One Corporate Center Rye, New York 10580-1422 ------------------------------------------------------- (Name and address of agent for service) registrant's telephone number, including area code: 1-800-422-3554 ---------------- Date of fiscal year end: December 31 Date of reporting period: December 31, 2005 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND ANNUAL REPORT DECEMBER 31, 2005 TO OUR SHAREHOLDERS, The Sarbanes-Oxley Act requires a Fund's principal executive and financial officers to certify the entire contents of the semi-annual and annual shareholder reports in a filing with the Securities and Exchange Commission on Form N-CSR. This certification would cover the portfolio manager's commentary and subjective opinions if they are attached to or a part of the financial statements. Many of these comments and opinions would be difficult or impossible to certify. Because we do not want our portfolio managers to eliminate their opinions and/or restrict their commentary to historical facts, we have separated their commentary from the financial statements and investment portfolio and have sent it to you separately. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com/funds. Enclosed are the audited financial statements and the investment portfolio as of December 31, 2005 with a description of factors that affected the performance during the past year. PERFORMANCE DISCUSSION We are pleased to report that last year, your Fund not only beat its benchmark, but also finished first out of the entire universe of 75 convertible securities funds monitored by Lipper*. For the five and ten year periods ending December 31, 2005, the Fund's Class AAA Shares ranked 30th and 31st out of 56 and 32 convertible securities funds monitored by Lipper, respectively. During the twelve month period ended December 31, 2005, the Fund generated a total rate of return of +8.0%, which includes reinvestment of its regular quarterly distributions of three cents per share. This compares to its benchmark, the Merrill Lynch Global 300 Convertible Index, which gained +0.2% in 2005. In addition to outperforming its benchmark last year, the Fund outperformed investment grade (-3.7%) and speculative grade bonds (+1.5%) and participated in 84% of the return from global equity markets (+9.5%) with less risk. Over this period, firmer global equity markets, and our over weight allocations to energy and Japan assisted performance. Forced liquidations by convertible arbitrage hedge funds, wider credit spreads, and a stronger U.S. dollar hindered results, while the impact of equity market volatility and long term interest rates were broadly neutral. The Fund's top five performing investments in 2005, which were in the portfolio as of the beginning of the year, included Arch Coal Inc. (+115%), Heiwa Real Estate (+107%), Mitsui Fudosan Co. Ltd. (+52%), Futaba Industrial Co. Ltd. (+36%), and Hon Hai Precision Industry Co. Ltd. (+31%). Disappointments included General Motors Corp. (-35%), Liberty Media Corp. exchangeable into Viacom (-24%), Elektrim Financial BV (-16%), Standard Motor Products Inc. (-13%), and Sovereign Bancorp. Inc. (-11%). Sincerely yours, /s/ Bruce N. Alpert Bruce N. Alpert President February 13, 2006 * Lipper, a Reuters company, is a leading provider of mutual fund industry data, classifies funds in their appropriate investment category, and monitors fund performance. [GRAPHIC OMITTED] PLOT POINTS FOLLOW: COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND CLASS AAA SHARES, THE LIPPER CONVERTIBLE SECURITIES FUND AVERAGE AND THE UBS GLOBAL CONVERTIBLE INDEX GAMCO Global Convertible UBS Global MSCI World Securities Fund Class AAA Shares Convertible Index Free Index 2/3/94 $10,000 $10,000 $10,000 12/31/94 10,090 9,709 9,863 12/31/95 11,363 11,146 11,910 12/31/96 11,985 11,883 13,520 12/31/97 12,323 12,057 15,632 12/31/98 13,388 14,544 19,442 12/31/99 20,229 19,734 24,268 12/31/00 17,397 17,683 21,070 12/31/01 15,093 16,633 17,526 12/31/02 14,361 16,533 14,040 12/31/03 17,446 20,595 18,688 12/31/04 19,479 22,482 21,439 12/31/05 21,037 22,496 23,474 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. COMPARATIVE RESULTS -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2005 (A) ----------------------------------------------------
Since Inception QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (2/3/94) ------------------------------------------------------------------------------------------------------------------- GAMCO GLOBAL CONVERTIBLE FUND CLASS AAA ............. 4.17% 8.00% 13.57% 3.87% 6.35% 6.44% Merrill Lynch Global 300 Convertible Index .......... 1.39 0.18 9.43 3.97 6.00 N/A* UBS Global Convertible Index ........................ 1.35 0.06 10.81 4.94 7.68 7.31 MSCI World Free Index ............................... 3.06 9.49 18.69 2.18 7.02 7.42 Class A ............................................. 4.16 8.16 13.60 3.89 6.36 6.45 (1.88)(b) 1.97(b) 11.38(b) 2.68(b) 5.74(b) 5.93(b) Class B ............................................. 4.03 7.29 12.79 3.15 5.98 6.12 (0.97)(c) 2.29(c) 12.00(c) 2.79(c) 5.98(c) 6.12(c) Class C ............................................. 3.98 7.19 12.77 3.29 6.05 6.19 2.98(c) 6.19(c) 12.77(c) 3.29(c) 6.05(c) 6.19(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. OTHER SHARE CLASSES ARE AVAILABLE AND HAVE DIFFERENT PERFORMANCE CHARACTERISTICS. INVESTING IN FOREIGN SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON MAY 2, 2001, MARCH 28, 2001 AND NOVEMBER 26, 2001, RESPECTIVELY. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. THE UBS (FORMERLY WARBURG DILLON REED) GLOBAL CONVERTIBLE INDEX, THE MERRILL LYNCH GLOBAL 300 CONVERTIBLE INDEX AND THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD FREE INDEX ARE UNMANAGED INDICATORS OF INVESTMENT PERFORMANCE. (b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF THE PERIOD. (c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT THE END OF THE PERIOD SHOWN FOR CLASS B AND CLASS C SHARES, RESPECTIVELY. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES. * THERE IS NO DATA AVAILABLE FOR THE MERRILL LYNCH GLOBAL 300 CONVERTIBLE INDEX PRIOR TO DECEMBER 31, 1994. -------------------------------------------------------------------------------- 2 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND DISCLOSURE OF FUND EXPENSES (UNAUDITED) For the Six Month Period from July 1, 2005 through December 31, 2005 EXPENSE TABLE ================================================================================ We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund's gross income, directly reduce the investment return of a fund. When a fund's expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The Expense Table below illustrates your Fund's costs in two ways: ACTUAL FUND RETURN: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The "Ending Account Value" shown is derived from the Fund's ACTUAL return during the past six months, and the "Expenses Paid During Period" shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading Expenses Paid During Period to estimate the expenses you paid during this period. HYPOTHETICAL 5% RETURN: This section provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case -- because the hypothetical return used is NOT the Fund's actual return -- the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The "Annualized Expense Ratio" represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the year ended December 31, 2005. Beginning Ending Annualized Expenses Account Value Account Value Expense Paid During 07/01/05 12/31/05 Ratio Period* -------------------------------------------------------------------------------- THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Class AAA $1,000.00 $1,107.80 2.15% $11.42 Class A $1,000.00 $1,107.60 2.21% $11.74 Class B $1,000.00 $1,103.80 2.92% $15.48 Class C $1,000.00 $1,104.30 2.81% $14.90 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,014.37 2.15% $10.92 Class A $1,000.00 $1,014.06 2.21% $11.22 Class B $1,000.00 $1,010.49 2.92% $14.80 Class C $1,000.00 $1,011.04 2.81% $14.24 * Expenses are equal to the Fund's annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. 3 SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED) The following table presents portfolio holdings as a percent of total net assets as of December 31, 2005: THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND Electronics ........................................ 12.5% Financial Services ................................. 11.2% Health Care ........................................ 8.8% Real Estate ........................................ 8.4% Telecommunications ................................. 7.7% Metals and Mining .................................. 6.5% Diversified Industrial ............................. 6.4% Automotive: Parts and Accessories .................. 5.6% Communications Equipment ........................... 5.2% Energy and Utilities ............................... 4.7% Products ........................................... 3.5% Hotels and Gaming .................................. 3.5% Broadcasting ....................................... 3.2% Equipment and Supplies ............................. 2.6% Business Services .................................. 1.4% Transportation ..................................... 1.3% Automotive ......................................... 1.2% Entertainment ...................................... 1.1% Paper and Forest Products .......................... 0.7% Other Assets and Liabilities - (Net) ............... 4.5% ------ 100.0% ====== THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI (800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330. PROXY VOTING The Fund files Form N-PX with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of the Fund's proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities are available without charge, upon request, (i) by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities and Exchange Commission's website at www.sec.gov. 4 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005 ================================================================================ PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------- CONVERTIBLE CORPORATE BONDS -- 73.1% AUTOMOTIVE: PARTS AND ACCESSORIES -- 5.6% $ 40,000,000(b) Futaba Industrial Co. Ltd., Cv., Zero Coupon, 09/30/09 ....... $ 385,017 $ 474,033 ----------- ----------- 125,000 Standard Motor Products Inc., Sub. Deb. Cv., 6.750%, 07/15/09 ................. 125,000 106,875 20,000,000(b) Suzuki Motor Corp., Cv., Zero Coupon, 03/31/10 ............ 216,436 214,072 ----------- ----------- 726,453 794,980 ----------- ----------- BUSINESS SERVICES -- 1.4% 126,600(c) SR Teleperformance, Cv., 3.250%, 01/01/08 ................. 182,676 197,052 ----------- ----------- COMMUNICATIONS EQUIPMENT -- 5.2% 450,000 Agere Systems Inc., Sub. Deb. Cv., 6.500%, 12/15/09 ................. 475,035 444,937 250,000 Cypress Semiconductor Corp., Sub. Deb. Cv., 1.250%, 06/15/08 ................. 279,150 284,375 ----------- ----------- 754,185 729,312 ----------- ----------- CONSUMER PRODUCTS -- 3.5% 170,000 Church & Dwight Co. Inc., Deb. Cv., 5.250%, 08/15/33 ................. 196,418 205,488 250,000 Mens Warehouse Inc., Cv., 3.125%, 10/15/23 ............ 293,818 291,250 ----------- ----------- 490,236 496,738 ----------- ----------- DIVERSIFIED INDUSTRIAL -- 5.0% 400,000 Roper Industries Inc., Cv., 1.481%, 01/15/34 ................. 167,572 221,000 30,000,000(b) Tokai Carbon Co. Ltd., Cv.,Zero Coupon, 08/08/08 ......................... 285,076 294,514 65,000 Walter Industries Inc., Sub. Deb. Cv., 3.750%, 05/01/24 ................. 175,587 184,762 ----------- ----------- 628,235 700,276 ----------- ----------- ELECTRONICS -- 12.5% 250,000 Asia Optical Co., Cv., Zero Coupon, 10/14/08 ......................... 289,748 308,750 300,000 Edo Corp., Sub. Deb. Cv., 4.000%, 11/15/25 ................. 297,759 305,625 40,000,000(b) Hamamatsu Photonics KK, Cv., Zero Coupon, 09/30/09 ......................... 430,456 521,907 300,000 Hon Hai Precision Industry Co. Ltd., Cv., Zero Coupon, 08/08/08 ................. 350,802 494,517 PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------- $ 5,000,000(b) Ibiden Co. Ltd., Cv., Zero Coupon, 09/30/14 ......................... $ 52,755 $ 128,746 ----------- ----------- 1,421,520 1,759,545 ----------- ----------- ENERGY AND UTILITIES -- 1.6% 100,000 Cal Dive International Inc., Cv., 3.250%, 12/15/25 ......................... 126,119 135,000 100,000 Hanover Compressor Co., Cv., 4.750%, 03/15/08 ............ 95,971 95,500 ----------- ----------- 222,090 230,500 ----------- ----------- ENTERTAINMENT -- 1.1% 200,000 Liberty Media Corp., Deb. Cv., 3.250%, 03/15/31 (a) ............. 200,000 151,750 ----------- ----------- EQUIPMENT AND SUPPLIES -- 2.6% 275,000 Cooper Cameron Corp., Cv., 1.500%, 05/15/24 ................. 292,198 360,250 ----------- ----------- FINANCIAL SERVICES -- 7.2% 75,000 Affiliated Managers Group Inc., Deb Cv., 3.890%, 02/25/33 ......................... 131,538 142,656 150,000 First Pacific Finance, Cv., Zero Coupon, 01/18/10 ............ 173,442 179,854 30,000,000(b) Mie Bank Ltd., Sub. Deb. Cv., 1.800%, 09/29/06 ................. 333,286 361,216 250,000 Repcon Luxembourg SA, Cv., 4.500%, 01/26/11 ................. 293,024 329,300 ----------- ----------- 931,290 1,013,026 ----------- ----------- HEALTH CARE -- 6.2% 375,000 Fisher Scientific International Inc., Sub. Deb. Cv., ............. 412,506 374,531 250,000 Manor Care Inc., Cv., 2.625%, 04/15/23 ................. 299,358 333,750 10,000,000(b) Rohto Pharmaceutical Co., Cv., Zero Coupon, 09/30/08 ............ 113,258 167,041 ----------- ----------- 825,122 875,322 ----------- ----------- HOTELS AND GAMING -- 3.5% 200,000(d) Hilton Group Finance Jersey Ltd., Cv., 3.375%, 10/02/10 ............ 400,391 493,058 ----------- ----------- METALS AND MINING -- 3.0% 300,000 Agnico-Eagle Mines Ltd., Sub. Deb. Cv., 4.500%, 02/15/12 ................. 303,657 425,250 ----------- ----------- REAL ESTATE -- 8.4% 20,000,000(b) Heiwa Real Estate, Cv., Zero Coupon, 06/24/08 ............ 199,403 360,877 30,000,000(b) Kyoritsu Maintenance Co. Ltd., Cv., Zero Coupon, 09/30/09 ......................... 301,159 459,433 See accompanying notes to financial statements. 5 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------- CONVERTIBLE CORPORATE BONDS (CONTINUED) REAL ESTATE (CONTINUED) $ 26,000,000(b) Mitsui Fudosan Co. Ltd., Cv., Zero Coupon, 07/30/10 ............ $ 279,135 $ 369,990 ----------- ----------- 779,697 1,190,300 ----------- ----------- TELECOMMUNICATIONS -- 5.0% 150,000(d) Cable & Wireless plc, Cv., 4.000%, 07/16/10 ................. 265,503 266,705 225,000 Harris Corp., Deb. Cv., 3.500%, 08/15/22 ................. 228,552 434,250 ----------- ----------- 494,055 700,955 ----------- ----------- TRANSPORTATION -- 1.3% 150,000 Yellow Roadway Corp., Cv., 3.375%, 11/25/23 ................. 189,931 185,063 ----------- ----------- TOTAL CONVERTIBLE CORPORATE BONDS .................. 8,841,736 10,303,377 ----------- ----------- CORPORATE BONDS -- 1.4% DIVERSIFIED INDUSTRIAL -- 1.4% 197,518(c) Elektrim Finance BV, 2.000%, 12/15/49 ................. 199,783 199,783 ----------- ----------- SHARES ------ CONVERTIBLE PREFERRED STOCKS -- 21.0% AUTOMOTIVE -- 1.2% 11,000 General Motors Corp., 5.250% Cv. Pfd., Ser. B ........................... 252,934 163,900 ----------- ----------- BROADCASTING -- 3.2% 10,000 Emmis Communications Corp., 6.250% Cv. Pfd., Ser. A ........................... 462,275 445,800 ----------- ----------- ENERGY AND UTILITIES -- 3.1% 1,000 Arch Coal Inc., 5.000% Cv. Pfd. .................. 57,750 194,100 5,000 Hanover Compressor Capital Trust, 7.250% Cv. Pfd. .................. 241,250 246,875 ----------- ----------- 299,000 440,975 ----------- ----------- FINANCIAL SERVICES -- 4.0% 16,450 Central Parking Financial Trust, 5.250% Cv. Pfd. .................. 332,850 333,935 1,000 Doral Financial Corp., 4.750% Cv. Pfd. .................. 195,000 159,000 1,500 Sovereign Bancorp Inc., 4.375% Cv. Pfd. .................. 70,182 66,000 ----------- ----------- 598,032 558,935 ----------- ----------- HEALTH CARE -- 2.6% 5,000 Omnicare Inc.,4.000% Cv. Pfd., Ser. B ........................... 254,375 371,350 ----------- ----------- MARKET SHARES COST VALUE --------- ---- ------- METALS AND MINING -- 3.5% 420 Freeport-McMoRan Copper & Gold Inc., 5.500% Cv. Pfd. .................. $ 410,950 $ 493,185 ----------- ----------- PAPER AND FOREST PRODUCTS -- 0.7% 2,000 Amcor Ltd., 7.250% Cv. Pfd. .................. 94,000 105,500 ----------- ----------- TELECOMMUNICATIONS -- 2.7% 10,000 Cincinnati Bell Inc., 6.750% Cv. Pfd., Ser. B ........................... 380,500 380,500 ----------- ----------- TOTAL CONVERTIBLE PREFERRED STOCKS ................. 2,752,066 2,960,145 ----------- ----------- TOTAL INVESTMENTS -- 95.5% ............. $11,793,585 13,463,305 =========== OTHER ASSETS AND LIABILITIES (NET) -- 4.5% ..................... 628,663 ----------- NET ASSETS -- 100.0% ............................ $14,091,968 =========== UNREALIZED PRINCIPAL SETTLEMENT APPRECIATION/ AMOUNT DATE (DEPRECIATION) --------- ----------- -------------- FORWARD FOREIGN EXCHANGE CONTRACTS -- 0.3% $ (300,000)(c)Deliver Euros in exchange for USD 355,183 ...................... 01/06/06 $ (835) (250,000)(c)Deliver Euros in exchange for USD 296,208 ...................... 01/19/06 4,422 (200,000,000)(b)Deliver Japanese Yen in exchange for USD 1,699,508 .................... 01/19/06 33,113 ----------- TOTAL FORWARD FOREIGN EXCHANGE CONTRACTS ........ $ 36,700 =========== ---------------- (a) Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2005, the market value of the Rule 144A security amounted to $151,750 or 1.08% of total net assets. The security has been deemed by the Board of Directors to be a liquid security. (b) Principal amount denoted in Japanese Yen. (c) Principal amount denoted in Euros. (d) Principal amount denoted in British Pounds. % OF MARKET MARKET GEOGRAPHIC DIVERSIFICATION VALUE VALUE -------------------------- -------- -------- North America ........................ 57.3% $ 7,716,811 Japan ................................ 24.9 3,351,829 Europe ............................... 11.0 1,485,898 Asia/Pacific ......................... 6.8 908,767 ------ ----------- 100.0% $13,463,305 ====== =========== See accompanying notes to financial statements. 6 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2005 ================================================================================ ASSETS: Investments, at value (cost $11,793,585) .... $ 13,463,305 Foreign currency, at value (cost $154,758) .. 153,538 Cash ........................................ 37,612 Receivable for investments sold ............. 246,992 Receivable for Fund shares sold ............. 151,767 Dividends and interest receivable ........... 82,988 Unrealized appreciation on forward foreign exchange contracts ............... 36,700 Other assets ................................ 1,774 ------------ TOTAL ASSETS ................................ 14,174,676 ------------ LIABILITIES: Payable for Fund shares redeemed ............ 27,190 Payable for shareholder communications expenses .................. 19,805 Payable for audit and legal fees ............ 14,777 Payable for investment advisory fees ........ 10,368 Payable for shareholder services fees ....... 4,657 Payable for distribution fees ............... 3,092 Other accrued expenses ...................... 2,819 ------------ TOTAL LIABILITIES ........................... 82,708 ------------ NET ASSETS applicable to 2,266,245 shares outstanding ........................ $ 14,091,968 ============ NET ASSETS CONSIST OF: Capital stock, each class at $0.001 par value $ 2,266 Additional paid-in capital .................. 12,435,863 Accumulated distributions in excess of net investment income .................. (50,030) Net unrealized appreciation on investments .. 1,669,720 Net unrealized appreciation on foreign currency translations ..................... 34,149 ------------ NET ASSETS .................................. $ 14,091,968 ============ SHARES OF CAPITAL STOCK: CLASS AAA: Net Asset Value, offering and redemption price per share ($13,780,609 / 2,214,702 shares outstanding; 75,000,000 shares authorized) ........................ $6.22 ===== CLASS A: Net Asset Value and redemption price per share ($92,975 / 14,931 shares outstanding; 50,000,000 shares authorized) ............. $6.23 ===== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price) ........... $6.61 ===== CLASS B: Net Asset Value and offering price per share ($72,888 / 12,335 shares outstanding; 25,000,000 shares authorized) ............. $5.91(a) ===== CLASS C: Net Asset Value and offering price per share ($145,496 / 24,277 shares outstanding; 25,000,000 shares authorized) ............. $5.99(a) ===== ---------------- (a) Redemption price varies based on length of time held. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 ================================================================================ INVESTMENT INCOME: Dividends (net of foreign taxes of $1,558) ......... $ 211,757 Interest ........................................... 237,350 ----------- TOTAL INVESTMENT INCOME ............................ 449,107 ----------- EXPENSES: Investment advisory fees ........................... 168,523 Distribution fees - Class AAA ...................... 40,487 Distribution fees - Class A ........................ 1,028 Distribution fees - Class B ........................ 935 Distribution fees - Class C ........................ 1,529 Shareholder communications expenses ................ 39,042 Legal and audit fees ............................... 30,211 Registration fees .................................. 23,885 Shareholder services fees .......................... 20,146 Custodian fees ..................................... 11,645 Interest expense ................................... 5,018 Directors' fees .................................... 2,024 Miscellaneous expenses ............................. 12,310 ----------- TOTAL EXPENSES ..................................... 356,783 Less: Expense reimbursement (see Note 3) ................. (11,992) Custodian fees credits ............................. (879) ----------- NET EXPENSES ....................................... 343,912 ----------- NET INVESTMENT INCOME .............................. 105,195 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on investments ................... 1,310,722 Net realized gain on foreign currency transactions ............................ 226,015 Net change in unrealized appreciation/ depreciation on investments and foreign currency translations .................... (906,265) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY ................ 630,472 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 735,667 =========== See accompanying notes to financial statements. 7 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND STATEMENT OF CHANGES IN NET ASSETS ================================================================================
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ----------------- ----------------- OPERATIONS: Net investment income ............................................... $ 105,195 $ 194,040 Net realized gain on investments and foreign currency transactions ..................................... 1,536,737 1,239,372 Net change in unrealized appreciation/ depreciation on investments and foreign currency translations ............................................. (906,265) 628,898 ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ 735,667 2,062,310 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA ......................................................... (558,053) (329,698) Class A ........................................................... (15,235) (4,835) Class B ........................................................... (3,509) (2,170) Class C ........................................................... (3,372) (1,316) ------------ ------------ (580,169) (338,019) ------------ ------------ Net realized gains Class AAA ......................................................... (1,034,911) (1,071,095) Class A ........................................................... (28,253) (15,708) Class B ........................................................... (6,508) (7,049) Class C ........................................................... (6,254) (4,276) ------------ ------------ (1,075,926) (1,098,128) ------------ ------------ Return of Capital Class AAA ......................................................... -- (1,990,268) Class A ........................................................... -- (29,187) Class B ........................................................... -- (13,098) Class C ........................................................... -- (7,945) ------------ ------------ -- (2,040,498) ------------ ------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................. (1,656,095) (3,476,645) ------------ ------------ CAPITAL SHARE TRANSACTIONS: Class AAA ......................................................... (5,708,864) 4,461,404 Class A ........................................................... (469,690) 516,340 Class B ........................................................... (52,160) 75,271 Class C ........................................................... 42,083 59,788 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (6,188,631) 5,112,803 ------------ ------------ REDEMPTION FEES ..................................................... 25,134 3,506 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ............................... (7,083,925) 3,701,974 NET ASSETS: Beginning of period ................................................. 21,175,893 17,473,919 ------------ ------------ End of period (including undistributed net investment income of $0 and $0, respectively) ................................ $ 14,091,968 $ 21,175,893 ============ ============
See accompanying notes to financial statements. 8 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS ================================================================================ 1. ORGANIZATION. The GAMCO Global Convertible Securities Fund (the "Fund"), formerly, The Gabelli Global Convertible Securities Fund, a series of GAMCO Global Series Funds, Inc. (the "Corporation"), formerly, Gabelli Global Series Funds, Inc., was organized on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of four separately managed portfolios (collectively, the "Portfolios") of the Corporation. The Fund's primary objective is to obtain a high level of total return through a combination of income and capital appreciation. The Fund commenced investment operations on February 3, 1994. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with U.S. 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 or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market's official closing price 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. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the "Board") so determines, by such other method as the Board shall determine in good faith, to reflect its fair market value. 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 "Adviser"). Portfolio securities primarily traded on foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if after the close of the foreign markets, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board. Debt instruments with remaining maturities of 60 days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board. Debt instruments having a maturity greater than 60 days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. 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. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons to the valuation and changes in valuation of similar securities, including a comparison of foreign securities to the equivalent U.S. dollar value ADR securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security. 9 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board. 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 102% 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. At December 31, 2005, there were no open repurchase agreements. FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the "initial margin". Subsequent payments ("variation margin") are made or received by the Fund each day, depending on the daily fluctuation of the value of the contract. The daily changes in the contract are included in unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed. There are several risks in connection with the use of futures contracts as a hedging instrument. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. At December 31, 2005, there were no open futures contracts. 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 translations. 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. Forward foreign exchange contracts at December 31, 2005, are reflected in the Schedule of Investments. 10 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ FOREIGN CURRENCY TRANSLATIONS. 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 current exchange rates. 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 that 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 translations. 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. FOREIGN SECURITIES. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers. FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests. 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 on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Premiums and discounts on debt securities are amortized using the yield to maturity method. Dividend income is recorded on the ex-dividend date except for certain dividends which are recorded as soon as the Fund is informed of the dividend. DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each Fund's average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board. In calculating the net asset value ("NAV") per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense. CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset shown as "custodian fee credits". 11 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with Federal income tax regulations, which may differ from income and capital gains as determined under U.S. generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income include net realized gains on foreign currency transactions. Distributions made in excess of current earnings and profits on a tax basis are treated as a non-taxable return of capital. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate equity accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund and the calculation of net investment income per share in the Financial Highlights excludes these adjustments. For the year ended December 31, 2005, reclassifications were made to decrease accumulated distributions in excess of net investment income by $428,553 and to increase accumulated net realized gain on investments and foreign currency transactions by $56,132, with an offsetting adjustment to additional paid-in capital. The tax character of distributions paid during the fiscal year ended December 31, 2005 and December 31, 2004 was as follows: YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ----------------- ----------------- DISTRIBUTIONS PAID FROM: Ordinary income (inclusive of short-term capital gains) ........ $1,232,664 $1,436,147 Long-term gains .................... 423,431 -- Non taxable return of capital ...... -- 2,040,498 ---------- ---------- Total distributions paid ........... $1,656,095 $3,476,645 ========== ========== The Fund has a fixed distribution policy. Under the policy, the Fund declares and pays distributions quarterly and identifies that portion of the distribution from net investment income, capital gains, and paid-in-capital. The actual source of the distribution is determined after the end of the year. Pursuant to this policy, distributions during the year were made in excess of required distributions. Such distributions were made from current earnings and profits and were considered ordinary income. The Fund continues to evaluate its distribution policy in light of ongoing economic and market conditions and may change the amount of the quarterly distributions in the future. For the period from January 2000 through April 2005, the Fund paid $0.10 per share on a monthly basis. On May 20, 2005, the Board announced a change in the distribution policy. The Fund currently intends to pay $0.03 per share on a quarterly basis in March, June, September, and December. PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for Federal income taxes is required. 12 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ As of December 31, 2005, the components of accumulated earnings/(losses) on a tax basis were as follows: Net unrealized appreciation on investments, foreign receivables and payables ........... $1,669,720 Other temporary differences .................... (15,881) ---------- Total accumulated gain ......................... $1,653,839 ========== For the year ended December 31, 2005, the Fund utilized net capital loss carryforwards of $502,405. The following summarizes the tax cost of investments and related unrealized appreciation/depreciation at December 31, 2005: GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION (DEPRECIATION) ---- ------------ ------------ -------------- Investments ...... $11,793,585 $1,977,878 $(308,158) $1,669,720 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 its 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 affiliated persons of the Adviser. The Adviser has voluntarily agreed to reimburse expenses of the Fund to the extent necessary to maintain the annualized total net operating expenses (exclusive of interest expense) of 2.00%, 2.00%, 2.75%, and 2.75% of average daily net assets for Class AAA, Class A, Class B, and Class C, respectively. For the year ended December 31, 2005, the Adviser reimbursed the Fund in the amount of $11,992. Such amount is not recoverable in future fiscal years. 4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the "Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act. Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser, serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and Class C Share Plans, payments are authorized to Gabelli & Company at annual rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for the year ended December 31, 2005, other than short-term securities, aggregated $9,668,051 and $17,743,881, respectively. 6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the Fund paid brokerage commissions of $125 to Gabelli & Company. Additionally, Gabelli & Company informed the Fund that it received $1,951 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares. 13 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to $25,000,000 from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at 0.75% above the Federal Funds rate on outstanding balances. At December 31, 2005, there were no borrowing outstanding from the line of credit. The average daily amount of borrowings outstanding from the line of credit within the year ended December 31, 2005 was $124,418 with a weighted average interest rate of 3.83%. The maximum amount borrowed at any time during the year ended December 31, 2005 was $1,920,000. 8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class AAA Shares are offered only to investors who acquire them directly from Gabelli & Company or through selected broker/dealers without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares are subject to a contingent deferred sales charge ("CDSC") upon redemption within six years of purchase and automatically convert to Class A Shares approximately eight years after the original purchase. The applicable CDSC is equal to a declining percentage of the lesser of the NAV per share at the date of the original purchase or at the date of redemption, based on the length of time held. Class C Shares are subject to a 1% CDSC for one year after purchase. Class B Shares are available only through exchange of Class B Shares of other funds distributed by Gabelli & Company. The Board has approved Class I Shares which have not been offered publicly. Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. (Prior to June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or exchanged within the sixtieth day after the date of a purchase.) The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund. The redemption fees retained by the Fund during the years ended December 31, 2005 and December 31, 2004 amounted to $25,134 and $3,506, respectively. The redemption fee does not apply to shares purchased through programs that the Adviser determined to have appropriate short-term trading policies in place. Additionally, certain recordkeepers for qualified and non-qualified retirement plans that could not collect the redemption fee at the participant level due to systems limitations have received an extension to implement such systems. 14 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ---------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ----------- CLASS AAA CLASS AAA ---------------------------- --------------------------- Shares sold ........................................ 1,258,482 $ 7,437,867 1,621,450 $10,337,026 Shares issued upon reinvestment of dividends ....... 232,662 1,356,751 482,014 3,037,994 Shares redeemed .................................... (2,527,933) (14,503,482) (1,404,805) (8,913,616) ---------- ------------ ---------- ----------- Net increase (decrease) .......................... (1,036,789) $ (5,708,864) 698,659 $ 4,461,404 ========== ============ ========== =========== CLASS A CLASS A ---------------------------- --------------------------- Shares sold ........................................ 14,762 $ 84,309 87,249 $ 546,490 Shares issued upon reinvestment of dividends ....... 2,003 11,680 3,755 23,269 Shares redeemed .................................... (97,283) (565,679) (8,221) (53,419) ---------- ------------ ---------- ----------- Net increase (decrease) .......................... (80,518) $ (469,690) 82,783 $ 516,340 ========== ============ ========== =========== CLASS B CLASS B ---------------------------- --------------------------- Shares sold ........................................ -- -- 10,388 $ 66,681 Shares issued upon reinvestment of dividends ....... 636 $ 3,542 1,567 9,539 Shares redeemed .................................... (10,395) (55,702) (159) (949) ---------- ------------ ---------- ----------- Net increase (decrease) .......................... (9,759) $ (52,160) 11,796 $ 75,271 ========== ============ ========== =========== CLASS C CLASS C ---------------------------- --------------------------- Shares sold ........................................ 23,314 $ 125,405 9,896 $ 61,575 Shares issued upon reinvestment of dividends ....... 1,090 6,137 1,486 9,073 Shares redeemed .................................... (15,698) (89,459) (1,689) (10,860) ---------- ------------ ---------- ----------- Net increase ..................................... 8,706 $ 42,083 9,693 $ 59,788 ========== ============ ========== ===========
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the Attorney General of the State of New York and the Securities and Exchange Commission (the "SEC") requesting information on mutual fund trading practices involving certain funds managed by the Adviser. GAMCO Investors, Inc., the Adviser's parent company, is responding to these requests for documents and testimony. On a separate matter, in September 2005, the Adviser was informed by the staff of the SEC that the staff may recommend to the Commission that an administrative remedy and a monetary penalty be sought from the Adviser in connection with the actions of two of seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered investment companies to provide written statements to shareholders when a dividend is made from a source other than net investment income. While the two closed-end funds sent annual statements and provided other materials containing this information, the funds did not send written statements to shareholders with each distribution in 2002 and 2003. The Adviser believes that all of the funds are now in compliance. The Adviser believes that these matters would have no effect on the Fund or any material adverse effect on the Adviser or its ability to manage the Fund. 15 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS ================================================================================ Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ------------------------------------- ----------------------------------------------- Net Net Asset Net Realized and Total Net Period Value, Investment Unrealized from Net Realized Return Ended Beginning Income Gain (Loss) on Investment Investment Gain on of Total December 31, of Period (Loss)(g) Investments Operations Income Investments Capital Distributions ------------ --------- -------- ----------- ---------- ------ ----------- ------- ------------- CLASS AAA 2005 $ 6.26 $ 0.04 $ 0.40 $ 0.44 $(0.17) $(0.32) -- $(0.49) 2004 6.77 0.07 0.62 0.69 (0.12) (0.38) $(0.70) (1.20) 2003 6.66 0.07 1.24 1.31 (0.11) -- (1.09) (1.20) 2002 8.29 0.07 (0.50) (0.43) (0.04) -- (1.16) (1.20) 2001 10.86 (0.09) (1.28) (1.37) -- (0.00)(d) (1.20) (1.20) CLASS A 2005 $ 6.26 $ 0.04 $ 0.41 $ 0.45 $(0.17) $(0.32) -- $(0.49) 2004 6.77 0.09 0.60 0.69 (0.11) (0.36) $(0.73) (1.20) 2003 6.66 0.07 1.24 1.31 (0.11) -- (1.09) (1.20) 2002 8.28 0.07 (0.49) (0.42) (0.04) -- (1.16) (1.20) 2001(b) 10.27 (0.09) (1.10) (1.19) -- (0.00)(d) (0.80) (0.80) CLASS B 2005 $ 6.01 $(0.01) $ 0.39 $ 0.38 $(0.17) $(0.32) -- $(0.49) 2004 6.59 0.03 0.59 0.62 (0.10) (0.34) $(0.76) (1.20) 2003 6.55 0.03 1.21 1.24 (0.07) -- (1.13) (1.20) 2002 8.23 0.02 (0.50) (0.48) (0.04) -- (1.16) (1.20) 2001(a) 10.04 (0.16) (0.75) (0.91) -- (0.00)(d) (0.90) (0.90) CLASS C 2005 $ 6.09 $ 0.00(d) $ 0.38 $ 0.38 $(0.17) $(0.32) -- $(0.49) 2004 6.66 0.03 0.60 0.63 (0.10) (0.34) $(0.76) (1.20) 2003 6.61 0.03 1.22 1.25 (0.07) -- (1.13) (1.20) 2002 8.27 0.02 (0.48) (0.46) (0.04) -- (1.16) (1.20) 2001(c) 8.58 (0.14) 0.03 (0.11) -- (0.00)(d) (0.20) (0.20)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA -------------------------------------------------------------------------- Net Asset Net Assets Net Operating Operating Period Value, End of Investment Expenses Expenses Portfolio Ended Redemption End of Total Period Income Before Net of Turnover December 31, Fees(g) Period Return+ (in 000's) (Loss) Reimbursement Reimbursement(e) Rate ------------ ------- ------- ------- ---------- ------ ------------- ---------------- -------- CLASS AAA 2005 $0.01 $6.22 8.0% $13,781 0.63% 2.11% 2.03%(h) 58% 2004 0.00(d) 6.26 11.7 20,350 1.06 2.06 2.01 60 2003 0.00(d) 6.77 21.5 17,281 1.12 2.07 2.01 54 2002 -- 6.66 (4.9) 9,316 0.97 2.83 2.83 33 2001 -- 8.29 (13.2) 8,288 (0.93) 2.69 2.69 49 CLASS A 2005 $0.01 $6.23 8.2% $ 93 0.68% 2.06% 2.04%(h) 58% 2004 0.00(d) 6.26 11.6 598 1.41 2.06 2.01 60 2003 0.00(d) 6.77 21.5 86 1.12 2.07 2.01 54 2002 -- 6.66 (4.7) 2 0.97 2.83 2.83 33 2001(b) -- 8.28 (13.3) 9 (0.93)(f) 2.69(f) 2.69(f) 49 CLASS B 2005 $0.01 $5.91 7.3% $ 73 (0.13)% 2.84% 2.78%(h) 58% 2004 0.00(d) 6.01 10.8 133 0.45 2.81 2.76 60 2003 0.00(d) 6.59 20.7 68 0.37 2.82 2.76 54 2002 -- 6.55 (5.6) 24 0.22 3.58 3.58 33 2001(a) -- 8.23 (13.8) 6 (1.68)(f) 3.44(f) 3.44(f) 49 CLASS C 2005 $0.01 $5.99 7.2% $ 145 (0.01)% 2.91% 2.78%(h) 58% 2004 0.00(d) 6.09 10.9 95 0.44 2.81 2.76 60 2003 0.00(d) 6.66 20.7 39 0.37 2.82 2.76 54 2002 -- 6.61 (5.3) 13 0.22 3.58 3.58 33 2001(c) -- 8.27 (13.5) 0 (1.68)(f) 3.44(f) 3.44(f) 49
-------------------- + 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 and does not reflect the applicable sales charges. Total return for the period of less than one year is not annualized. (a) From March 28, 2001, the date Class B Shares were continuously outstanding. (b) From May 2, 2001, the date shares were continuously outstanding. Class A Shares were outstanding for the period March 13, 2000 through November 30, 2000. (c) From November 26, 2001, the date Class C Shares were continuously outstanding. (d) Amount represents less than $0.005 per share. (e) The Fund incurred interest expense during the years ended December 31, 2005, 2004, 2003, 2002, and 2001. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 2.00%, 2.00%, 2.00%, 2.82%, and 2.67% (Class AAA), 2.00%, 2.00%, 2.00%, 2.82%, and 2.67% (Class A), 2.75%, 2.75%, 2.75%, 3.57%, and 3.42% (Class B) and 2.75%, 2.75%, 2.75%, 3.57%, and 3.42% (Class C), respectively. (f) Annualized. (g) Per share amounts have been calculated using the average shares outstanding method. (h) The ratios do not include a reduction of expenses for custodian fee credits on cash balances maintained with the custodian. Including such custodian fee credits, the expense ratios for the year ended December 31, 2005 would have been 2.03% (Class AAA), 2.03% (Class A), 2.78% (Class B), and 2.78% (Class C). See accompanying notes to financial statements. 16 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ================================================================================ To the Shareholders and Board of Directors of GAMCO Global Series Funds, Inc. We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The GAMCO Global Convertible Securities Fund (the "Fund") (formerly The Gabelli Global Convertible Securities Fund), a series of GAMCO Global Series Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of December 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended December 31, 2002 were audited by other auditors whose report dated January 31, 2003, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the Fund's custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The GAMCO Global Convertible Securities Fund, a series of GAMCO Global Series Funds, Inc., at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ ERNST & YOUNG LLP Philadelphia, Pennsylvania February 14, 2006 17 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED) During the six months ended December 31, 2005, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the "independent directors") who are not "interested persons" of the Fund. The following paragraphs summarize the material information and factors considered by the independent directors as well as their conclusions relative to such factors. NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered information regarding the portfolio managers, the depth of the analyst pool available to the Adviser and the portfolio managers, the scope of administrative, shareholder, and other services supervised or provided by the Adviser, and the absence of significant service problems reported to the Board. The independent directors noted the experience, length of service, and reputation of the portfolio managers. INVESTMENT PERFORMANCE. The independent directors reviewed the short and medium-term performance of the Fund against a peer group of convertible securities funds, noting that the Fund's performance was in or near the top third for the one and three year periods and in the bottom quartile for the five year period. PROFITABILITY. The independent directors reviewed summary data regarding the lack of profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The directors also noted that an affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions. ECONOMIES OF SCALE. The independent directors discussed the major elements of the Adviser's cost structure and the relationship of those elements to potential economies of scale and reviewed rudimentary data suggesting that 20% growth in the Fund would not produce meaningful economies of scale that the shareholders would not participate in. SHARING OF ECONOMIES OF SCALE. The independent directors noted that the investment advisory fee schedule for the Fund does not take into account any potential economies of scale that may develop. SERVICE AND COST COMPARISONS. The independent directors compared the expense ratios of the investment advisory fee, other expenses, and total expenses of the Fund to similar expense ratios of the peer group of convertible securities funds and noted that the Adviser's advisory fee includes substantially all administrative services of the Fund as well as investment advisory services. The directors noted that the Fund's expense ratios after voluntary expense reimbursements were significantly higher, and the Fund's size was significantly lower, than average within this group. The directors also noted that all but one of the peer group were domestic convertible funds, thereby limiting the usefulness of peer group comparisons. The directors also noted that the advisory fee structure was the same as that in effect for most of the Gabelli funds. The directors did not compare the advisory fee to the fee for other types of accounts managed by the Adviser. CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and a mixed performance record. The independent directors also concluded that the Fund's expense ratios were reasonable, particularly in light of the lack of profitability to the Adviser of managing the Fund, and that economies of scale were not a significant factor in their thinking at this time. The directors did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the independent directors determined to recommend continuation of the investment advisory agreement to the full Board of Directors. 18 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND ADDITIONAL FUND INFORMATION (UNAUDITED) ================================================================================ The business and affairs of the Company are managed under the direction of the Company's Board of Directors. Information pertaining to the Directors and officers of the Company is set forth below. The Fund's Statement of Additional Information includes additional information about The GAMCO Global Convertible Securities Fund's Directors and is available, without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The GAMCO Global Convertible Securities Fund at One Corporate Center, Rye, NY 10580-1422.
TERM OF NUMBER OF OFFICE AND FUNDS IN FUND NAME, POSITION(S) LENGTH OF COMPLEX ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4 ---------------- -------- ---------- ---------------------- ------------------ INTERESTED DIRECTORS 3: ---------------------- MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group Director and Officer of GAMCO Investors, Inc. Holdings, Inc. Chief Investment Officer and Chief Investment Officer - Value (holding company) Age: 63 Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Chairman and Chief Executive Officer of Lynch Interactive Corporation (multimedia and services) JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of GAMCO Director Company, Inc. Investors, Inc. Age: 61 NON-INTERESTED DIRECTORS: ------------------------ E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch Corporation Director Consultants, Inc.; Adviser, Iona College (diversified Age: 66 School of Business manufacturing) ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of -- Director Anthony J. Colavita, P.C. Age: 70 ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director/Trustee of Director Executive Officer of The Guardian Life 25 mutual funds within the Age: 75 Insurance Company of America from January Guardian Fund Complex 1993 to December 1995; President, Chief Executive Officer and a Director prior thereto WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence -- Director Hospital and practicing private physician Age: 65 ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. -- Director and futures trading) Age: 71 SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Director of Hollis-Eden Director Supplies Corp. Pharmaceuticals Age: 60 (biotechnology); Director of Earl Scheib, Inc. (automotive services)
19 THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED) ================================================================================
TERM OF OFFICE AND NAME, POSITION(S) LENGTH OF ADDRESS 1 TIME PRINCIPAL OCCUPATION(S) AND AGE SERVED 2 DURING PAST FIVE YEARS ---------------- -------- ---------------------- OFFICERS: BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating President and Treasurer Officer of Gabelli Funds, LLC since 1988 and Age: 54 an officer of all of the registered investment companies in the Gabelli Funds complex. Director and President of Gabelli Advisers, Inc. since 1998. JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of Secretary GAMCO Investors, Inc. since 1999 and GAMCO Age: 42 Asset Management Inc. since 1993; Secretary of all of the registered investment companies in the Gabelli Funds complex. PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc. Chief Compliance Officer since 2004; Chief Compliance Officer of all of the Age: 52 registered investment companies in the Gabelli Funds complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004.
--------------------------- 1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. 2 Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Company's By-Laws and Articles of Incorporation. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. Effective November 16, 2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves as Director Emeritus. 3 "Interested person" of the Company as defined in the Investment Company Act of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested person" because of their affiliation with Gabelli Funds, LLC which acts as the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. 4 This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or other investment companies registered under the 1940 Act. -------------------------------------------------------------------------------- 2005 TAX NOTICE TO SHAREHOLDERS (Unaudited) For the fiscal year ended December 31, 2005, the Fund paid to shareholders an ordinary income dividend (comprised of net investment income and short-term capital gains) totaling $0.36, $0.36, $0.36, and $0.36 and a long-term capital gain distribution totaling $0.13, $0.13, $0.13, and $0.13 per share for Class AAA, Class A, Class B, and Class C Shares, respectively. The Fund designates a maximum of $943,591 of long-term capital as a capital gain dividend for tax reporting purposes. For the fiscal year ended December 31, 2005, 21.40% of the ordinary income dividend qualifies for the dividend received deduction available to corporations, and 15.46% of the ordinary income distribution was qualified dividend income. U.S. GOVERNMENT INCOME The percentage of the ordinary income dividend paid by the Fund during fiscal year 2005 which was derived from U.S. Treasury securities was 0.41%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund's fiscal year in U.S. Government securities. The GAMCO Global Convertible Securities Fund did not meet this strict requirement in 2005. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax advisor as to the applicability of the information provided to your specific situation. -------------------------------------------------------------------------------- 20 -------------------------------------------------------------------------------- GABELLI FUNDS AND YOUR PERSONAL PRIVACY ================================================================================ WHO ARE WE? The Gabelli/GAMCO Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc., which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has subsidiaries that provide investment advisory or brokerage services for a variety of clients. WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A GABELLI CUSTOMER? If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is: o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your name, address, telephone number, social security number, bank account number, and other information. o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE SERVICES TO YOU. This would include information about the shares that you buy or redeem, and the deposits and withdrawals that you make. If we hire someone else to provide services--like a transfer agent--we will also have information about the transactions that you conduct through them. WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT? We do not disclose any non-public personal information about our customers or former customers to anyone, other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its web site, www.sec.gov. WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION? We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the Fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential. -------------------------------------------------------------------------------- GABELLI FAMILY OF FUNDS VALUE ________________________________________ 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. (MULTICLASS) 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 established companies which are temporarily out of favor. The fund's objective is to identify a catalyst or sequence of events that will return the company to a higher value. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA WESTWOOD EQUITY FUND Seeks to invest primarily in the common stock of well-seasoned companies that have recently reported positive earnings surprises and are trading below Westwood's proprietary growth rate estimates. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE FOCUSED VALUE ______________________________ GABELLI VALUE FUND Seeks to invest in securities of companies believed to be undervalued. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA SMALL CAP VALUE ____________________________ GABELLI SMALL CAP FUND Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA WESTWOOD SMALLCAP EQUITY FUND Seeks to invest primarily in smaller capitalization equity securities - market caps of $2.5 billion or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI WOODLAND SMALL CAP VALUE FUND Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company's value. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA GROWTH ______________________________________ GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN AGGRESSIVE GROWTH _________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED MICRO-CAP ___________________________________ WESTWOOD MIGHTY MITES(SM) FUND Seeks to invest in micro-cap companies that have market capitalizations of $300 million or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED EQUITY INCOME _______________________________ GABELLI EQUITY INCOME FUND Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA 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. (MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE MARK FREEMAN, CFA WESTWOOD INCOME FUND Seeks to provide a high level of current income as well as long-term capital appreciation by investing in income producing equity and fixed income securities. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE SPECIALTY EQUITY ____________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED GAMCO 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. (MULTICLASS) TEAM MANAGED SECTOR ______________________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN GABELLI UTILITIES FUND Seeks to provide a high level of total return through a combination of capital appreciation and current income. (MULTICLASS) TEAM MANAGED MERGER AND ARBITRAGE _____________________ 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 CONTRARIAN_________________________________ GAMCO MATHERS FUND Seeks long-term capital appreciation in various market conditions without excessive risk of capital loss. (CLASS AAA-NO-LOAD) PORTFOLIO MANAGER: HENRY VAN DER EB, CFA COMSTOCK CAPITAL VALUE FUND Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA COMSTOCK STRATEGY FUND The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA FIXED INCOME ________________________________ WESTWOOD INTERMEDIATE BOND FUND Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund's primary objective is total return. (MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA CASH MANAGEMENT-MONEY MARKET __________ 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 AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC, AND POLITICAL RISKS. TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. GAMCO Global Series Funds, Inc. THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA John D. Gabelli CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT EXECUTIVE OFFICER GABELLI & COMPANY, INC. GAMCO INVESTORS, INC. E. Val Cerutti Werner J. Roeder, MD CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL Anthony J. Colavita Anthonie C. van Ekris ATTORNEY-AT-LAW MANAGING DIRECTOR ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC. Arthur V. Ferrara Salvatore J. Zizza FORMER CHAIRMAN AND CHAIRMAN CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL GUARDIAN LIFE INSURANCE SUPPLIES CORP. COMPANY OF AMERICA OFFICERS Bruce N. Alpert James E. McKee PRESIDENT AND TREASURER SECRETARY Peter D. Goldstein CHIEF COMPLIANCE OFFICER DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The GAMCO Global Convertible Securities Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. -------------------------------------------------------------------------------- GAB441Q405SR GAMCO THE GAMCO GLOBAL CONVERTIBLE SECURITIES FUND ANNUAL REPORT DECEMBER 31, 2005 THE GAMCO GLOBAL GROWTH FUND ANNUAL REPORT DECEMBER 31, 2005 TO OUR SHAREHOLDERS, The Sarbanes-Oxley Act requires a Fund's principal executive and financial officers to certify the entire contents of the semi-annual and annual shareholder reports in a filing with the Securities and Exchange Commission on Form N-CSR. This certification would cover the portfolio manager's commentary and subjective opinions if they are attached to or a part of the financial statements. Many of these comments and opinions would be difficult or impossible to certify. Because we do not want our portfolio managers to eliminate their opinions and/or restrict their commentary to historical facts, we have separated their commentary from the financial statements and investment portfolio and have sent it to you separately. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com/funds. Enclosed are the audited financial statements and the investment portfolio as of December 31, 2005 with a description of factors that affected the performance during the past year. PERFORMANCE DISCUSSION Our focus is on picking stocks, not currencies or countries. We construct portfolios to be well diversified by country, sector, and issue. While we may make occasional investments in emerging markets, we invest primarily in developed markets. We invest for the long term and have below average portfolio turnover. This was a successful formula for 2005, as the Fund returned 13.7% for the year, compared to 11.4% for the MSCI AC World Free Index. Good news on profits and economic growth continued to overwhelm concerns about energy prices, inflation, and geopolitical tensions as most stock markets finished the year on a positive note. While the energy and utility sectors suffered from year end profit taking in the fourth quarter, all other sectors posted gains, with the exception of telecom services, which claims some distinction as the only sector with a negative return for the year (based on the MSCI AC World Free Index data). The dollar gained a bit on the major currencies eating into returns for dollar-based investors active in those stock markets. Emerging markets were higher in the aggregate but results varied greatly by market. For the year, Canada gets the gold medal, showing a rise (in U.S. dollars) of 28.3%. Japan takes the silver, rising 25.5%, Austria takes the bronze (+24.6%), followed by Denmark (+24.5%), and Norway (+24.3%). Bringing up the rear were Ireland (-2.3%), Portugal (-1.9%), New Zealand (+1.7%), Italy (+1.9%), and Spain (+4.4%). In 2005, energy stocks rode the trend of rising oil prices, advancing 31.2%. Materials stocks were also popular, given rising prices for metals and other commodities, with the materials sector advancing 20.5%. Low bond yields contributed to the rising demand for income stocks, and utilities rose 14.1%. Other sectors with double digit gains were industrials (+12.5%), and financials (+12.3%). In addition to telecom services (-5.6%), the other laggards were consumer discretionary (+2.3%), information technology (+6.8%), consumer staples (+7.0%), and health care (+9.4%). Fund performance during the past twelve months was enhanced by our generally overweight commitment to energy and metals and mining, the two best performing sectors. Our lack of exposure to utilities, the third best performing sector, was a negative. However, our growth bias in stock selection generally keeps utilities off our radar screen. We had strong performing stocks across a number of different industries. Our top stock was Vallourec SA, a French industrial company, which rose 330% (in local currency). This was followed by Peabody Energy Corp. (+104%), Koninklijke BAM Groep NV (+93%), Suncor Energy Inc. (+78%), Nikko Cordial Corp. (+72%), and Genentech Inc. (+70%). Other exceptional performers included Google Inc. (+67% since purchased), Transocean Inc. (+64%), Whole Foods Markets Inc. (+62%), Richemont AG (+53%), and Samsung Electronics Co. Ltd. (+47%). Sincerely yours, /s/ Bruce N. Alpert Bruce N. Alpert President February 15, 2006 SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED) The following table presents portfolio holdings as a percent of total net assets as of December 31, 2005: THE GAMCO GLOBAL GROWTH FUND Financial Services ................................. 15.8% Health Care ........................................ 13.5% Energy and Utilities ............................... 8.5% Computer Software and Services ..................... 7.3% Food and Beverage .................................. 7.2% Diversified Industrial ............................. 5.6% Metals and Mining .................................. 5.6% Retail ............................................. 5.4% Consumer Products .................................. 4.8% Electronics ........................................ 4.4% Building and Construction .......................... 2.8% Entertainment ...................................... 2.8% Equipment and Supplies ............................. 2.0% Telecommunications ................................. 2.0% Business Services .................................. 1.9% Machinery .......................................... 1.8% Aerospace .......................................... 1.7% Wireless Communications ............................ 1.7% U.S. Government Obligations ........................ 1.3% Broadcasting ....................................... 1.2% Hotels and Gaming .................................. 0.8% Chemicals and Allied Products ...................... 0.8% Consumer Services .................................. 0.8% Cable and Satellite ................................ 0.5% Other Assets and Liabilities - (Net) ............... (0.2)% ------ 100.0% ======= THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI (800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330. PROXY VOTING The Fund files Form N-PX with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of the Fund's proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities are available without charge, upon request, (i) by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities and Exchange Commission's website at www.sec.gov. 2 [GRAPHIC OMITTED] PLOT POINTS FOLLOW: COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL GROWTH FUND CLASS AAA SHARES, THE LIPPER GLOBAL FUND AVERAGE AND THE MSCI AC WORLD FREE INDEX Gabelli Global Lipper Global Multi-Cap MSCI AC Growth Fund Class AAA Shares Growth Fund Average World Free Index 2/7/94 $10,000 $10,000 $10,000 12/31/94 10,250 9,835 9,849 12/31/95 12,083 11,214 11,766 12/31/96 13,594 13,042 13,319 12/31/97 19,263 14,742 15,315 12/31/98 24,836 16,856 18,680 12/31/99 53,645 22,938 23,690 12/31/00 33,534 20,582 20,387 12/31/01 25,435 17,007 17,144 12/31/02 19,130 13,686 13,890 12/31/03 27,048 18,078 18,700 12/31/04 29,598 20,717 21,645 12/31/05 33,659 23,118 24,106 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. COMPARATIVE RESULTS --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2005 (A) ---------------------------------------------------- Since Inception QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (2/7/94) ------------------------------------------------------------------------------------------------------------------- GAMCO GLOBAL GROWTH FUND CLASS AAA .............. 3.64% 13.72% 20.73% 0.08% 10.79% 10.73% MSCI AC World Free Index ........................ 3.43 11.37 20.18 3.41 7.44 7.66 Lipper Global Multi-Cap Growth Fund Average ..... 3.81 11.60 20.42 2.90 9.93 9.13 Class A ......................................... 3.59 13.66 20.74 0.10 10.80 10.74 (2.39)(b) 7.12(b) 18.38(b) (1.08)(b) 10.15(b) 10.19(b) Class B ......................................... 3.48 12.87 19.83 (0.65) 10.35 10.37 (1.52)(c) 7.87(c) 19.13(c) (1.05)(c) 10.35(c) 10.37(c) Class C ......................................... 3.43 12.85 19.83 (0.66) 10.32 10.34 2.43(c) 11.85(c) 19.83(c) (0.66)(c) 10.32(c) 10.34(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. 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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON MARCH 2, 2000, MAY 5, 2000 AND MARCH 12, 2000, RESPECTIVELY. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. INVESTING IN FOREIGN SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE MSCI AC WORLD FREE 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. (b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF THE PERIOD. (c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT THE END OF THE PERIOD SHOWN FOR CLASS B AND CLASS C SHARES, RESPECTIVELY. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES. -------------------------------------------------------------------------------- 3 THE GAMCO GLOBAL GROWTH FUND DISCLOSURE OF FUND EXPENSES (UNAUDITED) For the Six Month Period from July 1, 2005 through December 31, 2005 EXPENSE TABLE ================================================================================ We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund's gross income, directly reduce the investment return of a fund. When a fund's expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The Expense Table below illustrates your Fund's costs in two ways: ACTUAL FUND RETURN: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The "Ending Account Value" shown is derived from the Fund's ACTUAL return during the past six months, and the "Expenses Paid During Period" shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading "Expenses Paid During Period" to estimate the expenses you paid during this period. HYPOTHETICAL 5% RETURN: This section provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case - because the hypothetical return used is NOT the Fund's actual return - the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The "Annualized Expense Ratio" represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the year ended December 31, 2005. Beginning Ending Annualized Expenses Account Value Account Value Expense Paid During 07/01/05 12/31/05 Ratio Period* -------------------------------------------------------------------------------- THE GAMCO GLOBAL GROWTH FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Class AAA $1,000.00 $1,136.60 1.73% $ 9.32 Class A $1,000.00 $1,136.60 1.74% $ 9.37 Class B $1,000.00 $1,132.60 2.48% $13.33 Class C $1,000.00 $1,132.40 2.49% $13.38 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,016.48 1.73% $ 8.79 Class A $1,000.00 $1,016.43 1.74% $ 8.84 Class B $1,000.00 $1,012.70 2.48% $12.58 Class C $1,000.00 $1,012.65 2.49% $12.63 * Expenses are equal to the Fund's annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. 4 THE GAMCO GLOBAL GROWTH FUND SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE --------- ---- ------- COMMON STOCKS -- 98.9% AEROSPACE -- 1.7% 8,358 Northrop Grumman Corp. ............... $ 431,525 $ 502,399 25,000 United Technologies Corp. ............ 1,221,038 1,397,750 ------------ ------------ 1,652,563 1,900,149 ------------ ------------ BROADCASTING -- 1.2% 7,000 Lagardere SCA ........................ 399,739 538,672 5,200 Nippon Television Network Corp. ...... 771,307 799,389 ------------ ------------ 1,171,046 1,338,061 ------------ ------------ BUILDING AND CONSTRUCTION -- 2.8% 20,000 CRH plc .............................. 482,219 588,396 15,000 Fomento de Construcciones y Contratas SA ..................... 402,698 850,628 5,000 Koninklijke BAM Groep NV ............. 139,129 419,691 50,000 Sekisui House Ltd. ................... 522,442 629,160 10,000 Technip SA ........................... 312,581 601,418 ------------ ------------ 1,859,069 3,089,293 ------------ ------------ BUSINESS SERVICES -- 1.9% 6,500 Getty Images Inc.+ ................... 469,625 580,255 2,800 Hakuhodo Dy Holdings Inc. ............ 191,989 197,295 10,000 SAP AG, ADR .......................... 452,250 450,700 16,000 Secom Co. Ltd. ....................... 620,342 837,071 ------------ ------------ 1,734,206 2,065,321 ------------ ------------ CABLE AND SATELLITE -- 0.5% 12,250 Rogers Communications Inc., Cl. B ........................ 84,714 518,474 ------------ ------------ CHEMICALS AND ALLIED PRODUCTS -- 0.8% 13,000 Shin-Etsu Chemical Co. Ltd. .......... 458,472 691,144 50,000 Tokai Carbon Co. Ltd. ................ 205,108 232,331 ------------ ------------ 663,580 923,475 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 7.3% 20,000 Adobe Systems Inc. ................... 603,573 739,200 35,000 Cisco Systems Inc.+ .................. 692,075 599,200 20,000 Dell Inc.+ ........................... 838,976 599,800 9,000 Electronic Arts Inc.+ ................ 467,980 470,790 40,000 EMC Corp.+ ........................... 524,899 544,800 3,200 Google Inc., Cl. A+ .................. 794,052 1,327,552 75,000 Microsoft Corp. ...................... 2,015,860 1,961,250 13,000 NAVTEQ Corp.+ ........................ 523,311 570,310 30,000 Yahoo! Inc.+ ......................... 1,104,800 1,175,400 ------------ ------------ 7,565,526 7,988,302 ------------ ------------ CONSUMER PRODUCTS -- 4.8% 9,924 Altadis SA ........................... 166,300 450,220 7,000 Christian Dior SA .................... 438,852 622,373 15,314 Compagnie Financiere Richemont AG, Cl. A ................ 443,000 666,612 MARKET SHARES COST VALUE --------- ---- ------- 17,247 Gallaher Group plc ................... $ 173,860 $ 260,383 6,000 Harman International Industries Inc. .................... 529,406 587,100 27,000 Luxottica Group SpA .................. 477,982 685,013 25,000 Procter & Gamble Co. ................. 1,382,601 1,447,000 4,000 Swatch Group AG, Cl. B ............... 464,406 593,585 ------------ ------------ 4,076,407 5,312,286 ------------ ------------ CONSUMER SERVICES -- 0.8% 20,000 eBay Inc.+ ........................... 696,529 865,000 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 5.6% 10,000 3M Co. ............................... 807,181 775,000 25,000 Bouygues SA .......................... 905,762 1,222,371 75,000 General Electric Co. ................. 2,728,135 2,628,750 9,000 ITT Industries Inc. .................. 786,992 925,380 10,000 Rockwell Automation Inc. ............. 611,683 591,600 ------------ ------------ 5,839,753 6,143,101 ------------ ------------ ELECTRONICS -- 4.4% 15,000 Broadcom Corp., Cl. A+ ............... 492,170 707,250 25,000 Intel Corp. .......................... 565,750 624,000 30,000 Linear Technology Corp. .............. 1,168,726 1,082,100 20,000 Microchip Technology Inc. ............ 572,524 643,000 1,070 Samsung Electronics Co. Ltd. ......... 175,381 697,561 20,000 Texas Instruments Inc. ............... 405,221 641,400 8,000 Tokyo Electron Ltd. .................. 436,931 502,650 ------------ ------------ 3,816,703 4,897,961 ------------ ------------ ENERGY AND UTILITIES -- 8.5% 10,000 Baker Hughes Inc. .................... 451,875 607,800 8,000 BP plc, ADR .......................... 466,366 513,760 12,000 Canadian Natural Resources Ltd. ...... 501,440 595,440 20,000 Chesapeake Energy Corp. .............. 635,060 634,600 4,266 ConocoPhillips ....................... 104,053 248,196 11,172 Devon Energy Corp. ................... 350,560 698,697 12,000 EnCana Corp. ......................... 576,522 541,920 10,000 Murphy Oil Corp. ..................... 458,214 539,900 6,000 Occidental Petroleum Corp. ........... 417,900 479,280 10,288 Pioneer Natural Resources Co. ........ 334,556 527,466 15,000 Repsol YPF SA ........................ 476,045 438,100 8,500 Schlumberger Ltd. .................... 538,841 825,775 10,000 Suncor Energy Inc. ................... 340,290 631,300 2,063 Total SA ............................. 356,308 518,271 4,000 Total SA, ADR ........................ 428,556 505,600 9,000 Transocean Inc.+ ..................... 366,974 627,210 9,000 Valero Energy Corp. .................. 438,558 464,400 ------------ ------------ 7,242,118 9,397,715 ------------ ------------ See accompanying notes to financial statements. 5 THE GAMCO GLOBAL GROWTH FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE --------- ---- ------- COMMON STOCKS (CONTINUED) ENTERTAINMENT -- 2.8% 90,000 Publishing & Broadcasting Ltd. ....... $ 502,272 $ 1,087,334 60,239 Time Warner Inc. ..................... 831,264 1,050,568 30,180 Vivendi Universal SA ................. 747,074 945,414 ------------ ------------ 2,080,610 3,083,316 ------------ ------------ EQUIPMENT AND SUPPLIES -- 2.0% 20,000 Ingersoll-Rand Co. Ltd., Cl. A ....... 803,357 807,400 2,600 Keyence Corp. ........................ 544,556 739,645 1,150 Vallourec SA ......................... 107,619 633,087 ------------ ------------ 1,455,532 2,180,132 ------------ ------------ FINANCIAL SERVICES -- 15.8% 27,000 77 Bank Ltd. ......................... 197,165 205,130 5,500 Allianz AG ........................... 704,835 833,071 10,000 American Express Co. ................. 491,340 514,600 60,000 Anglo Irish Bank Corp. plc ........... 141,074 910,651 30,000 Australia & New Zealand Banking Group Ltd. ................. 505,275 526,732 30,000 Aviva plc ............................ 320,646 363,883 29,039 Bank of Ireland, Ireland ............. 280,065 457,586 10,000 Bank of Ireland, London .............. 159,392 157,458 36,000 Citigroup Inc. ....................... 1,693,228 1,747,080 20,000 Credit Suisse Group, ADR ............. 942,161 1,019,000 10,000 Goldman Sachs Group Inc. ............. 1,049,500 1,277,100 15,000 HSBC Holdings plc, ADR ............... 1,289,686 1,207,050 11,914 Irish Life & Permanent plc ........... 129,749 243,451 5,000 Legg Mason Inc. ...................... 588,271 598,450 19,895 Merrill Lynch & Co. Inc. ............. 1,042,319 1,347,488 50 Mitsubishi UFJ Financial Group Inc. ......................... 552,547 678,340 79,500 Nikko Cordial Corp. .................. 817,370 1,259,219 35,000 Standard Chartered plc ............... 677,808 779,812 15,000 State Street Corp. ................... 712,853 831,600 15,000 UBS AG, New York ..................... 1,226,314 1,427,250 2,000 UBS AG, Switzerland .................. 136,647 190,404 33,000 Westpac Banking Corp. ................ 502,533 550,375 16,000 Yamaguchi Bank Ltd. .................. 202,431 229,957 ------------ ------------ 14,363,209 17,355,687 ------------ ------------ FOOD AND BEVERAGE -- 7.2% 53,000 Ajinomoto Co. Inc. ................... 602,454 542,426 60,000 Cadbury Schweppes plc ................ 592,403 567,245 18,996 Coca-Cola Hellenic Bottling Co. SA .................... 385,338 559,533 100,000 Davide Campari-Milano SpA ............ 467,325 739,934 77,000 Diageo plc ........................... 971,581 1,116,124 6,000 Diageo plc, ADR ...................... 326,867 349,800 12,000 General Mills Inc. ................... 542,811 591,840 3,000 Nestle SA ............................ 850,228 897,226 MARKET SHARES COST VALUE --------- ---- ------- 20,000 PepsiCo Inc. ......................... $ 1,020,471 $ 1,181,600 3,763 Pernod-Ricard SA ..................... 401,489 656,666 15,000 Starbucks Corp.+ ..................... 413,438 450,150 5,000 Wrigley (Wm.) Jr. Co. ................ 353,869 332,450 ------------ ------------ 6,928,274 7,984,994 ------------ ------------ HEALTH CARE -- 13.5% 17,000 Amgen Inc.+ .......................... 1,056,128 1,340,620 10,000 Caremark Rx Inc.+ .................... 381,225 517,900 10,000 Eli Lilly & Co. ...................... 543,034 565,900 10,000 Genentech Inc.+ ...................... 506,391 925,000 10,000 Genzyme Corp.+ ....................... 578,740 707,800 40,000 GlaxoSmithKline plc .................. 846,223 1,010,959 15,000 Hisamitsu Pharmaceutical Co. Inc. ........................... 252,777 377,751 20,000 Medtronic Inc. ....................... 947,550 1,151,400 20,000 Novartis AG .......................... 792,163 1,050,949 6,200 Roche Holding AG ..................... 495,746 930,908 10,530 Sanofi-Aventis ....................... 741,849 922,514 40,000 Smith & Nephew plc ................... 391,880 368,529 10,000 St. Jude Medical Inc.+ ............... 436,070 502,000 2,400 Straumann Holding AG ................. 504,079 556,143 20,000 Stryker Corp. ........................ 912,862 888,600 4,800 Synthes Inc. ......................... 398,130 539,158 13,000 Takeda Pharmaceutical Co. Ltd. ....... 553,551 703,269 15,000 Varian Medical Systems Inc.+ ......... 576,797 755,100 15,000 Zimmer Holdings Inc.+ ................ 1,213,549 1,011,600 ------------ ------------ 12,128,744 14,826,100 ------------ ------------ HOTELS AND GAMING -- 0.8% 8,550 Greek Organization of Football Prognostics SA ............ 101,078 294,559 102,011 Hilton Group plc ..................... 427,567 637,974 ------------ ------------ 528,645 932,533 ------------ ------------ MACHINERY -- 1.8% 10,000 Caterpillar Inc. ..................... 459,402 577,700 10,000 Deere & Co. .......................... 724,210 681,100 5,000 SMC Corp. ............................ 530,944 714,377 ------------ ------------ 1,714,556 1,973,177 ------------ ------------ METALS AND MINING -- 5.6% 20,000 BHP Billiton plc ..................... 317,858 326,721 25,404 Freeport-McMoRan Copper & Gold Inc., Cl. B ................... 854,573 1,366,735 61,026 Gold Fields Ltd., ADR ................ 528,792 1,075,888 23,473 Newmont Mining Corp. ................. 832,462 1,253,458 13,614 Peabody Energy Corp. ................. 337,506 1,122,066 16,000 Rio Tinto plc ........................ 587,296 730,864 11,000 Xstrata plc .......................... 288,341 257,385 ------------ ------------ 3,746,828 6,133,117 ------------ ------------ See accompanying notes to financial statements. 6 THE GAMCO GLOBAL GROWTH FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE --------- ---- ------- COMMON STOCKS (CONTINUED) RETAIL -- 5.4% 15,000 Bed Bath & Beyond Inc.+ .............. $ 613,399 $ 542,250 15,000 Best Buy Co. Inc. .................... 573,945 652,200 20,000 Coach Inc.+ .......................... 509,323 666,800 25,000 Matsumotokiyoshi Co. Ltd. ............ 663,268 790,690 24,000 Seven & I Holdings Co. Ltd.+ ......... 813,032 1,027,685 18,000 Tiffany & Co. ........................ 580,736 689,220 10,000 Wal-Mart Stores Inc. ................. 535,178 468,000 19,000 Walgreen Co. ......................... 737,867 840,940 3,400 Whole Foods Market Inc. .............. 156,629 263,126 ------------ ------------ 5,183,377 5,940,911 ------------ ------------ TELECOMMUNICATIONS -- 2.0% 115 KDDI Corp. ........................... 590,072 663,077 25,000 TDC A/S .............................. 931,760 1,497,541 ------------ ------------ 1,521,832 2,160,618 ------------ ------------ WIRELESS COMMUNICATIONS -- 1.7% 350,000 O2 plc ............................... 410,107 1,190,794 15,000 QUALCOMM Inc. ........................ 621,961 646,200 ------------ ------------ 1,032,068 1,836,994 ------------ ------------ TOTAL COMMON STOCKS .................. 87,085,889 108,846,717 ------------ ------------ PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------- U.S. GOVERNMENT OBLIGATIONS -- 1.3% $1,398,000 U.S. Treasury Bills, 3.891% to 4.004%++, 02/02/06 to 03/30/06 ............... $ 1,389,477 $ 1,389,398 ------------ ------------ TOTAL INVESTMENTS -- 100.2% .......... $ 88,475,366 110,236,115 ============ OTHER ASSETS AND LIABILITIES (NET) -- (0.2)% ...................... (214,832) ------------ NET ASSETS -- 100.0% ............................... $110,021,283 ============ ---------------- + Non-income producing security. ++ Represents annualized yield at date of purchase. ADR American Depository Receipt % OF MARKET MARKET GEOGRAPHIC DIVERSIFICATION VALUE VALUE -------------------------- -------- -------- North America ........................ 52.5% $ 57,921,798 Europe ............................... 31.9 35,121,211 Japan ................................ 10.7 11,820,605 Asia/Pacific ......................... 2.6 2,862,003 Latin America ........................ 1.3 1,434,610 South Africa ......................... 1.0 1,075,888 ------ ------------ 100.0% $110,236,115 ====== ============ See accompanying notes to financial statements. 7 THE GAMCO GLOBAL GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2005 ================================================================================ ASSETS: Investments, at value (cost $88,475,366) ................... $ 110,236,115 Cash ....................................................... 605 Dividends and interest receivable .......................... 128,922 Receivable for Fund shares sold ............................ 64,930 Other assets ............................................... 4,808 ------------- TOTAL ASSETS ............................................... 110,435,380 ------------- LIABILITIES: Payable for Fund shares redeemed ........................... 144,230 Payable for investment advisory fees ....................... 94,472 Payable for shareholder communications expenses ............ 52,412 Payable for shareholder services fees ...................... 42,351 Payable for legal and audit fees ........................... 37,200 Payable for distribution fees .............................. 23,883 Other accrued expenses ..................................... 19,549 ------------- TOTAL LIABILITIES .......................................... 414,097 ------------- NET ASSETS applicable to 5,386,367 shares outstanding ...... $ 110,021,283 ============= NET ASSETS CONSIST OF: Capital stock, each class at $0.001 par value .............. $ 5,386 Additional paid-in capital ................................. 156,564,422 Accumulated net investment income .......................... 374 Accumulated net realized loss on investments and foreign currency transactions ........................ (68,308,116) Net unrealized appreciation on investments ................. 21,760,749 Net unrealized depreciation on foreign currency translations (1,532) ------------- NET ASSETS ................................................. $ 110,021,283 ============= SHARES OF CAPITAL STOCK: CLASS AAA: Net Asset Value, offering and redemption price per share ($108,433,143 / 5,307,744 shares outstanding; 75,000,000 shares authorized) ............................ $20.43 ====== CLASS A: Net Asset Value and redemption price per share ($1,149,928 / 56,277 shares outstanding; 50,000,000 shares authorized) ............................. $20.43 ====== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price) ................... $21.68 ====== CLASS B: Net Asset Value and offering price per share ($201,636 / 10,263 shares outstanding; 25,000,000 shares authorized) ............................ $19.65(a) ====== CLASS C: Net Asset Value and offering price per share ($236,576 / 12,083 shares outstanding; 25,000,000 shares authorized) ............................ $19.58(a) ====== ----------------------- (a) Redemption price varies based on length of time held. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 ================================================================================ INVESTMENT INCOME: Dividends (net of foreign taxes of $112,568) ....... $ 1,962,150 Interest ........................................... 71,652 ------------ TOTAL INVESTMENT INCOME ............................ 2,033,802 ------------ EXPENSES: Investment advisory fees ........................... 1,074,091 Distribution fees - Class AAA ...................... 266,305 Distribution fees - Class A ........................ 1,543 Distribution fees - Class B ........................ 1,779 Distribution fees - Class C ........................ 918 Shareholder services fees .......................... 190,093 Shareholder communications expenses ................ 116,460 Legal and audit fees ............................... 83,401 Custodian fees ..................................... 52,702 Registration fees .................................. 34,470 Directors' fees .................................... 11,350 Miscellaneous expenses ............................. 91,373 ------------ TOTAL EXPENSES ..................................... 1,924,485 Less: Custodian fee credits ........................ (865) ------------ NET EXPENSES ....................................... 1,923,620 ------------ NET INVESTMENT INCOME .............................. 110,182 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on investments ................... 9,247,834 Net realized loss on foreign currency transactions . (14,936) Net change in unrealized appreciation / depreciation on investments and foreign currency translations . 4,268,855 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY .............. 13,501,753 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $ 13,611,935 ============ See accompanying notes to financial statements. 8 THE GAMCO GLOBAL GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS ================================================================================
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ---------------- ----------------- OPERATIONS: Net investment income (loss) ..................................... $ 110,182 $ (352,482) Net realized gain on investments and foreign currency transactions 9,232,898 14,399,556 Net change in unrealized appreciation/depreciation on investments and foreign currency translations ................. 4,268,855 (4,360,074) ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. 13,611,935 9,687,000 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA ...................................................... (92,625) -- Class A ........................................................ (2,247) -- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .............................. (94,872) -- ------------- ------------- CAPITAL SHARE TRANSACTIONS: Class AAA ...................................................... (18,980,399) (28,502,375) Class A ........................................................ 576,999 19,605 Class B ........................................................ (3,817) (43,097) Class C ........................................................ 171,726 (163,342) ------------- ------------- NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ....... (18,235,491) (28,689,209) ------------- ------------- REDEMPTION FEES .................................................. 873 11,158 ------------- ------------- NET DECREASE IN NET ASSETS ....................................... (4,717,555) (18,991,051) NET ASSETS: Beginning of period .............................................. 114,738,838 133,729,889 ------------- ------------- End of period (including undistributed net investment income of $374 and $0, respectively) ......................... $ 110,021,283 $ 114,738,838 ============= =============
NOTES TO FINANCIAL STATEMENTS ================================================================================ 1. ORGANIZATION. The GAMCO Global Growth Fund (the "Fund"), formerly, The Gabelli Global Growth Fund, a series of GAMCO Global Series Funds, Inc. (the "Corporation"), formerly, Gabelli Global Series Funds, Inc., was organized on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of four separately managed portfolios (collectively, the "Portfolios") of the Corporation. The Fund's primary objective is capital appreciation. The Fund commenced investment operations on February 7, 1994. Prior to January 13, 2000, the Fund's name was The Gabelli Global Interactive Couch Potato(R) Fund. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with U.S. 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 or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market's official closing price 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. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the "Board") so determines, by such other method as the Board shall determine in good faith, to reflect its fair market value. 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 "Adviser"). 9 THE GAMCO GLOBAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ Portfolio securities primarily traded on foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if after the close of the foreign markets, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board. Debt instruments with remaining maturities of 60 days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board. Debt instruments having a maturity greater than 60 days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. 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. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons to the valuation and changes in valuation of similar securities, including a comparison of foreign securities to the equivalent U.S. dollar value ADR securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board. 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 102% 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. At December 31, 2005, there were no open repurchase agreements. FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the "initial margin". Subsequent payments ("variation margin") are made or received by the Fund each day, depending on the daily fluctuation of the value of the contract. The daily changes in the contract are included in unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed. There are several risks in connection with the use of futures contracts as a hedging instrument. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not 10 THE GAMCO GLOBAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. At December 31, 2005, there were no open futures contracts. SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund does not own. The proceeds received for short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of the open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The Fund did not hold any short positions as of December 31, 2005. 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 translations. 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. At December 31, 2005, there were no open forward foreign exchange contracts. FOREIGN CURRENCY TRANSLATIONS. 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 current exchange rates. 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 that 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 translations. 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. FOREIGN SECURITIES. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers. 11 THE GAMCO GLOBAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests. 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 on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date except for certain dividends which are recorded as soon as the Fund is informed of the dividend. DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each Fund's average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board. In calculating the net asset value ("NAV") per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense. CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset shown as "custodian fee credits". DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with Federal income tax regulations, which may differ from income and capital gains as determined under U.S. generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate equity accounts in the period that the differences arise. These reclassifications have no impact on the NAV of the Fund and the calculation of net investment income per share in the Financial Highlights excludes these adjustments. For the year ended December 31, 2005, reclassifications were made to decrease accumulated net investment income by $14,936 and to decrease accumulated net realized loss on investments and foreign currency transactions by $14,936. The tax character of distributions paid during the year ended December 31, 2005 was $94,872 of ordinary income. No distributions were made in 2004. PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for Federal income taxes is required. 12 THE GAMCO GLOBAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ As of December 31, 2005, the components of accumulated earnings/(losses) on a tax basis were as follows: Undistributed ordinary income ............. $ 374 Capital loss carryforward ................. (68,172,627) Net unrealized appreciation on investments, currency and foreign receivables and payables ................................ 21,623,728 ------------ Total accumulated loss .................... $(46,548,525) ============ At December 31, 2005, the Fund has net capital loss carryforwards for Federal income tax purposes of $68,172,627, which are available to reduce future required distributions of net capital gains to shareholders. $26,923,440 is available through 2010; $39,969,419 is available through 2011; and $1,279,768 is available through 2012. For the year ended December 31, 2005, the Fund utilized capital loss carryforwards of $9,035,254. The following summarizes the tax cost of investments and related unrealized appreciation/depreciation at December 31, 2005: GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION (DEPRECIATION) ---- ------------ ------------ -------------- Investments ..... $88,610,855 $23,113,451 $(1,488,191) $21,625,260 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 its 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 affiliated persons of the Adviser. 4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the "Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act. Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser, serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and Class C Share Plans, payments are authorized to Gabelli & Company at annual rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for the year ended December 31, 2005, other than short-term securities, aggregated $35,281,286 and $52,384,851, respectively. 6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the Fund paid brokerage commissions of $1,350 to Gabelli & Company. Additionally, Gabelli & Company informed the Fund that it received $3,397 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares. The cost of calculating the Fund's NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the the year ended December 31, 2005, the Fund reimbursed the Adviser $45,000 in connection with the cost of computing the Fund's NAV, which is included in miscellaneous expenses in the Statement of Operations. 13 THE GAMCO GLOBAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to $25,000,000 from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at 0.75% above the Federal Funds rate on outstanding balances. At December 31, 2005, there were no borrowings outstanding from the line of credit. The average daily amount of borrowings outstanding from the line of credit within the year ended December 31, 2005, was $7,167 with a weighted average interest rate of 3.30%. The maximum amount borrowed at any time during the year ended December 31, 2005 was $707,000. 8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class AAA Shares are offered only to investors who acquire them directly from Gabelli & Company or through selected broker/dealers without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares are subject to a contingent deferred sales charge ("CDSC") upon redemption within six years of purchase and automatically convert to Class A Shares approximately eight years after the original purchase. The applicable CDSC is equal to a declining percentage of the lesser of the NAV per share at the date of the original purchase or at the date of redemption, based on the length of time held. Class C Shares are subject to a 1% CDSC for one year after purchase. Class B Shares are available only through exchange of Class B Shares of other funds distributed by Gabelli & Company. The Board has approved Class I Shares which have not been offered publicly. Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. (Prior to June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or exchanged within the sixtieth day after the date of a purchase.) The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund. The redemption fees retained by the Fund during the years ended December 31, 2005 and December 31, 2004 amounted to $873 and $11,158, respectively. The redemption fee does not apply to shares purchased through programs that the Adviser determined to have appropriate short-term trading policies in place. Additionally, certain recordkeepers for qualified and non-qualified retirement plans that could not collect the redemption fee at the participant level due to systems limitations have received an extension to implement such systems. 14 THE GAMCO GLOBAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ---------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ CLASS AAA CLASS AAA ---------------------------- ---------------------------- Shares sold ........................................ 351,247 $ 6,634,577 303,833 $ 4,973,892 Shares issued upon reinvestment of dividends ....... 4,351 89,324 -- -- Shares redeemed .................................... (1,387,756) (25,704,300) (2,053,668) (33,476,267) ---------- ------------ ---------- ------------ Net decrease ..................................... (1,032,158) $(18,980,399) (1,749,835) $(28,502,375) ========== ============ ========== ============ CLASS A CLASS A ---------------------------- ---------------------------- Shares sold ........................................ 36,708 $ 724,402 18,166 $ 291,654 Shares issued upon reinvestment of dividends ....... 97 1,998 -- -- Shares redeemed .................................... (7,903) (149,401) (16,659) (272,049) ---------- ------------ ---------- ------------ Net increase ..................................... 28,902 $ 576,999 1,507 $ 19,605 ========== ============ ========== ============ CLASS B CLASS B ---------------------------- ---------------------------- Shares sold ........................................ 1,074 $ 18,953 207 $ 3,080 Shares redeemed .................................... (1,326) (22,770) (2,868) (46,177) ---------- ------------ ---------- ------------ Net decrease ..................................... (252) $ (3,817) (2,661) $ (43,097) ========== ============ ========== ============ CLASS C CLASS C ---------------------------- ---------------------------- Shares sold ........................................ 9,486 $ 178,993 4,553 $ 69,965 Shares redeemed .................................... (394) (7,267) (14,548) (233,307) ---------- ------------ ---------- ------------ Net increase/(decrease) .......................... 9,092 $ 171,726 (9,995) $ (163,342) ========== ============ ========== ============
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the Attorney General of the State of New York and the Securities and Exchange Commission (the "SEC") requesting information on mutual fund trading practices involving certain funds managed by the Adviser. GAMCO Investors, Inc., the Adviser's parent company, is responding to these requests for documents and testimony. On a separate matter, in September 2005, the Adviser was informed by the staff of the SEC that the staff may recommend to the Commission that an administrative remedy and a monetary penalty be sought from the Adviser in connection with the actions of two of seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered investment companies to provide written statements to shareholders when a dividend is made from a source other than net investment income. While the two closed-end funds sent annual statements and provided other materials containing this information, the funds did not send written statements to shareholders with each distribution in 2002 and 2003. The Adviser believes that all of the funds are now in compliance. The Adviser believes that these matters would have no effect on the Fund or any material adverse effect on the Adviser or its ability to manage the Fund. 15 THE GAMCO GLOBAL GROWTH FUND FINANCIAL HIGHLIGHTS ================================================================================ Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ------------------------------------- -------------------------- Net Net Asset Net Realized and Total Period Value, Investment Unrealized from Net Ended Beginning Income Gain (Loss) on Investment Investments Total Redemption December 31, of Period (Loss)(c) Investments Operations Income Distributions Fees(c) ------------ --------- -------- ----------- ---------- ------ ------------- ------- CLASS AAA 2005 $17.98 $ 0.02 $ 2.45 $ 2.47 $(0.02) $(0.02) $0.00(a) 2004 16.43 (0.05) 1.60 1.55 -- -- 0.00(a) 2003 11.62 (0.06) 4.86 4.80 -- -- 0.01 2002 15.45 (0.08) (3.75) (3.83) -- -- -- 2001 20.37 (0.16) (4.76) (4.92) -- -- -- CLASS A 2005 $18.01 $ 0.01 $ 2.45 $ 2.46 $(0.04) $(0.04) $0.00(a) 2004 16.45 (0.05) 1.61 1.56 -- -- 0.00(a) 2003 11.63 (0.06) 4.87 4.81 -- -- 0.01 2002 15.47 (0.08) (3.76) (3.84) -- -- -- 2001 20.37 (0.16) (4.74) (4.90) -- -- -- CLASS B 2005 $17.41 $(0.12) $ 2.36 $ 2.24 -- -- $0.00(a) 2004 16.02 (0.17) 1.56 1.39 -- -- 0.00(a) 2003 11.42 (0.16) 4.75 4.59 -- -- 0.01 2002 15.30 (0.17) (3.71) (3.88) -- -- -- 2001 20.30 (0.29) (4.71) (5.00) -- -- -- CLASS C 2005 $17.35 $(0.16) $ 2.39 $ 2.23 -- -- $0.00(a) 2004 15.97 (0.19) 1.57 1.38 -- -- 0.00(a) 2003 11.38 (0.16) 4.74 4.58 -- -- 0.01 2002 15.26 (0.17) (3.71) (3.88) -- -- -- 2001 20.24 (0.28) (4.70) (4.98) -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ---------------------------------------------------------- Net Asset Net Assets Net Period Value, End of Investment Portfolio Ended End of Total Period Income Operating Turnover December 31, Period Return+ (in 000's) (Loss) Expenses (b) Rate ------------ ------- ------- ---------- ------ ------------- -------- CLASS AAA 2005 $20.43 13.7% $108,433 0.11% 1.79%(d) 33% 2004 17.98 9.4 114,011 (0.30) 1.82 100 2003 16.43 41.4 132,886 (0.45) 1.71 63 2002 11.62 (24.8) 105,034 (0.58) 1.75 82 2001 15.45 (24.2) 178,575 (0.91) 1.75 102 CLASS A 2005 $20.43 13.7% $ 1,150 0.03% 1.79%(d) 33% 2004 18.01 9.5 493 (0.29) 1.82 100 2003 16.45 41.4 426 (0.45) 1.71 63 2002 11.63 (24.8) 176 (0.58) 1.75 82 2001 15.47 (24.1) 163 (0.91) 1.75 102 CLASS B 2005 $19.65 12.9% $ 202 (0.67)% 2.54%(d) 33% 2004 17.41 8.7 183 (1.05) 2.57 100 2003 16.02 40.3 211 (1.20) 2.46 63 2002 11.42 (25.4) 86 (1.33) 2.50 82 2001 15.30 (24.6) 57 (1.66) 2.50 102 CLASS C 2005 $19.58 12.9% $ 236 (0.90)% 2.52%(d) 33% 2004 17.35 8.6 52 (1.17) 2.57 100 2003 15.97 40.3 207 (1.20) 2.46 63 2002 11.38 (25.4) 101 (1.33) 2.50 82 2001 15.26 (24.6) 55 (1.66) 2.50 102
------------- + 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 and does not reflect applicable sales charges. (a) Amount represents less than $0.005 per share. (b) The Fund incurred interest expense during the years ended December 31, 2004, 2002, and 2001. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.81%, 1.70%, and 1.59% (Class AAA), 1.81%, 1.70%, and 1.59%, (Class A), 2.56%, 2.45%, and 2.34% (Class B), and 2.56%, 2.45%, and 2.34% (Class C), respectively. (c) Per share amounts have been calculated using the average shares outstanding method. (d) The ratios do not include a reduction of expenses for custodian fee credits on cash balances maintained with the custodian. Including such custodian fee credits, the expense ratios for the year ended December 31, 2005 would have been 1.79%, 1.79%, 2.53%, and 2.52% for Class AAA, Class A, Class B, and Class C, respectively. See accompanying notes to financial statements. 16 THE GAMCO GLOBAL GROWTH FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ================================================================================ To the Shareholders and Board of Directors of GAMCO Global Series Funds, Inc. We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The GAMCO Global Growth Fund (the "Fund") (formerly The Gabelli Global Growth Fund), a series of GAMCO Global Series Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of December 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended December 31, 2002 were audited by other auditors whose report dated January 31, 2003, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the Fund's custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The GAMCO Global Growth Fund, a series of GAMCO Global Series Funds, Inc., at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young Philadelphia, Pennsylvania February 14, 2006 17 THE GAMCO GLOBAL GROWTH FUND BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED) During the six months ended December 31, 2005, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the "independent directors") who are not "interested persons" of the Fund. The following paragraphs summarize the material information and factors considered by the independent directors as well as their conclusions relative to such factors. NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered information regarding the portfolio managers, the depth of the analyst pool available to the Adviser and the portfolio managers, the scope of administrative, shareholder, and other services supervised or provided by the Adviser, and the absence of significant service problems reported to the Board. The independent directors noted the experience, length of service, and reputation of the portfolio managers. INVESTMENT PERFORMANCE. The independent directors reviewed the short, medium, and long-term performance of the Fund against a peer group of global multi-cap core and global multi-cap growth funds, noting its top third performance for the one and three year periods and bottom quartile performance for the five year period. PROFITABILITY. The independent directors reviewed summary data regarding the profitability of the Fund to the Adviser both with a pro rata administrative overhead charge and with a standalone administrative charge. The directors also noted an affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions. ECONOMIES OF SCALE. The independent directors discussed the major elements of the Adviser's cost structure and the relationship of those elements to potential economies of scale and reviewed rudimentary data suggesting that 20% growth in the Fund would not produce meaningful economies of scale that the shareholders would not participate in. SHARING OF ECONOMIES OF SCALE. The independent directors noted that the investment advisory fee schedule for the Fund does not take into account any potential economies of scale that may develop. SERVICE AND COST COMPARISONS. The independent directors compared the expense ratios of the investment advisory fee, other expenses, and total expenses of the Fund to similar expense ratios of the peer group of global multi-cap core and multi-cap growth funds and noted that the Adviser's advisory fee includes substantially all administrative services of the Fund as well as investment advisory services. The directors noted that the Fund's expense ratios were significantly higher, and the Fund's size was lower, than average within this group. The directors also noted that the advisory fee structure was the same as that in effect for most of the Gabelli/GAMCO funds. The directors were presented with, but did not compare, the advisory fee to the fee for other types of accounts managed by the Adviser. CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and a mixed performance record. The independent directors also concluded that the Fund's expense ratios and the profitability to the Adviser of managing the Fund were reasonable, and that economies of scale were not a significant factor in their thinking at this time. The directors did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the independent directors determined to recommend continuation of the investment advisory agreement to the full Board of Directors. 18 THE GAMCO GLOBAL GROWTH FUND ADDITIONAL FUND INFORMATION (UNAUDITED) ================================================================================ The business and affairs of the Company are managed under the direction of the Company's Board of Directors. Information pertaining to the Directors and officers of the Company is set forth below. The Fund's Statement of Additional Information includes additional information about The GAMCO Global Growth Fund's Directors and is available, without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The GAMCO Global Growth Fund at One Corporate Center, Rye, NY 10580-1422.
TERM OF NUMBER OF OFFICE AND FUNDS IN FUND NAME, POSITION(S) LENGTH OF COMPLEX ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4 ---------------- -------- ---------- ---------------------- ------------------ INTERESTED DIRECTORS 3: ---------------------- MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group Director and Officer of GAMCO Investors, Inc. Holdings, Inc. Chief Investment Officer and Chief Investment Officer - Value (holding company) Age: 63 Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Chairman and Chief Executive Officer of Lynch Interactive Corporation (multimedia and services) JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Company, Director of GAMCO Director Inc. Investors, Inc. Age: 61 NON-INTERESTED DIRECTORS: ------------------------ E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch Corporation Director Consultants, Inc.; Adviser, (diversified manufacturing) Age: 66 Iona College School of Business ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of -- Director Anthony J. Colavita, P.C. Age: 70 ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director/Trustee of Director Executive Officer of The Guardian Life 25 mutual funds within the Age: 75 Insurance Company of America from January Guardian Fund Complex 1993 to December 1995; President, Chief Executive Officer and a Director prior thereto WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence -- Director Hospital and practicing private physician Age: 65 ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. -- Director (commodities and futures trading) Age: 71 SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Director of Hollis-Eden Director Supplies Corp. Pharmaceuticals (biotechnology); Age: 60 Director of Earl Scheib, Inc. (automotive services)
19 THE GAMCO GLOBAL GROWTH FUND ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED) ================================================================================
TERM OF OFFICE AND NAME, POSITION(S) LENGTH OF ADDRESS 1 TIME PRINCIPAL OCCUPATION(S) AND AGE SERVED 2 DURING PAST FIVE YEARS ---------------- -------- ---------------------- OFFICERS: -------- BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating President Officer of Gabelli Funds, LLC since 1988 and and Treasurer an officer of all of the registered investment Age: 54 companies in the Gabelli Funds complex. Director and President of Gabelli Advisers, Inc. since 1998. JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of Secretary GAMCO Investors, Inc. since 1999 and GAMCO Age: 42 Asset Management Inc. since 1993; Secretary of all of the registered investment companies in the Gabelli Funds complex. PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc. Chief Compliance Officer since 2004; Chief Compliance Officer of all of the Age: 52 registered investment companies in the Gabelli Funds complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004.
-------------- 1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. 2 Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Company's By-Laws and Articles of Incorporation. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. Effective November 16, 2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves as Director Emeritus. 3 "Interested person" of the Company as defined in the Investment Company Act of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested person" because of their affiliation with Gabelli Funds, LLC which acts as the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. 4 This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or other investment companies registered under the 1940 Act. -------------------------------------------------------------------------------- 2005 TAX NOTICE TO SHAREHOLDERS (Unaudited) For the fiscal year ended December 31, 2005, the Fund paid to shareholders ordinary income dividends (comprised of net investment income) totaling $0.0174 and $0.0400 per share for Class AAA and Class A, respectively. For the year ended December 31, 2005, 100% of the distribution qualifies for the dividend received deduction available to corporations, and 100% of the ordinary income distribution was qualified dividend income. -------------------------------------------------------------------------------- 20 -------------------------------------------------------------------------------- GABELLI FUNDS AND YOUR PERSONAL PRIVACY ================================================================================ WHO ARE WE? The Gabelli Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc., which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has subsidiaries that provide investment advisory or brokerage services for a variety of clients. WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A GABELLI CUSTOMER? If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is: o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your name, address, telephone number, social security number, bank account number, and other information. o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE SERVICES TO YOU. This would include information about the shares that you buy or redeem, and the deposits and withdrawals that you make. If we hire someone else to provide services--like a transfer agent--we will also have information about the transactions that you conduct through them. WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT? We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its web site, www.sec.gov. WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION? We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the Fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential. -------------------------------------------------------------------------------- GABELLI FAMILY OF FUNDS VALUE ________________________________________ 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. (MULTICLASS) 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 established companies which are temporarily out of favor. The fund's objective is to identify a catalyst or sequence of events that will return the company to a higher value. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA WESTWOOD EQUITY FUND Seeks to invest primarily in the common stock of well-seasoned companies that have recently reported positive earnings surprises and are trading below Westwood's proprietary growth rate estimates. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE FOCUSED VALUE ______________________________ GABELLI VALUE FUND Seeks to invest in securities of companies believed to be undervalued. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA SMALL CAP VALUE ____________________________ GABELLI SMALL CAP FUND Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA WESTWOOD SMALLCAP EQUITY FUND Seeks to invest primarily in smaller capitalization equity securities - market caps of $2.5 billion or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI WOODLAND SMALL CAP VALUE FUND Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company's value. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA GROWTH ______________________________________ GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN AGGRESSIVE GROWTH _________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED MICRO-CAP ___________________________________ WESTWOOD MIGHTY MITES(SM) FUND Seeks to invest in micro-cap companies that have market capitalizations of $300 million or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED EQUITY INCOME _______________________________ GABELLI EQUITY INCOME FUND Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA 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. (MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE MARK FREEMAN, CFA WESTWOOD INCOME FUND Seeks to provide a high level of current income as well as long-term capital appreciation by investing in income producing equity and fixed income securities. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE SPECIALTY EQUITY ____________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED GAMCO 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. (MULTICLASS) TEAM MANAGED SECTOR ______________________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN GABELLI UTILITIES FUND Seeks to provide a high level of total return through a combination of capital appreciation and current income. (MULTICLASS) TEAM MANAGED MERGER AND ARBITRAGE _____________________ 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 CONTRARIAN_________________________________ GAMCO MATHERS FUND Seeks long-term capital appreciation in various market conditions without excessive risk of capital loss. (CLASS AAA-NO-LOAD) PORTFOLIO MANAGER: HENRY VAN DER EB, CFA COMSTOCK CAPITAL VALUE FUND Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA COMSTOCK STRATEGY FUND The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA FIXED INCOME ________________________________ WESTWOOD INTERMEDIATE BOND FUND Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund's primary objective is total return. (MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA CASH MANAGEMENT-MONEY MARKET __________ 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 AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC, AND POLITICAL RISKS. TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. GAMCO Global Series Funds, Inc. THE GAMCO GLOBAL GROWTH FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA John D. Gabelli CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT EXECUTIVE OFFICER GABELLI & COMPANY, INC. GAMCO INVESTORS, INC. E. Val Cerutti Werner J. Roeder, MD CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL Anthony J. Colavita Anthonie C. van Ekris ATTORNEY-AT-LAW MANAGING DIRECTOR ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC. Arthur V. Ferrara Salvatore J. Zizza FORMER CHAIRMAN AND CHAIRMAN CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL GUARDIAN LIFE INSURANCE SUPPLIES CORP. COMPANY OF AMERICA OFFICERS Bruce N. Alpert James E. McKee PRESIDENT AND TREASURER SECRETARY Peter D. Goldstein CHIEF COMPLIANCE OFFICER DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The GAMCO Global Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. -------------------------------------------------------------------------------- GAB442Q405SR GAMCO THE GAMCO GLOBAL GROWTH FUND ANNUAL REPORT DECEMBER 31, 2005 THE GAMCO GLOBAL OPPORTUNITY FUND ANNUAL REPORT DECEMBER 31, 2005 TO OUR SHAREHOLDERS, The Sarbanes-Oxley Act requires a Fund's principal executive and financial officers to certify the entire contents of the semi-annual and annual shareholder reports in a filing with the Securities and Exchange Commission on Form N-CSR. This certification would cover the portfolio manager's commentary and subjective opinions if they are attached to or a part of the financial statements. Many of these comments and opinions would be difficult or impossible to certify. Because we do not want our portfolio managers to eliminate their opinions and/or restrict their commentary to historical facts, we have separated their commentary from the financial statements and investment portfolio and have sent it to you separately. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com/funds. Enclosed are the audited financial statements and the investment portfolio as of December 31, 2005 with a description of factors that affected the performance during the past year. PERFORMANCE DISCUSSION For 2005, The GAMCO Global Opportunity Fund returned 15.12% compared with a rise of 11.37% for the MSCI AC World Free Index and 11.60% for the average Global Multi Cap Growth Fund monitored by Lipper. The Japanese equity market was rerated in 2005. This was driven by institutional foreign investors who purchased (Y)10 trillion of stock in 2005 and also by individual investors who bought (Y)2 trillion of stock in the past three months. Japan was the top performer among leading non-U.S. equity markets. Again smaller companies outperformed with the TOPIX second section index rallying 41.9% in 2005. The U.S. economy continues to perform well despite the presence of some stiff headwinds. These include higher energy prices following the devastating gulf coast hurricanes and the tightening of monetary policy. The dollar benefited during the past year from strong inflows from overseas investors, which had a negative impact on the dollar denominated return of the Fund. Clearly, the European story does not revolve around growth. Rather it is based on corporate self help. Corporate managers are acutely aware of the need to create shareholder value, as Europe has become the center of global merger and acquisition activity in 2005. Mining holdings and gold miners in particular had an outstanding 2005 with Antofagasta plc up 67.2%, followed by Harmony Gold Mining Co. Ltd. (+65.8%), Gold Fields Ltd. (+41.2%), and Newmont Mining Corp. (+20.2%). Another top performing sector in our portfolio during the last year was energy and utilities. Among the best performing energy and utility companies in 2005 were Petrobras Brasiliero (+79.16%), Suncor Energy Inc. (+78.33%), Transocean Inc. (+64.40%), Schlumberger Ltd. (+45.11%), and Kanto Natural Gas Development Co. Ltd. (+35.5%). Telecommunications and entertainment holdings disappointed in 2005 with Telephone & Data Systems Inc. down by over 50%, Verizon Communications Inc. declining by 25.7% and Time Warner Inc. (-10.3)%. The Fund's performance in 2005 was helped by its exposure to Japan and Europe while most of its domestic holdings disappointed in the past twelve months. Sincerely yours, /s/ Bruce N. Alpert Bruce N. Alpert President February 15, 2006 [GRAPHIC OMITTED] PLOT POINTS FOLLOW: COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL OPPORTUNITY FUND CLASS AAA SHARES, THE LIPPER GLOBAL MULTI-CAP GROWTH FUND AVERAGE AND THE MSCI AC WORLD FREE INDEX GAMCO Global Opportunity Fund Lipper Global Multi-Cap MSCI AC World Class AAA Shares Growth Fund Average Free Index 5/11/98 $10,000 $10,000 $10,000 12/31/98 11,010 9,922 10,613 12/31/99 19,731 13,502 13,459 12/31/00 17,069 12,115 11,583 12/31/01 12,131 10,011 9,740 12/31/02 10,738 8,056 7,892 12/31/03 14,756 10,641 10,624 12/31/04 16,823 12,194 12,298 12/31/05 19,367 13,608 13,696 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. COMPARATIVE RESULTS --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2005 (A) ---------------------------------------------------- Since Inception QUARTER 1 YEAR 3 YEAR 5 YEAR (5/11/98) -------------------------------------------------------------------------------------------------------------------- GAMCO GLOBAL OPPORTUNITY FUND CLASS AAA ............ 4.68% 15.12% 21.72% 2.56% 9.02% MSCI AC World Free Index ........................... 3.43 11.37 20.18 3.41 4.19 Lipper Global Multi-Cap Growth Fund Average ........ 3.81 11.60 20.42 2.90 6.65 Class A ............................................ 4.64 15.18 21.74 2.60 9.06 (1.39)(b) 8.57(b) 19.36(b) 1.39(b) 8.22(b) Class B ............................................ 4.45 14.23 20.82 1.83 8.50 (0.55)(c) 9.23(c) 20.13(c) 1.45(c) 8.50(c) Class C ............................................ 4.44 14.47 21.69 2.64 9.08 3.44(c) 13.47(c) 21.69(c) 2.64(c) 9.08(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS AND ARE NET OF EXPENSES. 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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. INVESTING IN FOREIGN SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC, AND POLITICAL RISKS. THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON MARCH 12, 2000, AUGUST 16, 2000 AND NOVEMBER 23, 2001, RESPECTIVELY. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER FOR THE PERIODS STARTING PRIOR TO AUGUST 16, 2000 AND NOVEMBER 23, 2001, RESPECTIVELY, DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REIMBURSED CERTAIN EXPENSES OF THE FUND. THE MSCI AC WORLD FREE 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. (b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF THE PERIOD. (c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT THE END OF THE PERIOD SHOWN FOR CLASS B AND CLASS C SHARES, RESPECTIVELY. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES. -------------------------------------------------------------------------------- 2 THE GAMCO GLOBAL OPPORTUNITY FUND DISCLOSURE OF FUND EXPENSES (UNAUDITED) For the Six Month Period from July 1, 2005 through December 31, 2005 EXPENSE TABLE ================================================================================ We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund's gross income, directly reduce the investment return of a fund. When a fund's expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The Expense Table below illustrates your Fund's costs in two ways: ACTUAL FUND RETURN: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The "Ending Account Value" shown is derived from the Fund's ACTUAL return during the past six months, and the "Expenses Paid During Period" shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading "Expenses Paid During Period" to estimate the expenses you paid during this period. HYPOTHETICAL 5% RETURN: This section provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case - because the hypothetical return used is NOT the Fund's actual return - the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The "Annualized Expense Ratio" represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the year ended December 31, 2005. Beginning Ending Annualized Expenses Account Value Account Value Expense Paid During 07/01/05 12/31/05 Ratio Period* -------------------------------------------------------------------------------- THE GAMCO GLOBAL OPPORTUNITY FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Class AAA $1,000.00 $1,153.70 2.00% $10.86 Class A $1,000.00 $1,153.40 2.00% $10.86 Class B $1,000.00 $1,149.10 2.75% $14.90 Class C $1,000.00 $1,148.70 2.75% $14.89 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,015.12 2.00% $10.16 Class A $1,000.00 $1,015.12 2.00% $10.16 Class B $1,000.00 $1,011.34 2.75% $13.94 Class C $1,000.00 $1,011.34 2.75% $13.94 * Expenses are equal to the Fund's annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. 3 SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED) The following table presents portfolio holdings as a percent of total net assets as of December 31, 2005: THE GAMCO GLOBAL OPPORTUNITY FUND Metals and Mining .................................. 12.8% Health Care ........................................ 12.4% Energy and Utilities ............................... 11.7% Financial Services ................................. 9.8% Consumer Products .................................. 9.1% Entertainment ...................................... 5.3% Telecommunications ................................. 5.0% Retail ............................................. 4.6% Building and Construction .......................... 4.1% Food and Beverage .................................. 4.0% Computer Software and Services ..................... 3.6% Diversified Industrial ............................. 3.1% Aerospace .......................................... 2.6% Cable and Satellite ................................ 2.5% Broadcasting ....................................... 1.9% Aviation: Parts and Services ....................... 1.8% Hotels and Gaming .................................. 1.6% Wireless Communications ............................ 1.0% Business Services .................................. 0.9% Electronics ........................................ 0.7% Publishing ......................................... 0.6% U.S. Treasury Bills ................................ 0.4% Other Assets and Liabilities - (Net) ............... 0.5% ------ 100.0% ====== THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI (800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330. PROXY VOTING The Fund files Form N-PX with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of the Fund's proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities are available without charge, upon request, (i) by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities and Exchange Commission's website at www.sec.gov. 4 THE GAMCO GLOBAL OPPORTUNITY FUND SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE --------- ---- ------- COMMON STOCKS -- 99.1% AEROSPACE -- 2.6% 3,000 L-3 Communications Holdings Inc. ..... $ 127,720 $ 223,050 5,500 Lockheed Martin Corp. ................ 135,166 349,965 ----------- ----------- 262,886 573,015 ----------- ----------- AVIATION: PARTS AND SERVICES -- 1.8% 7,400 Precision Castparts Corp. ............ 109,705 383,394 ----------- ----------- BROADCASTING -- 1.9% 20,000 Mediaset SpA ......................... 195,380 211,917 5,000 Modern Times Group, Cl. B+ ........... 185,468 208,635 ----------- ----------- 380,848 420,552 ----------- ----------- BUILDING AND CONSTRUCTION -- 4.1% 22,000 Aica Kogyo Co. Ltd. .................. 210,378 301,827 20,125 CRH plc .............................. 270,443 592,073 ----------- ----------- 480,821 893,900 ----------- ----------- BUSINESS SERVICES -- 0.9% 12,000 Sohgo Security Services Co. Ltd. ..... 150,253 183,660 ----------- ----------- CABLE AND SATELLITE -- 2.5% 7,000 Cablevision Systems Corp., Cl. A+ .... 137,535 164,290 9,000 Rogers Communications Inc., Cl. B .... 151,574 380,340 ----------- ----------- 289,109 544,630 ----------- ----------- COMPUTER SOFTWARE AND SERVICES -- 3.6% 700 Google Inc., Cl. A+ .................. 220,948 290,402 11,500 Microsoft Corp. ...................... 301,125 300,725 5,000 Yahoo! Inc.+ ......................... 169,373 195,900 ----------- ----------- 691,446 787,027 ----------- ----------- CONSUMER PRODUCTS -- 9.1% 7,000 Altadis SA ........................... 214,528 317,568 6,800 Christian Dior SA .................... 323,455 604,591 12,700 Compagnie Financiere Richemont AG, Cl. A ................ 254,839 552,825 8,500 Escada AG+ ........................... 207,341 272,710 4,000 Procter & Gamble Co. ................. 221,128 231,520 ----------- ----------- 1,221,291 1,979,214 ----------- ----------- DIVERSIFIED INDUSTRIAL -- 3.1% 7,000 Bouygues SA .......................... 252,231 342,264 9,500 General Electric Co. ................. 320,183 332,975 ----------- ----------- 572,414 675,239 ----------- ----------- ELECTRONICS -- 0.7% 4,400 Linear Technology Corp. .............. 165,609 158,708 ----------- ----------- MARKET SHARES COST VALUE --------- ---- ------- ENERGY AND UTILITIES -- 11.7% 2,200 Imperial Oil Ltd. .................... $ 222,619 $ 218,420 40,000 Kanto Natural Gas Development Co. Ltd. ............... 205,212 282,868 6,000 Murphy Oil Corp. ..................... 240,211 323,940 7,000 Petroleo Brasileiro SA, ADR .......... 211,615 498,890 3,600 Schlumberger Ltd. .................... 238,374 349,740 6,000 Suncor Energy Inc. ................... 201,704 378,780 45,000 Tokai Carbon Co. Ltd. ................ 196,346 209,098 4,000 Transocean Inc.+ ..................... 164,064 278,760 ----------- ----------- 1,680,145 2,540,496 ----------- ----------- ENTERTAINMENT -- 5.3% 14,000 Discovery Holding Co., Cl. A+ ........ 201,048 212,100 4,500 Oriental Land Co. Ltd. ............... 261,721 245,347 35,000 Publishing & Broadcasting Ltd. ....... 176,587 422,852 15,000 Time Warner Inc. ..................... 225,367 261,600 ----------- ----------- 864,723 1,141,899 ----------- ----------- FINANCIAL SERVICES -- 9.8% 15,000 Bank of Ireland ...................... 92,773 236,187 5,000 Canaccord Capital Inc. ............... 63,107 64,046 7,000 Citigroup Inc. ....................... 270,158 339,710 4,375 Julius Baer Holding Ltd. AG .......... 295,394 309,967 22,000 Nikko Cordial Corp. .................. 233,390 348,463 25,000 Shizuoka Bank Ltd. ................... 253,840 250,562 5,000 TSX Group Inc. ....................... 198,762 201,428 4,000 UBS AG ............................... 336,926 380,600 ----------- ----------- 1,744,350 2,130,963 ----------- ----------- FOOD AND BEVERAGE -- 4.0% 5,000 ARIAKE JAPAN Co. Ltd. ................ 121,202 123,161 5,000 General Mills Inc. ................... 248,004 246,600 5,000 PepsiCo Inc. ......................... 261,500 295,400 2,700 Whole Foods Market Inc. .............. 136,042 208,953 ----------- ----------- 766,748 874,114 ----------- ----------- HEALTH CARE -- 12.4% 8,208 GlaxoSmithKline plc .................. 245,935 207,449 7,000 Novartis AG .......................... 268,348 367,832 4,000 Roche Holding AG ..................... 353,538 600,586 6,691 Sanofi-Aventis, ADR .................. 231,241 293,735 1,200 Straumann Holding AG ................. 254,333 278,072 2,000 Synthes Inc. ......................... 189,898 224,649 6,000 Takeda Pharmaceutical Co. Ltd. ....... 376,833 324,585 2,000 UnitedHealth Group Inc. .............. 112,260 124,280 5,000 William Demant Holding A/S+ .......... 235,806 276,499 ----------- ----------- 2,268,192 2,697,687 ----------- ----------- See accompanying notes to financial statements. 5 THE GAMCO GLOBAL OPPORTUNITY FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE --------- ---- ------- COMMON STOCKS (CONTINUED) HOTELS AND GAMING -- 1.6% 10,000 Greek Organization of Football Prognostics SA ........... $ 168,339 $ 344,513 ----------- ----------- METALS AND MINING -- 12.8% 17,726 Andsberg Ltd.+ (a) ................... 8,277 15,776 14,726 Antofagasta plc ...................... 88,100 473,529 59,000 Gold Fields Ltd., ADR ................ 256,194 1,040,170 10,000 Harmony Gold Mining Co. Ltd.+ ........ 56,555 134,176 24,000 Harmony Gold Mining Co. Ltd., ADR+ ... 130,306 313,200 15,000 Newmont Mining Corp. ................. 349,500 801,000 ----------- ----------- 888,932 2,777,851 ----------- ----------- PUBLISHING -- 0.6% 40,000 Independent News & Media plc ......... 98,736 120,284 ----------- ----------- RETAIL -- 4.6% 12,000 Matsumotokiyoshi Co. Ltd. ............ 309,058 379,531 8,000 Seven & I Holdings Co. Ltd.+ ......... 275,092 342,562 6,000 Walgreen Co. ......................... 233,238 265,560 ----------- ----------- 817,388 987,653 ----------- ----------- TELECOMMUNICATIONS -- 5.0% 3,000 ALLTEL Corp. ......................... 156,153 189,300 40 KDDI Corp. ........................... 281,155 230,635 15,675 Sprint Nextel Corp. .................. 280,989 366,168 2,300 Telephone & Data Systems Inc. ........ 45,066 82,869 2,300 Telephone & Data Systems Inc., Special 41,599 79,603 4,500 Verizon Communications Inc. .......... 273,319 135,540 ----------- ----------- 1,078,281 1,084,115 ----------- ----------- WIRELESS COMMUNICATIONS -- 1.0% 4,500 United States Cellular Corp.+ ........ 254,809 222,300 ----------- ----------- TOTAL COMMON STOCKS .................. 14,955,025 21,521,214 ----------- ----------- PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------- U.S. GOVERNMENT OBLIGATIONS -- 0.4% $ 95,000 U.S. Treasury Bill, 3.790%++, 01/19/06 ................. $ 94,842 $ 94,835 ----------- ----------- TOTAL INVESTMENTS -- 99.5% ........... $15,049,867 21,616,049 =========== OTHER ASSETS AND LIABILITIES (NET) -- 0.5% ........ 104,711 ----------- NET ASSETS -- 100.0% .............................. $21,720,760 =========== ---------------- (a) Security fair valued under procedures established by the Board of Directors. The procedures may include reviewing valuation of comparable securities and other factors on a regular basis. At December 31, 2005, the market value of the fair valued security amounted to $15,776 or 0.07% of total net assets. + Non-income producing security. ++ Represents annualized yield at date of purchase. ADR American Depository Receipt % OF MARKET MARKET GEOGRAPHIC DIVERSIFICATION VALUE VALUE -------------------------- -------- -------- North America ........................ 37.6% $ 8,123,700 Europe ............................... 35.1 7,582,001 Japan ................................ 14.9 3,222,300 South Africa ......................... 6.9 1,487,546 Latin America ........................ 3.6 777,650 Asia/Pacific ......................... 1.9 422,852 ------ ----------- 100.0% $21,616,049 ====== =========== See accompanying notes to financial statements. 6 THE GAMCO GLOBAL OPPORTUNITY FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2005 ================================================================================ ASSETS: Investments, at value (cost $15,049,867) ................... $ 21,616,049 Foreign currency, at value ($63,107) ....................... 63,186 Cash ....................................................... 965 Receivable for Fund shares sold ............................ 137,845 Dividends receivable ....................................... 29,626 Other assets ............................................... 2,048 ------------ TOTAL ASSETS ............................................... 21,849,719 ------------ LIABILITIES: Payable for investments purchased .......................... 63,186 Payable for shareholder communications expenses ............ 18,743 Payable for legal and audit fees ........................... 13,998 Payable for investment advisory fees ....................... 13,525 Payable for shareholder services fees ...................... 5,066 Payable for distribution fees .............................. 4,830 Payable for Fund shares redeemed ........................... 2,684 Other accrued expenses ..................................... 6,927 ------------ TOTAL LIABILITIES .......................................... 128,959 ------------ NET ASSETS applicable to 1,365,472 shares outstanding ....................................... $ 21,720,760 ============ NET ASSETS CONSIST OF: Capital stock, each class at $0.001 par value .............. $ 1,365 Additional paid-in capital ................................. 22,376,559 Accumulated distributions in excess of net investment income .................................... (39,588) Accumulated net realized loss on investments and foreign currency transactions ........................ (7,183,096) Net unrealized appreciation on investments ................. 6,566,182 Net unrealized depreciation on foreign currency translations (662) ------------ NET ASSETS ................................................. $ 21,720,760 ============ SHARES OF CAPITAL STOCK: CLASS AAA: Net Asset Value, offering and redemption price per share ($21,424,756 / 1,346,753 shares outstanding; 75,000,000 shares authorized) ............................ $15.91 ====== CLASS A: Net Asset Value and redemption price per share ($244,038 / 15,375 shares outstanding; 50,000,000 shares authorized) ............................ $15.87 ====== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price) ............................. $16.84 ====== CLASS B: Net Asset Value and offering price per share ($48,376 / 3,123 shares outstanding; 25,000,000 shares authorized) ............................ $15.49(a) ====== CLASS C: Net Asset Value and offering price per share ($3,590 / 221.3 shares outstanding; 25,000,000 shares authorized) ............................ $16.22(a) ====== ------------------ (a) Redemption price varies based on length of time held. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 ================================================================================ INVESTMENT INCOME: Dividends (net of foreign taxes of $21,566) ...... $ 384,542 Interest ......................................... 17,699 ----------- TOTAL INVESTMENT INCOME .......................... 402,241 ----------- EXPENSES: Investment advisory fees ......................... 207,305 Distribution fees - Class AAA .................... 51,314 Distribution fees - Class A ...................... 387 Distribution fees - Class B ...................... 476 Distribution fees - Class C ...................... 25 Shareholder communications expenses .............. 40,925 Legal and audit fees ............................. 29,153 Registration fees ................................ 23,922 Securities pricing expense ....................... 23,506 Shareholder services fees ........................ 18,915 Custodian fees ................................... 15,034 Directors' fees .................................. 2,320 Interest expense ................................. 1,499 Miscellaneous expenses ........................... 8,758 ----------- TOTAL EXPENSES ................................... 423,539 Less: Expense reimbursement (see Note 3) ............... (40,432) Custodian fee credits ............................ (284) ----------- NET EXPENSES ..................................... 382,823 ----------- NET INVESTMENT INCOME ............................ 19,418 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on investments ................. 863,144 Net realized loss on foreign currency transactions (6,620) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 2,088,178 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY ............ 2,944,702 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................. $ 2,964,120 =========== See accompanying notes to financial statements. 7 THE GAMCO GLOBAL OPPORTUNITY FUND STATEMENT OF CHANGES IN NET ASSETS ================================================================================
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ----------------- ----------------- OPERATIONS: Net investment income .................................... $ 19,418 $ 49,315 Net realized gain (loss) on investments and foreign currency transactions .......................... 856,524 (1,229,955) Net change in unrealized appreciation/depreciation on investments and foreign currency translations .......... 2,088,178 3,736,389 ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..... 2,964,120 2,555,749 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA .............................................. (30,715) (70,537) Class A ................................................ (552) (397) Class B ................................................ -- (97) ------------ ------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................... (31,267) (71,031) ------------ ------------ CAPITAL SHARE TRANSACTIONS: Class AAA .............................................. (2,510,492) (744,951) Class A ................................................ 112,811 27,787 Class B ................................................ (9,204) 35,901 Class C ................................................ 3,000 -- ------------ ------------ NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (2,403,885) (681,263) ------------ ------------ REDEMPTION FEES .......................................... 970 3,073 ------------ ------------ NET INCREASE IN NET ASSETS ............................... 529,938 1,806,528 NET ASSETS: Beginning of period ...................................... 21,190,822 19,384,294 ------------ ------------ End of period (including undistributed net investment income of $0 and $0, respectively) ..................... $ 21,720,760 $ 21,190,822 ============ ============
NOTES TO FINANCIAL STATEMENTS ================================================================================ 1. ORGANIZATION. The GAMCO Global Opportunity Fund (the "Fund"), formerly, The Gabelli Global Opportunity Fund, a series of GAMCO Global Series Funds, Inc. (the "Corporation"), formerly, Gabelli Global Series Funds, Inc., was organized on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of four separately managed portfolios (collectively, the "Portfolios") of the Corporation. The Fund's primary objective is capital appreciation. The Fund commenced investment operations on May 11, 1998. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with U.S. 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 or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market's official closing price 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. If no bid 8 THE GAMCO GLOBAL OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the "Board") so determines, by such other method as the Board shall determine in good faith, to reflect its fair market value. 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 "Adviser"). Portfolio securities primarily traded on foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if after the close of foreign markets, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board. Debt instruments with remaining maturities of 60 days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board. Debt instruments having a maturity greater than 60 days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. 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. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons to the valuation and changes in valuation of similar securities, including a comparison of foreign securities to the equivalent U.S. dollar value ADR securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board. 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 102% 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. At December 31, 2005, there were no open repurchase agreements. SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund does not own. The proceeds received for short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of the open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The Fund did not hold any short positions as of December 31, 2005. 9 THE GAMCO GLOBAL OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 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 translations. 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. At December 31, 2005, there were no open forward foreign exchange contracts. FOREIGN CURRENCY TRANSLATIONS. 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 current exchange rates. 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 that 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 translations. 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. FOREIGN SECURITIES. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers. FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests. 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 on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date except for certain dividends which are recorded as soon as the Fund is informed of the dividend. 10 THE GAMCO GLOBAL OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each Fund's average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board. In calculating the net asset value ("NAV") per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense. CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset shown as "custodian fee credits". DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with Federal income tax regulations, which may differ from income and capital gains as determined under U.S. generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate equity accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund and the calculation of net investment income per share in the Financial Highlights excludes these adjustments. For the year ended December 31, 2005, reclassifications were made to increase accumulated distributions in excess of net investment income by $6,620 and to decrease accumulated net realized loss on investments and foreign currency transactions by $6,620. The tax character of distributions paid during the fiscal years ended December 31, 2005 and December 31, 2004 was $31,267 and $71,031, respectively, of ordinary income. PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for Federal income taxes is required. 11 THE GAMCO GLOBAL OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ As of December 31, 2005, the components of accumulated earnings/(losses) on a tax basis were as follows: Undistributed ordinary income.. $ 3,912 Capital loss carryforward ..... (7,183,070) Net unrealized appreciation ... 6,565,493 Other temporary differences ... (43,499) ----------- Total accumulated loss ........ $ (657,164) =========== At December 31, 2005, the Fund has net capital loss carryforwards for Federal income tax purposes of $7,183,070, which are available to reduce future required distributions of net capital gains to shareholders. $2,301,024 of the loss carryforward is available through 2009; $1,904,804 is available through 2010; $1,776,091 is available through 2011; and $1,201,151 is available through 2012. For the year ended December 31, 2005, the Fund utilized net tax capital loss carryforwards of $833,769. The following summarizes the tax cost of investments and related unrealized appreciation/depreciation at December 31, 2005: GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION (DEPRECIATION) ---- ------------ ------------ -------------- Investments ... $15,049,894 $6,910,287 $(344,132) $6,566,155 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 its 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 affiliated persons of the Adviser. Effective May 1, 2005, the Adviser has agreed to reimburse expenses of the Fund to the extent necessary to maintain the annualized total operating expenses of the Fund (exclusive of interest expense) at 2.00%, 2.00%, 2.75%, and 2.75% (1.50%, 1.50%, 2.25%, and 2.25% prior to May 1, 2005) of the value of the Fund's average daily net assets for Class AAA, Class A, Class B, and Class C, respectively. For the year ended December 31, 2005, the Adviser reimbursed the Fund in the amount of $40,432. Beginning January 1, 2004, the Fund is obliged to repay the Adviser for a period of two fiscal years following the fiscal year in which the Adviser reimbursed the Fund only to the extent that the operating expenses of the Fund fall below the applicable expense limitations. The cumulative amount which the Fund may repay the Adviser is $138,048. 4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the "Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act. Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser, serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and Class C Share Plans, payments are authorized to Gabelli & Company at annual rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for the year ended December 31, 2005, other than short-term securities, aggregated $5,217,258 and $7,631,248, respectively. 12 THE GAMCO GLOBAL OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the Fund paid brokerage commissions of $150 to Gabelli & Company. Additionally, Gabelli & Company informed the Fund that it received $984 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares. 7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to $25,000,000 from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at 0.75% above the Federal Funds rate on outstanding balances. At December 31, 2005, there were no borrowings outstanding from the line of credit. The average daily amount of borrowings outstanding from the line of credit within the year ended December 31, 2005 was $59,800 with a related weighted average interest rate of 4.24%. The maximum amount borrowed at any time during the year ended December 31, 2005 was $2,007,000. 8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class AAA Shares are offered only to investors who acquire them directly from Gabelli & Company or through selected broker/dealers without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares are subject to a contingent deferred sales charge ("CDSC") upon redemption within six years of purchase and automatically convert to Class A Shares approximately eight years after the original purchase. The applicable CDSC is equal to a declining percentage of the lesser of the NAV per share at the date of original purchase or at the date of redemption, based on the length of time held. Class C Shares are subject to a 1% CDSC for one year after purchase. Class B Shares are available only through exchange of Class B Shares of other funds distributed by Gabelli & Company. The Board has approved Class I Shares which have not been offered publicly. Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. (Prior to June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or exchanged within the sixtieth day after the date of a purchase.) The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund. The redemption fees retained by the Fund during the years ended December 31, 2005 and December 31, 2004 amounted to $970 and $3,073, respectively. The redemption fee does not apply to shares purchased through programs that the Adviser determined to have appropriate short-term trading policies in place. Additionally, certain recordkeepers for qualified and non-qualified retirement plans that could not collect the redemption fee at the participant level due to systems limitations have received an extension to implement such systems. 13 THE GAMCO GLOBAL OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 -------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT -------- ----------- -------- ----------- CLASS AAA CLASS AAA -------------------------- ------------------------- Shares sold .......................................... 343,785 $ 5,002,957 224,553 $ 2,803,469 Shares issued upon reinvestment of dividends ......... 1,830 29,087 4,847 66,793 Shares redeemed ...................................... (518,825) (7,542,536) (294,740) (3,615,213) -------- ----------- -------- ----------- Net decrease ....................................... (173,210) $(2,510,492) (65,340) $ (744,951) ======== =========== ======== =========== CLASS A CLASS A -------------------------- ------------------------- Shares sold .......................................... 10,880 $ 157,398 2,611 $ 33,417 Shares issued upon reinvestment of dividends ......... 35 547 29 399 Shares redeemed ...................................... (3,190) (45,134) (494) (6,029) -------- ----------- -------- ----------- Net increase ....................................... 7,725 $ 112,811 2,146 $ 27,787 ======== =========== ======== =========== CLASS B CLASS B -------------------------- ------------------------- Shares sold .......................................... 36 $ 500 2,776 $ 35,814 Shares issued upon reinvestment of dividends ......... -- -- 7 97 Shares redeemed ...................................... (727) (9,704) (1) (10) -------- ----------- -------- ----------- Net increase (decrease) ............................ (691) $ (9,204) 2,782 $ 35,901 ======== =========== ======== =========== CLASS C CLASS C -------------------------- ------------------------- Shares sold .......................................... 211 $ 3,000 -- -- Shares issued upon reinvestment of dividends ......... -- -- -- -- Shares redeemed ...................................... -- -- -- -- -------- ----------- -------- ----------- Net increase ....................................... 211 $ 3,000 -- -- ======== =========== ======== ===========
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the Attorney General of the State of New York and the Securities and Exchange Commission (the "SEC") requesting information on mutual fund trading practices involving certain funds managed by the Adviser. GAMCO Investors, Inc., the Adviser's parent company, is responding to these requests for documents and testimony. On a separate matter, in September 2005, the Adviser was informed by the staff of the SEC that the staff may recommend to the Commission that an administrative remedy and a monetary penalty be sought from the Adviser in connection with the actions of two of seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered investment companies to provide written statements to shareholders when a dividend is made from a source other than net investment income. While the two closed-end funds sent annual statements and provided other materials containing this information, the funds did not send written statements to shareholders with each distribution in 2002 and 2003. The Adviser believes that all of the funds are now in compliance. The Adviser believes that these matters would have no effect on the Fund or any material adverse effect on the Adviser or its ability to manage the Fund. 14 THE GAMCO GLOBAL OPPORTUNITY FUND FINANCIAL HIGHLIGHTS ================================================================================ Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ------------------------------------- -------------------------- Net Net Asset Net Realized and Total Period Value, Investment Unrealized from Net Ended Beginning Income Gain (Loss) on Investment Investment Total Redemption December 31, of Period (Loss)(h) Investments Operations Income Distributions Fees(h) ------------ --------- -------- ----------- ---------- ------ ------------- ------- CLASS AAA 2005 $13.84 $ 0.01 $2.08 $2.09 $(0.02) $(0.02) $0.00(g) 2004 12.18 0.03 1.68 1.71 (0.05) (0.05) 0.00(g) 2003 8.87 0.00(g) 3.29 3.29 (0.01) (0.01) 0.03 2002 10.02 0.00(g) (1.15) (1.15) -- -- -- 2001 14.24 0.13 (4.25) (4.12) (0.10) (0.10) -- CLASS A 2005 $13.81 $ 0.01 $2.09 $2.10 $(0.04) $(0.04) $0.00(g) 2004 12.16 0.03 1.67 1.70 (0.05) (0.05) 0.00(g) 2003 8.86 0.00(g) 3.28 3.28 (0.01) (0.01) 0.03 2002 9.99 0.00(g) (1.13) (1.13) -- -- -- 2001 14.21 0.13 (4.24) (4.11) (0.11) (0.11) -- CLASS B 2005 $13.56 $(0.08) $2.01 $1.93 -- -- $0.00(g) 2004 12.00 (0.07) 1.66 1.59 $(0.03) $(0.03) 0.00(g) 2003 8.80 (0.07) 3.24 3.17 -- -- 0.03 2002 10.00 (0.07) (1.13) (1.20) -- -- -- 2001 14.22 0.07 (4.26) (4.19) (0.03) (0.03) -- CLASS C(E) 2005 $14.17 $(0.10) $2.15 $2.05 -- -- $0.00(g) 2004 12.39 0.07 1.71 1.78 -- -- 0.00(g) 2003 9.00 (0.07) 3.43 3.36 -- -- 0.03 2002 10.11 (0.07) (1.04) (1.11) -- -- -- 2001(f) 10.15 0.07 (0.11) (0.04) -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ---------------------------------------------------------- Net Asset Net Assets Net Operating Operating Period Value, End of Investment Expenses Expenses Portfolio Ended End of Total Period Income Before Net of Turnover December 31, Period Return+ (in 000's) (Loss) Reimbursements(b) Reimbursement(c)(d) Rate ------------ ------- ------- ---------- ------ ----------------- ------------------ --------- CLASS AAA 2005 $15.91 15.1% $21,425 0.10% 2.04% 1.85%(i) 26% 2004 13.84 14.0 21,033 0.25 2.00 1.50 35 2003 12.18 37.4 19,305 0.04 1.83 1.52 13 2002 8.87 (11.5) 15,000 (0.05) 2.39 1.59 0 2001 10.02 (28.9) 18,422 1.11 2.00 1.59 31 CLASS A 2005 $15.87 15.2% $ 244 0.05% 2.06% 1.87%(i) 26% 2004 13.81 14.0 106 0.26 2.00 1.50 35 2003 12.16 37.4 67 0.04 1.83 1.52 13 2002 8.86 (11.3) 36 (0.05) 2.39 1.59 0 2001 9.99 (29.0) 45 1.11 2.00 1.59 31 CLASS B 2005 $15.49 14.2% $ 48 (0.60)% 2.79% 2.58%(i) 26% 2004 13.56 13.2 52 (0.53) 2.75 2.25 35 2003 12.00 36.4 12 (0.71) 2.58 2.27 13 2002 8.80 (12.0) 9 (0.80) 3.14 2.34 0 2001 10.00 (29.5) 10 0.36 2.75 2.34 31 CLASS C(E) 2005 $16.22 14.5% $ 4 (0.66)% 2.79% 2.68%(i) 26% 2004 14.17 14.4 0.1 0.58 2.75 2.25 35 2003 12.39 37.7 0.1 (0.71) 2.58 2.27 13 2002 9.00 (11.0) 0.1 (0.80) 3.14 2.34 0 2001(f) 10.11 (29.0) 0.1 0.36(a) 2.75(a) 2.34(a) 31
------------ + 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 and does not reflect applicable sales charges. Total return for the period of less than one year is not annualized. (a) Annualized. (b) During the years ended December 31, 2005, 2004, 2003, 2002, and 2001, the Adviser voluntarily reimbursed certain expenses. If such expense reimbursements had not occurred, the ratio of operating expenses to average net assets would have been as shown. (c) The Fund incurred interest expense during the years ended December 31, 2004, 2003, 2002, and 2001. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.50%, 1.50%, 2.25%, and 2.25% for Class AAA, Class A, Class B, and Class C, respectively for each year. (d) The Fund incurred interest expense during the year ended December 31, 2005. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.84%, 1.86%, 2.57%, and 2.68% for Class AAA, Class A, Class B, and Class C, respectively. (e) Class C Shares were outstanding for the period October 27, 2000 through December 12, 2000 and for the period April 24, 2001 through May 10, 2001. Financial Highlights are not presented for Class C Shares as the information for this period is not considered meaningful. (f) From November 23, 2001, the date shares were continuously outstanding. (g) Amount represents less than $0.005 per share. (h) Per share data is calculated using the average shares outstanding method. (i) The ratios do not include a reduction of expenses for custodian fee credits on cash balances maintained with the custodian. Including such custodian fee credits, the expense ratios for the year ended December 31, 2005 would have been 1.84%, 1.87%, 2.58%, and 2.68% for Class AAA, Class A, Class B, and Class C, respectively. See accompanying notes to financial statements. 15 THE GAMCO GLOBAL OPPORTUNITY FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ================================================================================ To the Shareholders and Board of Directors of GAMCO Global Series Funds, Inc. We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The GAMCO Global Opportunity Fund (the "Fund") (formerly The Gabelli Global Opportunity Fund), a series of GAMCO Global Series Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of December 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended December 31, 2002 were audited by other auditors whose report dated January 31, 2003, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the Fund's custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The GAMCO Global Opportunity Fund, a series of GAMCO Global Series Funds, Inc., at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ ERNST & YOUNG LLP Philadelphia, Pennsylvania February 14, 2006 16 THE GAMCO GLOBAL OPPORTUNITY FUND BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED) During the six months ended December 31, 2005, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the "independent directors") who are not "interested persons" of the Fund. The following paragraphs summarize the material information and factors considered by the independent directors as well as their conclusions relative to such factors. NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered information regarding the portfolio managers, the depth of the analyst pool available to the Adviser and the portfolio managers, the scope of administrative, shareholder, and other services supervised or provided by the Adviser, and the absence of significant service problems reported to the Board. The independent directors noted the experience, length of service, and reputation of the portfolio managers. INVESTMENT PERFORMANCE. The independent directors reviewed the short and medium-term performance of the Fund against a peer group of global multi-cap core and multi-cap growth funds, noting the Fund's top half performance for the one year period, top quartile for the three year period, and bottom quartile performance for the five year period. PROFITABILITY. The independent directors reviewed summary data regarding the lack of profitability of the Fund to the Adviser both with a pro rata administrative charge and with a standalone administrative charge. The directors also noted that an affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions. ECONOMIES OF SCALE. The independent directors discussed the major elements of the Adviser's cost structure and the relationship of those elements to potential economies of scale and reviewed rudimentary data suggesting that 20% growth in the Fund would not produce meaningful economies of scale that the shareholders would not participate in. SHARING OF ECONOMIES OF SCALE. The independent directors noted that the investment advisory fee schedule for the Fund does not take into account any potential economies of scale that may develop or any losses or diminished profitability to the Adviser in prior years. SERVICE AND COST COMPARISONS. The independent directors compared the expense ratios of the investment advisory fee, other expenses, and total expenses of the Fund to similar expense ratios of the peer group of global multi-cap core and multi-cap growth funds, and noted that the Adviser's advisory fee includes substantially all administrative services of the Fund as well as investment advisory services. The directors noted that the Fund's expense ratios after waivers were moderately higher, and the Fund's size was significantly lower, than average within this group and that the Adviser had been waiving substantial portions of its fees in order to make the Fund a more attractive investment. The directors also noted that the advisory fee structure before waivers was the same as that in effect for most of the Gabelli funds. The directors were presented with, but did not compare, the advisory fee to the fee for other types of accounts managed by the Adviser. CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and a mixed performance record. The independent directors also concluded that the Fund's expense ratios were reasonable, particularly in light of the lack of profitability to the Adviser of managing the Fund, and that economies of scale were not a factor in their thinking at this time. The directors did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the independent directors determined to recommend continuation of the investment advisory agreement to the full Board of Directors. 17 THE GAMCO GLOBAL OPPORTUNITY FUND ADDITIONAL FUND INFORMATION (UNAUDITED) ================================================================================ The business and affairs of the Company are managed under the direction of the Company's Board of Directors. Information pertaining to the Directors and officers of the Company is set forth below. The Fund's Statement of Additional Information includes additional information about The GAMCO Global Opportunity Fund's Directors and is available, without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The GAMCO Global Opportunity Fund at One Corporate Center, Rye, NY 10580-1422.
TERM OF NUMBER OF OFFICE AND FUNDS IN FUND NAME, POSITION(S) LENGTH OF COMPLEX ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4 ---------------- -------- ---------- ---------------------- ------------------ INTERESTED DIRECTORS 3: ---------------------- MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group Director and Officer of GAMCO Investors, Inc. Holdings, Inc. Chief Investment Officer and Chief Investment Officer - Value (holding company) Age: 63 Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Chairman and Chief Executive Officer of Lynch Interactive Corporation (multimedia and services) JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of Director Company, Inc. GAMCO Investors, Inc. Age: 61 NON-INTERESTED DIRECTORS: ------------------------ E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch Director Consultants, Inc.; former President Corporation (diversified Age: 66 and Chief Operating Officer of manufacturing) Stella D'oro Biscuit Company (through 1992); Adviser, Iona College School of Business ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of -- Director Anthony J. Colavita, P.C. Age: 70 ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director/Trustee of Director Executive Officer of The Guardian Life 25 mutual funds within the Age: 75 Insurance Company of America from January Guardian Fund Complex 1993 to December 1995; President, Chief Executive Officer and a Director prior thereto WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence Hospital -- Director and practicing private physician Age: 65 ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. -- Director (commodities and futures trading) Age: 71 SALVATORE J. ZIZZA Since 2004 25 Chairman, Hallmark Electrical Supplies Corp. Director of Hollis-Eden Director Pharmaceuticals Age: 60 (biotechnology); Director of Earl Scheib, Inc. (automotive services)
18 THE GAMCO GLOBAL OPPORTUNITY FUND ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED) ================================================================================
TERM OF OFFICE AND NAME, POSITION(S) LENGTH OF ADDRESS 1 TIME PRINCIPAL OCCUPATION(S) AND AGE SERVED 2 DURING PAST FIVE YEARS ---------------- -------- ---------------------- OFFICERS: -------- BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating and President and Treasurer Officer of Gabelli Funds, LLC since 1988 and Age: 54 an officer of all of the registered investment companies in the Gabelli Funds complex. Director and President of Gabelli Advisers, Inc. since 1998. JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of Secretary GAMCO Investors, Inc. since 1999 and GAMCO Age: 42 Asset Management Inc. since 1993; Secretary of all of the registered investment companies in the Gabelli Funds complex. PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc. Chief Compliance Officer since 2004; Chief Compliance Officer of all of the registered Age: 52 investment companies in the Gabelli Funds complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004.
---------------- 1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. 2 Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Company's By-Laws and Articles of Incorporation. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. Effective November 16, 2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves as Director Emeritus. 3 "Interested person" of the Company as defined in the Investment Company Act of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested person" because of their affiliation with Gabelli Funds, LLC which acts as the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. 4 This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or other investment companies registered under the 1940 Act. 19 THE GAMCO GLOBAL OPPORTUNITY FUND ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED) ================================================================================ -------------------------------------------------------------------------------- 2005 TAX NOTICE TO SHAREHOLDERS (Unaudited) For the year ended December 31, 2005, the Fund paid to shareholders, an ordinary income dividend (comprised of net investment income) totaling $0.023 and $0.036 per share for Class AAA and Class A, respectively. For the year ended December 31, 2005, 53.24% of the distribution qualifies for the dividend received deduction available to corporations, and 100% of the ordinary income distribution was qualified dividend income. Also for the year ended December 31, 2005, the Fund passed through foreign tax credits of $0.0210 per share to Class AAA and Class A shareholders. The foreign source income and tax credits by country are presented in the table below. Visit www.gabelli.com for more information about 2005 foreign source income and foreign taxes paid. U.S. GOVERNMENT INCOME: The percentage of the ordinary income dividend paid by the Fund during fiscal year 2005 which was derived from U.S. Treasury securities was 4.39%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund's fiscal year in U.S. Government securities. The GAMCO Global Opportunity Fund did not meet this strict requirement in 2005. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax advisor as to the applicability of the information provided to your specific situation. -------------------------------------------------------------------------------- FOREIGN SOURCE INCOME AND TAX CREDITS BY COUNTRY FOR 2005 (UNAUDITED) THE GAMCO GLOBAL OPPORTUNITY FUND --------------------------------- Foreign Source Foreign Qualified Income % Income % Foreign Tax % -------- -------- ------------- Australia 4.94 6.02 0.00 Austria 0.00 0.00 0.00 Brazil 2.34 2.86 4.03 Canada 1.41 1.72 3.20 Denmark 0.00 0.00 0.00 Finland 0.00 0.00 0.00 France 17.56 21.39 26.55 Germany 1.58 1.92 6.02 Hong Kong 0.00 0.00 0.00 Ireland 9.09 11.08 0.00 Italy 7.21 8.79 14.66 Japan 9.01 10.98 9.10 Luxembourg 1.52 1.85 3.26 Malaysia 0.00 0.00 0.00 Netherlands 0.75 0.91 0.00 Spain 3.89 4.74 8.64 Singapore 0.00 0.00 0.00 South Africa 1.81 2.20 0.00 Sweden 0.21 0.26 0.46 Switzerland 11.04 13.45 24.09 United Kingdom 5.40 6.64 0.00 20 -------------------------------------------------------------------------------- GABELLI FUNDS AND YOUR PERSONAL PRIVACY ================================================================================ WHO ARE WE? The Gabelli/GAMCO Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc., which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has subsidiaries that provide investment advisory or brokerage services for a variety of clients. WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A GABELLI CUSTOMER? If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is: o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your name, address, telephone number, social security number, bank account number, and other information. o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE SERVICES TO YOU. This would include information about the shares that you buy or redeem, and the deposits and withdrawals that you make. If we hire someone else to provide services--like a transfer agent--we will also have information about the transactions that you conduct through them. WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT? We do not disclose any non-public personal information about our customers or former customers to anyone, other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its web site, www.sec.gov. WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION? We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the Fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential. -------------------------------------------------------------------------------- GABELLI FAMILY OF FUNDS VALUE ________________________________________ 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. (MULTICLASS) 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 established companies which are temporarily out of favor. The fund's objective is to identify a catalyst or sequence of events that will return the company to a higher value. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA WESTWOOD EQUITY FUND Seeks to invest primarily in the common stock of well-seasoned companies that have recently reported positive earnings surprises and are trading below Westwood's proprietary growth rate estimates. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE FOCUSED VALUE ______________________________ GABELLI VALUE FUND Seeks to invest in securities of companies believed to be undervalued. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA SMALL CAP VALUE ____________________________ GABELLI SMALL CAP FUND Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA WESTWOOD SMALLCAP EQUITY FUND Seeks to invest primarily in smaller capitalization equity securities - market caps of $2.5 billion or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI WOODLAND SMALL CAP VALUE FUND Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company's value. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA GROWTH ______________________________________ GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN AGGRESSIVE GROWTH _________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED MICRO-CAP ___________________________________ WESTWOOD MIGHTY MITES(SM) FUND Seeks to invest in micro-cap companies that have market capitalizations of $300 million or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED EQUITY INCOME _______________________________ GABELLI EQUITY INCOME FUND Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA 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. (MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE MARK FREEMAN, CFA WESTWOOD INCOME FUND Seeks to provide a high level of current income as well as long-term capital appreciation by investing in income producing equity and fixed income securities. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE SPECIALTY EQUITY ____________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED GAMCO 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. (MULTICLASS) TEAM MANAGED SECTOR ______________________________________ GAMCO 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. (MULTICLASS) TEAM MANAGED GAMCO 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. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN GABELLI UTILITIES FUND Seeks to provide a high level of total return through a combination of capital appreciation and current income. (MULTICLASS) TEAM MANAGED MERGER AND ARBITRAGE _____________________ 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 CONTRARIAN_________________________________ GAMCO MATHERS FUND Seeks long-term capital appreciation in various market conditions without excessive risk of capital loss. (CLASS AAA-NO-LOAD) PORTFOLIO MANAGER: HENRY VAN DER EB, CFA COMSTOCK CAPITAL VALUE FUND Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA COMSTOCK STRATEGY FUND The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA FIXED INCOME ________________________________ WESTWOOD INTERMEDIATE BOND FUND Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund's primary objective is total return. (MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA CASH MANAGEMENT-MONEY MARKET __________ 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 AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC, AND POLITICAL RISKS. TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. GAMCO Global Series Funds, Inc. THE GAMCO GLOBAL OPPORTUNITY FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA John D. Gabelli CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT EXECUTIVE OFFICER GABELLI & COMPANY, INC. GAMCO INVESTORS, INC. E. Val Cerutti Werner J. Roeder, MD CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL Anthony J. Colavita Anthonie C. van Ekris ATTORNEY-AT-LAW MANAGING DIRECTOR ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC. Arthur V. Ferrara Salvatore J. Zizza FORMER CHAIRMAN AND CHAIRMAN CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL GUARDIAN LIFE INSURANCE SUPPLIES CORP. COMPANY OF AMERICA OFFICERS Bruce N. Alpert James E. McKee PRESIDENT AND TREASURER SECRETARY Peter D. Goldstein CHIEF COMPLIANCE OFFICER DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The GAMCO Global Opportunity Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. -------------------------------------------------------------------------------- GAB403Q405SR GAMCO THE GAMCO GLOBAL OPPORTUNITY FUND ANNUAL REPORT DECEMBER 31, 2005 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND ANNUAL REPORT DECEMBER 31, 2005 TO OUR SHAREHOLDERS, The Sarbanes-Oxley Act requires a Fund's principal executive and financial officers to certify the entire contents of the semi-annual and annual shareholder reports in a filing with the Securities and Exchange Commission on Form N-CSR. This certification would cover the portfolio manager's commentary and subjective opinions if they are attached to or a part of the financial statements. Many of these comments and opinions would be difficult or impossible to certify. Because we do not want our portfolio managers to eliminate their opinions and/or restrict their commentary to historical facts, we have separated their commentary from the financial statements and investment portfolio and have sent it to you separately. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com/funds. Enclosed are the audited financial statements and the investment portfolio as of December 31, 2005 with a description of factors that affected the performance during the past year. PERFORMANCE DISCUSSION The GAMCO Global Telecommunications Fund gained 2.84% in 2005, a significant outperformance of the S&P/Citigroup Global Telecommunications Broad Market Index that declined by 0.89% for the year. The two primary sources for the superior performance versus the index were the contributions from wireless operators, and exposure to non-U.S. holdings. Among top Fund holdings, Rogers Communications Inc., America Movil SA de CV, Telus Corp., and O2 plc (acquired by Telefonica) realized substantial share price outperformance. Other holdings that contributed to returns in 2005 were telecommunications companies in emerging markets. The best performing emerging market telecom stocks in our portfolio were China Mobile (Hong Kong) Ltd. (+40%), Philippine Long Distance Telephone Co. (+34%), Telefonos De Mexico Sa de CV (+28.8%), Vimpel Communications (+22.4%), and Telecom Argentina SA(+17.6%). Communication equipment makers need to be noted as they rebounded in the past twelve months. Significant Fund holdings in this sector that contributed to returns included Furukawa Electric Co. Ltd. (+64.3%), Motorola Inc. (+31.3%), Scientific Atlanta Inc. (+30.5%) which was acquired by Cisco in 2005, and Nokia Corp. (+16.8%). Laggards in the past year included a number of holdings in the regional and national telecommunications sectors. Among the regional and national telecom companies that hurt the Fund's return in 2005 were Telephone & Data Systems Inc. (-53.2%), Commonwealth Telephone Enterprises Inc. (-32.0%), Deutsche Telekom AG (-26.7%), Verizon Communications Inc. (-25.7%), France Telecom SA (-24.9%), and Swisscom AG (-20.3%). Cable and satellite holdings Echostar Communications Corp. (-18.3%), DIRECTV Group Inc. (-15.7%), and Cablevision Systems Corp. (-5.7%) also underperformed. In general, 2005 was a difficult year for the telecommunications industry. Despite the continuation of industry consolidation, which saw the acquisitions of the major U.S. long distance carriers, AT&T Inc. and MCI Inc., sentiment for the group remained generally negative. There is a general market perception that growth prospects and margins for integrated and wireless operators and cable companies may have peaked. Pricing pressures are coming not only from intensifying competition, but equally or more so from technological change. 2005 marked the first year in which the shift to VoIP (Voice over Internet Protocol) became a significant issue. In its essence, the change heralds the era when calling will no longer be charged on a per-minute basis, or according to distance. As voice revenue declines at an accelerating pace, the question is whether operating costs can move in parallel, particularly for operators that have already undertaken years of efficiency and productivity measures. Not all the news flow during 2005 was bad. The uptake of broadband services in developed markets continues apace, with ever-increasing transmission speeds being offered by telecom companies, cable operators and new competitive entrants. This trend is also accompanied by the uptake of `Triple Play' offerings of video/entertainment services, high-speed Internet connectivity and traditional voice telephony delivered by a single provider. The aggressive moves of U.S. Regional Bell Operating Companies and, more recently, European incumbent operators into video services via either DSL networks or increasingly fiber-to-the-home (IPTV) offers the potential to create new revenue streams to supplant the decline of voice. While stepping up capital spending levels to enable these new technologies, overall debt levels in the industry continued to decline, leaving balance sheet flexibility that allowed dividends to grow, share buybacks, and acquisitive growth/consolidation to boost top line performance. Developing markets saw continued dramatic growth in wireless subscriber numbers in 2005, aided by low priced handsets. Finally, after many false starts, 2005 marked the beginnings of 3rd generation (3G) wireless networks beginning to gain traction. Weak fundamentals in the telecommunications drove investors away from the sector during 2005, and left industry valuations at, or near, all-time lows. Nevertheless, the GAMCO Global Telecommunications Fund was able to deliver a positive return through stock selection, non-index weightings and focusing on a number of special situations. Sincerely yours, /s/ Bruce N. Alpert Bruce N. Alpert President February 13, 2006 SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED) The following table presents portfolio holdings as a percent of total net assets as of December 31, 2005: THE GAMCO GLOBAL TELECOMMUNICATIONS FUND Wireless Communications ....................... 25.3% Telecommunications: National .................. 24.4% Telecommunications: Regional .................. 16.9% Cable ......................................... 9.3% Entertainment ................................. 6.0% Telecommunications: Long Distance ............. 5.7% Communications Equipment ...................... 3.2% Satellite ..................................... 2.7% Diversified Industrial ........................ 2.0% Business Services ............................. 1.6% Computer Software and Services ................ 0.9% Publishing .................................... 0.6% Broadcasting .................................. 0.5% Energy and Utilities .......................... 0.5% Telecommunications: Broadband ................. 0.3% Electronics ................................... 0.2% Equipment and Supplies ........................ 0.2% Other Assets and Liabilities - (Net) .......... (0.3)% ------ 100.0% ====== THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2005. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI (800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330. PROXY VOTING The Fund files Form N-PX with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of the Fund's proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities are available without charge, upon request, (i) by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities and Exchange Commission's website at www.sec.gov. 2 [GRAPHIC OMITTED] PLOT POINTS FOLLOW: COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GAMCO GLOBAL TELECOMMUNICATIONS FUND CLASS AAA SHARES, THE S&P/CITIGROUP GLOBAL TELECOMMUNICATIONS INDEX AND THE MSCI AC WORLD FREE INDEX GAMCO Global Telecommunications Fund S&P/Citigroup Global MSCI AC World Class AAA Shares Telecommunications Index Free Index 11/1/93 $10,000 $10,000 $10,000 12/31/93 10,300 10,045 9,993 12/31/94 9,921 9,555 10,496 12/31/95 11,524 10,794 12,538 12/31/96 12,560 12,307 14,193 12/31/97 16,563 15,011 16,321 12/31/98 22,319 21,612 19,907 12/31/99 40,234 37,987 25,246 12/31/00 30,546 21,208 21,727 12/31/01 24,214 14,937 18,270 12/31/02 17,051 10,720 14,803 12/31/03 24,337 15,030 19,929 12/31/04 30,025 18,599 23,067 12/31/05 30,878 18,434 25,690 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. COMPARATIVE RESULTS --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2005 (A) ---------------------------------------------------- Since Inception QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (11/1/93) -------------------------------------------------------------------------------------------------------------------- GAMCO GLOBAL TELECOMMUNICATIONS FUND CLASS AAA ................................ (0.95)% 2.84% 21.89% 0.22% 10.36% 9.70% S&P/Citigroup Global Telecommunications Broad Market Index .... (3.16) (0.89) 19.22 (2.70) N/A* N/A* MSCI AC World Free Index ..................... 3.43 11.37 20.18 3.41 7.44 8.06 Class A ...................................... (0.97) 2.82 21.86 0.22 10.36 9.71 (6.66)(b) (3.09)(b) 19.48(b) (0.95)(b) 9.71(b) 9.17(b) Class B ...................................... (1.16) 2.03 20.95 (0.53) 9.91 9.34 (6.10)(c) (2.97)(c) 20.26(c) (0.93)(c) 9.91(c) 9.34(c) Class C ...................................... (1.22) 1.97 20.95 (0.54) 9.90 9.33 (2.21)(c) 0.97(c) 20.95(c) (0.54)(c) 9.90(c) 9.33(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS AND ARE NET OF EXPENSES. INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED. WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR IS NOT ANNUALIZED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. THE CLASS AAA SHARES' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON MARCH 12, 2000, MARCH 13, 2000 AND JUNE 2, 2000, RESPECTIVELY. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. INVESTING IN FOREIGN SECURITIES INVOLVES RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE S&P/CITIGROUP GLOBAL TELECOMMUNICATIONS INDEX AND THE MSCI AC WORLD FREE INDEX ARE UNMANAGED INDICATORS OF GLOBAL STOCK MARKET PERFORMANCE. (b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF THE PERIOD. (c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT THE END OF THE PERIOD SHOWN FOR CLASS B AND CLASS C SHARES, RESPECTIVELY. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES. * INFORMATION FOR THE S&P CITIGROUP GLOBAL TELECOMMUNICATIONS BROAD MARKET INDEX IS NOT AVAILABLE PRIOR TO JANUARY 1, 2000. -------------------------------------------------------------------------------- 3 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND DISCLOSURE OF FUND EXPENSES (UNAUDITED) For the Six Month Period from July 1, 2005 through December 31, 2005 EXPENSE TABLE ================================================================================ We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund's gross income, directly reduce the investment return of a fund. When a fund's expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The Expense Table below illustrates your Fund's costs in two ways: ACTUAL FUND RETURN: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The "Ending Account Value" shown is derived from the Fund's ACTUAL return during the past six months, and the "Expenses Paid During Period" shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading "Expenses Paid During Period" to estimate the expenses you paid during this period. HYPOTHETICAL 5% RETURN: This section provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case - because the hypothetical return used is NOT the Fund's actual return - the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The "Annualized Expense Ratio" represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the year ended December 31, 2005. Beginning Ending Annualized Expenses Account Value Account Value Expense Paid During 07/01/05 12/31/05 Ratio Period* -------------------------------------------------------------------------------- THE GAMCO GLOBAL TELECOMMUNICATIONS FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Class AAA $1,000.00 $1,052.20 1.58% $ 8.17 Class A $1,000.00 $1,052.70 1.58% $ 8.17 Class B $1,000.00 $1,048.40 2.33% $12.03 Class C $1,000.00 $1,048.00 2.32% $11.98 HYPOTHETICAL 5% RETURN Class AAA $1,000.00 $1,017.24 1.58% $ 8.03 Class A $1,000.00 $1,017.24 1.58% $ 8.03 Class B $1,000.00 $1,013.46 2.33% $11.82 Class C $1,000.00 $1,013.51 2.32% $11.77 * Expenses are equal to the Fund's annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. 4 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS -- 100.3% BROADCASTING -- 0.5% 23,566 CanWest Global Communications Corp.+ ............ $ 322,321 $ 194,420 35,434 CanWest Global Communications Corp., Cl. A+ .................... 407,389 292,629 1,400 Claxson Interactive Group Inc.+ .... 2,240 5,950 10,000 Cogeco Inc. ........................ 195,069 206,460 7,000 Fisher Communications Inc.+ ........ 353,932 290,010 35,000 Paxson Communications Corp.+ ....... 134,000 31,500 ------------ ------------ 1,414,951 1,020,969 ------------ ------------ BUSINESS SERVICES -- 1.6% 75,000 AFK Sistema, GDR (a) ............... 1,275,000 1,781,250 9,000 BB Holdings Ltd. ................... 42,460 60,930 3,600 Carlisle Group Ltd.+ ............... 5,790 6,999 25,693 Contax Participacoes SA, ADR ....... 11,050 30,914 4,000 Convergys Corp.+ ................... 53,716 63,400 6,000 Donnelley (R.H.) Corp.+ ............ 80,412 369,720 59,500 Group 4 Securicor plc .............. 0 164,814 15,000 TNT NV, ADR ........................ 198,278 469,200 ------------ ------------ 1,666,706 2,947,227 ------------ ------------ CABLE -- 9.3% 80,000 Adelphia Communications Corp., Cl. A+ .................... 74,756 3,200 19,065 Austar United Communications Ltd.+ ............. 41,202 16,562 80,000 Cablevision Systems Corp., Cl. A+ ........................... 1,808,961 1,877,600 20,000 Charter Communications Inc., Cl. A+ ........................... 58,692 24,400 6,000 Comcast Corp., Cl. A+ .............. 185,040 155,760 22,000 Comcast Corp., Cl. A, Special+ ..... 175,463 565,180 60,732 Liberty Global Inc., Cl. A+ ........ 1,330,262 1,366,470 59,000 Liberty Global Inc., Cl. C+ ........ 1,268,497 1,250,800 18,000 Mediacom Communications Corp., Cl. A+ ........................... 165,595 98,820 284,765 Rogers Communications Inc., Cl. B, New York .................. 2,946,497 12,034,169 235 Rogers Communications Inc., Cl. B, Toronto ................... 11,540 9,946 ------------ ------------ 8,066,505 17,402,907 ------------ ------------ MARKET SHARES COST VALUE ------ ---- ------ COMMUNICATIONS EQUIPMENT -- 3.2% 10,000 Agere Systems Inc.+ ................ $ 166,400 $ 129,000 3,000 Andrew Corp.+ ...................... 8,535 32,190 500 Avaya Inc.+ ........................ 4,138 5,335 100,000 Champion Technology Holdings Ltd. .. 87,982 15,477 25,000 Communications Systems Inc. ........ 237,711 307,000 3,200 Ericsson (L.M.) Telephone Co., Cl. B, ADR ....................... 40,907 110,080 75,000 Furukawa Electric Co. Ltd.+ ........ 381,079 586,340 100,000 GN Store Nord A/S .................. 541,433 1,309,108 10,000 JDS Uniphase Corp.+ ................ 45,488 23,600 1,000 L-3 Communications Holdings Inc. ... 11,000 74,350 100,000 Lucent Technologies Inc.+ .......... 390,922 266,000 67,000 Motorola Inc. ...................... 549,845 1,513,530 28,000 Nokia Corp., ADR ................... 67,091 512,400 45,000 Nortel Networks Corp.+ ............. 196,650 137,700 22,000 Scientific-Atlanta Inc. ............ 179,954 947,540 750 Siemens AG, ADR .................... 23,625 64,192 300,000 Time Engineering Berhad+ ........... 316,448 21,828 816 Tut Systems Inc.+ .................. 13,135 2,440 ------------ ------------ 3,262,343 6,058,110 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 0.9% 2,000 America Online Latin America Inc., Cl. A+ ........................... 840 50 6,000 Covad Communications Group Inc.+ ... 11,761 5,880 3,230 EarthLink Inc.+ .................... 45,250 35,885 1,000 Geoworks Corp.+ .................... 1,375 32 10 Korea Thrunet Co. Ltd. (c) ......... 5,250 1 18,000 Net2Phone Inc.+ .................... 55,561 36,720 20,000 NorthPoint Communications Group Inc.+ ...................... 11,250 12 5,852 Telecom Italia Media SpA+ .......... 4,669 3,097 1,000 Via Net.Works Inc.+ ................ 2,625 32 40,000 Yahoo! Inc.+ ....................... 1,356,975 1,567,200 ------------ ------------ 1,495,556 1,648,909 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 2.0% 65,000 Bouygues SA ........................ 1,809,898 3,178,164 50,000 Hutchison Whampoa Ltd. ............. 487,171 476,228 ------------ ------------ 2,297,069 3,654,392 ------------ ------------ ELECTRONICS -- 0.2% 32,000 California Micro Devices Corp.+ .... 203,882 208,320 8,000 Freescale Semiconductor Inc., Cl. B+ ........................... 68,379 201,360 2,000 TiVo Inc.+ ......................... 11,105 10,240 1,000 Vishay Intertechnology Inc.+ ....... 22,909 13,760 ------------ ------------ 306,275 433,680 ------------ ------------ See accompanying notes to financial statements. 5 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) ENERGY AND UTILITIES -- 0.5% 3,000 E.ON AG ............................ $ 126,255 $ 310,382 11,000 SCANA Corp. ........................ 290,109 433,180 2,500 SJW Corp. .......................... 78,585 113,750 ------------ ------------ 494,949 857,312 ------------ ------------ ENTERTAINMENT -- 6.0% 40,000 Discovery Holding Co., Cl. A+ ...... 222,452 606,000 440,000 Gemstar-TV Guide International Inc.+ .............. 2,121,732 1,148,400 375,000 Liberty Media Corp., Cl. A+ ........ 1,308,068 2,951,250 15,000 Metromedia International Group Inc.+ ...................... 59,576 22,650 195,000 Time Warner Inc. ................... 3,365,101 3,400,800 100,000 Vivendi Universal SA, ADR .......... 2,087,247 3,143,000 ------------ ------------ 9,164,176 11,272,100 ------------ ------------ EQUIPMENT AND SUPPLIES -- 0.2% 1,000 Amphenol Corp., Cl. A .............. 8,184 44,260 15,000 ThyssenKrupp AG .................... 275,840 312,903 ------------ ------------ 284,024 357,163 ------------ ------------ PUBLISHING -- 0.6% 600 Media General Inc., Cl. A .......... 34,079 30,420 35,000 News Corp., Cl. A .................. 519,579 544,250 2,000 News Corp., Cl. B .................. 21,050 33,220 15,428 Seat Pagine Gialle SpA+ ............ 30,783 7,205 25,000 Telegraaf Media Groep NV ........... 541,844 540,152 ------------ ------------ 1,147,335 1,155,247 ------------ ------------ SATELLITE -- 2.7% 1,500 Asia Satellite Telecommunications Holdings Ltd., ADR ............... 22,103 25,425 1,500 British Sky Broadcasting Group plc, ADR ................... 36,400 52,020 137,000 DIRECTV Group Inc.+ ................ 2,767,667 1,934,440 100,000 EchoStar Communications Corp., Cl. A+ .................... 1,863,471 2,717,000 1,000 Lockheed Martin Corp. .............. 22,787 63,630 2,524 Orbital Sciences Corp.+ ............ 16,208 32,408 5,000 Pegasus Communications Corp., Cl. A+ ........................... 33,138 19,750 8,000 PT Indosat Tbk, ADR ................ 78,653 232,720 ------------ ------------ 4,840,427 5,077,393 ------------ ------------ TELECOMMUNICATIONS: BROADBAND -- 0.3% 6,720 Colt Telecom Group plc, ADR+ ....... 39,630 25,133 10,000 E.Spire Communications Inc.+ ....... 50,000 5 MARKET SHARES COST VALUE ------ ---- ------ 18,000 Golden Telecom Inc. ................ $ 188,378 $ 467,280 22,422 McLeodUSA Inc., Cl. A+ ............. 78,431 247 6,000 Time Warner Telecom Inc., Cl. A+ ... 4,800 59,100 ------------ ------------ 361,239 551,765 ------------ ------------ TELECOMMUNICATIONS: LONG DISTANCE -- 5.7% 90,000 AT&T Inc. .......................... 3,229,896 2,204,100 320,000 Cable & Wireless plc ............... 608,019 656,538 5,200 Embratel Participacoes SA, ADR+ .... 505,937 76,700 80,000 General Communication Inc., Cl. A+ ........................... 376,995 826,400 37,000 IDT Corp.+ ......................... 328,471 427,720 35,000 IDT Corp., Cl. B+ .................. 248,267 409,500 600 KDDI Corp. ......................... 3,016,474 3,459,533 5,000 MCI Inc. ........................... 128,650 98,650 75,416 Philippine Long Distance Telephone Co., ADR ............... 1,482,822 2,529,456 ------------ ------------ 9,925,531 10,688,597 ------------ ------------ TELECOMMUNICATIONS: NATIONAL -- 24.4% 44,214 Brasil Telecom SA, Pfd. ............ 474 190 42,000 BT Group plc, ADR .................. 1,633,962 1,611,960 17,415,054 Cable & Wireless Jamaica Ltd.+ ..... 406,745 399,818 75,000 China Unicom Ltd., ADR ............. 628,818 613,500 145,000 Compania de Telecomunicaciones de Chile SA, ADR ................. 2,027,580 1,276,000 285,000 Deutsche Telekom AG, ADR ........... 3,105,835 4,739,550 180,000 Elisa Oyj, Cl. A ................... 2,286,461 3,335,030 40,000 France Telecom SA, ADR ............. 1,091,954 993,600 5,507 Hellenic Telecommunications Organization SA+ ................. 86,065 117,355 36,000 Hellenic Telecommunications Organization SA, ADR+ ............ 218,769 377,280 18,000 Hungarian Telephone & Cable Corp.+ ..................... 139,278 279,900 57,000 KPN NV, ADR ........................ 472,195 572,280 10,000 KT Corp., ADR ...................... 183,666 215,500 500 Magyar Telekom, ADR ................ 9,650 11,015 5,000 Manitoba Telecom Services Inc. ..... 168,270 173,771 2,000 Maroc Telecom ...................... 18,299 21,263 237 Nippon Telegraph & Telephone Corp. .................. 1,207,105 1,077,136 22,000 Nippon Telegraph & Telephone Corp., ADR ............. 622,716 501,820 2,000 Pakistan Telecommunications Co. Ltd., GDR (a) ................ 155,766 218,766 100,000 PCCW Ltd. .......................... 81,405 61,584 See accompanying notes to financial statements. 6 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) TELECOMMUNICATIONS: NATIONAL (CONTINUED) 68,000 Portugal Telecom SGPS SA, ADR ...... $ 277,645 $ 684,760 18,360 PT Telekomunikasi Indonesia, ADR ... 165,504 438,070 10,000 Rostelecom, ADR .................... 79,578 136,500 928,580 Singapore Telecommunications Ltd. .......... 806,749 1,457,669 102,000 Swisscom AG, ADR ................... 2,681,536 3,214,020 60,000 TDC A/S, ADR ....................... 1,061,291 1,792,800 25,000 Telecom Corp. of New Zealand Ltd., ADR ................ 515,375 817,000 2,210,000 Telecom Italia SpA ................. 4,212,814 6,436,360 27,000 Telecom Italia SpA, ADR ............ 621,934 788,670 57,700 Telefonica de Argentina SA, ADR+ ... 376,367 595,464 100,000 Telefonica SA, ADR ................. 2,634,654 4,502,000 6,361 Telefonica SA, BDR ................. 108,406 96,572 100,000 Telefonos de Mexico SA de CV, Cl. L, ADR ....................... 719,898 2,468,000 46,604 Telekom Austria AG ................. 347,582 1,048,310 339,000 Telekom Malaysia Berhad ............ 1,520,064 856,581 3,355 Telemar Norte Leste SA ............. 148,531 91,110 666,336 TeliaSonera AB ..................... 2,961,330 3,581,414 2,400 Telstra Corp. Ltd., ADR ............ 47,304 34,392 8,075 Thai Telephone & Telecom, GDR+ (a)(b) ............. 100,542 1,696 ------------ ------------ 33,932,117 45,638,706 ------------ ------------ TELECOMMUNICATIONS: REGIONAL -- 16.9% 78,000 Aliant Inc. ........................ 1,345,457 2,073,379 13,300 Atlantic Tele-Network Inc. ......... 112,178 557,270 148,000 BCE Inc. ........................... 3,411,732 3,544,600 65,000 BellSouth Corp. .................... 1,899,994 1,761,500 12,000 Brasil Telecom Participacoes SA, ADR ............ 595,898 448,200 952 Brasil Telecom SA .................. 3 7 40,000 CenturyTel Inc. .................... 1,103,188 1,326,400 255,000 Cincinnati Bell Inc.+ .............. 1,853,126 895,050 120,000 Citizens Communications Co. ........ 1,223,332 1,467,600 49,000 Commonwealth Telephone Enterprises Inc. ................. 1,479,530 1,654,730 50,060 D&E Communications Inc. ............ 624,913 417,000 170,000 First Pacific Co. Ltd. ............. 92,079 65,775 20,000 First Pacific Co. Ltd., ADR ........ 30,144 38,692 450,000 Qwest Communications International Inc.+ .............. 1,840,303 2,542,500 11,000 Shenandoah Telecommunications Co. .. 138,825 438,240 25,693 Tele Norte Leste Participacoes SA, ADR .......................... 357,296 460,419 MARKET SHARES COST VALUE ------ ---- ------ 215,000 Telecom Argentina SA, Cl. B, ADR+ .. $ 1,013,186 $ 2,771,350 70,000 Telephone & Data Systems Inc. ...... 1,520,586 2,522,100 65,000 Telephone & Data Systems Inc., Special .......................... 1,306,850 2,249,650 13,421 TELUS Corp. ........................ 274,410 552,565 36,579 TELUS Corp., ADR ................... 654,075 1,498,670 50,000 TELUS Corp., Non-Voting ............ 1,252,423 2,007,398 1,000,000 True Corp. plc+ .................... 687,194 243,754 70,000 Verizon Communications Inc. ........ 2,749,746 2,108,400 ------------ ------------ 25,566,468 31,645,249 ------------ ------------ WIRELESS COMMUNICATIONS -- 25.3% 38,000 ABC Communications Holdings Ltd. ... 19,234 3,039 42,500 ALLTEL Corp. ....................... 1,749,052 2,681,750 245,000 America Movil SA de CV, Cl. L, ADR ....................... 1,196,828 7,168,700 5 Celular CRT Participacoes SA, Pfd. ......................... 205 128 35,000 Centennial Communications Corp.+ ... 315,665 543,200 80,000 China Mobile (Hong Kong) Ltd., ADR ........................ 1,165,904 1,923,200 70,000 CP Pokphand Co. Ltd., ADR+ ......... 58,725 95,921 40,000 Dobson Communications Corp., Cl. A+ .................... 129,100 300,000 10,000 EasyCall International Ltd.+ ....... 9,532 469 240,000 Europolitan Vodafone AB+ (c) ....... 220,305 1,419,850 17,500 Grupo Iusacell SA de CV+ ........... 29,040 42,637 26,000 Himachal Futuristic Communications Ltd.+ (a)(c) ...... 141,200 49,660 666 Hutchison Telecommunications International Ltd.+ .............. 519 962 2,000 Millicom International Cellular SA+ ..................... 17,000 53,680 800 Mobile TeleSystems, ADR ............ 29,612 28,000 65,000 Nextel Partners Inc., Cl. A+ ....... 666,568 1,816,100 1,500 NTT DoCoMo Inc. .................... 4,313,046 2,289,397 1,550,000 O2 plc ............................. 1,627,628 5,273,514 92,000 Price Communications Corp.+ ........ 1,354,830 1,368,040 42,000 Rural Cellular Corp., Cl. A+ ....... 432,519 613,620 90,000 SK Telecom Co. Ltd., ADR ........... 1,068,189 1,826,100 460,000 Sprint Nextel Corp. ................ 6,805,241 10,745,600 6,000 SunCom Wireless Holdings Inc., Cl. A+ ............ 20,520 16,620 3,413 Tele Centro Oeste Celular Participacoes SA, ADR ............ 9,894 38,294 264 Tele Leste Celular Participacoes SA, ADR+ ........... 6,975 3,736 See accompanying notes to financial statements. 7 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005 ================================================================================ MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) WIRELESS COMMUNICATIONS (CONTINUED) 460 Tele Norte Celular Participacoes SA, ADR+ ........... $ 7,079 $ 3,427 3,918 Tele Sudeste Celular Participacoes SA, Pfd. ........... 118,808 46,916 1,150 Telemig Celular Participacoes SA, ADR ............ 30,497 45,322 3,020 Telesp Celular Participacoes SA+ ... 6,747 10,965 12,425 Telesp Celular Participacoes SA, ADR ............ 299,286 46,966 107 Telesp Celular Participacoes SA, Pfd.+ ........................ 40,643 405 4,430 Tim Participacoes SA, ADR .......... 54,016 111,990 110,000 United States Cellular Corp.+ ...... 4,971,685 5,434,000 59,000 Vimpel-Communications, ADR+ ........ 447,656 2,609,570 33,000 Vodafone Group plc, ADR ............ 669,669 708,510 ------------ ------------ 28,033,417 47,320,288 ------------ ------------ TOTAL COMMON STOCKS ................ 132,259,088 187,730,014 ------------ ------------ RIGHTS -- 0.0% TELECOMMUNICATIONS -- 0.0% 315,789 True Corp. plc Rights+(c) .......... 0 15,272 ------------ ------------ MARKET SHARES COST VALUE ------ ---- ------ WARRANTS -- 0.0% COMMUNICATIONS EQUIPMENT -- 0.0% 19,375 Champion Technology Holdings Ltd., expire 02/16/06+ (c) ............. $ 0 $ 45 20,000 Champion Technology Holdings Ltd., expire 02/27/07+ (c) ............. 0 0 1,473 Lucent Technologies Inc., expire 12/10/07+ ................. 2,445 832 ------------ ------------ TOTAL WARRANTS ..................... 2,445 877 ------------ ------------ TOTAL INVESTMENTS -- 100.3% ........ $132,261,533 187,746,163 ============ OTHER ASSETS AND LIABILITIES (NET) -- (0.3)% .................... (521,410) ------------ NET ASSETS -- 100.0% ............................. $187,224,753 ============ ---------------- (a) Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2005, the market value of Rule 144A securities amounted to $2,051,372 or 1.10% of total net assets. Except as noted in (b), these securities are liquid. (b) At December 31, 2005, the Fund held an investment in a restricted and illiquid security amounting to $1,696 or 0.00% of net assets, which was valued under methods approved by the Board, as follows: 12/31/05 CARRYING ACQUISITION ACQUISITION ACQUISITION VALUE SHARES ISSUER DATE COST PER UNIT ------ ------ ----------- ----------- -------- 8,075 Thai Telephone & Telecom, GDR ..... 03/31/94 $100,542 $0.2100 (c) Security fair valued under procedures established by the Board of Directors. The procedures may include reviewing available financial information about the company and reviewing valuation of comparable securities and other factors on a regular basis. At December 31, 2005, the market value of fair valued securities amounted to $1,484,828 or 0.79% of total net assets. + Non-income producing security. ADR American Depository Receipt BDR Brazilian Depository Receipt GDR Global Depository Receipt % OF MARKET MARKET GEOGRAPHIC DIVERSIFICATION VALUE VALUE -------------------------- -------- -------- North America ........................ 50.2% $ 94,184,835 Europe ............................... 30.5 57,214,102 Latin America ........................ 8.6 16,250,018 Asia/Pacific ......................... 6.5 12,182,983 Japan ................................ 4.2 7,914,225 ------ ------------ 100.0% $187,746,163 ====== ============ See accompanying notes to financial statements. 8 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2005 ================================================================================ ASSETS: Investments at value (cost $132,261,533) ................... $ 187,746,163 Dividends and interest receivable .......................... 512,317 Receivable for investments sold ............................ 210,244 Receivable for Fund shares sold ............................ 103,036 Other assets ............................................... 7,365 ------------- TOTAL ASSETS ............................................... 188,579,125 ------------- LIABILITIES: Payable to custodian ....................................... 776,038 Payable for Fund shares redeemed ........................... 214,246 Payable for investment advisory fees ....................... 160,791 Payable for shareholder communications expenses ............ 62,185 Payable for shareholder services fees ...................... 57,314 Payable for distribution fees .............................. 40,619 Other accrued expenses ..................................... 43,179 ------------- TOTAL LIABILITIES .......................................... 1,354,372 ------------- NET ASSETS applicable to 10,684,132 shares outstanding ..... $ 187,224,753 ============= NET ASSETS CONSIST OF: Capital stock, each class at $0.001 par value .............. $ 10,684 Additional paid-in capital ................................. 193,252,725 Accumulated distributions in excess of net investment income (240,918) Accumulated net realized loss on investments and foreign currency transactions ......................... (61,281,481) Net unrealized appreciation on investments ................. 55,484,630 Net unrealized depreciation on foreign currency translations (887) ------------- NET ASSETS ................................................. $ 187,224,753 ============= SHARES OF CAPITAL STOCK: CLASS AAA: Net Asset Value, offering and redemption price per share ($185,870,434 / 10,605,897 shares outstanding; 75,000,000 shares authorized) ............................ $17.53 ====== CLASS A: Net Asset Value and redemption price per share ($735,215 / 41,995 shares outstanding; 50,000,000 shares authorized) ............................ $17.51 ====== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price) .......................... $18.58 ====== CLASS B: Net Asset Value and offering price per share ($424,617 / 24,821 shares outstanding; 25,000,000 shares authorized) ............................ $17.11(a) ====== CLASS C: Net Asset Value and offering price per share ($194,487 / 11,419 shares outstanding; 25,000,000 shares authorized) ............................ $17.03(a) ====== --------------- (a) Redemption price varies based on length of time held. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 ================================================================================ INVESTMENT INCOME: Dividends (net of foreign taxes of $410,517) ..... $ 4,876,260 Interest ......................................... 33,781 ----------- TOTAL INVESTMENT INCOME .......................... 4,910,041 ----------- EXPENSES: Investment advisory fees ......................... 1,960,781 Distribution fees - Class AAA .................... 486,304 Distribution fees - Class A ...................... 1,693 Distribution fees - Class B ...................... 6,108 Distribution fees - Class C ...................... 2,684 Shareholder services fees ........................ 258,550 Shareholder communications expenses .............. 148,207 Custodian fees ................................... 64,468 Legal and audit fees ............................. 51,813 Registration fees ................................ 33,975 Directors' fees .................................. 20,658 Interest expense ................................. 5,118 Miscellaneous expenses ........................... 78,654 ----------- TOTAL EXPENSES ................................... 3,119,013 Less: Custodian fee credits ...................... (338) ----------- NET EXPENSES ..................................... 3,118,675 ----------- NET INVESTMENT INCOME ............................ 1,791,366 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on investments ................. 5,150,759 Net realized loss on foreign currency transactions (20,876) Net change in unrealized appreciation/depreciation on investments and foreign currency translations (2,147,155) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY ............ 2,982,728 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................... $ 4,774,094 =========== See accompanying notes to financial statements. 9 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND STATEMENT OF CHANGES IN NET ASSETS ================================================================================
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ----------------- ----------------- OPERATIONS: Net investment income ................................................... $ 1,791,366 $ 941,134 Net realized gain (loss) on investments and foreign currency transactions 5,129,883 (1,842,073) Net change in unrealized appreciation/depreciation on investments and foreign currency translations ..................................... (2,147,155) 40,701,406 ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................... 4,774,094 39,800,467 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA ............................................................. (2,003,135) (962,965) Class A ............................................................... (8,156) (2,741) Class B ............................................................... -- -- Class C ............................................................... (117) (743) ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (2,011,408) (966,449) ------------- ------------- CAPITAL SHARE TRANSACTIONS: Class AAA ............................................................. (25,916,855) (15,265,831) Class A ............................................................... 124,167 86,356 Class B ............................................................... (435,480) (125,404) Class C ............................................................... (62,137) 132,412 ------------- ------------- NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS .............. (26,290,305) (15,172,467) ------------- ------------- REDEMPTION FEES ......................................................... 7,745 31,714 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS ................................... (23,519,874) 23,693,265 NET ASSETS: Beginning of period ..................................................... 210,744,627 187,051,362 ------------- ------------- End of period (including undistributed net investment income of $0 and $0, respectively) .................................... $ 187,224,753 $ 210,744,627 ============= =============
See accompanying notes to financial statements. 10 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS ================================================================================ 1. ORGANIZATION. The GAMCO Global Telecommunications Fund (the "Fund"), formerly, The Gabelli Global Telecommunications Fund, a series of GAMCO Global Series Funds, Inc. (the "Corporation"), formerly, Gabelli Global Series Funds, Inc., was organized on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of four separately managed portfolios (collectively, the "Portfolios") of the Corporation. The Fund's primary objective is capital appreciation. The Fund commenced investment operations on November 1, 1993. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with U.S. 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 or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market's official closing price 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. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the "Board") so determines, by such other method as the Board shall determine in good faith, to reflect its fair market value. 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 "Adviser"). Portfolio securities primarily traded on foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if after the close of the foreign markets, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board. Debt instruments with remaining maturities of 60 days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board. Debt instruments having a maturity greater than 60 days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. 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. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons to the valuation and changes in valuation of similar securities, including a comparison of foreign securities to the equivalent U.S. dollar value ADR securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security. 11 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board. 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 102% 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. At December 31, 2005, there were no open repurchase agreements. FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the "initial margin". Subsequent payments ("variation margin") are made or received by the Fund each day, depending on the daily fluctuation of the value of the contract. The daily changes in the contract are included in unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed. There are several risks in connection with the use of futures contracts as a hedging instrument. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. At December 31, 2005, there were no open futures contracts. SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund does not own. The proceeds received for short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of the open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The Fund did not hold any short positions as of December 31, 2005. 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 translations. 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. 12 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 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. At December 31, 2005, there were no open forward foreign exchange contracts. FOREIGN CURRENCY TRANSLATIONS. 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 current exchange rates. 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 that 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 translations. 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. FOREIGN SECURITIES. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers. FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests. RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in securities for which the markets are illiquid. Illiquid securities include securities the disposition of which is subject to substantial legal or contractual restrictions. The sale of illiquid securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely salable among qualified institutional investors under special rules adopted by the Securities and Exchange Commission (the "SEC") may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. 13 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ CONCENTRATION RISK. The Fund may invest a high percentage of its assets in specific sectors of the market in order to achieve a potentially greater investment return. As a result, the Fund may be more susceptible to economic, political, and regulatory developments in a particular sector of the market, positive or negative, and may experience increased volatility to the Fund's net asset value ("NAV") and a magnified effect in its total return. 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 on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date except for certain dividends which are recorded as soon as the Fund is informed of the dividend. DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each Fund's average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board. In calculating NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense. CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset shown as "custodian fee credits". DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with Federal income tax regulations, which may differ from income and capital gains as determined under U.S. generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate equity accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund and the calculation of net investment income per share in the Financial Highlights excludes these adjustments. For the year ended December 31, 2005, reclassifications were made to increase accumulated distributions in excess of net investment income by $20,876 and to decrease accumulated net realized loss on investments and foreign currency transactions by $20,876. The tax character of distributions paid during the fiscal years ended December 31, 2005 and December 31, 2004 was $2,011,408 and $966,449 of ordinary income. 14 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for Federal income taxes is required. As of December 31, 2005, the components of accumulated earnings/(losses) on a tax basis were as follows: Capital loss carryforward ................ $(54,058,602) Net unrealized appreciation on securities, foreign receivables and payables ....... 48,007,197 Undistributed ordinary income ............ 12,749 ------------ Total accumulated loss ................... $ (6,038,656) ============ At December 31, 2005, the Fund has net capital loss carryforwards for Federal income tax purposes of $54,058,602, which are available to reduce future required distributions of net capital gains to shareholders. $8,565,109 of the loss carryforward is available through 2009; $30,268,699 is available through 2010; $11,910,139 is available through 2011; and $3,314,655 is available through 2012. For the year ended December 31, 2005, the Fund utilized net capital loss carryforwards of $4,405,318. The following summarizes the tax cost of investments and related unrealized appreciation/depreciation at December 31, 2005: GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION (DEPRECIATION) ---- ------------ ------------ -------------- Investments ...... $139,739,386 $67,443,772 $(19,436,995) $48,006,777 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 its 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 affiliated persons of the Adviser. 4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the "Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act. Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser, serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and Class C Share Plans, payments are authorized to Gabelli & Company at annual rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for the year ended December 31, 2005, other than short-term securities, aggregated $7,197,223 and $27,682,812, respectively. 15 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the Fund paid brokerage commissions of $38,223 to Gabelli & Company. Additionally, Gabelli & Company informed the Fund that it received $13,514 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares. The cost of calculating the Fund's NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the year ended December 31, 2005, the Fund reimbursed the Adviser $45,000 in connection with the cost of computing the Fund's NAV, which is included in miscellaneous expenses in the Statement of Operations. 7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of up to $25,000,000 from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at 0.75% above the Federal Funds rate on outstanding balances. At December 31, 2005, there was a balance of $777,000 outstanding from the line of credit. The average daily amount of borrowings from the line of credit within the year ended December 31, 2005 was $143,323 with a weighted average interest rate of 3.98%. The maximum amount borrowed at any time during the year ended December 31, 2005 was $4,271,000. 8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class AAA Shares are offered only to investors who acquire them directly from Gabelli & Company or through selected broker/dealers without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares are subject to a contingent deferred sales charge ("CDSC") upon redemption within six years of purchase and automatically convert to Class A Shares approximately eight years after the original purchase. The applicable CDSC is equal to a declining percentage of the lesser of the NAV per share at the date of the original purchase or at the date of redemption, based on the length of time held. Class C Shares are subject to a 1% CDSC for one year after purchase. Class B Shares are available only through exchange of Class B Shares of other funds distributed by Gabelli & Company. The Board has approved Class I Shares which have not been offered publicly. Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. (Prior to June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or exchanged within the sixtieth day after the date of a purchase.) The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund. The redemption fees retained by the Fund during the years ended December 31, 2005 and December 31, 2004 amounted to $7,745 and $31,714, respectively. The redemption fee does not apply to shares purchased through programs that the Adviser determined to have appropriate short-term trading policies in place. Additionally, certain recordkeepers for qualified and non-qualified retirement plans that could not collect the redemption fee at the participant level due to systems limitations have received an extension to implement such systems. 16 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 2005 DECEMBER 31, 2004 ---------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ CLASS AAA CLASS AAA ---------------------------- --------------------------- Shares sold ........................................ 947,426 $ 16,136,166 2,349,410 $ 35,596,632 Shares issued upon reinvestment of dividends ....... 108,341 1,901,378 53,559 917,462 Shares redeemed .................................... (2,579,717) (43,954,399) (3,507,385) (51,779,925) ---------- ------------ ---------- ------------ Net decrease ................................... (1,523,950) $(25,916,855) (1,104,416) $(15,265,831) ========== ============ ========== ============ CLASS A CLASS A ---------------------------- --------------------------- Shares sold ........................................ 22,621 $ 384,773 24,016 $ 370,807 Shares issued upon reinvestment of dividends ....... 386 6,767 155 2,655 Shares redeemed .................................... (15,718) (267,373) (19,465) (287,106) ---------- ------------ ---------- ------------ Net increase ................................... 7,289 $ 124,167 4,706 $ 86,356 ========== ============ ========== ============ CLASS B CLASS B ---------------------------- --------------------------- Shares sold ........................................ -- -- 4,815 $ 69,837 Shares redeemed .................................... (26,153) $ (435,480) (13,535) (195,241) ---------- ------------ ---------- ------------ Net decrease ................................... (26,153) $ (435,480) (8,720) $ (125,404) ========== ============ ========== ============ CLASS C CLASS C ---------------------------- --------------------------- Shares sold ........................................ 6,357 $ 101,796 15,392 $ 235,791 Shares issued upon reinvestment of dividends ....... 7 118 45 743 Shares redeemed .................................... (9,842) (164,051) (7,412) (104,122) ---------- ------------ ---------- ------------ Net increase/(decrease) ........................ (3,478) $ (62,137) 8,025 $ 132,412 ========== ============ ========== ============
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the Attorney General of the State of New York and the SEC requesting information on mutual fund trading practices involving certain funds managed by the Adviser. GAMCO Investors, Inc., the Adviser's parent company, is responding to these requests for documents and testimony. On a separate matter, in September 2005, the Adviser was informed by the staff of the SEC that the staff may recommend to the Commission that an administrative remedy and a monetary penalty be sought from the Adviser in connection with the actions of two of seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered investment companies to provide written statements to shareholders when a dividend is made from a source other than net investment income. While the two closed-end funds sent annual statements and provided other materials containing this information, the funds did not send written statements to shareholders with each distribution in 2002 and 2003. The Adviser believes that all of the funds are now in compliance. The Adviser believes that these matters would have no effect on the Fund or any material adverse effect on the Adviser or its ability to manage the Fund. 17 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND FINANCIAL HIGHLIGHTS ================================================================================ Selected data for a share of capital stock outstanding throughout each period:
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ------------------------------------- -------------------------- Net Net Asset Net Realized and Total Net Period Value, Investment Unrealized from Net Realized Ended Beginning Income Gain (Loss) on Investment Investment Gain on Total December 31, of Period (Loss)(c) Investments Operations Income Investments Distributions ------------ --------- -------- ----------- ---------- ------ ----------- ------------- CLASS AAA 2005 $17.23 $ 0.16 $ 0.33 $ 0.49 $(0.19) -- $(0.19) 2004 14.03 0.07 3.21 3.28 (0.08) -- (0.08) 2003 9.83 (0.04) 4.24 4.20 -- -- -- 2002 13.96 (0.01) (4.12) (4.13) -- -- -- 2001 17.63 (0.07) (3.58) (3.65) -- $(0.02) (0.02) CLASS A 2005 $17.22 $ 0.14 $ 0.35 $ 0.49 $(0.20) -- $(0.20) 2004 14.03 0.08 3.19 3.27 (0.08) -- (0.08) 2003 9.83 (0.04) 4.24 4.20 -- -- -- 2002 13.95 (0.00)(a) (4.12) (4.12) -- -- -- 2001 17.61 (0.06) (3.58) (3.64) -- $(0.02) (0.02) CLASS B 2005 $16.77 $ 0.01 $ 0.33 $ 0.34 -- -- -- 2004 13.69 (0.04) 3.12 3.08 -- -- -- 2003 9.67 (0.13) 4.15 4.02 -- -- -- 2002 13.83 (0.08) (4.08) (4.16) -- -- -- 2001 17.59 (0.17) (3.57) (3.74) -- $(0.02) $(0.02) CLASS C 2005 $16.71 $ 0.04 $ 0.29 $ 0.33 $(0.01) -- $(0.01) 2004 13.68 (0.06) 3.14 3.08 (0.05) -- (0.05) 2003 9.66 (0.16) 4.18 4.02 -- -- -- 2002 13.82 (0.08) (4.08) (4.16) -- -- -- 2001 17.58 (0.17) (3.57) (3.74) -- $(0.02) (0.02)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ---------------------------------------------------------- Net Asset Net Assets Net Period Value, End of Investment Portfolio Ended Redemption End of Total Period Income Operating Turnover December 31, Fees(c) Period Return+ (in 000's) (Loss) Expenses(b) Rate ------------ ------- ------- ------- ---------- ------ ------------- -------- CLASS AAA 2005 $0.00(a) $17.53 2.8% $185,870 0.92% 1.59% 4% 2004 0.00(a) 17.23 23.4 209,043 0.49 1.62 15 2003 0.00(a) 14.03 42.7 185,719 (0.38) 1.62 11 2002 -- 9.83 (29.6) 139,455 (0.05) 1.66 8 2001 -- 13.96 (20.7) 233,887 (0.45) 1.52 15 CLASS A 2005 $0.00(a) $17.51 2.8% $ 735 0.83% 1.59% 4% 2004 0.00(a) 17.22 23.3 598 0.52 1.62 15 2003 0.00(a) 14.03 42.7 421 (0.38) 1.62 11 2002 -- 9.83 (29.5) 372 (0.05) 1.66 8 2001 -- 13.95 (20.7) 219 (0.45) 1.52 15 CLASS B 2005 $0.00(a) $17.11 2.0% $ 425 0.09% 2.33% 4% 2004 0.00(a) 16.77 22.5 855 (0.25) 2.37 15 2003 0.00(a) 13.69 41.6 817 (1.13) 2.37 11 2002 -- 9.67 (30.1) 610 (0.80) 2.41 8 2001 -- 13.83 (21.3) 640 (1.20) 2.27 15 CLASS C 2005 $0.00(a) $17.03 2.0% $ 195 0.26% 2.34% 4% 2004 0.00(a) 16.71 22.5 249 (0.44) 2.37 15 2003 0.00(a) 13.68 41.6 94 (1.13) 2.37 11 2002 -- 9.66 (30.1) 252 (0.80) 2.41 8 2001 -- 13.82 (21.3) 196 (1.20) 2.27 15
--------------- + 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 and does not reflect applicable sales charges. (a) Amount represents less than $0.005 per share. (b) The Fund incurred interest expense during the years ended December 31, 2005, 2004, 2003, and 2002. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.58%, 1.61%, 1.61%, and 1.64% (Class AAA), 1.59%, 1.61%, 1.61%, and 1.64% (Class A), 2.33%, 2.36%, 2.36%, and 2.39% (Class B), and 2.34%, 2.36%, 2.36%, and 2.39% (Class C), respectively. (c) Per share amounts have been calculated using the average shares outstanding method. See accompanying notes to financial statements. 18 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ================================================================================ To the Shareholders and Board of Directors of GAMCO Global Series Funds, Inc. We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The GAMCO Global Telecommunications Fund (the "Fund") (formerly The Gabelli Global Telecommunications Fund), a series of GAMCO Global Series Funds, Inc., (formerly Gabelli Global Series Funds, Inc.) as of December 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended December 31, 2002 were audited by other auditors whose report dated January 31, 2003, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the Fund's custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The GAMCO Global Telecommunications Fund, a series of GAMCO Global Series Funds, Inc., at December 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ ERNST & YOUNG LLP Philadelphia, Pennsylvania February 14, 2006 19 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED) During the six months ended December 31, 2005, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the "independent directors") who are not "interested persons" of the Fund. The following paragraphs summarize the material information and factors considered by the independent directors as well as their conclusions relative to such factors. NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered information regarding the portfolio managers, the depth of the analyst pool available to the Adviser and the portfolio managers, the scope of administrative, shareholder, and other services supervised or provided by the Adviser, and the absence of significant service problems reported to the Board. The independent directors noted the experience, length of service, and reputation of the portfolio managers. INVESTMENT PERFORMANCE. The independent directors reviewed the short, medium, and long-term performance of the Fund against a peer group of all telecommunications funds, noting that the Fund's performance was in the top half of its peer group for the one and three year periods and in the top third for the five year period. PROFITABILITY. The independent directors reviewed summary data regarding the profitability of the Fund to the Adviser both with a pro rata administrative charge and with a standalone administrative charge. The directors also noted that a substantial portion of the Fund's portfolio transactions were executed by an affiliated broker of the Adviser and that the affiliated broker received distribution fees and minor amounts of sales commissions. ECONOMIES OF SCALE. The independent directors discussed the major elements of the Adviser's cost structure and the relationship of those elements to potential economies of scale and reviewed rudimentary data suggesting that 20% growth in the Fund would not produce meaningful economies of scale that the shareholders would not participate in. SHARING OF ECONOMIES OF SCALE. The independent directors noted that the investment advisory fee schedule for the Fund does not take into account any potential economies of scale that may develop. SERVICE AND COST COMPARISONS. The independent directors compared the expense ratios of the investment advisory fee, other expenses, and total expenses of the Fund to similar expense ratios of the peer group of telecommunication funds and noted that the Adviser's advisory fee includes substantially all administrative services of the Fund as well as investment advisory services. The directors noted that the Fund's expense ratios were moderately higher, and the Fund's size was moderately lower, than average within this group. The directors also noted that the advisory fee structure was the same as that in effect for most of the Gabelli/GAMCO funds. The directors were presented with, but did not compare, the advisory fee to the fee for other types of accounts managed by the Adviser. CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and a moderately above average performance record. The independent directors also concluded that the Fund's expense ratios and the profitability to the Adviser of managing the Fund were reasonable, and that economies of scale were not a significant factor in their thinking at this time. The directors did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the independent directors determined to recommend continuation of the investment advisory agreement to the full Board of Directors. 20 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND ADDITIONAL FUND INFORMATION (UNAUDITED) ================================================================================ The business and affairs of the Company are managed under the direction of the Company's Board of Directors. Information pertaining to the Directors and officers of the Company is set forth below. The Fund's Statement of Additional Information includes additional information about GAMCO Global Series Funds, Inc. Directors and is available, without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to GAMCO Global Series Funds, Inc. at One Corporate Center, Rye, NY 10580-1422.
TERM OF NUMBER OF OFFICE AND FUNDS IN FUND NAME, POSITION(S) LENGTH OF COMPLEX ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4 ---------------- -------- ---------- ---------------------- ------------------ INTERESTED DIRECTORS 3: ---------------------- MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group Director and Officer of GAMCO Investors, Inc. Holdings, Inc. Chief Investment Officer and Chief Investment Officer - Value (holding company) Age: 63 Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Chairman and Chief Executive Officer of Lynch Interactive Corporation (multimedia and services) JOHN D. GABELLI Since 1993 10 Senior Vice President of Gabelli & Director of Director Company, Inc. GAMCO Investors, Inc. Age: 61 NON-INTERESTED DIRECTORS: ------------------------ E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Director of Lynch Director Consultants, Inc.; Adviser, Iona College Corporation (diversified Age: 66 School of Business manufacturing) ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of -- Director Anthony J. Colavita, P.C. Age: 70 ARTHUR V. FERRARA Since 2001 6 Formerly, Chairman of the Board and Chief Director of The Guardian Life Director Executive Officer of The Guardian Life Insurance Company of America; Age: 75 Insurance Company of America from January Director of The Guardian 1993 to December 1995; President, Chief Insurance and Annuity Executive Officer and a Director Company, Inc., Guardian prior thereto Investor Services LLC, and 25 mutual funds within the Guardian Fund Complex WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence Hospital -- Director and practicing private physician Age: 65 ANTHONIE C. VAN EKRIS Since 1993 18 Chairman of BALMAC International, Inc. -- Director (commodities and futures trading) Age: 71 SALVATORE J. ZIZZA Since 2004 25 Chairman of Hallmark Electrical Director of Hollis-Eden Director Supplies Corp. Pharmaceuticals (biotechnology); Age: 60 Director of Earl Scheib, Inc. (automotive services)
21 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED) ================================================================================
TERM OF OFFICE AND NAME, POSITION(S) LENGTH OF ADDRESS 1 TIME PRINCIPAL OCCUPATION(S) AND AGE SERVED 2 DURING PAST FIVE YEARS ---------------- -------- ---------------------- OFFICERS: -------- BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating and Treasurer President and Treasurer Officer of Gabelli Funds, LLC since 1988 and an Age: 54 officer of all of the registered investment companies in the Gabelli Funds complex. Director and President of Gabelli Advisers, Inc. since 1998. JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of GAMCO Secretary Investors, Inc. since 1999 and GAMCO Asset Age: 42 Management Inc. since 1993; Secretary of all of the registered investment companies in the Gabelli Funds complex. PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc. Chief Compliance Officer since 2004; Chief Compliance Officer of all of the Age: 52 registered investment companies in the Gabelli Funds complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004.
--------------------- 1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. 2 Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Company's By-Laws and Articles of Incorporation. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. Effective November 16, 2005, Mr. Karl Otto Pohl resigned from the Board of Directors and now serves as Director Emeritus. 3 "Interested person" of the Company as defined in the Investment Company Act of 1940. Messrs. M. Gabelli and J. Gabelli are each considered an "interested person" because of their affiliation with Gabelli Funds, LLC which acts as the Company's investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. 4 This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or other investment companies registered under the 1940 Act. 22 THE GAMCO GLOBAL TELECOMMUNICATIONS FUND ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED) ================================================================================ -------------------------------------------------------------------------------- 2005 TAX NOTICE TO SHAREHOLDERS (Unaudited) For the year ended December 31, 2005, the Fund paid to shareholders ordinary income dividends (comprised of net investment income) totaling $0.190, $0.196, and $0.010 per share for Class AAA, Class A, and Class C, respectively. For the year ended December 31, 2005, 86.01% of the ordinary income dividend qualifies for the dividend received deduction available to corporations and 100% of the ordinary income distribution was qualified dividend income. Also for the year ended December 31, 2005, the Fund passed through foreign tax credits of $0.0425 per share to Class AAA, Class A, and Class C shareholders. The foreign source income and tax credits by country are presented in the table below. Visit www.gabelli.com for more information about 2005 foreign source income and foreign taxes paid. U.S. GOVERNMENT INCOME: The percentage of the ordinary income dividend paid by the Fund during fiscal year 2005 which was derived from U.S. Treasury securities was 0.92%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund's fiscal year in U.S. Government securities. The GAMCO Global Telecommunications Fund did not meet this strict requirement in 2005. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax advisor as to the applicability of the information provided to your specific situation. -------------------------------------------------------------------------------- FOREIGN SOURCE INCOME AND TAX CREDITS BY COUNTRY FOR 2005 (UNAUDITED) THE GAMCO GLOBAL TELECOMMUNICATIONS FUND ---------------------------------------- Foreign Source Foreign Qualifying Income % Income % Foreign Tax % -------- -------- ------------- Australia 0.07 0.10 0.00 Austria 0.26 0.39 0.45 Bermuda 0.01 0.02 0.00 Brazil 2.03 2.96 2.99 Canada 6.90 10.07 11.40 Chile 1.86 2.72 5.97 Denmark 1.10 1.61 4.35 Finland 3.70 5.40 6.41 France 11.29 16.48 12.79 Germany 3.95 5.76 11.54 Hong Kong 1.35 1.97 0.00 Hungary 0.01 0.02 0.04 Indonesia 0.28 0.41 0.56 Italy 8.93 13.04 15.66 Jamaica 0.32 0.47 0.00 Japan 1.86 2.71 1.50 Malaysia 0.51 0.75 0.00 Mexico 4.49 6.56 0.00 Morroco 0.01 0.01 0.00 Netherlands 0.77 1.12 2.53 New Zealand 1.32 1.92 2.66 Pakistan 0.11 0.17 0.16 Philippines 1.56 2.28 3.16 Portugal 0.49 0.71 0.80 Russia 0.34 0.49 0.18 Singapore 1.12 1.63 0.00 South Africa 0.00 0.00 0.00 South Korea 2.02 2.94 6.01 Spain 3.34 4.88 2.97 Sweden 2.19 3.20 3.77 Switzerland 1.55 2.26 4.10 United Kingdom 4.74 6.92 0.00 23 GAMCO Global Series Funds, Inc. THE GAMCO GLOBAL TELECOMMUNICATIONS FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA John D. Gabelli CHAIRMAN AND CHIEF SENIOR VICE PRESIDENT EXECUTIVE OFFICER GABELLI & COMPANY, INC. GAMCO INVESTORS, INC. E. Val Cerutti Werner J. Roeder, MD CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL Anthony J. Colavita Anthonie C. van Ekris ATTORNEY-AT-LAW MANAGING DIRECTOR ANTHONY J. COLAVITA, P.C. BALMAC INTERNATIONAL, INC. Arthur V. Ferrara Salvatore J.Zizza FORMER CHAIRMAN AND CHAIRMAN CHIEF EXECUTIVE OFFICER HALLMARK ELECTRICAL GUARDIAN LIFE INSURANCE SUPPLIES CORP. COMPANY OF AMERICA OFFICERS Bruce N. Alpert James E. McKee PRESIDENT AND TREASURER SECRETARY Peter D. Goldstein CHIEF COMPLIANCE OFFICER DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The GAMCO Global Telecommunications Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. -------------------------------------------------------------------------------- GAB401Q405SR [GRAPHIC OMITTED] TRIANGLE ART THE GAMCO GLOBAL TELECOMMUNICATIONS FUND ANNUAL REPORT DECEMBER 31, 2005 ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. (d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. As of the end of the period covered by the report, the registrant's Board of Directors has determined that Salvatore J. Zizza is qualified to serve as an audit committee financial expert serving on its audit committee and that he is "independent," as defined by Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. AUDIT FEES (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $119,700 in 2005 and $105,600 in 2004. AUDIT-RELATED FEES (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 in 2005 and $0 in 2004. TAX FEES (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $14,400 in 2005 and $13,600 in 2004. Tax fees represent tax compliance services provided in connection with the review of the Registrant's tax returns. ALL OTHER FEES (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 in 2005 and $0 in 2004. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. Pre-Approval Policies and Procedures. The Audit Committee ("Committee") of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent auditors to the registrant and (ii) all permissible non-audit services to be provided by the independent auditors to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides services to the registrant (a "Covered Services Provider") if the independent auditors' engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson's pre-approval of such services, his or her decision(s). The Committee may also establish detailed pre-approval policies and procedures for pre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee's pre-approval responsibilities to the other persons (other than Gabelli or the registrant's officers). Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the registrant, Gabelli and any Covered Services Provider constitutes not more than 5% of the total amount of revenues paid by the registrant to its independent auditors during the fiscal year in which the permissible non-audit services are provided; (ii) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit. (e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: (b) N/A (c) 100% (d) N/A (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was zero percent (0%). (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $79,400 in 2005 and $78,600 in 2004. (h) The registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's Board of Directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) GAMCO Global Series Funds, Inc. -------------------------------------------------------------------- By (Signature and Title)* /s/ Bruce N. Alpert ------------------------------------------------------- Bruce N. Alpert, Principal Executive Officer Date March 8, 2006 ---------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Bruce N. Alpert ------------------------------------------------------- Bruce N. Alpert, Principal Executive Officer & Principal Financial Officer Date March 8, 2006 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.