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 811-06367
Gabelli Equity 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: September 30
Date of reporting period: September 30, 2015
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. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
The Gabelli Equity Income Fund Annual Report — September 30, 2015 | Mario J. Gabelli, CFA Portfolio Manager |
To Our Shareholders,
For the year ended September 30, 2015, the net asset value (“NAV”) per Class AAA Share of The Gabelli Equity Income Fund decreased 5.4% compared with a decrease of 0.6% for the Standard & Poor’s (“S&P”) 500 Index. See page 3 for additional performance information.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2015.
Performance Discussion
Our stock selection process is based on the investment principles of Graham and Dodd, the first investors to articulate the fundamentals of value investing. Their work provided the framework for value investing, and we contributed to this framework with the discipline of Private Market Value with a Catalyst®. This proprietary research and valuation method identifies companies whose shares are selling at a discount to intrinsic value, with an identifiable path to realizing, or surfacing, that private market value. We define private market value as the price an informed acquirer would pay for an entire enterprise. The catalyst comprises identifiable events or circumstances that might reasonably result in the narrowing of the difference between the public market price of the stock and our estimate of the private market value. This realization of value can take place gradually or suddenly, with company specific changes such as management changes or restructurings, sale of assets or of the business as a whole, or industry changes such as changes in regulation or changes in competition.
The Fund’s first fiscal quarter, (calendar fourth quarter), saw a weak employment report, but an improvement in the Purchasing Managers Index, better housing activity, and higher vehicle sales. Despite a considerable amount of volatility during the fourth quarter, the S&P 500 managed to end the quarter up a respectable 4.9%. A number of stocks in the portfolio experienced double digit percentage gains in the quarter. Among those top performing stocks were the automotive aftermarket parts supplier Genuine Parts Co.(1.9% of net assets as of September 30, 2015); the pharmacy company CVS Health Corp. (2.3%); and The Home Depot Corp. (2.6%), the home improvement retailer.
Not all stocks did well in the Fund’s first quarter. Energy prices crashed as Saudi Arabia initiated a price war in response to the growth of U.S. shale oil production. Many stocks in the energy sector suffered, including oil services companies Halliburton Co. (0.6%) and Weatherford International plc (0.4%). In addition, Anadarko Petroleum Corp. (0.6%), a large oil exploration and production company, was down by more than 10% during the quarter.
During the quarter ended March 2015, there was an uptick in United States equity markets. As the domestic economy improved, the labor market followed. The highest returns in the portfolio were due to merger activity, as the American manufacturing and processing conglomerate Kraft Foods Group merged with H.J. Heinz to form ‘The Kraft Heinz Co.’ (0.4%), the third largest food and beverage company in North America. In addition, pharmaceutical company Hospira was acquired by Pfizer Inc. (1.5%), putting the former up over 40% in the quarter.
Two of the portfolios larger holdings were down double digits in the Fund’s second quarter. Auto parts supplier Genuine Parts Co. (1.9%) cited currency headwinds as a cause for decreased sales; and financial services provider American Express Co. (1.2%) lost a lucrative and exclusive co-branding agreement with Costco Wholesale Corp. (1.4%), the major retailer.
During the Fund’s third fiscal quarter, the S&P 500 was essentially flat, and most of the sectors that make up the S&P 500 Index did not move significantly either. However, despite the subdued performance of the broad market, there was plenty of action both in U.S. equity markets and around the world. Some of the best performing stocks in the Fund during the quarter were spirits company Brown-Forman Corp. (1.1%), benefiting from bourbon’s global popularity; insurance company American International Group Inc. (1.4%), which continues to improve its balance sheet and profitability since its troubles during the financial crisis; and bank JPMorgan Chase & Co. (0.8%).
Among the worst performing stocks in this quarter, were Wal-Mart Stores Inc. (0.5%), the multi branched retailer; and Navistar International Corp. (0.3%), truck manufacturer and holding company, both of which were down over 10% during the quarter.
The September employment report came in significantly weaker than expected, but we have had sixty months in a row of job gains. The economy has been resilient, albeit at a low level, supported by the auto industry and good household formation fuelling housing demand, both of which are important to the health of the economy. Strong performers for the Fund’s fiscal fourth quarter were the home improvement retailer The Home Depot Corp. (2.6%); automotive parts retailer O’Reilly Automotive Inc. (0.8%); and the membership warehouse giant Costco Wholesale Corp. (1.4%). Weaker portfolio holdings for the quarter included the multifaceted retail company Macy’s Inc. (1.1%); Rockwell Automation Inc. (1.2%), the American provider of industrial automation and information solutions; and the American global mass media company Viacom Inc. (0.6%).
Among the better performing stocks for the fiscal year were: Ingles Markets Inc. (0.2%), an American regional supermarket chain based in Black Mountain, North Carolina; cable and high speed internet provider Cablevision Systems Corp. (0.2%); and consumer packaged goods holding company Post Holdings Inc. (less than 0.1%). All three holdings returned over 75% for the year. Some of our weaker performers were Peabody Energy (sold), the largest private sector coal company; international natural resources company WesternZagros Resources Ltd. (less than 0.1%); and American energy company CONSOL Energy Inc. (less than 0.1%).
We appreciate your loyalty and support in these volatile markets.
2
Comparative Results
Average Annual Returns through September 30, 2015 (a)(b) (Unaudited) | Since | ||||||||||||||||||||||||
1 Year | 5 Year | 10 Year | 15 Year | Inception (01/02/92) | |||||||||||||||||||||
Class AAA (GABEX) | (5.40 | )% | 10.10 | % | 6.46 | % | 7.08 | % | 9.78 | % | |||||||||||||||
S&P 500 Index | (0.61 | ) | 13.34 | 6.80 | 3.96 | 8.82 | (e) | ||||||||||||||||||
Nasdaq Composite Index | 4.16 | 15.75 | 9.15 | 2.53 | 9.07 | (e) | |||||||||||||||||||
Lipper Equity Income Fund Average | (4.24 | ) | 10.94 | 5.63 | 5.08 | 7.98 | |||||||||||||||||||
Class A (GCAEX) | (5.38 | ) | 10.09 | 6.46 | 7.07 | 9.77 | |||||||||||||||||||
With sales charge (c) | (10.82 | ) | 8.80 | 5.84 | 6.65 | 9.50 | |||||||||||||||||||
Class C (GCCEX) | (6.10 | ) | 9.28 | 5.67 | 6.46 | 9.37 | |||||||||||||||||||
With contingent deferred sales charge (d) | (7.04 | ) | 9.28 | 5.67 | 6.46 | 9.37 | |||||||||||||||||||
Class I (GCIEX) | (5.15 | ) | 10.37 | 6.67 | 7.22 | 9.87 |
In the current prospectuses dated January 28, 2015, the expense ratios for Class AAA, A, C, and I Shares are 1.37%, 1.37%, 2.12%, and 1.12%, respectively. See page 14 for the expense ratios for the year ended September 30, 2015. Class AAA and Class I Shares do not have a sales charge. The maximum sales charge for Class A and C Shares is 5.75% and 1.00%, respectively.
(a) | Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price, reinvestment of 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. Visit www.gabelli.com for performance information as of the most recent month end. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days after the date of purchase. Performance returns for periods of less than one year are not annualized. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus please visit www.gabelli.com. The Class AAA Share NAVs are used to calculate performance for the periods prior to the issuance of Class A Shares and Class C Shares on December 31, 2003 and Class I Shares on January 11, 2008. The actual performance of the Class A Shares and Class C Shares would have been lower due to the additional fees and expenses associated with these classes of shares. The actual performance of the Class I Shares would have been higher due to lower expenses related to this class of shares. The S&P 500 Index is a market capitalization weighted index of 500 large capitalization stocks commonly used to represent the U.S. equity market. The Nasdaq Composite Index is an unmanaged indicator of stock market performance. The Lipper Equity Income Fund Average includes the 30 largest equity funds in this category tracked by Lipper, Inc. Dividends are considered reinvested, except for the Nasdaq Composite Index. You cannot invest directly in an index. |
(b) | The Fund’s fiscal year ends September 30. |
(c) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(d) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
(e) | S&P 500 Index and Nasdaq Composite Index since inception performance is as of December 31, 1991. |
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI EQUITY INCOME FUND CLASS AAA SHARES AND S&P 500 INDEX (Unaudited)
* | 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. |
3
The Gabelli Equity Income Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from April 1, 2015 through September 30, 2015 | 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 September 30, 2015.
Beginning Account Value 04/01/15 | Ending Account Value 09/30/15 | Annualized Expenses Ratio | Expense Paid During Period* | |||||
| ||||||||
The Gabelli Equity Income Fund | ||||||||
| ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $ 907.40 | 1.37% | $ 6.55 | ||||
Class A | $1,000.00 | $ 907.10 | 1.37% | $ 6.55 | ||||
Class C | $1,000.00 | $ 903.70 | 2.12% | $10.12 | ||||
Class I | $1,000.00 | $ 908.30 | 1.12% | $ 5.36 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,018.20 | 1.37% | $ 6.93 | ||||
Class A | $1,000.00 | $1,018.20 | 1.37% | $ 6.93 | ||||
Class C | $1,000.00 | $1,014.44 | 2.12% | $10.71 | ||||
Class I | $1,000.00 | $1,019.45 | 1.12% | $ 5.67 |
* | 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 (183 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2015:
The Gabelli Equity Income Fund
Financial Services | 18.3 | % | ||
Health Care | 13.3 | % | ||
Food and Beverage | 12.8 | % | ||
Retail | 9.9 | % | ||
Diversified Industrial | 4.6 | % | ||
Consumer Products | 3.7 | % | ||
Energy and Utilities: Oil | 3.6 | % | ||
Telecommunications | 3.3 | % | ||
Automotive: Parts and Accessories | 3.1 | % | ||
Aerospace | 2.7 | % | ||
Energy and Utilities: Integrated | 2.1 | % | ||
Specialty Chemicals | 2.0 | % | ||
Entertainment | 1.6 | % | ||
Energy and Utilities: Natural Gas | 1.6 | % | ||
Energy and Utilities: Services | 1.5 | % | ||
Computer Hardware | 1.4 | % | ||
Computer Software and Services | 1.3 | % | ||
Business Services | 1.1 | % | ||
Wireless Communications | 1.1 | % | ||
Equipment and Supplies | 1.1 | % | ||
Electronics | 1.0 | % | ||
Machinery | 1.0 | % |
Cable and Satellite | 0.9 | % | ||
Broadcasting | 0.8 | % | ||
Metals and Mining | 0.8 | % | ||
Automotive | 0.8 | % | ||
Real Estate Investment Trusts | 0.8 | % | ||
Hotels and Gaming | 0.6 | % | ||
Energy and Utilities: Electric | 0.6 | % | ||
Communications Equipment | 0.6 | % | ||
Agriculture | 0.6 | % | ||
Building and Construction | 0.5 | % | ||
Environmental Services | 0.5 | % | ||
Transportation | 0.4 | % | ||
Energy and Utilities: Water | 0.3 | % | ||
Aviation: Parts and Services | 0.3 | % | ||
Consumer Services | 0.2 | % | ||
Paper and Forest Products | 0.1 | % | ||
Publishing | 0.0 | %* | ||
Real Estate | 0.0 | %* | ||
Other Assets and Liabilities (Net) | (0.9 | )% | ||
|
| |||
100.0 | % | |||
|
|
* | Amount represents less than (0.05)% |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. 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 SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Equity Income Fund
Schedule of Investments — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 100.6% |
| |||||||||||
Aerospace — 2.7% |
| |||||||||||
74,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 442,031 | $ | 1,197,320 | |||||||
2,000 | Lockheed Martin Corp. | 47,350 | 414,620 | |||||||||
10,000 | Raytheon Co. | 279,200 | 1,092,600 | |||||||||
255,000 | Rockwell Automation Inc. | 11,011,685 | 25,874,850 | |||||||||
2,000 | Rockwell Collins Inc. | 15,844 | 163,680 | |||||||||
1,600,000 | Rolls-Royce Holdings plc | 11,982,896 | 16,386,052 | |||||||||
95,000 | The Boeing Co. | 5,878,303 | 12,440,250 | |||||||||
|
|
|
| |||||||||
29,657,309 | 57,569,372 | |||||||||||
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|
|
| |||||||||
Agriculture — 0.6% |
| |||||||||||
100,000 | Archer Daniels Midland Co. | 2,734,560 | 4,145,000 | |||||||||
85,000 | Monsanto Co. | 1,768,309 | 7,253,900 | |||||||||
12,000 | The Mosaic Co. | 186,246 | 373,320 | |||||||||
|
|
|
| |||||||||
4,689,115 | 11,772,220 | |||||||||||
|
|
|
| |||||||||
Automotive — 0.8% |
| |||||||||||
500,000 | Ford Motor Co. | 6,761,796 | 6,785,000 | |||||||||
88,000 | General Motors Co. | 2,442,696 | 2,641,760 | |||||||||
465,000 | Navistar International Corp.† | 11,809,517 | 5,914,800 | |||||||||
31,000 | PACCAR Inc. | 1,399,566 | 1,617,270 | |||||||||
|
|
|
| |||||||||
22,413,575 | 16,958,830 | |||||||||||
|
|
|
| |||||||||
Automotive: Parts and Accessories — 3.1% |
| |||||||||||
8,000 | BorgWarner Inc. | 246,560 | 332,720 | |||||||||
200,000 | Dana Holding Corp. | 3,459,118 | 3,176,000 | |||||||||
78,000 | Federal-Mogul Holdings Corp.† | 852,707 | 532,740 | |||||||||
500,000 | Genuine Parts Co. | 22,397,791 | 41,445,000 | |||||||||
6,000 | Johnson Controls Inc. | 50,425 | 248,160 | |||||||||
46,000 | Modine Manufacturing Co.† | 417,313 | 362,020 | |||||||||
65,000 | O’Reilly Automotive Inc.† | 1,764,736 | 16,250,000 | |||||||||
47,000 | Tenneco Inc.† | 717,637 | 2,104,190 | |||||||||
150,000 | The Pep Boys - Manny, Moe & Jack† | 1,654,558 | 1,828,500 | |||||||||
|
|
|
| |||||||||
31,560,845 | 66,279,330 | |||||||||||
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|
|
| |||||||||
Aviation: Parts and Services — 0.3% |
| |||||||||||
60,000 | Curtiss-Wright Corp. | 926,093 | 3,745,200 | |||||||||
2,000 | Precision Castparts Corp. | 185,634 | 459,420 | |||||||||
29,000 | United Technologies Corp. | 1,453,950 | 2,580,710 | |||||||||
|
|
|
| |||||||||
2,565,677 | 6,785,330 | |||||||||||
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|
|
| |||||||||
Broadcasting — 0.8% |
| |||||||||||
350,359 | CBS Corp., Cl. A, Voting | 8,434,882 | 15,731,119 | |||||||||
54,200 | CBS Corp., Cl. B, Non-Voting | 1,247,068 | 2,162,580 | |||||||||
|
|
|
| |||||||||
9,681,950 | 17,893,699 | |||||||||||
|
|
|
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Building and Construction — 0.5% |
| |||||||||||
240,000 | Fortune Brands Home & Security Inc. | 2,635,459 | 11,392,800 | |||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Business Services — 1.1% |
| |||||||||||
37,000 | Automatic Data Processing Inc. | $ | 1,358,159 | $ | 2,973,320 | |||||||
37,789 | Blackhawk Network Holdings Inc.† | 881,223 | 1,601,876 | |||||||||
186,000 | Diebold Inc. | 6,358,543 | 5,537,220 | |||||||||
4,000 | Landauer Inc. | 134,546 | 147,960 | |||||||||
100,000 | MasterCard Inc., Cl. A | 864,079 | 9,012,000 | |||||||||
30,000 | McGraw Hill Financial Inc. | 1,225,693 | 2,595,000 | |||||||||
11,000 | MSC Industrial Direct Co. Inc., Cl. A | 845,797 | 671,330 | |||||||||
40,000 | Pentair plc | 1,223,885 | 2,041,600 | |||||||||
4,000 | Vectrus Inc.† | 61,245 | 88,160 | |||||||||
|
|
|
| |||||||||
12,953,170 | 24,668,466 | |||||||||||
|
|
|
| |||||||||
Cable and Satellite — 0.9% |
| |||||||||||
12,000 | AMC Networks Inc., Cl. A† | 467,690 | 878,040 | |||||||||
1,000 | Cable One Inc.† | 179,904 | 419,420 | |||||||||
120,000 | Cablevision Systems Corp., Cl. A | 1,350,583 | 3,896,400 | |||||||||
164,000 | DISH Network Corp., Cl. A† | 3,200,961 | 9,567,760 | |||||||||
16,000 | EchoStar Corp., Cl. A† | 478,840 | 688,480 | |||||||||
58,000 | Scripps Networks Interactive Inc., Cl. A | 2,452,305 | 2,853,020 | |||||||||
9,700 | Time Warner Cable Inc. | 1,304,241 | 1,739,889 | |||||||||
|
|
|
| |||||||||
9,434,524 | 20,043,009 | |||||||||||
|
|
|
| |||||||||
Communications Equipment — 0.6% |
| |||||||||||
745,000 | Corning Inc. | 10,014,271 | 12,754,400 | |||||||||
|
|
|
| |||||||||
Computer Hardware — 1.4% |
| |||||||||||
22,000 | Apple Inc. | 1,611,288 | 2,426,600 | |||||||||
300,000 | Hewlett-Packard Co. | 6,437,422 | 7,683,000 | |||||||||
144,000 | International Business Machines Corp. | 11,656,060 | 20,875,680 | |||||||||
|
|
|
| |||||||||
19,704,770 | 30,985,280 | |||||||||||
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|
|
| |||||||||
Computer Software and Services — 1.3% |
| |||||||||||
11,000 | CDK Global Inc. | 171,508 | 525,580 | |||||||||
460,000 | EMC Corp. | 11,993,022 | 11,113,600 | |||||||||
111,500 | Fidelity National Information Services Inc. | 1,973,852 | 7,479,420 | |||||||||
54,000 | Microsoft Corp. | 1,502,082 | 2,390,040 | |||||||||
23,969 | NetScout Systems Inc.† | 386,199 | 847,784 | |||||||||
170,000 | Yahoo! Inc.† | 2,777,079 | 4,914,700 | |||||||||
|
|
|
| |||||||||
18,803,742 | 27,271,124 | |||||||||||
|
|
|
| |||||||||
Consumer Products — 3.7% |
| |||||||||||
45,000 | Altria Group Inc. | 538,092 | 2,448,000 | |||||||||
80,000 | Edgewell Personal Care Co. | 3,324,552 | 6,528,000 | |||||||||
70,000 | Energizer Holdings Inc. | 942,538 | 2,709,700 | |||||||||
10,000 | Hanesbrands Inc. | 54,475 | 289,400 | |||||||||
2,000 | National Presto Industries Inc. | 60,046 | 168,520 |
See accompanying notes to financial statements.
6
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Consumer Products (Continued) |
| |||||||||||
50,000 | Philip Morris International Inc. | $ | 1,501,172 | $ | 3,966,500 | |||||||
103,000 | Reckitt Benckiser Group plc | 3,301,972 | 9,328,508 | |||||||||
25,500 | Svenska Cellulosa AB, Cl. A | 439,719 | 706,205 | |||||||||
1,230,000 | Swedish Match AB | 17,616,268 | 37,135,347 | |||||||||
200,000 | The Procter & Gamble Co. | 11,801,060 | 14,388,000 | |||||||||
81,000 | Unilever NV - NY Shares | 1,639,778 | 3,256,200 | |||||||||
|
|
|
| |||||||||
41,219,672 | 80,924,380 | |||||||||||
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|
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| |||||||||
Consumer Services — 0.2% |
| |||||||||||
4,000 | Allegion plc | 59,917 | 230,640 | |||||||||
145,000 | Rollins Inc. | 368,364 | 3,896,150 | |||||||||
10,000 | The ADT Corp. | 303,772 | 299,000 | |||||||||
|
|
|
| |||||||||
732,053 | 4,425,790 | |||||||||||
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Diversified Industrial — 4.4% |
| |||||||||||
1,200 | Acuity Brands Inc. | 11,386 | 210,696 | |||||||||
100,000 | Crane Co. | 3,402,503 | 4,661,000 | |||||||||
80,000 | Eaton Corp. plc | 3,945,548 | 4,104,000 | |||||||||
1,500,000 | General Electric Co. | 29,741,605 | 37,830,000 | |||||||||
228,000 | Honeywell International Inc. | 8,324,113 | 21,589,320 | |||||||||
50,000 | ITT Corp. | 1,004,526 | 1,671,500 | |||||||||
50,000 | Jardine Matheson Holdings Ltd. | 2,372,853 | 2,362,500 | |||||||||
180,000 | Jardine Strategic Holdings Ltd. | 4,227,653 | 4,831,200 | |||||||||
120,000 | Textron Inc. | 763,372 | 4,516,800 | |||||||||
350,000 | Toray Industries Inc. | 2,392,238 | 3,006,502 | |||||||||
26,000 | Trinity Industries Inc. | 376,576 | 589,420 | |||||||||
305,000 | Tyco International plc | 6,428,113 | 10,205,300 | |||||||||
|
|
|
| |||||||||
62,990,486 | 95,578,238 | |||||||||||
|
|
|
| |||||||||
Electronics — 1.0% |
| |||||||||||
46,000 | Dolby Laboratories Inc., Cl. A | 1,842,600 | 1,499,600 | |||||||||
34,000 | Intel Corp. | 662,350 | 1,024,760 | |||||||||
26,000 | Sony Corp. | 720,543 | 628,192 | |||||||||
50,000 | Sony Corp., ADR† | 1,237,165 | 1,225,000 | |||||||||
74,000 | TE Connectivity Ltd. | 2,500,525 | 4,431,860 | |||||||||
270,000 | Texas Instruments Inc. | 6,437,837 | 13,370,400 | |||||||||
|
|
|
| |||||||||
13,401,020 | 22,179,812 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Electric — 0.6% |
| |||||||||||
50,000 | American Electric Power Co. Inc. | 1,892,283 | 2,843,000 | |||||||||
2,000 | DTE Energy Co. | 81,030 | 160,740 | |||||||||
90,000 | El Paso Electric Co. | 820,152 | 3,313,800 | |||||||||
50,000 | Great Plains Energy Inc. | 1,192,611 | 1,351,000 | |||||||||
100,000 | Korea Electric Power Corp., ADR | 1,479,637 | 2,049,000 | |||||||||
250,000 | The AES Corp. | 2,394,954 | 2,447,500 |
Shares | Cost | Market Value | ||||||||||
14,000 | UIL Holdings Corp. | $ | 346,227 | $ | 703,780 | |||||||
|
|
|
| |||||||||
8,206,894 | 12,868,820 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Integrated — 2.1% |
| |||||||||||
18,000 | CONSOL Energy Inc. | 679,549 | 176,400 | |||||||||
82,000 | Dominion Resources Inc. | 3,290,564 | 5,771,160 | |||||||||
52,000 | Duke Energy Corp. | 2,499,908 | 3,740,880 | |||||||||
220,000 | Energy Transfer Equity LP | 1,666,164 | 4,578,200 | |||||||||
29,000 | Eni SpA | 304,221 | 455,287 | |||||||||
120,000 | Eversource Energy | 2,464,860 | 6,074,400 | |||||||||
29,500 | FirstEnergy Corp. | 975,487 | 923,645 | |||||||||
13,069 | Iberdrola SA, ADR | 299,699 | 347,505 | |||||||||
100,000 | NextEra Energy Inc. | 5,106,681 | 9,755,000 | |||||||||
135,000 | OGE Energy Corp. | 1,845,256 | 3,693,600 | |||||||||
118,000 | PNM Resources Inc. | 1,394,458 | 3,309,900 | |||||||||
8,000 | Suncor Energy Inc., New York | 211,198 | 213,760 | |||||||||
2,000 | Suncor Energy Inc., Toronto | 61,550 | 53,488 | |||||||||
40,000 | TECO Energy Inc. | 496,772 | 1,050,400 | |||||||||
126,000 | Westar Energy Inc. | 2,022,369 | 4,843,440 | |||||||||
|
|
|
| |||||||||
23,318,736 | 44,987,065 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Natural Gas — 1.6% |
| |||||||||||
6,000 | AGL Resources Inc. | 105,825 | 366,240 | |||||||||
5,500 | Atmos Energy Corp. | 144,673 | 319,990 | |||||||||
55,000 | California Resources Corp. | 277,801 | 143,000 | |||||||||
100,000 | Kinder Morgan Inc. | 3,211,500 | 2,768,000 | |||||||||
314,000 | National Fuel Gas Co. | 15,777,258 | 15,693,720 | |||||||||
34,000 | ONE Gas Inc. | 187,197 | 1,541,220 | |||||||||
130,000 | ONEOK Inc. | 1,319,048 | 4,186,000 | |||||||||
24,000 | Piedmont Natural Gas Co. Inc. | 394,017 | 961,680 | |||||||||
55,000 | Southwest Gas Corp. | 1,485,223 | 3,207,600 | |||||||||
165,000 | Spectra Energy Corp. | 3,698,360 | 4,334,550 | |||||||||
|
|
|
| |||||||||
26,600,902 | 33,522,000 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Oil — 3.6% |
| |||||||||||
200,000 | Anadarko Petroleum Corp. | 10,740,292 | 12,078,000 | |||||||||
330,000 | BP plc, ADR | 14,380,717 | 10,084,800 | |||||||||
168,000 | Chevron Corp. | 8,217,304 | 13,251,840 | |||||||||
170,000 | ConocoPhillips | 3,774,376 | 8,153,200 | |||||||||
32,000 | Denbury Resources Inc. | 314,547 | 78,080 | |||||||||
58,000 | Devon Energy Corp. | 2,515,154 | 2,151,220 | |||||||||
140,000 | Exxon Mobil Corp. | 4,743,815 | 10,409,000 | |||||||||
120,000 | Hess Corp. | 7,451,605 | 6,007,200 | |||||||||
34,500 | Marathon Oil Corp. | 840,669 | 531,300 | |||||||||
36,000 | Marathon Petroleum Corp. | 565,270 | 1,667,880 | |||||||||
95,000 | Occidental Petroleum Corp. | 3,802,100 | 6,284,250 | |||||||||
4,000 | PetroChina Co. Ltd., ADR | 317,768 | 278,800 | |||||||||
26,000 | Repsol SA, ADR | 522,154 | 302,900 | |||||||||
120,000 | Royal Dutch Shell plc, Cl. A, ADR | 5,524,835 | 5,686,800 | |||||||||
10,000 | Statoil ASA | 241,444 | 145,774 | |||||||||
10,000 | Statoil ASA, ADR | 267,639 | 145,600 |
See accompanying notes to financial statements.
7
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Energy and Utilities: Oil (Continued) |
| |||||||||||
17,518 | Total SA, ADR | $ | 290,564 | $ | 783,230 | |||||||
40,000 | WesternZagros Resources Ltd.† | 147,109 | 3,747 | |||||||||
|
|
|
| |||||||||
64,657,362 | 78,043,621 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Services — 1.5% |
| |||||||||||
50,000 | Cameron International Corp.† | 716,898 | 3,066,000 | |||||||||
350,000 | Halliburton Co. | 10,342,941 | 12,372,500 | |||||||||
94,000 | Oceaneering International Inc. | 2,032,090 | 3,692,320 | |||||||||
40,000 | Schlumberger Ltd. | 1,275,020 | 2,758,800 | |||||||||
1,120,000 | Weatherford International plc† | 16,280,830 | 9,497,600 | |||||||||
|
|
|
| |||||||||
30,647,779 | 31,387,220 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Water — 0.3% |
| |||||||||||
45,000 | Aqua America Inc. | 458,537 | 1,191,150 | |||||||||
170,000 | Severn Trent plc | 4,555,187 | 5,616,519 | |||||||||
|
|
|
| |||||||||
5,013,724 | 6,807,669 | |||||||||||
|
|
|
| |||||||||
Entertainment — 1.6% |
| |||||||||||
150,000 | Grupo Televisa SAB, ADR | 3,532,654 | 3,903,000 | |||||||||
36,000 | The Madison Square Garden Co., Cl. A† | 482,024 | 2,597,040 | |||||||||
115,000 | Time Warner Inc. | 3,180,120 | 7,906,250 | |||||||||
140,016 | Twenty-First Century Fox Inc., Cl. B | 4,461,794 | 3,790,233 | |||||||||
300,000 | Viacom Inc., Cl. A | 11,945,525 | 13,281,000 | |||||||||
140,000 | Vivendi SA | 3,069,667 | 3,305,510 | |||||||||
|
|
|
| |||||||||
26,671,784 | 34,783,033 | |||||||||||
|
|
|
| |||||||||
Environmental Services — 0.5% |
| |||||||||||
50,000 | Republic Services Inc. | 1,684,307 | 2,060,000 | |||||||||
175,000 | Waste Management Inc. | 5,905,150 | 8,716,750 | |||||||||
|
|
|
| |||||||||
7,589,457 | 10,776,750 | |||||||||||
|
|
|
| |||||||||
Equipment and Supplies — 1.1% |
| |||||||||||
34,000 | A.O. Smith Corp. | 238,161 | 2,216,460 | |||||||||
16,346 | Danaher Corp. | 627,561 | 1,392,843 | |||||||||
190,000 | Flowserve Corp. | 2,554,267 | 7,816,600 | |||||||||
24,000 | Graco Inc. | 1,307,940 | 1,608,720 | |||||||||
12,000 | Ingersoll-Rand plc | 249,750 | 609,240 | |||||||||
26,000 | Minerals Technologies Inc. | 951,815 | 1,252,160 | |||||||||
190,000 | Mueller Industries Inc. | 3,794,476 | 5,620,200 | |||||||||
16,500 | Parker Hannifin Corp. | 848,060 | 1,605,450 | |||||||||
36,000 | Tenaris SA, ADR | 1,075,107 | 867,960 | |||||||||
|
|
|
| |||||||||
11,647,137 | 22,989,633 | |||||||||||
|
|
|
| |||||||||
Financial Services — 18.3% |
| |||||||||||
6,579 | Alleghany Corp.† | 1,015,114 | 3,079,696 | |||||||||
400,000 | AllianceBernstein Holding LP | 7,882,330 | 10,640,000 | |||||||||
362,000 | American Express Co. | 14,826,769 | 26,835,060 |
Shares | Cost | Market Value | ||||||||||
525,000 | American International Group Inc. | $ | 13,870,205 | $ | 29,830,500 | |||||||
30,000 | Argo Group International Holdings Ltd. | 764,717 | 1,697,700 | |||||||||
22,447 | Banco Popular Espanol SA | 200,241 | 81,744 | |||||||||
124 | Banco Popular I-2015 Shares | 506 | 452 | |||||||||
5,195 | Banco Santander Chile, ADR | 29,250 | 94,653 | |||||||||
160,000 | Banco Santander SA, ADR | 1,233,058 | 844,800 | |||||||||
320,000 | Bank of America Corp. | 3,184,684 | 4,985,600 | |||||||||
13,056 | BNP Paribas SA | 580,935 | 765,331 | |||||||||
510,000 | Citigroup Inc. | 20,768,079 | 25,301,100 | |||||||||
43,000 | Deutsche Bank AG | 1,652,315 | 1,159,280 | |||||||||
78,000 | Dundee Corp., Cl. A† | 1,828,287 | 503,829 | |||||||||
44,000 | Eaton Vance Corp. | 1,344,334 | 1,470,480 | |||||||||
132,000 | Federated Investors Inc., Cl. B | 3,257,871 | 3,814,800 | |||||||||
34,167 | Fidelity Southern Corp. | 284,705 | 722,290 | |||||||||
270,000 | H&R Block Inc. | 4,898,488 | 9,774,000 | |||||||||
65,000 | Hudson City Bancorp Inc. | 574,396 | 661,050 | |||||||||
54,000 | Interactive Brokers Group Inc., Cl. A | 820,617 | 2,131,380 | |||||||||
315,034 | Janus Capital Group Inc. | 3,167,807 | 4,284,462 | |||||||||
274,000 | JPMorgan Chase & Co. | 9,683,358 | 16,705,780 | |||||||||
82,758 | Julius Baer Group Ltd. | 2,738,518 | 3,754,934 | |||||||||
32,000 | Kemper Corp. | 868,650 | 1,131,840 | |||||||||
90,100 | Kinnevik Investment AB, Cl. A | 1,682,511 | 2,593,216 | |||||||||
19,000 | Kinnevik Investment AB, Cl. B | 278,394 | 542,309 | |||||||||
473,000 | Legg Mason Inc. | 11,114,576 | 19,681,530 | |||||||||
15,000 | Leucadia National Corp. | 263,160 | 303,900 | |||||||||
180,000 | Loews Corp. | 7,797,363 | 6,505,200 | |||||||||
156,000 | M&T Bank Corp. | 11,432,160 | 19,024,200 | |||||||||
365,000 | Marsh & McLennan Companies Inc. | 11,002,192 | 19,060,300 | |||||||||
370,000 | Morgan Stanley | 9,894,694 | 11,655,000 | |||||||||
288,000 | Navient Corp. | 2,385,656 | 3,237,120 | |||||||||
90,000 | Northern Trust Corp. | 4,193,632 | 6,134,400 | |||||||||
28,000 | Och-Ziff Capital Management Group LLC, Cl. A | 273,682 | 244,440 | |||||||||
40,000 | Oritani Financial Corp. | 400,000 | 624,800 | |||||||||
25,000 | PayPal Holdings Inc.† | 639,653 | 776,000 | |||||||||
45,000 | Popular Inc. | 1,154,010 | 1,360,350 | |||||||||
26,000 | Royal Bank of Canada | 1,333,900 | 1,436,500 | |||||||||
315,000 | SLM Corp.† | 1,496,699 | 2,331,000 | |||||||||
170,000 | State Street Corp. | 7,766,302 | 11,425,700 | |||||||||
310,000 | Sterling Bancorp. | 3,484,951 | 4,609,700 | |||||||||
12,000 | SunTrust Banks Inc. | 251,737 | 458,880 | |||||||||
82,000 | T. Rowe Price Group Inc. | 3,733,964 | 5,699,000 | |||||||||
100,000 | TD Ameritrade Holding Corp . | 1,692,686 | 3,184,000 | |||||||||
1,162,000 | The Bank of New York Mellon Corp. | 34,454,739 | 45,492,300 | |||||||||
3,000 | The Dun & Bradstreet Corp. | 105,969 | 315,000 | |||||||||
21,000 | The Goldman Sachs Group Inc. | 2,643,896 | 3,648,960 |
See accompanying notes to financial statements.
8
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Financial Services (Continued) |
| |||||||||||
152,000 | The Hartford Financial Services Group Inc. | $ | 4,798,325 | $ | 6,958,560 | |||||||
106,000 | The PNC Financial Services | |||||||||||
Group Inc. | 5,651,498 | 9,455,200 | ||||||||||
20,000 | The Travelers Companies Inc. | 795,964 | 1,990,600 | |||||||||
86,000 | W. R. Berkley Corp. | 3,152,681 | 4,675,820 | |||||||||
140,000 | Waddell & Reed Financial Inc., Cl. A | 3,211,846 | 4,867,800 | |||||||||
920,000 | Wells Fargo & Co. | 29,357,941 | 47,242,000 | |||||||||
400,000 | Wright Investors’ Service Holdings Inc.† | 984,526 | 528,000 | |||||||||
|
|
|
| |||||||||
262,904,541 | 396,332,546 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 12.8% |
| |||||||||||
1,000 | Ajinomoto Co. Inc. | 15,519 | 20,964 | |||||||||
30,000 | Anheuser-Busch InBev NV | 496,266 | 3,181,925 | |||||||||
194,000 | Brown-Forman Corp., Cl. A | 7,483,790 | 20,756,060 | |||||||||
20,250 | Brown-Forman Corp., Cl. B | 825,919 | 1,962,225 | |||||||||
214,000 | Campbell Soup Co. | 7,010,409 | 10,845,520 | |||||||||
80,000 | Coca-Cola Amatil Ltd., ADR | 246,845 | 510,400 | |||||||||
20,000 | Coca-Cola Enterprises Inc. | 450,000 | 967,000 | |||||||||
14,500 | Coca-Cola Femsa SAB de CV, ADR | 590,410 | 1,006,010 | |||||||||
18,000 | Constellation Brands Inc., Cl. A | 223,261 | 2,253,780 | |||||||||
144,000 | Danone SA | 7,408,425 | 9,078,341 | |||||||||
550,000 | Davide Campari-Milano SpA | 3,822,395 | 4,375,761 | |||||||||
60,000 | Dean Foods Co. | 813,595 | 991,200 | |||||||||
3,000 | Diageo plc | 79,177 | 80,349 | |||||||||
102,000 | Diageo plc, ADR | 6,285,132 | 10,994,580 | |||||||||
95,000 | Dr Pepper Snapple Group Inc. | 2,087,691 | 7,509,750 | |||||||||
133,000 | Fomento Economico Mexicano SAB de CV, ADR | 3,194,849 | 11,870,250 | |||||||||
240,000 | General Mills Inc. | 6,648,484 | 13,471,200 | |||||||||
3,000,000 | Grupo Bimbo SAB de CV, Cl. A† | 2,411,096 | 7,593,656 | |||||||||
148,000 | Heineken NV | 6,988,553 | 11,946,767 | |||||||||
17,000 | Heineken NV, ADR | 430,190 | 693,430 | |||||||||
240,000 | ITO EN Ltd. | 4,972,831 | 4,999,458 | |||||||||
35,000 | Kellogg Co. | 1,790,141 | 2,329,250 | |||||||||
2,000 | McCormick & Co. Inc., Cl. V | 137,120 | 165,270 | |||||||||
28,000 | McCormick & Co. Inc., Non-Voting | 1,282,199 | 2,301,040 | |||||||||
970,000 | Mondelēz International Inc., Cl. A | 18,672,930 | 40,613,900 | |||||||||
115,000 | Nestlé SA | 3,174,203 | 8,643,290 | |||||||||
65,000 | Nestlé SA, ADR | 3,829,280 | 4,890,600 | |||||||||
130,000 | NISSIN FOODS HOLDINGS CO. LTD. | 4,309,367 | 5,949,235 | |||||||||
4,000,000 | Parmalat SpA | 11,205,603 | 10,315,891 | |||||||||
100,000 | PepsiCo Inc. | 6,444,340 | 9,430,000 |
Shares | Cost | Market Value | ||||||||||
45,000 | Pernod Ricard SA | $ | 3,674,041 | $ | 4,534,545 | |||||||
2,119 | Post Holdings Inc.† | 99,991 | 125,233 | |||||||||
58,000 | Remy Cointreau SA | 3,534,133 | 3,802,376 | |||||||||
20,000 | SABMiller plc | 733,959 | 1,130,626 | |||||||||
220,000 | Sapporo Holdings Ltd. | 1,080,450 | 854,583 | |||||||||
116,000 | The Kraft Heinz Co. | 3,536,066 | 8,187,280 | |||||||||
730,000 | The Coca-Cola Co. | 17,989,643 | 29,287,600 | |||||||||
2,000 | The Hershey Co. | 72,601 | 183,760 | |||||||||
153,000 | The WhiteWave Foods Co.† | 2,058,578 | 6,142,950 | |||||||||
95,113 | Tootsie Roll Industries Inc. | 1,956,710 | 2,976,086 | |||||||||
52,000 | Tyson Foods Inc., Cl. A | 472,056 | 2,241,200 | |||||||||
155,000 | Yakult Honsha Co. Ltd. | 4,171,714 | 7,674,738 | |||||||||
|
|
|
| |||||||||
152,709,962 | 276,888,079 | |||||||||||
|
|
|
| |||||||||
Health Care — 13.3% |
| |||||||||||
38,000 | Abbott Laboratories | 1,098,377 | 1,528,360 | |||||||||
18,500 | AbbVie Inc. | 460,207 | 1,006,585 | |||||||||
40,000 | Aetna Inc. | 1,658,697 | 4,376,400 | |||||||||
4,200 | Allergan plc† | 604,800 | 1,141,602 | |||||||||
113,000 | Baxalta Inc. | 2,336,603 | 3,560,630 | |||||||||
113,000 | Baxter International Inc. | 2,742,969 | 3,712,050 | |||||||||
40,000 | Becton, Dickinson and Co. | 3,160,073 | 5,306,400 | |||||||||
23,000 | Bio-Rad Laboratories Inc., Cl. A† | 2,376,779 | 3,089,130 | |||||||||
500,000 | Boston Scientific Corp.† | 3,634,680 | 8,205,000 | |||||||||
642,000 | Bristol-Myers Squibb Co. | 16,835,115 | 38,006,400 | |||||||||
449,000 | Eli Lilly & Co. | 17,859,208 | 37,576,810 | |||||||||
20,000 | Express Scripts Holding Co.† | 1,010,819 | 1,619,200 | |||||||||
14,076 | GlaxoSmithKline plc, ADR | 635,995 | 541,222 | |||||||||
22,000 | Henry Schein Inc.† | 566,365 | 2,919,840 | |||||||||
105,000 | Indivior plc | 68,659 | 359,927 | |||||||||
313,000 | Johnson & Johnson | 19,753,268 | 29,218,550 | |||||||||
22,000 | Laboratory Corp. of America Holdings† | 1,656,832 | 2,386,340 | |||||||||
87,000 | Mead Johnson Nutrition Co. | 4,077,188 | 6,124,800 | |||||||||
510,000 | Merck & Co. Inc. | 15,703,221 | 25,188,900 | |||||||||
270,000 | Novartis AG, ADR | 14,823,663 | 24,818,400 | |||||||||
215,000 | Patterson Companies Inc. | 7,565,090 | 9,298,750 | |||||||||
1,000,000 | Pfizer Inc. | 18,734,222 | 31,410,000 | |||||||||
136,000 | Roche Holding AG, ADR | 2,632,469 | 4,481,200 | |||||||||
38,000 | Roche Holding AG, Genusschein | 5,601,684 | 10,020,521 | |||||||||
50,000 | St. Jude Medical Inc. | 1,999,918 | 3,154,500 | |||||||||
130,000 | Tenet Healthcare Corp.† | 3,394,425 | 4,799,600 | |||||||||
100,000 | UnitedHealth Group Inc. | 3,169,668 | 11,601,000 | |||||||||
18,000 | William Demant Holding A/S† | 880,509 | 1,496,103 | |||||||||
60,000 | Wright Medical Group Inc.† | 949,266 | 1,261,200 | |||||||||
53,500 | Zimmer Biomet Holdings Inc. | 3,151,375 | 5,025,255 | |||||||||
80,000 | Zoetis Inc. | 2,404,538 | 3,294,400 | |||||||||
|
|
|
| |||||||||
161,546,682 | 286,529,075 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 0.6% |
| |||||||||||
500,000 | Ladbrokes plc | 973,205 | 723,848 |
See accompanying notes to financial statements.
9
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Hotels and Gaming (Continued) |
| |||||||||||
132,000 | Las Vegas Sands Corp. | $ | 2,057,115 | $ | 5,012,040 | |||||||
78,000 | MGM Resorts International† | 799,235 | 1,439,100 | |||||||||
78,000 | Starwood Hotels & Resorts Worldwide Inc. | 1,586,433 | 5,185,440 | |||||||||
14,500 | Wynn Resorts Ltd. | 468,737 | 770,240 | |||||||||
|
|
|
| |||||||||
5,884,725 | 13,130,668 | |||||||||||
|
|
|
| |||||||||
Machinery — 1.0% |
| |||||||||||
6,000 | Caterpillar Inc. | 35,181 | 392,160 | |||||||||
220,000 | Deere & Co. | 12,642,338 | 16,280,000 | |||||||||
160,000 | Xylem Inc. | 4,529,039 | 5,256,000 | |||||||||
|
|
|
| |||||||||
17,206,558 | 21,928,160 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 0.8% |
| |||||||||||
930,000 | Alcoa Inc. | 9,645,346 | 8,983,800 | |||||||||
340,000 | Freeport-McMoRan Inc. | 5,925,909 | 3,294,600 | |||||||||
300,000 | Newmont Mining Corp. | 10,261,917 | 4,821,000 | |||||||||
2,000 | Royal Gold Inc. | 88,166 | 93,960 | |||||||||
|
|
|
| |||||||||
25,921,338 | 17,193,360 | |||||||||||
|
|
|
| |||||||||
Paper and Forest Products — 0.1% |
| |||||||||||
60,000 | International Paper Co. | 1,905,913 | 2,267,400 | |||||||||
|
|
|
| |||||||||
Publishing — 0.0% |
| |||||||||||
1,000 | Graham Holdings Co., Cl. B | 293,530 | 577,000 | |||||||||
3,000 | Value Line Inc. | 41,976 | 46,470 | |||||||||
|
|
|
| |||||||||
335,506 | 623,470 | |||||||||||
|
|
|
| |||||||||
Real Estate — 0.0% |
| |||||||||||
70,000 | Dream Unlimited Corp., Cl. A† | 924,406 | 368,752 | |||||||||
10,000 | Griffin Industrial Realty Inc. | 224,290 | 247,300 | |||||||||
|
|
|
| |||||||||
1,148,696 | 616,052 | |||||||||||
|
|
|
| |||||||||
Real Estate Investment Trusts — 0.8% |
| |||||||||||
73,000 | Plum Creek Timber Co. Inc. | 3,005,977 | 2,884,230 | |||||||||
45,000 | Ryman Hospitality Properties Inc. | 1,712,312 | 2,215,350 | |||||||||
500 | Seritage Growth Properties, Cl. A† | 20,584 | 18,625 | |||||||||
425,000 | Weyerhaeuser Co. | 9,756,175 | 11,619,500 | |||||||||
|
|
|
| |||||||||
14,495,048 | 16,737,705 | |||||||||||
|
|
|
| |||||||||
Retail — 9.9% |
| |||||||||||
16,000 | Compagnie Financiere Richemont SA | 540,728 | 1,242,766 | |||||||||
40,266 | Copart Inc.† | 696,640 | 1,324,751 | |||||||||
210,000 | Costco Wholesale Corp. | 10,924,864 | 30,359,700 | |||||||||
525,000 | CVS Health Corp. | 18,583,544 | 50,652,000 | |||||||||
130,000 | Hertz Global Holdings Inc.† | 2,815,176 | 2,174,900 | |||||||||
100,000 | Ingles Markets Inc., Cl. A | 1,788,883 | 4,783,000 | |||||||||
470,000 | J.C. Penney Co. Inc.† | 5,780,871 | 4,366,300 | |||||||||
1,000 | Lands’ End Inc.† | 31,291 | 27,010 | |||||||||
479,000 | Macy’s Inc. | 7,471,238 | 24,582,280 |
Shares | Cost | Market Value | ||||||||||
1,000 | Sears Canada Inc.† | $ | 5,933 | $ | 6,520 | |||||||
1,000 | Sears Holdings Corp.† | 24,001 | 22,600 | |||||||||
209 | Sears Hometown and Outlet Stores Inc.† | 1,992 | 1,674 | |||||||||
90,000 | Seven & i Holdings Co. Ltd. | 2,692,986 | 4,084,191 | |||||||||
483,500 | The Home Depot Inc. | 13,640,297 | 55,839,415 | |||||||||
81,500 | Tractor Supply Co. | 696,068 | 6,872,080 | |||||||||
123,000 | Walgreens Boots Alliance Inc. | 3,867,264 | 10,221,300 | |||||||||
168,000 | Wal-Mart Stores Inc. | 7,890,002 | 10,893,120 | |||||||||
10,000 | Weis Markets Inc. | 300,480 | 417,500 | |||||||||
218,000 | Whole Foods Market Inc. | 4,142,651 | 6,899,700 | |||||||||
|
|
|
| |||||||||
81,894,909 | 214,770,807 | |||||||||||
|
|
|
| |||||||||
Specialty Chemicals — 2.0% |
| |||||||||||
26,000 | Albemarle Corp. | 445,794 | 1,146,600 | |||||||||
6,000 | Ashland Inc. | 275,062 | 603,720 | |||||||||
100,000 | E. I. du Pont de Nemours and Co. | 4,273,799 | 4,820,000 | |||||||||
294,000 | Ferro Corp.† | 2,479,612 | 3,219,300 | |||||||||
8,000 | FMC Corp. | 186,076 | 271,280 | |||||||||
46,000 | H.B. Fuller Co. | 950,216 | 1,561,240 | |||||||||
229,000 | International Flavors & Fragrances Inc. | 11,122,420 | 23,646,540 | |||||||||
2,400 | NewMarket Corp. | 9,263 | 856,800 | |||||||||
3,200 | Quaker Chemical Corp. | 56,889 | 246,656 | |||||||||
40,000 | Sensient Technologies Corp. | 822,757 | 2,452,000 | |||||||||
20,000 | The Chemours Co. | 224,937 | 129,400 | |||||||||
93,000 | The Dow Chemical Co. | 3,162,105 | 3,943,200 | |||||||||
|
|
|
| |||||||||
24,008,930 | 42,896,736 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 3.2% |
| |||||||||||
160,000 | AT&T Inc. | 4,379,909 | 5,212,800 | |||||||||
475,000 | BCE Inc. | 10,667,948 | 19,456,000 | |||||||||
50,000 | BT Group plc | 204,914 | 317,374 | |||||||||
16,000 | BT Group plc, ADR | 469,025 | 1,020,000 | |||||||||
40,000 | CenturyLink Inc. | 1,274,072 | 1,004,800 | |||||||||
570,000 | Cincinnati Bell Inc.† | 2,113,892 | 1,778,400 | |||||||||
400,000 | Deutsche Telekom AG, ADR | 6,359,094 | 7,108,000 | |||||||||
11,000 | Harris Corp. | 874,663 | 804,650 | |||||||||
33,000 | Loral Space & Communications Inc.† | 1,317,447 | 1,553,640 | |||||||||
25,000 | Orange SA, ADR | 424,798 | 378,000 | |||||||||
55,000 | Proximus | 1,742,927 | 1,896,573 | |||||||||
50,220 | Sprint Corp.† | 267,237 | 192,845 | |||||||||
45,010 | Telefonica SA, ADR | 428,921 | 541,920 | |||||||||
385,000 | Telephone & Data Systems Inc. | 11,493,248 | 9,609,600 | |||||||||
24,000 | TELUS Corp. | 185,454 | 756,238 | |||||||||
30,000 | TELUS Corp., New York | 687,084 | 946,200 | |||||||||
400,000 | Verizon Communications Inc. | 15,156,497 | 17,404,000 | |||||||||
|
|
|
| |||||||||
58,047,130 | 69,981,040 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
10
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Transportation — 0.4% |
| |||||||||||
171,000 | GATX Corp. | $ | 6,081,094 | $ | 7,549,650 | |||||||
|
|
|
| |||||||||
Wireless Communications — 1.1% |
| |||||||||||
10,000,000 | Cable & Wireless Communications plc | 7,326,145 | 8,380,607 | |||||||||
12,000 | Millicom International Cellular SA | 951,075 | 750,720 | |||||||||
44,000 | Millicom International Cellular SA, SDR | 3,493,962 | 2,749,359 | |||||||||
240,000 | NTT DoCoMo Inc. | 3,485,733 | 3,987,163 | |||||||||
100,000 | Turkcell Iletisim Hizmetleri A/S, ADR | 1,519,216 | 868,000 | |||||||||
32,000 | United States Cellular Corp.† | 1,394,584 | 1,133,760 | |||||||||
195,000 | Vodafone Group plc, ADR | 9,629,193 | 6,189,300 | |||||||||
|
|
|
| |||||||||
27,799,908 | 24,058,909 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 1,338,702,353 | 2,175,151,548 | ||||||||||
|
|
|
| |||||||||
CONVERTIBLE PREFERRED STOCKS — 0.1% |
| |||||||||||
Telecommunications — 0.1% |
| |||||||||||
31,500 | Cincinnati Bell Inc., 6.750%, Ser. B | 659,951 | 1,511,055 | |||||||||
|
|
|
| |||||||||
RIGHTS — 0.0% | ||||||||||||
Retail — 0.0% | ||||||||||||
250,017 | Safeway Casa Ley, CVR, expire 01/30/19† | 27,343 | 112,508 | |||||||||
250,017 | Safeway PDC, CVR, expire 01/30/17† | 1,313 | 12,201 | |||||||||
|
|
|
| |||||||||
TOTAL RIGHTS | 28,656 | 124,709 | ||||||||||
|
|
|
| |||||||||
WARRANTS — 0.0% | ||||||||||||
Energy and Utilities: Natural Gas — 0.0% |
| |||||||||||
310,000 | Kinder Morgan Inc., expire 05/25/17† | 553,864 | 285,200 | |||||||||
|
|
|
| |||||||||
Retail — 0.0% | ||||||||||||
105 | Sears Holdings Corp., expire 12/15/19† | 522 | 1,837 | |||||||||
|
|
|
| |||||||||
TOTAL WARRANTS | 554,386 | 287,037 | ||||||||||
|
|
|
|
Principal | Cost | Market Value | ||||||||||
CONVERTIBLE CORPORATE BONDS — 0.0% |
| |||||||||||
Building and Construction — 0.0% |
| |||||||||||
$1,000,000 | Layne Christensen Co., 4.250%, 11/15/18 | $ | 1,000,000 | $ | 737,500 | |||||||
|
|
|
| |||||||||
Transportation — 0.0% |
| |||||||||||
600,000 | Navistar International Corp., Sub. Deb., 4.500%, 10/15/18 | 598,102 | 442,125 | |||||||||
|
|
|
| |||||||||
TOTAL CONVERTIBLE CORPORATE BONDS | 1,598,102 | 1,179,625 | ||||||||||
|
|
|
| |||||||||
CORPORATE BONDS — 0.2% |
| |||||||||||
Diversified Industrial — 0.2% |
| |||||||||||
3,300,000 | Griffon Corp., Sub. Deb., 4.000%, 01/15/17(a) | 3,290,548 | 3,949,687 | |||||||||
|
|
|
| |||||||||
Energy and Utilities: Electric — 0.0% |
| |||||||||||
100,000 | Texas Competitive Electric Holdings Co. LLC, Ser. B, 10.250%, 11/01/15† | 83,290 | 83,290 | |||||||||
|
|
|
| |||||||||
Retail — 0.0% | ||||||||||||
3,000 | Sears Holdings Corp., 8.000%, 12/15/19 | 2,547 | 3,023 | |||||||||
|
|
|
| |||||||||
TOTAL CORPORATE BONDS | 3,376,385 | 4,036,000 | ||||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 100.9% | $ | 1,344,919,833 | 2,182,289,974 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — (0.9)% |
| (19,950,164 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 2,162,339,810 | |||||||||
|
|
(a) | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2015, the market value of the Rule 144A security amounted to $3,949,687 or 0.18% of net assets. |
† | Non-income producing security. |
ADR | American Depositary Receipt |
CVR | Contingent Value Right |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
11
The Gabelli Equity Income Fund
Statement of Assets and Liabilities
September 30, 2015
Assets: | ||||
Investments, at value (cost $1,344,919,833) | $ | 2,182,289,974 | ||
Deposit at brokers | 124,548 | |||
Receivable for Fund shares sold | 2,678,429 | |||
Receivable for investments sold | 467,407 | |||
Dividends and interest receivable | 4,680,253 | |||
Prepaid expenses | 50,652 | |||
|
| |||
Total Assets | 2,190,291,263 | |||
|
| |||
Liabilities: | ||||
Payable to custodian | 3,673 | |||
Payable for Fund shares redeemed | 6,365,346 | |||
Payable for investment advisory fees | 1,841,734 | |||
Payable for distribution fees | 529,300 | |||
Payable for accounting fees | 3,750 | |||
Line of credit payable | 18,632,000 | |||
Other accrued expenses | 575,650 | |||
|
| |||
Total Liabilities | 27,951,453 | |||
|
| |||
Net Assets | $ | 2,162,339,810 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 1,333,472,669 | ||
Undistributed net investment income | 2,994,832 | |||
Distributions in excess of net realized gain on investments and foreign currency transactions | (11,472,460 | ) | ||
Net unrealized appreciation on investments | 837,370,141 | |||
Net unrealized depreciation on foreign currency translations | (25,372 | ) | ||
|
| |||
Net Assets | $ | 2,162,339,810 | ||
|
| |||
Shares of Capital Stock, each at $0.001 par value: |
| |||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($985,647,239 ÷ 39,300,834 shares outstanding; 150,000,000 shares authorized) | $ | 25.08 | ||
|
| |||
Class A: | ||||
Net Asset Value and redemption price per share ($183,417,786 ÷ 7,339,630 shares outstanding; 50,000,000 shares authorized) | $ | 24.99 | ||
|
| |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 26.51 | ||
|
| |||
Class C: | ||||
Net Asset Value and offering price per share ($329,845,595 ÷ 14,670,931 shares outstanding; 50,000,000 shares authorized) | $ | 22.48 | (a) | |
|
| |||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($663,429,190 ÷ 25,834,884 shares outstanding; 50,000,000 shares authorized) | $ | 25.68 | ||
|
|
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2015
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $1,297,982) | $ | 58,752,127 | ||
Interest | 294,385 | |||
|
| |||
Total Investment Income | 59,046,512 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 26,095,419 | |||
Distribution fees - Class AAA | 3,210,903 | |||
Distribution fees - Class A | 525,252 | |||
Distribution fees - Class C | 3,531,790 | |||
Shareholder services fees | 2,032,300 | |||
Shareholder communication expenses | 370,399 | |||
Custodian fees | 286,120 | |||
Registration expenses | 97,400 | |||
Directors’ fees | 73,527 | |||
Legal and audit fees | 72,750 | |||
Interest expense | 54,177 | |||
Accounting fees | 45,000 | |||
Miscellaneous expenses | 131,125 | |||
|
| |||
Total Expenses | 36,526,162 | |||
|
| |||
Less: | (7,021 | ) | ||
Net Expenses | 36,519,141 | |||
|
| |||
Net Investment Income | 22,527,371 | |||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, and Foreign Currency: | ||||
Net realized gain on investments | 165,938,800 | |||
Net realized gain on securities sold short | 50,112 | |||
Net realized loss on foreign currency transactions | (58,454 | ) | ||
|
| |||
Net realized gain on investments, securities sold short, and foreign currency transactions | 165,930,458 | |||
|
| |||
Net change in unrealized appreciation/depreciation: | (299,629,656 | ) | ||
on foreign currency translations | (1,180 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (299,630,836 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, and Foreign Currency | (133,700,378 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (111,173,007 | ) | |
|
|
See accompanying notes to financial statements.
12
The Gabelli Equity Income Fund
Statement of Changes in Net Assets
Year Ended | Year Ended | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 22,527,371 | $ | 28,386,135 | ||||||||
Net realized gain on investments, securities sold short, and foreign currency transactions | 165,930,458 | 47,283,650 | ||||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (299,630,836 | ) | 246,998,546 | |||||||||
|
|
|
| |||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (111,173,007 | ) | 322,668,331 | |||||||||
|
|
|
| |||||||||
Distributions to Shareholders: | ||||||||||||
Net investment income | ||||||||||||
Class AAA | (10,878,119 | ) | (27,406,848 | ) | ||||||||
Class A | (1,801,369 | ) | (3,639,863 | ) | ||||||||
Class C | (3,397,674 | ) | (2,641,166 | ) | ||||||||
Class I | (6,350,097 | ) | (7,939,425 | ) | ||||||||
|
|
|
| |||||||||
(22,427,259 | ) | (41,627,302 | ) | |||||||||
|
|
|
| |||||||||
Net realized gain | ||||||||||||
Class AAA | (69,951,446 | ) | (20,871,995 | ) | ||||||||
Class A | (13,005,643 | ) | (2,726,111 | ) | ||||||||
Class C | (25,979,180 | ) | (4,571,309 | ) | ||||||||
Class I | (46,112,598 | ) | (8,346,719 | ) | ||||||||
|
|
|
| |||||||||
(155,048,867 | ) | (36,516,134 | ) | |||||||||
|
|
|
| |||||||||
Return of capital | ||||||||||||
Class AAA | — | (41,806,373 | ) | |||||||||
Class A | — | (5,575,681 | ) | |||||||||
Class C | — | (9,187,258 | ) | |||||||||
Class I | — | (9,001,319 | ) | |||||||||
|
|
|
| |||||||||
— | (65,570,631 | ) | ||||||||||
|
|
|
| |||||||||
Total Distributions to Shareholders | (177,476,126 | ) | (143,714,067 | ) | ||||||||
|
|
|
| |||||||||
Capital Share Transactions: | ||||||||||||
Class AAA | (491,853,048 | ) | (250,759,913 | ) | ||||||||
Class A | (1,515,615 | ) | (22,635,248 | ) | ||||||||
Class C | 58,551,145 | 84,763,874 | ||||||||||
Class I | 97,181,640 | 249,070,109 | ||||||||||
|
|
|
| |||||||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | (337,635,878 | ) | 60,438,822 | |||||||||
|
|
|
| |||||||||
Redemption Fees | 4,168 | 13,357 | ||||||||||
|
|
|
| |||||||||
Net Increase/(Decrease) in Net Assets | (626,280,843 | ) | 239,406,443 | |||||||||
Net Assets: | ||||||||||||
Beginning of year | 2,788,620,653 | 2,549,214,210 | ||||||||||
|
|
|
| |||||||||
End of year (including undistributed net investment income of $2,994,832 and $2,990,000, respectively) | $ | 2,162,339,810 | $ | 2,788,620,653 | ||||||||
|
|
|
|
See accompanying notes to financial statements.
13
The Gabelli Equity Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended | Net Asset Value, Beginning of Year | Net Investment Income (a) | Net Realized and Unrealized Gain/(Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Return of Capital | Total Distributions | Redemption Fees (a)(b) | Net Asset Value, End of Year | Total Return † | Net Assets End of Year (in 000’s) | Net Investment Income | Operating Expenses | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 28.55 | $ | 0.25 | $ | (1.71) | $ | (1.46) | $ | (0.18) | $ | (1.83) | — | $ | (2.01) | $ | 0.00 | $ | 25.08 | (5.40) | % | $ | 985,647 | 0.88 | % | 1.37 | %(c) | 3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
2014 | 26.68 | 0.30 | 3.05 | 3.35 | (0.44) | (0.38) | $ | (0.66) | (1.48) | 0.00 | 28.55 | 12.64 | 1,604,629 | 1.06 | 1.37 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 22.54 | 0.29 | 4.49 | 4.78 | (0.64) | — | — | (0.64) | 0.00 | 26.68 | 21.38 | 1,726,724 | 1.15 | 1.39 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 18.52 | 0.25 | 4.13 | 4.38 | (0.35) | — | (0.01) | (0.36) | 0.00 | 22.54 | 23.78 | 1,603,696 | 1.17 | 1.40 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 18.65 | 0.16 | 0.07 | 0.23 | (0.16) | — | (0.20) | (0.36) | 0.00 | 18.52 | 1.05 | 1,464,658 | 0.79 | 1.41 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 28.45 | $ | 0.26 | $ | (1.71) | $ | (1.45) | $ | (0.18) | $ | (1.83) | — | $ | (2.01) | $ | 0.00 | $ | 24.99 | (5.38) | % | $ | 183,418 | 0.90 | % | 1.37 | %(c) | 3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
2014 | 26.59 | 0.30 | 3.04 | 3.34 | (0.44) | (0.38) | $ | (0.66) | (1.48) | 0.00 | 28.45 | 12.64 | 209,501 | 1.07 | 1.37 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 22.47 | 0.28 | 4.48 | 4.76 | (0.64) | — | — | (0.64) | 0.00 | 26.59 | 21.36 | 215,353 | 1.14 | 1.39 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 18.47 | 0.25 | 4.11 | 4.36 | (0.35) | — | (0.01) | (0.36) | 0.00 | 22.47 | 23.73 | 164,177 | 1.19 | 1.40 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 18.60 | 0.17 | 0.06 | 0.23 | (0.16) | — | (0.20) | (0.36) | 0.00 | 18.47 | 1.06 | 115,210 | 0.82 | 1.41 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 25.99 | $ | 0.04 | $ | (1.54) | $ | (1.50) | $ | (0.18) | $ | (1.83) | — | $ | (2.01) | $ | 0.00 | $ | 22.48 | (6.10) | % | $ | 329,846 | 0.15 | % | 2.12 | %(c) | 3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
2014 | 24.59 | 0.08 | 2.80 | 2.88 | (0.25) | (0.38) | $ | (0.85) | (1.48) | 0.00 | 25.99 | 11.78 | 321,772 | 0.31 | 2.12 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 20.97 | 0.09 | 4.17 | 4.26 | (0.64) | — | — | (0.64) | 0.00 | 24.59 | 20.50 | 224,804 | 0.38 | 2.14 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 17.38 | 0.09 | 3.86 | 3.95 | (0.21) | — | (0.15) | (0.36) | 0.00 | 20.97 | 22.85 | 161,842 | 0.46 | 2.15 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 17.65 | 0.02 | 0.07 | 0.09 | (0.02) | — | (0.34) | (0.36) | 0.00 | 17.38 | 0.31 | 98,296 | 0.09 | 2.16 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 29.11 | $ | 0.34 | $ | (1.76) | $ | (1.42) | $ | (0.18) | $ | (1.83) | — | $ | (2.01) | $ | 0.00 | $ | 25.68 | (5.15) | % | $ | 663,429 | 1.15 | % | 1.12 | %(c) | 3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
2014 | 27.11 | 0.38 | 3.10 | 3.48 | (0.51) | (0.38) | $ | (0.59) | (1.48) | 0.00 | 29.11 | 12.92 | 652,719 | 1.28 | 1.12 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 22.84 | 0.35 | 4.56 | 4.91 | (0.64) | — | — | (0.64) | 0.00 | 27.11 | 21.67 | 382,333 | 1.38 | 1.14 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 18.71 | 0.33 | 4.16 | 4.49 | (0.36) | — | — | (0.36) | 0.00 | 22.84 | 24.13 | 309,157 | 1.54 | 1.15 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 18.80 | 0.23 | 0.04 | 0.27 | (0.22) | — | (0.14) | (0.36) | 0.00 | 18.71 | 1.26 | 112,929 | 1.10 | 1.16 | 14 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year and does not reflect applicable sales charges. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Amount represents less than $0.005 per share. |
(c) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the year ended September 30, 2015, there was no impact to the expense ratios. |
See accompanying notes to financial statements.
14
The Gabelli Equity Income Fund
Notes to Financial Statements
1. Organization. The Gabelli Equity Income Fund is a series of the Gabelli Equity Series Funds, Inc. (the “Corporation”). The Corporation was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and one of three separately managed portfolios of the Corporation. The Fund seeks to provide a high level of total return on its assets with an emphasis on income. The Fund commenced investment operations on January 2, 1992.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its 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 a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty 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 fair valued as determined by the Board. Debt instruments having a maturity greater than sixty 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. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.
Securities and assets for which market quotations are not readily available are fair valued as determined by 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 with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt 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.
15
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of September 30, 2015 is as follows:
Valuation Inputs | ||||||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 9/30/15 | |||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||
Financial Services | $ 395,804,094 | $ 528,452 | — | $ 396,332,546 | ||||||||||||||||
Food and Beverage | 276,722,809 | 165,270 | 276,888,079 | |||||||||||||||||
Other Industries (a) | 1,501,930,923 | — | — | 1,501,930,923 | ||||||||||||||||
Total Common Stocks | 2,174,457,826 | 693,722 | — | 2,175,151,548 | ||||||||||||||||
Convertible Preferred Stocks (a) | 1,511,055 | — | 1,511,055 | |||||||||||||||||
Rights (a) | — | — | $124,709 | 124,709 | ||||||||||||||||
Warrants (a) | 287,037 | — | — | 287,037 | ||||||||||||||||
Convertible Corporate Bonds (a) | — | 1,179,625 | — | 1,179,625 | ||||||||||||||||
Corporate Bonds (a) | — | 4,036,000 | — | 4,036,000 | ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $2,176,255,918 | $5,909,347 | $124,709 | $2,182,289,974 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have transfers among Level 1, Level 2, and Level 3 during the year ended September 30, 2015. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are
16
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purposes of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or that, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.
The Fund’s derivative contracts held at September 30, 2015, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
Swap Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the Fund’s portfolio securities at the time an equity for difference swap transaction reaches its scheduled termination date, there is a risk that the Fund will not be able to obtain a replacement transaction or that the terms of the replacement will not be as favorable as on the expiring transaction.
Unrealized gains related to swaps are reported as an asset and unrealized losses are reported as a liability in the Statement of Assets and Liabilities. The change in value of swaps, including the accrual of periodic amounts of interest to be received or paid on swaps, is reported as unrealized gain or loss in the Statement of Operations. A realized gain or loss is recorded upon payment or receipt of a periodic payment or termination
17
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
of swap agreements. At September 30, 2015, the Fund held no investments in equity contract for difference swap agreements.
Securities Sold Short. The Fund may enter into short sale transactions. Short selling involves selling securities that may or may not be owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from 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 an 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 broker retains collateral for the value of the open positions, which is adjusted periodically as the value of the position fluctuates. At September 30, 2015, there were no short sales outstanding.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at 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 purchase 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 inability 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 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 Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted 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 saleable among qualified institutional
18
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
investors under special rules adopted by 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. The Fund did not hold restricted securities as of September 30, 2015.
Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(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 from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
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 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.
Distributions to Shareholders. 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 GAAP. 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 for federal income tax purposes 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 capital accounts in the period when the differences arise. Permanent differences were primarily due to the recharacterization of distributions and tax treatment of currency gains and losses. These reclassifications have no impact on the NAV of the Fund. For the year ended September 30, 2015, reclassifications were made to decrease undistributed net investment income by $95,280 and decrease distributions in excess of net realized gain on investments and foreign currency transactions by $9,107,919, with an offsetting adjustment to paid-in capital.
The tax character of distributions paid during the years ended September 30, 2015 and 2014 was as follows:
Year Ended September 30, 2015* | Year Ended September 30, 2014 | |||||||||
Distributions paid from: | ||||||||||
Ordinary income | $ 24,713,020 | $ 41,627,302 | ||||||||
Net long term capital gains | 162,112,388 | 36,516,134 | ||||||||
Return of capital | — | 65,570,631 | ||||||||
|
|
|
| |||||||
Total distributions paid | $186,825,408 | $143,714,067 | ||||||||
|
|
|
|
* | Total distributions paid differs from the Statement of Changes in Net Assets due to the utilization of equalization. |
19
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
The Fund has a fixed distribution policy. Under the policy, the Fund declares and pays monthly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the calendar year. Pursuant to this policy, distributions during the calendar year are made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. The Fund’s current distribution policy may restrict the Fund’s ability to pass through to shareholders all of its net realized long term capital gains as a Capital Gain Dividend, subject to the maximum federal income tax rate of 20%, and may cause such gains to be treated as ordinary income subject to a maximum federal income tax rate of 39.6%. In addition, certain U.S. shareholders who are individuals, estates, or trusts and whose income exceeds certain thresholds will be required to pay 3.8% Medicare tax on their “net investment income,” which includes dividends received from the Fund and capital gains from the sale or other disposition of shares of the Fund. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board continues to evaluate its distribution policy in light of ongoing economic and market conditions and may change the amount of the monthly distributions in the future.
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.
At September 30, 2015, the components of accumulated earnings/losses on a tax basis were as follows:
Net unrealized appreciation on investments | $ | 828,867,141 | ||
|
| |||
Total | $ | 828,867,141 | ||
|
|
The Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses.
At September 30, 2015, the temporary difference between book basis and tax basis net unrealized appreciation on investments was due to deferral of losses from wash sales for tax purposes and tax basis adjustments on investments in partnerships.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2015:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||||||
Investments | $ | 1,353,397,460 | $ | 906,355,437 | $ | (77,462,923 | ) | $ | 828,892,514 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended September 30, 2015, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2015, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three
20
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions. 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 Corporation pays each Director who is not considered an affiliated person an annual retainer of $18,000 plus $2,000 for each Board meeting attended, and they are reimbursed for any out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000 per meeting attended. The Chairman of the Audit Committee receives a $3,000 annual fee, and the Lead Director receives an annual fee of $2,000. A Director may receive a single meeting fee, allocated among the participating funds, for attending certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the “Plan”) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the “Distributor”), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, 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 sales of securities during the year ended September 30, 2015, other than short term securities and U.S. Government obligations, aggregated $71,339,270 and $501,384,980 respectively.
6. Transactions with Affiliates and Other Arrangements. During the year ended September 30, 2015, the Fund paid brokerage commissions on security trades of $237,968 to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $209,877 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during the year ended September 30, 2015 was $7,021.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the year ended September 30, 2015, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.
7. Line of Credit. The Fund participates in an unsecured line of credit of up to $75,000,000 under which it may borrow up to 15% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a variable rate per annum equal to the overnight rate plus a spread, as determined and quoted by the custodian in its sole discretion at the time of the request, which rate may be subject to change from time to time at the sole discretion of the custodian. The overnight rate is defined as of
21
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
any day, the higher of (a) the federal funds rate as in effect on that day and (b) the overnight LIBOR rate as in effect on that day. This amount, if any, would be included in “interest expense” in the Statement of Operations. At September 30, 2015, there was $18,632,000 outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the year ended September 30, 2015 was $4,952,367 with a weighted average interest rate of 1.15%. The maximum amount borrowed at any time during the year ended September 30, 2015 was $29,302,000.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%, and Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh 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 as an increase in paid-in capital. The redemption fees retained by the Fund during the years ended September 30, 2015 and 2014, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2015 | Year Ended September 30, 2014 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 2,524,754 | $ | 72,709,871 | 6,104,249 | $ | 173,799,360 | ||||||||||
Shares issued upon reinvestment of distributions | 2,944,279 | 79,537,003 | 3,029,246 | 86,808,062 | ||||||||||||
Shares redeemed | (22,375,421 | ) | (644,099,922 | ) | (17,655,748 | ) | (511,367,335 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (16,906,388 | ) | $ | (491,853,048 | ) | (8,522,253 | ) | $ | (250,759,913 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class A | ||||||||||||||||
Shares sold | 2,028,495 | $ | 57,870,814 | 2,168,130 | $ | 61,699,822 | ||||||||||
Shares issued upon reinvestment of distributions | 463,391 | 12,372,383 | 355,177 | 10,149,638 | ||||||||||||
Shares redeemed | (2,514,896 | ) | (71,758,812 | ) | (3,258,793 | ) | (94,484,708 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (23,010 | ) | $ | (1,515,615 | ) | (735,486 | ) | $ | (22,635,248 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 3,932,456 | $ | 102,375,805 | 4,166,730 | $ | 109,305,673 | ||||||||||
Shares issued upon reinvestment of distributions | 967,909 | 23,322,668 | 496,540 | 13,046,277 | ||||||||||||
Shares redeemed | (2,608,248 | ) | (67,147,328 | ) | (1,427,603 | ) | (37,588,076 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 2,292,117 | $ | 58,551,145 | 3,235,667 | $ | 84,763,874 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Class I | ||||||||||||||||
Shares sold | 10,629,569 | $ | 311,718,190 | 11,933,805 | $ | 354,287,712 | ||||||||||
Shares issued upon reinvestment of distributions | 1,693,262 | 46,565,405 | 738,803 | 21,622,925 | ||||||||||||
Shares redeemed | (8,909,295 | ) | (261,101,955 | ) | (4,354,513 | ) | (126,840,528 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 3,413,536 | $ | 97,181,640 | 8,318,095 | $ | 249,070,109 | ||||||||||
|
|
|
|
|
|
|
|
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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
22
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
10. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
23
The Gabelli Equity Income Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
The Gabelli Equity Income Fund
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Gabelli Equity Income Fund (the “Fund”), a series of Gabelli Equity Series Funds, Inc., as of September 30, 2015, 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 five 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.
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 September 30, 2015, 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 Gabelli Equity Income Fund, a series of Gabelli Equity Series Funds, Inc., at September 30, 2015, 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 its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York
November 27, 2015
24
The Gabelli Equity Income Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Equity Income Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director4 | ||||
INTERESTED DIRECTORS3 : | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer Age: 73 | Since 1991 | 31 | Chairman, Chief Executive Officer, and Chief Investment Officer–Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer–Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/ GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc. | Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications); Director of RLJ Acquisition Inc. (blank check company) (2011-2012) | ||||
John D. Gabelli Director Age: 71 | Since 1991 | 10 | Senior Vice President of G.research, LLC | — | ||||
INDEPENDENT DIRECTORS5 : | ||||||||
Anthony J. Colavita Director Age: 79 | Since 1991 | 37 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director Age: 71 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008- 2014); Director of LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director Age: 76 | Since 1991 | 6 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board, Belmont Savings Bank | ||||
Kuni Nakamura Director Age: 47 | Since 2009 | 18 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||
Anthony R. Pustorino Director Age: 90 | Since 1991 | 13 | Certified Public Accountant; Professor Emeritus, Pace University | Director of LGL Group, Inc. (diversified manufacturing) (2004-2011) | ||||
Anthonie C. van Ekris Director Age: 81 | Since 1991 | 22 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/ export company) | — | ||||
Salvatore J. Zizza Director Age: 69 | Since 2001 | 31 | President of Zizza & Associates Corp. (financial consulting); Chairman of Harbor Diversified, Inc. (pharmaceuticals); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Bergen Cove Realty Inc.; Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014) | Director and Vice Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals); Director, Chairman, and CEO of General Employment Enterprises (staffing services) (2009-2012) |
25
The Gabelli Equity Income Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) and Age | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
Bruce N. Alpert President Age: 63 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of several registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008; Director of Teton Advisors, Inc., 1998-2012; Chairman of Teton Advisors, Inc., 2008-2010; President of Teton Advisors, Inc., 1998-2008 | ||
Andrea R. Mango Secretary Age: 43 | Since 2013 | Counsel of Gabelli Funds, LLC since 2013; Secretary of all registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of all closed-end funds within the Gabelli/GAMCO Fund Complex since 2014; Corporate Vice President within the Corporate Compliance Department of New York Life Insurance Company, 2011-2013; Vice President and Counsel of Deutsche Bank, 2006-2011 | ||
Agnes Mullady Treasurer Age: 57 | Since 2006 | President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex | ||
Richard J. Walz Chief Compliance Officer Age: 56 | Since 2013 | Chief Compliance Officer of all of the registered investment companies within the Gabelli/ GAMCO Fund Complex since 2013; Chief Compliance Officer of AEGON USA Investment Management, 2011-2013; Chief Compliance Officer of Cutwater Asset Management, 2004-2011 |
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 Fund’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. |
3 | “Interested person” of the Fund as defined in the 1940 Act. Messers. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’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, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
The Gabelli Equity Income Fund
Additional Fund Information (Continued) (Unaudited)
2015 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended September 30, 2015, the Fund paid to shareholders, ordinary income distributions (inclusive of short term capital gains) totaling $0.21, $0.21, $0.21, and $0.21 per share for Class AAA, Class A, Class C, and Class I Shares, respectively, and long term capital gains totaling $152,763,106, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors. For the year ended September 30, 2015, 100% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 0.52% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010. The Fund designates 100% of the ordinary income distribution as qualified short term gain pursuant to the American Jobs Creation Act of 2004.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
27
Gabelli/GAMCO 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 GAMCO Asset Management 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 fund shareholder?
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:
• | 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. |
• | 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. 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 website, 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.
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GABELLI EQUITY INCOME FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Mario J. Gabelli, CFA, is Chairman and Chief Executive Officer of GAMCO Investors, Inc. that he founded in 1977 and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.
We have separated the portfolio manager’s commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio manager’s commentary is unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com. |
Gabelli Equity Series Funds, Inc.
THE GABELLI EQUITY INCOME FUND
One Corporate Center
Rye, New York 10580-1422
t 800-GABELLI (800-422-3554)
f 914-921-5118
e info@gabelli.com
GABELLI.COM
Net Asset Value per share available daily
by calling 800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc.
Anthony J. Colavita President, Anthony J. Colavita, P.C.
Vincent D. Enright Former Senior Vice President and Chief Financial Officer, KeySpan Corp.
John D. Gabelli Senior Vice President, G.research, LLC.
Robert J. Morrissey Partner, Morrissey, Hawkins & Lynch
Kuni Nakamura President, Advanced Polymer, Inc.
Anthony R. Pustorino Certified Public Accountant, Professor Emeritus, Pace University | Anthonie C. van Ekris Chairman, BALMAC International, Inc.
Salvatore J. Zizza Chairman, Zizza & Associates Corp.
OFFICERS Bruce N. Alpert President
Andrea R. Mango Secretary
Agnes Mullady Treasurer
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR G.distributors, LLC
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT State Street Bank and Trust Company
LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP | |
This report is submitted for the general information of the shareholders of The Gabelli Equity Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
GAB444Q315AR
The Gabelli Small Cap Growth Fund
Annual Report — September 30, 2015
Morningstar® rated The Gabelli Small Cap Growth Fund Class AAA Shares 4 stars overall, 3 stars for the three and five year periods, and 5 stars for the ten year period ended September 30, 2015 among 645, 645, 577, and 383 Small Blend funds, respectively. Morningstar RatingTM is based on risk-adjusted returns. |
Mario J. Gabelli, CFA Portfolio Manager |
To Our Shareholders,
For the year ended September 30, 2015, the net asset value (“NAV”) per Class AAA Share of The Gabelli Small Cap Growth Fund decreased 1.3% compared with an increase of 1.3% for the Russell 2000 Index. See page 3 for additional performance information.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2015.
Performance Discussion
The Fund seeks to provide a high level of capital appreciation. Under normal circumstances, the Fund will invest at least 80% of its net assets in equity securities of companies that are considered to be small companies at the time the Fund makes its investment. The Fund invests primarily in common stocks of companies which the portfolio manager believes are likely to have rapid growth in revenues and above average rates of earnings growth. Gabelli Funds, LLC, the Adviser, currently characterizes small companies for the Fund as those with total common stock market values of $3 billion or less at the time of investment.
In selecting investments for the Fund, the Adviser seeks issuers with a dominant market share or niche franchise in growing and/or consolidating industries. The Adviser considers for purchase the stocks of small capitalization (capitalization is the price per share multiplied by the number of shares outstanding) companies with experienced management, strong balance sheets, and rising free cash flow and earnings. The Adviser’s goal is to invest long term in the stocks of companies trading at reasonable market valuations relative to perceived economic worth.
Among the better performing stocks for the fiscal year were: O’Reilly Automotive Inc. (2.0% of net assets as of September 30, 2015), a retailer of aftermarket car parts; Chemtura Corp. (1.2%), a developer and manufacturer of specialty chemicals for industrial manufacturing; and Post Holdings Inc. (0.5%), a manufacturer of refrigerated, active nutrition, and private label food products in the U.S. and Canada. The Fund’s weaker performing stocks during the year were Weatherford International Plc (sold), a provider of equipment and services used in the drilling, completion, and production of oil and natural gas wells worldwide; Methanex Corp. (sold), a producer and supplier of methanol; and Bioscrip Inc. (sold), a provider of home care services and pharmacy benefit management services.
We appreciate your loyalty and support.
Comparative Results
Average Annual Returns through September 30, 2015 (a)(b) (Unaudited) | Since Inception | |||||||||||||||||||||
1 Year | 5 Year | 10 Year | 15 Year | |||||||||||||||||||
Class AAA (GABSX) | (1.25) | % | 10.97% | 8.17% | 9.40% | 12.37% | ||||||||||||||||
Russell 2000 Index | 1.25 | 11.73 | 6.55 | 6.51 | 9.27 | |||||||||||||||||
Class A (GCASX) | (1.25) | 10.98 | 8.17 | 9.40 | 12.37 | |||||||||||||||||
With sales charge (c) | (6.93) | 9.67 | 7.53 | 8.97 | 12.09 | |||||||||||||||||
Class C (GCCSX) | (1.98) | 10.15 | 7.37 | 8.77 | 11.96 | |||||||||||||||||
With contingent deferred sales charge (d) | (2.96) | 10.15 | 7.37 | 8.77 | 11.96 | |||||||||||||||||
Class I (GACIX) | (1.00) | 11.25 | 8.38 | 9.55 | 12.46 |
In the current prospectuses dated January 28, 2015, the expense ratios for Class AAA, A, C, and I Shares are 1.38%, 1.38%, 2.13%, and 1.13%, respectively. See page 16 for the expense ratios for the year ended September 30, 2015. Class AAA and Class I Shares have no sales charge. The maximum sales charge for Class A and C Shares is 5.75% and 1.00%, respectively.
(a) | Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price, reinvestment of 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. Visit www.gabelli.com for performance information as of the most recent month end. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days after the date of purchase. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus please visit our website at www.gabelli.com. The Class AAA Share NAVs are used to calculate performance for the periods prior to the issuance of Class A Shares and Class C Shares on December 31, 2003, and the Class I Shares on January 11, 2008. The actual performance of the Class A Shares and Class C Shares would have been lower due to the additional fees and expenses associated with these classes of shares. The actual performance of the Class I Shares would have been higher due to lower expenses associated with this class of shares. Investing in small capitalization securities involves special risks because these securities may trade less frequently and experience more abrupt price movements than large capitalization securities. The Russell 2000 Index is an unmanaged indicator which measures the performance of the small cap segment of the U.S. equity market. Dividends are considered reinvested. You cannot invest directly in an index. |
(b) | The Fund’s fiscal year ends September 30. |
(c) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(d) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI SMALL CAP GROWTH FUND CLASS AAA AND THE RUSSELL 2000 INDEX (Unaudited)
* | 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. |
2
The Gabelli Small Cap Growth Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from April 1, 2015 through September 30, 2015 | 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 September 30, 2015.
Beginning Account Value 04/01/15 | Ending Account Value 09/30/15 | Annualized Expense Ratio | Expenses Paid During Period* | |||||
The Gabelli Small Cap Growth Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $ 892.60 | 1.38% | $ 6.55 | ||||
Class A | $1,000.00 | $ 892.60 | 1.38% | $ 6.55 | ||||
Class C | $1,000.00 | $ 889.20 | 2.13% | $10.09 | ||||
Class I | $1,000.00 | $ 893.80 | 1.13% | $ 5.36 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,018.15 | 1.38% | $ 6.98 | ||||
Class A | $1,000.00 | $1,018.15 | 1.38% | $ 6.98 | ||||
Class C | $1,000.00 | $1,014.39 | 2.13% | $10.76 | ||||
Class I | $1,000.00 | $1,019.40 | 1.13% | $ 5.72 |
* | 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 (183 days), then divided by 365. |
3
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2015:
The Gabelli Small Cap Growth Fund
Food and Beverage | 9.9 | % | ||
U.S. Government Obligations | 7.8 | % | ||
Equipment and Supplies | 7.7 | % | ||
Automotive: Parts and Accessories | 6.8 | % | ||
Retail | 6.7 | % | ||
Energy and Utilities | 5.7 | % | ||
Business Services | 5.5 | % | ||
Diversified Industrial | 5.4 | % | ||
Health Care | 4.7 | % | ||
Financial Services | 4.5 | % | ||
Specialty Chemicals | 4.0 | % | ||
Hotels and Gaming | 3.3 | % | ||
Aviation: Parts and Services | 2.9 | % | ||
Building and Construction | 2.8 | % | ||
Computer Software and Services | 2.7 | % | ||
Entertainment | 2.6 | % | ||
Telecommunications | 2.3 | % | ||
Electronics | 1.5 | % | ||
Consumer Services | 1.4 | % | ||
Consumer Products | 1.4 | % | ||
Wireless Communications | 1.3 | % | ||
Cable | 1.2 | % | ||
Real Estate | 1.0 | % |
Machinery | 1.0 | % | ||
Broadcasting | 0.9 | % | ||
Publishing | 0.9 | % | ||
Transportation | 0.8 | % | ||
Aerospace | 0.6 | % | ||
Home Furnishings | 0.6 | % | ||
Automotive | 0.5 | % | ||
Environmental Services | 0.5 | % | ||
Metals and Mining | 0.4 | % | ||
Manufactured Housing and Recreational Vehicles | 0.3 | % | ||
Communications Equipment | 0.1 | % | ||
Closed-End Funds | 0.1 | % | ||
Paper and Forest Products | 0.1 | % | ||
Educational Services | 0.0 | %* | ||
Closed-End Business Development Company | 0.0 | %* | ||
Agriculture | 0.0 | %* | ||
Other Assets and Liabilities (Net) | 0.1 | % | ||
|
| |||
100.0 | % | |||
|
|
* | Amount represents less than 0.05%. |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. 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 SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
4
The Gabelli Small Cap Growth Fund
Schedule of Investments — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 92.0% |
| |||||||||||
Aerospace — 0.6% |
| |||||||||||
1,245,095 | Aerojet Rocketdyne Holdings Inc.† | $ | 8,096,303 | $ | 20,145,637 | |||||||
25,000 | Embraer SA, ADR | 430,623 | 639,500 | |||||||||
20,000 | Innovative Solutions & Support Inc.† | 69,694 | 54,200 | |||||||||
|
|
|
| |||||||||
8,596,620 | 20,839,337 | |||||||||||
|
|
|
| |||||||||
Agriculture — 0.0% |
| |||||||||||
365,075 | Black Earth Farming Ltd., SDR† | 483,408 | 128,671 | |||||||||
12,000 | Cadiz Inc.† | 93,950 | 87,120 | |||||||||
10,000 | Ceres Inc.† | 123,134 | 10,900 | |||||||||
|
|
|
| |||||||||
700,492 | 226,691 | |||||||||||
|
|
|
| |||||||||
Automotive — 0.5% |
| |||||||||||
1,335,015 | Navistar International Corp.† | 38,637,977 | 16,981,391 | |||||||||
12,000 | PACCAR Inc. | 471,506 | 626,040 | |||||||||
|
|
|
| |||||||||
39,109,483 | 17,607,431 | |||||||||||
|
|
|
| |||||||||
Automotive: Parts and Accessories — 6.7% |
| |||||||||||
236,000 | BorgWarner Inc. | 1,330,291 | 9,815,240 | |||||||||
746,000 | Brembo SpA | 8,392,743 | 28,842,032 | |||||||||
90,022 | China Automotive Systems Inc.† | 447,666 | 478,917 | |||||||||
398,000 | Cooper Tire & Rubber Co. | 10,347,569 | 15,724,980 | |||||||||
1,160,000 | Dana Holding Corp. | 10,293,010 | 18,420,800 | |||||||||
1,340,000 | Federal-Mogul Holdings Corp.† | 16,618,948 | 9,152,200 | |||||||||
756,000 | Modine Manufacturing Co.† | 9,525,533 | 5,949,720 | |||||||||
22,000 | Monro Muffler Brake Inc. | 150,657 | 1,486,100 | |||||||||
268,500 | O’Reilly Automotive Inc.† | 7,057,108 | 67,125,000 | |||||||||
45,000 | Puradyn Filter Technologies Inc.† | 11,732 | 3,150 | |||||||||
200,000 | SORL Auto Parts Inc.† | 1,164,477 | 354,000 | |||||||||
80,375 | Spartan Motors Inc. | 388,580 | 331,949 | |||||||||
225,000 | Standard Motor Products Inc. | 1,824,108 | 7,848,000 | |||||||||
207,000 | Strattec Security | 4,420,973 | 13,053,420 | |||||||||
400,000 | Superior Industries International Inc. | 6,650,124 | 7,472,000 | |||||||||
475,000 | Tenneco Inc.† | 4,109,505 | 21,265,750 | |||||||||
930,000 | The Pep Boys - Manny, Moe & Jack† | 9,970,374 | 11,336,700 | |||||||||
26,000 | Thor Industries Inc. | 240,934 | 1,346,800 | |||||||||
15,500 | Visteon Corp.† | 1,591,078 | 1,569,220 | |||||||||
|
|
|
| |||||||||
94,535,410 | 221,575,978 | |||||||||||
|
|
|
| |||||||||
Aviation: Parts and Services — 2.9% |
| |||||||||||
25,000 | AAR Corp. | 302,990 | 474,250 | |||||||||
9,500 | Astronics Corp.† | 20,799 | 384,085 | |||||||||
12,340 | Astronics Corp., Cl. B† | 26,185 | 502,608 | |||||||||
32,300 | B/E Aerospace Inc. | 1,774,398 | 1,417,970 |
Shares | Cost | Market Value | ||||||||||
4,850,000 | BBA Aviation plc | $ | 12,846,744 | $ | 19,640,647 | |||||||
500,000 | Curtiss-Wright Corp. | 14,149,715 | 31,210,000 | |||||||||
44,000 | Ducommun Inc.† | 868,225 | 883,080 | |||||||||
873,018 | Kaman Corp. | 16,652,337 | 31,297,695 | |||||||||
27,000 | KLX Inc.† | 1,198,159 | 964,980 | |||||||||
85,000 | Moog Inc., Cl. A† | 703,065 | �� | 4,595,950 | ||||||||
16,200 | Moog Inc., Cl. B† | 471,841 | 876,420 | |||||||||
68,000 | Woodward Inc. | 1,052,020 | 2,767,600 | |||||||||
|
|
|
| |||||||||
50,066,478 | 95,015,285 | |||||||||||
|
|
|
| |||||||||
Broadcasting — 0.9% |
| |||||||||||
245,017 | Beasley Broadcast Group Inc., Cl. A | 1,423,031 | 1,014,370 | |||||||||
23,300 | Cogeco Inc. | 592,837 | 931,476 | |||||||||
445,000 | Crown Media Holdings Inc., Cl. A† | 1,623,074 | 2,380,750 | |||||||||
29,100 | Gray Television Inc.† | 84,889 | 371,316 | |||||||||
71,200 | Gray Television Inc., Cl. A† | 373,008 | 825,920 | |||||||||
400,000 | ITV plc | 1,310,259 | 1,488,541 | |||||||||
20,000 | Liberty Broadband Corp., Cl. A† | 124,003 | 1,028,800 | |||||||||
52,362 | Liberty Broadband Corp., Cl. C† | 730,014 | 2,679,364 | |||||||||
440 | Liberty Global plc LiLAC, Cl. A† | 4,313 | 14,824 | |||||||||
1,320 | Liberty Global plc LiLAC, Cl. C† | 15,336 | 45,197 | |||||||||
80,000 | Liberty Media Corp., Cl. A† | 372,009 | 2,857,600 | |||||||||
160,000 | Liberty Media Corp., Cl. C† | 731,764 | 5,513,600 | |||||||||
125,000 | Pandora Media Inc.† | 1,715,827 | 2,667,500 | |||||||||
594,500 | Salem Media Group Inc. | 2,210,372 | 3,638,340 | |||||||||
170,000 | Sinclair Broadcast Group Inc., Cl. A | 1,335,314 | 4,304,400 | |||||||||
450,000 | Sirius XM Holdings Inc.† | 219,282 | 1,683,000 | |||||||||
|
|
|
| |||||||||
12,865,332 | 31,444,998 | |||||||||||
|
|
|
| |||||||||
Building and Construction — 2.8% |
| |||||||||||
66,000 | Beazer Homes USA Inc.† | 1,228,434 | 879,780 | |||||||||
295,000 | D.R. Horton Inc. | 3,487,620 | 8,661,200 | |||||||||
20,000 | Gibraltar Industries Inc.† | 354,021 | 367,000 | |||||||||
750,000 | Hovnanian Enterprises Inc., Cl. A† | 1,928,866 | 1,327,500 | |||||||||
200,000 | KB Home | 2,123,861 | 2,710,000 | |||||||||
435,000 | Layne Christensen Co.† | 9,096,617 | 2,827,500 | |||||||||
76,000 | Lennar Corp., Cl. A | 1,084,836 | 3,657,880 | |||||||||
447,009 | Lennar Corp., Cl. B | 11,971,835 | 17,701,556 | |||||||||
600,000 | Louisiana-Pacific Corp.† | 5,071,723 | 8,544,000 | |||||||||
142,000 | MDC Holdings Inc. | 3,592,233 | 3,717,560 | |||||||||
155,000 | Meritage Homes Corp.† | 3,454,885 | 5,660,600 | |||||||||
12,000 | Nortek Inc.† | 436,978 | 759,720 | |||||||||
2,800 | NVR Inc.† | 1,980,556 | 4,270,616 | |||||||||
345,000 | PulteGroup Inc. | 2,447,273 | 6,510,150 | |||||||||
200,000 | Standard Pacific Corp.† | 771,232 | 1,600,000 |
See accompanying notes to financial statements.
5
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Building and Construction (Continued) |
| |||||||||||
245,000 | The Ryland Group Inc. | $ | 3,991,160 | $ | 10,003,350 | |||||||
380,000 | Toll Brothers Inc.† | 7,446,446 | 13,011,200 | |||||||||
|
|
|
| |||||||||
60,468,576 | 92,209,612 | |||||||||||
|
|
|
| |||||||||
Business Services — 5.5% |
| |||||||||||
40,000 | ACCO Brands Corp.† | 363,855 | 282,800 | |||||||||
124,000 | Ascent Capital Group Inc., Cl. A† | 3,561,132 | 3,395,120 | |||||||||
125,000 | Blackhawk Network Holdings Inc.† | 2,894,657 | 5,298,750 | |||||||||
510,006 | Clear Channel Outdoor Holdings Inc., Cl. A† | 1,794,403 | 3,636,343 | |||||||||
1,220,500 | Diebold Inc. | 40,135,329 | 36,334,285 | |||||||||
560,488 | Edgewater Technology Inc.† | 2,775,139 | 4,102,772 | |||||||||
420,000 | Furmanite Corp.† | 1,870,692 | 2,553,600 | |||||||||
95,000 | GP Strategies Corp.† | 791,180 | 2,167,900 | |||||||||
30,000 | GSE Systems Inc.† | 130,842 | 44,700 | |||||||||
365,000 | Internap Corp.† | 2,507,950 | 2,237,450 | |||||||||
17,000 | Landauer Inc. | 443,034 | 628,830 | |||||||||
1,100,000 | Live Nation Entertainment Inc.† | 11,276,960 | 26,444,000 | |||||||||
240,000 | Loomis AB, Cl. B | 2,578,660 | 6,282,475 | |||||||||
200,000 | Macquarie Infrastructure Corp. | 2,469,909 | 14,932,000 | |||||||||
95,000 | McGrath RentCorp | 2,581,641 | 2,535,550 | |||||||||
35,000 | Rentrak Corp.† | 1,802,239 | 1,892,450 | |||||||||
325,000 | Scientific Games Corp., Cl. A† | 4,256,864 | 3,396,250 | |||||||||
15,000 | Sealed Air Corp. | 362,982 | 703,200 | |||||||||
120,000 | Sohgo Security Services Co. Ltd. | 1,459,559 | 5,441,587 | |||||||||
54,000 | Stamps.com Inc.† | 484,967 | 3,996,540 | |||||||||
80,598 | Team Inc.† | 3,216,021 | 2,588,808 | |||||||||
400,000 | The Brink’s Co. | 9,807,432 | 10,804,000 | |||||||||
2,000,000 | The Interpublic Group of Companies Inc. | 15,460,476 | 38,260,000 | |||||||||
100,418 | TNT Express NV | 887,655 | 765,032 | |||||||||
33,050 | TransAct Technologies Inc. | 168,459 | 301,085 | |||||||||
404,180 | Trans-Lux Corp.†(a) | 3,957,787 | 1,455,048 | |||||||||
40,000 | United Rentals Inc.† | 256,125 | 2,402,000 | |||||||||
14,444 | Vectrus Inc.† | 306,666 | 318,346 | |||||||||
|
|
|
| |||||||||
118,602,615 | 183,200,921 | |||||||||||
|
|
|
| |||||||||
Cable — 1.2% |
| |||||||||||
167,000 | AMC Networks Inc., Cl. A† | 2,124,059 | 12,219,390 | |||||||||
4,000 | Cable One Inc.† | 1,226,313 | 1,677,680 | |||||||||
555,068 | Cablevision Systems Corp., Cl. A | 956,653 | 18,023,058 | |||||||||
10,000 | Cogeco Cable Inc. | 340,851 | 483,327 | |||||||||
50,000 | DISH Network Corp., Cl. A† | 968,420 | 2,917,000 | |||||||||
36,000 | EchoStar Corp., Cl. A† | 708,109 | 1,549,080 |
Shares | Cost | Market Value | ||||||||||
8,800 | Liberty Global plc, Cl. A† | $ | 103,508 | $ | 377,872 | |||||||
26,400 | Liberty Global plc, Cl. C† | 291,379 | 1,082,928 | |||||||||
|
|
|
| |||||||||
6,719,292 | 38,330,335 | |||||||||||
|
|
|
| |||||||||
Closed-End Business Development Company — 0.0% |
| |||||||||||
113,000 | MVC Capital Inc. | 1,287,652 | 927,730 | |||||||||
|
|
|
| |||||||||
Closed-End Funds — 0.1% |
| |||||||||||
90,902 | The Central Europe, Russia, and Turkey Fund Inc. | 2,993,642 | 1,626,237 | |||||||||
31,977 | The European Equity Fund Inc. | 318,173 | 248,781 | |||||||||
95,578 | The New Germany Fund Inc. | 1,314,407 | 1,377,279 | |||||||||
|
|
|
| |||||||||
4,626,222 | 3,252,297 | |||||||||||
|
|
|
| |||||||||
Communications Equipment — 0.1% |
| |||||||||||
240,000 | Communications Systems Inc. | 2,168,311 | 2,001,600 | |||||||||
52,000 | Fortinet Inc.† | 1,067,508 | 2,208,960 | |||||||||
290,000 | Sycamore Networks Inc.† | 412,061 | 142,825 | |||||||||
|
|
|
| |||||||||
3,647,880 | 4,353,385 | |||||||||||
|
|
|
| |||||||||
Computer Software and Services — 2.7% |
| |||||||||||
213,000 | Activision Blizzard Inc. | 3,307,155 | 6,579,570 | |||||||||
40,000 | Avid Technology Inc.† | 402,666 | 318,400 | |||||||||
2,000 | Blackbaud Inc. | 78,260 | 112,240 | |||||||||
750,000 | EarthLink Holdings Corp. | 3,999,020 | 5,835,000 | |||||||||
95,500 | Electronic Arts Inc.† | 1,686,467 | 6,470,125 | |||||||||
400,000 | FalconStor Software Inc.† | 1,130,208 | 796,000 | |||||||||
253,231 | Global Sources Ltd.† | 1,641,060 | 2,104,350 | |||||||||
73,077 | Guidance Software Inc.† | 659,687 | 439,924 | |||||||||
42,000 | InterXion Holding NV† | 687,045 | 1,137,360 | |||||||||
60,000 | Mentor Graphics Corp. | 720,436 | 1,477,800 | |||||||||
20,000 | Mercury Systems Inc.† | 303,410 | 318,200 | |||||||||
20,187 | MKS Instruments Inc. | 367,981 | 676,870 | |||||||||
440,000 | NCR Corp.† | 4,746,089 | 10,010,000 | |||||||||
3,996 | NetScout Systems Inc.† | 14,188 | 141,338 | |||||||||
65,000 | Quantum Corp.† | 204,798 | 45,325 | |||||||||
7,000 | Rocket Internet SE† | 387,260 | 224,917 | |||||||||
100,000 | Rockwell Automation Inc. | 2,731,906 | 10,147,000 | |||||||||
142,000 | Stratasys Ltd.† | 7,625,342 | 3,761,580 | |||||||||
260,000 | Tyler Technologies Inc.† | 1,113,298 | 38,820,600 | |||||||||
|
|
|
| |||||||||
31,806,276 | 89,416,599 | |||||||||||
|
|
|
| |||||||||
Consumer Products — 1.4% |
| |||||||||||
295,000 | 1-800-FLOWERS.COM Inc., Cl. A† | 1,342,595 | 2,684,500 | |||||||||
54,000 | Brunswick Corp. | 951,695 | 2,586,060 | |||||||||
33,500 | Chofu Seisakusho Co. Ltd. | 484,644 | 648,973 | |||||||||
55,000 | Church & Dwight Co. Inc. | 283,335 | 4,614,500 | |||||||||
29,000 | Elizabeth Arden Inc.† | 393,968 | 339,010 | |||||||||
45,000 | Ginko International Co. Ltd. | 680,547 | 452,357 | |||||||||
2,000 | Harley-Davidson Inc. | 4,712 | 109,800 |
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Consumer Products (Continued) |
| |||||||||||
25,000 | Harman International Industries Inc. | $ | 1,186,027 | $ | 2,399,750 | |||||||
105,229 | Hunter Douglas NV | 4,585,536 | 4,467,585 | |||||||||
491,085 | Marine Products Corp. | 1,506,990 | 3,408,130 | |||||||||
10,000 | National Presto Industries Inc. | 300,897 | 842,600 | |||||||||
445,000 | Sally Beauty Holdings Inc.† | 2,951,051 | 10,568,750 | |||||||||
220,000 | Samick Musical Instruments Co. Ltd. | 299,584 | 784,190 | |||||||||
13,000 | Shimano Inc. | 1,500,919 | 1,814,029 | |||||||||
9,750 | Steven Madden Ltd.† | 36,466 | 357,045 | |||||||||
150,000 | Swedish Match AB | 2,992,162 | 4,528,701 | |||||||||
87,425 | Syratech Corp.† | 17,426 | 262 | |||||||||
25,000 | The Scotts Miracle-Gro Co., Cl. A | 771,996 | 1,520,500 | |||||||||
22,000 | WD-40 Co. | 606,916 | 1,959,540 | |||||||||
105,000 | Wolverine World Wide Inc. | 542,857 | 2,272,200 | |||||||||
|
|
|
| |||||||||
21,440,323 | 46,358,482 | |||||||||||
|
|
|
| |||||||||
Consumer Services — 1.4% |
| |||||||||||
53,000 | Bowlin Travel Centers Inc.† | 53,947 | 76,320 | |||||||||
2,750 | Collectors Universe Inc. | 2,778 | 41,470 | |||||||||
18,000 | IAC/InterActiveCorp. | 199,991 | 1,174,860 | |||||||||
265,017 | KAR Auction Services Inc. | 3,573,437 | 9,408,103 | |||||||||
100,000 | Liberty Interactive Corp. QVC Group, Cl. A† | 1,487,382 | 2,623,000 | |||||||||
37,000 | Liberty TripAdvisor Holdings Inc., Cl. A† | 393,577 | 820,290 | |||||||||
51,217 | Liberty Ventures, Cl. A† | 656,056 | 2,066,606 | |||||||||
285,818 | Martha Stewart Living Omnimedia Inc., Cl. A† | 1,519,000 | 1,703,475 | |||||||||
900,000 | Rollins Inc. | 2,281,581 | 24,183,000 | |||||||||
50,000 | The ADT Corp. | 1,239,655 | 1,495,000 | |||||||||
455,000 | TiVo Inc.† | 4,819,951 | 3,940,300 | |||||||||
|
|
|
| |||||||||
16,227,355 | 47,532,424 | |||||||||||
|
|
|
| |||||||||
Diversified Industrial — 5.4% |
| |||||||||||
20,000 | Acuity Brands Inc. | 278,605 | 3,511,600 | |||||||||
30,000 | Aegion Corp.† | 561,304 | 494,400 | |||||||||
110,000 | Albany International Corp., Cl. A | 2,476,422 | 3,147,100 | |||||||||
240,706 | Ampco-Pittsburgh Corp. | 3,908,986 | 2,626,102 | |||||||||
6,000 | Anixter International Inc.† | 57,120 | 346,680 | |||||||||
25,000 | Burnham Holdings Inc., Cl. A | 532,461 | 449,500 | |||||||||
40,076 | Covisint Corp.† | 103,328 | 86,163 | |||||||||
402,000 | Crane Co. | 9,587,092 | 18,737,220 | |||||||||
75,000 | EnPro Industries Inc. | 4,535,099 | 2,937,750 | |||||||||
115,000 | Greif Inc., Cl. A | 2,267,516 | 3,669,650 | |||||||||
117,970 | Greif Inc., Cl. B | 5,709,954 | 4,561,900 | |||||||||
1,245,000 | Griffon Corp. | 13,703,772 | 19,633,650 | |||||||||
34,000 | Haynes International Inc. | 1,694,519 | 1,286,560 |
Shares | Cost | Market Value | ||||||||||
190,000 | Jardine Strategic Holdings Ltd. | $ | 3,487,637 | $ | 5,099,600 | |||||||
500,000 | Katy Industries Inc.†(a) | 724,863 | 1,627,500 | |||||||||
45,000 | Key Technology Inc.† | 657,015 | 542,700 | |||||||||
190,018 | Kimball International Inc., Cl. B | 1,930,007 | 1,797,570 | |||||||||
10,000 | L.B. Foster Co., Cl. A | 245,654 | 122,800 | |||||||||
75,000 | Lawson Products Inc.† | 1,075,729 | 1,623,750 | |||||||||
96,000 | Lincoln Electric Holdings Inc. | 2,586,322 | 5,033,280 | |||||||||
63,000 | Lindsay Corp. | 1,530,827 | 4,270,770 | |||||||||
40,083 | Lydall Inc.† | 447,165 | 1,141,965 | |||||||||
31,500 | Matthews International Corp., Cl. A | 750,010 | 1,542,555 | |||||||||
560,076 | Myers Industries Inc. | 6,247,497 | 7,505,018 | |||||||||
134,000 | Oil-Dri Corp. of America | 1,466,599 | 3,068,600 | |||||||||
125,000 | Olin Corp. | 2,446,749 | 2,101,250 | |||||||||
306,000 | Park-Ohio Holdings Corp. | 2,984,705 | 8,831,160 | |||||||||
19,000 | Pentair plc | 727,134 | 969,760 | |||||||||
87,000 | Precision Castparts Corp. | 2,064,742 | 19,984,770 | |||||||||
100,000 | Raven Industries Inc. | 2,480,022 | 1,695,000 | |||||||||
32,000 | Roper Technologies Inc. | 620,029 | 5,014,400 | |||||||||
300,000 | Sevcon Inc.†(a) | 1,854,639 | 2,964,000 | |||||||||
96,000 | Sonoco Products Co. | 2,940,089 | 3,623,040 | |||||||||
58,000 | Standex International Corp. | 1,563,076 | 4,370,300 | |||||||||
249,346 | Steel Partners Holdings LP† | 4,226,775 | 4,121,689 | |||||||||
390,000 | Textron Inc. | 2,523,213 | 14,679,600 | |||||||||
519,036 | Tredegar Corp. | 8,942,959 | 6,788,991 | |||||||||
168,000 | Trinity Industries Inc. | 2,539,068 | 3,808,560 | |||||||||
147,000 | Tyco International plc | 2,752,473 | 4,918,620 | |||||||||
|
|
|
| |||||||||
105,231,176 | 178,735,523 | |||||||||||
|
|
|
| |||||||||
Educational Services — 0.0% |
| |||||||||||
59,000 | Career Education Corp.† | 416,169 | 221,840 | |||||||||
125,000 | Corinthian Colleges Inc.† | 209,899 | 119 | |||||||||
340,418 | Universal Technical Institute Inc. | 5,583,877 | 1,194,867 | |||||||||
|
|
|
| |||||||||
6,209,945 | 1,416,826 | |||||||||||
|
|
|
| |||||||||
Electronics — 1.5% |
| |||||||||||
98,000 | Badger Meter Inc. | 2,797,399 | 5,689,880 | |||||||||
281,368 | Bel Fuse Inc., Cl. A(a) | 6,436,126 | 4,639,758 | |||||||||
550,000 | CTS Corp. | 5,306,161 | 10,180,500 | |||||||||
575,000 | Cypress Semiconductor Corp. | 4,718,233 | 4,899,000 | |||||||||
40,000 | Daktronics Inc. | 362,126 | 346,800 | |||||||||
111,000 | Dolby Laboratories Inc., Cl. A | 4,575,628 | 3,618,600 | |||||||||
1,000 | FARO Technologies Inc.† | 46,484 | 35,000 | |||||||||
225,000 | Gentex Corp. | 2,755,934 | 3,487,500 | |||||||||
85,000 | Greatbatch Inc.† | 2,161,402 | 4,795,700 | |||||||||
20,000 | IMAX Corp.† | 158,565 | 675,800 | |||||||||
68,000 | KEMET Corp.† | 264,474 | 125,120 | |||||||||
35,000 | Kimball Electronics Inc.† | 211,927 | 417,550 | |||||||||
70,000 | MOCON Inc. | 1,038,750 | 945,000 |
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Electronics (Continued) |
| |||||||||||
320,000 | Park Electrochemical Corp. | $ | 5,756,198 | $ | 5,628,800 | |||||||
55,500 | Renesas Electronics Corp.† | 362,072 | 291,923 | |||||||||
135,000 | Rofin-Sinar Technologies Inc.† | 3,214,465 | 3,500,550 | |||||||||
170,000 | Stoneridge Inc.† | 1,355,936 | 2,097,800 | |||||||||
|
|
|
| |||||||||
41,521,880 | 51,375,281 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities — 5.7% |
| |||||||||||
13,000 | Amec Foster Wheeler plc, ADR | 30,339 | 141,570 | |||||||||
125,000 | Avista Corp. | 4,157,796 | 4,156,250 | |||||||||
365,000 | Black Hills Corp. | 9,458,416 | 15,089,100 | |||||||||
70,000 | Black Ridge Oil and Gas Inc.† | 0 | 12,040 | |||||||||
150,000 | Callon Petroleum Co.† | 1,046,593 | 1,093,500 | |||||||||
49,000 | Chesapeake Utilities Corp. | 888,481 | 2,600,920 | |||||||||
7,000 | Clean Energy Fuels Corp.† | 82,845 | 31,500 | |||||||||
170,000 | Cleco Corp. | 9,304,336 | 9,050,800 | |||||||||
40,000 | CMS Energy Corp. | 209,606 | 1,412,800 | |||||||||
23,000 | Connecticut Water Service Inc. | 464,832 | 839,960 | |||||||||
15,000 | CONSOL Energy Inc. | 197,331 | 147,000 | |||||||||
11,000 | Consolidated Water Co. Ltd. | 141,093 | 127,600 | |||||||||
155,000 | Covanta Holding Corp. | 502,271 | 2,704,750 | |||||||||
15,000 | Dawson Geophysical Co.† | 181,755 | 57,150 | |||||||||
103,000 | Diamondback Energy Inc.† | 5,377,395 | 6,653,800 | |||||||||
406,000 | El Paso Electric Co. | 5,906,970 | 14,948,920 | |||||||||
80,000 | Energy Recovery Inc.† | 352,081 | 171,200 | |||||||||
62,214 | EXCO Resources Inc. | 304,988 | 46,661 | |||||||||
20,000 | Gamesa Corporacion Tecnologica SA | 117,491 | 276,670 | |||||||||
185,000 | Great Plains Energy Inc. | 3,792,694 | 4,998,700 | |||||||||
110,000 | Hawaiian Electric Industries Inc. | 2,784,810 | 3,155,900 | |||||||||
15,000 | Key Energy Services Inc.† | 125,869 | 7,050 | |||||||||
45,000 | Middlesex Water Co. | 773,022 | 1,072,800 | |||||||||
95,000 | National Fuel Gas Co. | 5,556,830 | 4,748,100 | |||||||||
16,000 | Northwest Natural Gas Co. | 764,416 | 733,440 | |||||||||
100,000 | NorthWestern Corp. | 2,966,899 | 5,383,000 | |||||||||
80,000 | Oceaneering International Inc. | 1,366,984 | 3,142,400 | |||||||||
310,000 | Otter Tail Corp. | 7,388,106 | 8,078,600 | |||||||||
12,000 | Patterson-UTI Energy Inc. | 241,902 | 157,680 | |||||||||
1,255,000 | PNM Resources Inc. | 14,761,652 | 35,202,750 | |||||||||
122,000 | Rowan Companies plc, Cl. A | 4,271,947 | 1,970,300 | |||||||||
2,370,129 | RPC Inc. | 3,583,935 | 20,975,642 | |||||||||
146,000 | SJW Corp. | 2,888,246 | 4,489,500 | |||||||||
190,000 | Southwest Gas Corp. | 4,610,233 | 11,080,800 | |||||||||
222,178 | Steel Excel Inc.† | 5,952,003 | 4,432,451 | |||||||||
129,000 | SunEdison Inc.† | 489,820 | 926,220 | |||||||||
30,000 | Tesoro Corp. | 352,883 | 2,917,200 | |||||||||
22,000 | The Laclede Group Inc. | 876,504 | 1,199,660 |
Shares | Cost | Market Value | ||||||||||
46,000 | The York Water Co. | $ | 647,831 | $ | 966,920 | |||||||
70,000 | UIL Holdings Corp. | 3,447,454 | 3,518,900 | |||||||||
14,000 | Vestas Wind Systems A/S | 132,040 | 726,695 | |||||||||
220,000 | Westar Energy Inc. | 4,036,837 | 8,456,800 | |||||||||
|
|
|
| |||||||||
110,537,536 | 187,903,699 | |||||||||||
|
|
|
| |||||||||
Entertainment — 2.6% |
| |||||||||||
75,000 | Carmike Cinemas Inc.† | 510,631 | 1,506,750 | |||||||||
50,000 | Discovery Communications Inc., Cl. A† | 863,334 | 1,301,500 | |||||||||
100,000 | Discovery Communications Inc., Cl. C† | 926,160 | 2,429,000 | |||||||||
431,384 | Dover Motorsports Inc. | 1,595,309 | 994,340 | |||||||||
3,000 | Global Eagle Entertainment Inc.† | 38,822 | 34,440 | |||||||||
69,000 | International Speedway Corp., Cl. A | 2,180,287 | 2,188,680 | |||||||||
6,814 | International Speedway Corp., Cl. B | 167,786 | 221,285 | |||||||||
1,876,811 | Media General Inc.† | 12,601,094 | 26,256,586 | |||||||||
72,000 | Starz, Cl. A† | 180,768 | 2,688,480 | |||||||||
330,000 | Take-Two Interactive Software Inc.† | 4,423,800 | 9,480,900 | |||||||||
360,000 | The Madison Square Garden Co., Cl. A† | 8,494,132 | 25,970,400 | |||||||||
260,000 | Twenty-First Century Fox Inc., Cl. A | 673,473 | 7,014,800 | |||||||||
157,000 | Universal Entertainment Corp. | 2,117,510 | 2,756,154 | |||||||||
165,000 | World Wrestling Entertainment Inc., Cl. A | 1,796,388 | 2,788,500 | |||||||||
|
|
|
| |||||||||
36,569,494 | 85,631,815 | |||||||||||
|
|
|
| |||||||||
Environmental Services — 0.5% |
| |||||||||||
400,000 | Republic Services Inc. | 5,798,456 | 16,480,000 | |||||||||
|
|
|
| |||||||||
Equipment and Supplies — 7.7% |
| |||||||||||
44,000 | A.O. Smith Corp. | 328,585 | 2,868,360 | |||||||||
538,000 | AMETEK Inc. | 1,016,606 | 28,148,160 | |||||||||
40,500 | AZZ Inc. | 1,280,665 | 1,971,945 | |||||||||
15,000 | Belden Inc. | 175,366 | 700,350 | |||||||||
60,000 | Capstone Turbine Corp.† | 118,600 | 20,400 | |||||||||
545,000 | CIRCOR International Inc. | 15,694,341 | 21,865,400 | |||||||||
223,000 | CLARCOR Inc. | 1,454,445 | 10,632,640 | |||||||||
325,000 | Core Molding Technologies Inc.† | 638,902 | 5,996,250 | |||||||||
165,000 | Crown Holdings Inc.† | 666,877 | 7,548,750 | |||||||||
2,335 | Danaher Corp. | 19,909 | 198,965 | |||||||||
178,000 | Donaldson Co. Inc. | 1,577,779 | 4,998,240 | |||||||||
215,000 | Entegris Inc.† | 1,209,536 | 2,835,850 | |||||||||
830,063 | Federal Signal Corp. | 5,906,469 | 11,380,164 | |||||||||
300,000 | Flowserve Corp. | 2,954,946 | 12,342,000 | |||||||||
315,500 | Franklin Electric Co. Inc. | 1,601,373 | 8,591,065 |
See accompanying notes to financial statements.
8
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Equipment and Supplies (Continued) |
| |||||||||||
244,000 | Graco Inc. | $ | 8,720,951 | $ | 16,355,320 | |||||||
96,000 | IDEX Corp. | 751,281 | 6,844,800 | |||||||||
470,000 | Interpump Group SpA | 2,870,088 | 6,254,903 | |||||||||
66,000 | Itron Inc.† | 2,755,984 | 2,106,060 | |||||||||
15,750 | Jarden Corp.† | 115,037 | 769,860 | |||||||||
38,000 | Littelfuse Inc. | 745,492 | 3,463,700 | |||||||||
55,000 | Maezawa Kyuso Industries Co. Ltd. | 359,609 | 699,621 | |||||||||
65,000 | Minerals Technologies Inc. | 3,312,093 | 3,130,400 | |||||||||
6,000 | MSA Safety Inc. | 179,592 | 239,820 | |||||||||
650,007 | Mueller Industries Inc. | 17,399,220 | 19,227,207 | |||||||||
530,000 | Mueller Water Products Inc., Cl. A | 3,997,254 | 4,059,800 | |||||||||
10,000 | Plantronics Inc. | 262,977 | 508,500 | |||||||||
2,000 | Regal Beloit Corp. | 59,351 | 112,900 | |||||||||
94,032 | SL Industries Inc.† | 1,340,944 | 3,197,088 | |||||||||
5,000 | Teleflex Inc. | 76,167 | 621,050 | |||||||||
282,000 | Tennant Co. | 5,860,985 | 15,842,760 | |||||||||
860,000 | The Gorman-Rupp Co. | 14,423,967 | 20,614,200 | |||||||||
155,000 | The Greenbrier Companies Inc. | 2,327,736 | 4,977,050 | |||||||||
258,000 | The L.S. Starrett Co., Cl. A | 3,179,754 | 3,116,640 | |||||||||
100,000 | The Manitowoc Co. Inc. | 666,995 | 1,500,000 | |||||||||
75,000 | The Middleby Corp.† | 1,121,311 | 7,889,250 | |||||||||
35,000 | The Timken Co. | 1,218,937 | 962,150 | |||||||||
24,000 | The Toro Co. | 845,248 | 1,692,960 | |||||||||
7,500 | Valmont Industries Inc. | 172,236 | 711,675 | |||||||||
149,649 | Vicor Corp.† | 1,308,465 | 1,526,420 | |||||||||
7,875 | Watsco Inc., Cl. B | 23,627 | 953,151 | |||||||||
176,500 | Watts Water Technologies Inc., Cl. A | 4,730,803 | 9,322,730 | |||||||||
|
|
|
| |||||||||
113,470,503 | 256,798,554 | |||||||||||
|
|
|
| |||||||||
Financial Services — 4.5% |
| |||||||||||
10,800 | Alleghany Corp.† | 1,858,236 | 5,055,588 | |||||||||
26,620 | Argo Group International Holdings Ltd. | 724,275 | 1,506,426 | |||||||||
310,000 | BBCN Bancorp Inc. | 3,512,655 | 4,656,200 | |||||||||
107,700 | BKF Capital Group Inc.† | 210,018 | 59,343 | |||||||||
130,000 | Calamos Asset Management Inc., Cl. A | 1,559,099 | 1,232,400 | |||||||||
12,500 | Capitol Federal Financial Inc. | 125,000 | 151,500 | |||||||||
22,000 | Crazy Woman Creek Bancorp Inc.† | 343,564 | 247,500 | |||||||||
636,000 | Energy Transfer Equity LP | 1,960,970 | 13,235,160 | |||||||||
55,000 | FCB Financial Holdings Inc., Cl. A† | 1,530,693 | 1,794,100 | |||||||||
9,967 | Fidelity Southern Corp. | 63,366 | 210,702 | |||||||||
237,500 | First Niagara Financial Group Inc. | 3,056,521 | 2,424,875 | |||||||||
245,000 | FirstMerit Corp. | 4,452,737 | 4,329,150 |
Shares | Cost | Market Value | ||||||||||
500,093 | Flushing Financial Corp. | $ | 8,835,466 | $ | 10,011,862 | |||||||
290,064 | Fortress Investment Group LLC, Cl. A | 1,707,143 | 1,609,855 | |||||||||
1,100,000 | GAM Holding AG | 14,010,725 | 19,356,659 | |||||||||
255,000 | Hilltop Holdings Inc.† | 6,189,394 | 5,051,550 | |||||||||
1,350,000 | Janus Capital Group Inc. | 13,871,453 | 18,360,000 | |||||||||
750,072 | KKR & Co. LP | 4,778,165 | 12,586,208 | |||||||||
180,000 | Legg Mason Inc. | 4,136,892 | 7,489,800 | |||||||||
15,000 | M&T Bank Corp. | 1,294,650 | 1,829,250 | |||||||||
4,000 | Manning & Napier Inc. | 53,431 | 29,440 | |||||||||
60,024 | Medallion Financial Corp. | 463,920 | 454,982 | |||||||||
250,000 | Och-Ziff Capital Management Group LLC, Cl. A | 1,907,164 | 2,182,500 | |||||||||
165,000 | Oritani Financial Corp. | 1,685,540 | 2,577,300 | |||||||||
32,000 | PrivateBancorp Inc. | 541,949 | 1,226,560 | |||||||||
54,000 | Pzena Investment Management Inc., Cl. A | 540,947 | 480,600 | |||||||||
15,000 | StanCorp. Financial Group Inc. | 1,707,911 | 1,713,000 | |||||||||
12,000 | State Auto Financial Corp. | 284,397 | 273,720 | |||||||||
431,887 | Sterling Bancorp | 4,773,930 | 6,422,160 | |||||||||
14,000 | T. Rowe Price Group Inc. | 603,780 | 973,000 | |||||||||
14,000 | TFS Financial Corp. | 205,115 | 241,500 | |||||||||
150,000 | The Charles Schwab Corp. | 2,404,087 | 4,284,000 | |||||||||
10,000 | Universal American Corp.† | 73,364 | 68,400 | |||||||||
40,782 | Value Line Inc. | 570,979 | 631,713 | |||||||||
20,000 | Virtu Financial Inc., Cl. A | 380,000 | 458,400 | |||||||||
395,000 | Waddell & Reed Financial Inc., Cl. A | 7,302,161 | 13,734,150 | |||||||||
10,121 | Waterloo Investment Holdings Ltd.† | 1,390 | 405 | |||||||||
572,300 | Wright Investors’ Service Holdings Inc.† | 1,177,469 | 755,436 | |||||||||
30,000 | Yadkin Financial Corp. | 648,150 | 644,700 | |||||||||
|
|
|
| |||||||||
99,546,706 | 148,350,094 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 9.9% |
| |||||||||||
575,000 | Arca Continental SAB de CV | 1,132,490 | 3,238,114 | |||||||||
1,100 | Blue Buffalo Pet Products Inc.† | 22,000 | 19,701 | |||||||||
585,000 | Boulder Brands Inc.† | 3,809,777 | 4,791,150 | |||||||||
57,150 | Brown-Forman Corp., Cl. A | 1,115,861 | 6,114,479 | |||||||||
7,500 | Brown-Forman Corp., Cl. B | 144,052 | 726,750 | |||||||||
210,000 | Bull-Dog Sauce Co. Ltd. | 120,234 | 397,366 | |||||||||
5,000,000 | China Tontine Wines Group Ltd.† | 960,438 | 164,515 | |||||||||
222,000 | Chr. Hansen Holding A/S | 9,290,797 | 12,401,027 | |||||||||
550,000 | Cott Corp. | 4,106,945 | 5,956,500 | |||||||||
300,000 | Crimson Wine Group Ltd.† | 2,685,588 | 2,715,000 | |||||||||
1,800,000 | Davide Campari-Milano SpA | 11,746,861 | 14,320,673 | |||||||||
80,000 | Dean Foods Co. | 899,523 | 1,321,600 | |||||||||
310,000 | Denny’s Corp.† | 962,864 | 3,419,300 |
See accompanying notes to financial statements.
9
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Food and Beverage (Continued) |
| |||||||||||
340,000 | Diamond Foods Inc.† | $ | 7,499,380 | $ | 10,492,400 | |||||||
320,000 | Dr Pepper Snapple Group Inc. | 6,532,502 | 25,296,000 | |||||||||
3,500,000 | Dynasty Fine Wines Group Ltd.† | 1,246,520 | 650,318 | |||||||||
110,000 | Farmer Brothers Co.† | 1,983,969 | 2,997,500 | |||||||||
510,000 | Flowers Foods Inc. | 1,347,594 | 12,617,400 | |||||||||
164,000 | Ingredion Inc. | 3,465,432 | 14,318,840 | |||||||||
180,000 | ITO EN Ltd. | 3,741,497 | 3,749,594 | |||||||||
70,000 | Iwatsuka Confectionery Co. Ltd. | 4,170,275 | 3,174,259 | |||||||||
23,500 | J & J Snack Foods Corp. | 531,096 | 2,671,010 | |||||||||
125,000 | Kameda Seika Co. Ltd. | 5,073,668 | 5,194,223 | |||||||||
70,000 | Keurig Green Mountain Inc. | 2,913,138 | 3,649,800 | |||||||||
1,325,000 | Kikkoman Corp. | 14,057,979 | 36,227,233 | |||||||||
240,043 | Lifeway Foods Inc.† | 2,482,791 | 2,515,651 | |||||||||
1,140,000 | Maple Leaf Foods Inc. | 20,573,860 | 18,819,183 | |||||||||
6,000 | MEIJI Holdings Co. Ltd. | 117,526 | 437,127 | |||||||||
70,000 | MGP Ingredients Inc. | 331,262 | 1,120,700 | |||||||||
450,000 | Morinaga Milk Industry Co. Ltd. | 1,808,850 | 1,864,294 | |||||||||
85,000 | NISSIN FOODS HOLDINGS CO. LTD. | 2,907,986 | 3,889,885 | |||||||||
30,000 | Nutrisystem Inc. | 382,707 | 795,600 | |||||||||
4,000,000 | Parmalat SpA | 11,431,602 | 10,315,891 | |||||||||
288,000 | Post Holdings Inc.† | 10,186,312 | 17,020,800 | |||||||||
162,000 | Rock Field Co. Ltd. | 2,539,700 | 3,718,985 | |||||||||
625,736 | Snyder’s-Lance Inc. | 13,273,299 | 21,106,075 | |||||||||
27,000 | The Boston Beer Co. Inc., Cl. A† | 576,300 | 5,686,470 | |||||||||
428,000 | The Hain Celestial Group Inc.† | 3,744,555 | 22,084,800 | |||||||||
76,000 | The J.M. Smucker Co. | 2,608,859 | 8,670,840 | |||||||||
185,000 | The WhiteWave Foods Co.† | 2,425,256 | 7,427,750 | |||||||||
700,000 | Tingyi (Cayman Islands) Holding Corp. | 1,792,917 | 1,112,767 | |||||||||
331,696 | Tootsie Roll Industries Inc. | 6,529,087 | 10,378,768 | |||||||||
90,000 | United Natural Foods Inc.† | 2,545,822 | 4,365,900 | |||||||||
21,000 | Vina Concha Y Toro SA, ADR | 787,224 | 697,200 | |||||||||
1,400,000 | Vitasoy International Holdings Ltd. | 1,028,189 | 2,070,180 | |||||||||
20,000 | Willamette Valley Vineyards Inc.† | 73,225 | 134,600 | |||||||||
150,000 | Yakult Honsha Co. Ltd. | 3,747,741 | 7,427,166 | |||||||||
|
|
|
| |||||||||
181,455,550 | 328,285,384 | |||||||||||
|
|
|
| |||||||||
Health Care — 4.7% |
| |||||||||||
40,000 | Achaogen Inc.† | 482,670 | 230,400 | |||||||||
32,000 | Alere Inc.† | 773,166 | 1,540,800 | |||||||||
14,000 | Align Technology Inc.† | 102,423 | 794,640 | |||||||||
22,000 | Allergan plc† | 6,783,480 | 5,979,820 |
Shares | Cost | Market Value | ||||||||||
78,000 | AngioDynamics Inc.† | $ | 856,768 | $ | 1,028,820 | |||||||
7,000 | Anika Therapeutics Inc.† | 63,228 | 222,810 | |||||||||
200,000 | ArthroCare Corp. Stub† | 0 | 70,000 | |||||||||
43,000 | Biolase Inc.† | 38,708 | 38,700 | |||||||||
12,400 | Bio-Rad Laboratories Inc., Cl. A† | 883,151 | 1,665,444 | |||||||||
18,000 | Bruker Corp.† | 164,974 | 295,740 | |||||||||
215,000 | Cantel Medical Corp. | 2,501,835 | 12,190,500 | |||||||||
48,000 | Cempra Inc.† | 486,026 | 1,336,320 | |||||||||
214,000 | Cepheid Inc.† | 2,876,957 | 9,672,800 | |||||||||
183,000 | Chemed Corp. | 5,023,790 | 24,425,010 | |||||||||
59,000 | CONMED Corp. | 1,505,771 | 2,816,660 | |||||||||
370,000 | Cutera Inc.† | 3,852,538 | 4,839,600 | |||||||||
89,000 | DexCom Inc.† | 832,355 | 7,641,540 | |||||||||
28,000 | DGT Holdings Corp.† | 330,269 | 500,500 | |||||||||
210,024 | Exactech Inc.† | 3,283,169 | 3,660,718 | |||||||||
7,000 | Globus Medical Inc., Cl. A† | 177,736 | 144,620 | |||||||||
43,000 | Henry Schein Inc.† | 844,050 | 5,706,960 | |||||||||
5,000 | Heska Corp.† | 39,067 | 152,400 | |||||||||
46,500 | ICU Medical Inc.† | 2,163,255 | 5,091,750 | |||||||||
88,000 | Kindred Healthcare Inc. | 1,613,040 | 1,386,000 | |||||||||
14,285 | Lexicon Pharmaceuticals Inc.† | 195,721 | 153,421 | |||||||||
122,000 | Masimo Corp.† | 3,191,918 | 4,704,320 | |||||||||
195,000 | Meridian Bioscience Inc. | 3,985,410 | 3,334,500 | |||||||||
19,853 | Neogen Corp.† | 576,800 | 893,186 | |||||||||
135,000 | NuVasive Inc.† | 3,817,435 | 6,509,700 | |||||||||
18,000 | Ophthotech Corp.† | 726,750 | 729,360 | |||||||||
319,500 | OPKO Health Inc.† | 1,967,486 | 2,686,995 | |||||||||
153,444 | Orthofix International NV† | 3,694,663 | 5,178,735 | |||||||||
69,678 | Owens & Minor Inc. | 1,452,849 | 2,225,515 | |||||||||
160,000 | Pain Therapeutics Inc.† | 516,921 | 292,800 | |||||||||
50,000 | Patterson Companies Inc. | 1,908,401 | 2,162,500 | |||||||||
636,000 | Quidel Corp.† | 7,144,104 | 12,007,680 | |||||||||
205,000 | RTI Surgical Inc.† | 1,010,145 | 1,164,400 | |||||||||
925,103 | Sorin SpA† | 2,339,583 | 2,666,987 | |||||||||
54,084 | STERIS Corp. | 1,726,476 | 3,513,837 | |||||||||
2,300 | Straumann Holding AG | 206,988 | 661,374 | |||||||||
3,000 | Stryker Corp. | 142,188 | 282,300 | |||||||||
40,000 | SurModics Inc.† | 833,602 | 873,600 | |||||||||
14,000 | Syneron Medical Ltd.† | 116,750 | 100,100 | |||||||||
40,000 | Tetraphase Pharmaceuticals Inc.† | 456,344 | 298,400 | |||||||||
29,000 | The Cooper Companies Inc. | 1,198,854 | 4,316,940 | |||||||||
45,500 | United-Guardian Inc. | 411,719 | 819,910 | |||||||||
70,000 | Vascular Solutions Inc.† | 528,293 | 2,268,700 | |||||||||
390,000 | Wright Medical Group Inc.† | 6,239,716 | 8,197,800 | |||||||||
|
|
|
| |||||||||
80,067,542 | 157,475,612 | |||||||||||
|
|
|
| |||||||||
Home Furnishings — 0.6% |
| |||||||||||
212,050 | Bassett Furniture Industries Inc. | 2,326,401 | 5,905,593 |
See accompanying notes to financial statements.
10
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Home Furnishings (Continued) |
| |||||||||||
35,000 | Bed Bath & Beyond Inc.† | $ | 992,346 | $ | 1,995,700 | |||||||
200,004 | Blyth Inc.† | 2,369,732 | 1,194,024 | |||||||||
165,000 | Ethan Allen Interiors Inc. | 4,255,759 | 4,357,650 | |||||||||
220,000 | La-Z-Boy Inc. | 4,355,724 | 5,843,200 | |||||||||
|
|
|
| |||||||||
14,299,962 | 19,296,167 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 3.3% |
| |||||||||||
148,000 | Belmond Ltd., Cl. A† | 1,399,351 | 1,496,280 | |||||||||
500,000 | Boyd Gaming Corp.† | 4,146,653 | 8,150,000 | |||||||||
176,580 | Canterbury Park Holding Corp. | 1,816,370 | 1,760,503 | |||||||||
228,000 | Churchill Downs Inc. | 9,640,112 | 30,508,680 | |||||||||
162,000 | Dover Downs Gaming & Entertainment Inc.† | 751,780 | 161,287 | |||||||||
108,401 | Formosa International Hotels Corp. | 1,053,136 | 724,264 | |||||||||
75,000 | Gaming and Leisure Properties Inc. | 1,393,693 | 2,227,500 | |||||||||
1,000,000 | Genting Singapore plc | 1,020,254 | 509,469 | |||||||||
160,000 | Golden Entertainment Inc.† | 1,348,531 | 1,448,000 | |||||||||
18,000 | Homeinns Hotel Group, ADR† | 343,247 | 517,320 | |||||||||
65,573 | International Game Technology plc | 1,242,608 | 1,005,234 | |||||||||
173,000 | Las Vegas Sands Corp. | 908,003 | 6,568,810 | |||||||||
3,125,000 | Mandarin Oriental International Ltd. | 4,491,326 | 4,765,625 | |||||||||
94,500 | Morgans Hotel Group Co.† | 642,826 | 313,740 | |||||||||
34,000 | Penn National Gaming Inc.† | 149,835 | 570,520 | |||||||||
255,000 | Pinnacle Entertainment Inc.† | 2,086,833 | 8,629,200 | |||||||||
560,000 | Ryman Hospitality Properties Inc. | 16,389,148 | 27,568,800 | |||||||||
2,900,000 | The Hongkong & Shanghai Hotels Ltd. | 3,109,105 | 3,270,430 | |||||||||
385,057 | The Marcus Corp. | 4,939,900 | 7,447,002 | |||||||||
24,000 | Wynn Resorts Ltd. | 199,481 | 1,274,880 | |||||||||
|
|
|
| |||||||||
57,072,192 | 108,917,544 | |||||||||||
|
|
|
| |||||||||
Machinery — 1.0% | ||||||||||||
445,000 | Astec Industries Inc. | 16,328,206 | 14,911,950 | |||||||||
1,685,000 | CNH Industrial NV | 5,677,380 | 10,986,200 | |||||||||
2,000 | Disco Corp. | 156,366 | 139,374 | |||||||||
29,000 | Global Power Equipment Group Inc. | 408,976 | 106,430 | |||||||||
95,000 | Kennametal Inc. | 3,132,688 | 2,364,550 | |||||||||
6,000 | Nordson Corp. | 107,171 | 377,640 | |||||||||
150,000 | The Eastern Co. | 2,965,688 | 2,430,000 | |||||||||
156,000 | Twin Disc Inc. | 3,349,932 | 1,935,960 | |||||||||
6,000 | Xylem Inc. | 221,939 | 197,100 | |||||||||
|
|
|
| |||||||||
32,348,346 | 33,449,204 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Manufactured Housing and Recreational |
| |||||||||||
91,000 | Cavco Industries Inc.† | $ | 2,571,702 | $ | 6,196,190 | |||||||
15,000 | Drew Industries Inc. | 255,948 | 819,150 | |||||||||
72,000 | Nobility Homes Inc.† | 824,536 | 849,960 | |||||||||
84,490 | Skyline Corp.† | 493,561 | 243,331 | |||||||||
60,000 | Winnebago Industries Inc. | 734,195 | 1,149,000 | |||||||||
|
|
|
| |||||||||
4,879,942 | 9,257,631 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 0.4% |
| |||||||||||
52,003 | Barrick Gold Corp. | 1,522,648 | 330,739 | |||||||||
215,000 | Century Aluminum Co.† | 2,491,045 | 989,000 | |||||||||
19,000 | Constellium NV, Cl. A† | 323,501 | 115,140 | |||||||||
45,000 | Ivanhoe Mines Ltd., Cl. A† | 117,783 | 21,918 | |||||||||
135,000 | Kinross Gold Corp.† | 796,824 | 232,200 | |||||||||
200,000 | Lynas Corp Ltd.† | 184,524 | 4,492 | |||||||||
348,000 | Materion Corp. | 7,898,592 | 10,446,960 | |||||||||
360,000 | Peabody Energy Corp. | 801,667 | 496,800 | |||||||||
52,100 | Stillwater Mining Co.† | 477,514 | 538,193 | |||||||||
36,000 | TimkenSteel Corp. | 846,196 | 364,320 | |||||||||
245,000 | Turquoise Hill Resources Ltd.† | 1,368,145 | 624,750 | |||||||||
20,000 | United States Steel Corp. | 205,790 | 208,400 | |||||||||
15,000 | Yamana Gold Inc. | 50,671 | 25,500 | |||||||||
|
|
|
| |||||||||
17,084,900 | 14,398,412 | |||||||||||
|
|
|
| |||||||||
Paper and Forest Products — 0.1% |
| |||||||||||
16,500 | Schweitzer-Mauduit International Inc. | 379,501 | 567,270 | |||||||||
260,000 | Wausau Paper Corp. | 2,461,396 | 1,664,000 | |||||||||
|
|
|
| |||||||||
2,840,897 | 2,231,270 | |||||||||||
|
|
|
| |||||||||
Publishing — 0.9% |
| |||||||||||
80,000 | Cambium Learning Group Inc.† | 261,134 | 381,600 | |||||||||
3,200 | Graham Holdings Co., Cl. B | 1,491,702 | 1,846,400 | |||||||||
690,000 | Il Sole 24 Ore SpA† | 1,066,569 | 528,142 | |||||||||
12,000 | John Wiley & Sons Inc., Cl. B | 46,500 | 596,760 | |||||||||
350,000 | Journal Media Group Inc. | 1,119,718 | 2,625,000 | |||||||||
50,000 | Meredith Corp. | 1,485,183 | 2,129,000 | |||||||||
65,000 | News Corp., Cl. A | 91,837 | 820,300 | |||||||||
1,120,056 | The E.W. Scripps Co., Cl. A | 10,377,554 | 19,791,390 | |||||||||
|
|
|
| |||||||||
15,940,197 | 28,718,592 | |||||||||||
|
|
|
| |||||||||
Real Estate — 1.0% |
| |||||||||||
50,000 | Capital Properties Inc., Cl. A† | 573,002 | 617,500 | |||||||||
152,000 | Cohen & Steers Inc. | 3,488,944 | 4,172,400 | |||||||||
230,068 | Griffin Industrial Realty Inc. | 3,970,595 | 5,689,582 | |||||||||
8,400 | Gyrodyne Special Distribution, LLC† | 173,880 | 111,684 | |||||||||
20,000 | Lamar Advertising Co., Cl. A | 184,258 | 1,043,600 | |||||||||
104,000 | Morguard Corp. | 1,326,847 | 10,522,353 | |||||||||
50,000 | New Senior Investment Group Inc. | 687,500 | 523,000 | |||||||||
129,447 | Tejon Ranch Co.† | 3,598,476 | 2,823,239 |
See accompanying notes to financial statements.
11
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Real Estate (Continued) |
| |||||||||||
490,060 | The St. Joe Co.† | $ | 7,884,711 | $ | 9,374,848 | |||||||
|
|
|
| |||||||||
21,888,213 | 34,878,206 | |||||||||||
|
|
|
| |||||||||
Retail — 6.7% |
| |||||||||||
330,000 | Aaron’s Inc. | 3,379,591 | 11,916,300 | |||||||||
200,000 | AutoNation Inc.† | 3,399,442 | 11,636,000 | |||||||||
20,224 | Barnes & Noble Education Inc.† | 151,401 | 257,047 | |||||||||
32,000 | Barnes & Noble Inc. | 293,897 | 387,520 | |||||||||
320,700 | Big 5 Sporting Goods Corp. | 4,271,391 | 3,328,866 | |||||||||
22,561 | Biglari Holdings Inc.† | 6,337,182 | 8,251,460 | |||||||||
299,000 | Casey’s General Stores Inc. | 11,197,037 | 30,773,080 | |||||||||
50,000 | Coldwater Creek Inc.† | 71,495 | 735 | |||||||||
82,000 | Copart Inc.† | 1,407,742 | 2,697,800 | |||||||||
1,000 | Cracker Barrel Old Country Store Inc. | 59,645 | 147,280 | |||||||||
420,000 | CST Brands Inc. | 14,274,431 | 14,137,200 | |||||||||
460,241 | Dominion Diamond Corp. | 6,598,927 | 4,915,374 | |||||||||
2,500 | Dunkin’ Brands Group Inc. | 47,500 | 122,500 | |||||||||
25,000 | Fairway Group Holdings Corp.† | 155,693 | 26,250 | |||||||||
10,000 | GNC Holdings Inc., Cl. A | 428,073 | 404,200 | |||||||||
80,000 | HSN Inc. | 2,423,032 | 4,579,200 | |||||||||
665,000 | Ingles Markets Inc., Cl. A | 11,051,587 | 31,806,950 | |||||||||
650,000 | J.C. Penney Co. Inc.† | 8,024,486 | 6,038,500 | |||||||||
380,000 | Krispy Kreme Doughnuts Inc.† | 2,420,097 | 5,559,400 | |||||||||
180,000 | Macy’s Inc. | 2,590,692 | 9,237,600 | |||||||||
80,000 | Movado Group Inc. | 1,353,733 | 2,066,400 | |||||||||
108,000 | Murphy USA Inc.† | 4,233,837 | 5,934,600 | |||||||||
157,000 | Nathan’s Famous Inc. | 2,358,179 | 5,969,140 | |||||||||
100,000 | Penske Automotive Group Inc. | 1,476,842 | 4,844,000 | |||||||||
550,000 | Pier 1 Imports Inc. | 6,583,363 | 3,795,000 | |||||||||
10,000 | Regis Corp.† | 185,808 | 131,000 | |||||||||
142,000 | Roundy’s Inc.† | 564,798 | 329,440 | |||||||||
290,000 | Rush Enterprises Inc., Cl. B† | 3,282,048 | 6,759,900 | |||||||||
3,100 | Sprouts Farmers Market Inc.† | 57,829 | 65,410 | |||||||||
260,000 | SUPERVALU Inc.† | 2,427,375 | 1,866,800 | |||||||||
439,000 | The Bon-Ton Stores Inc. | 3,657,951 | 1,378,460 | |||||||||
400,000 | The Cheesecake Factory Inc. | 11,476,310 | 21,584,000 | |||||||||
210,000 | Tractor Supply Co. | 1,916,768 | 17,707,200 | |||||||||
43,173 | Village Super Market Inc., Cl. A | 1,125,566 | 1,019,315 | |||||||||
22,040 | Vitamin Shoppe, Inc.† | 915,616 | 719,386 | |||||||||
56,000 | Weis Markets Inc. | 1,772,705 | 2,338,000 | |||||||||
1,054 | Winmark Corp. | 72,976 | 108,478 | |||||||||
12,000 | Yoox SpA† | 295,129 | 360,699 | |||||||||
|
|
|
| |||||||||
122,340,174 | 223,200,490 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Specialty Chemicals — 4.0% |
| |||||||||||
28,000 | A. Schulman Inc. | $ | 660,272 | $ | 909,160 | |||||||
17,000 | Airgas Inc. | 534,158 | 1,518,610 | |||||||||
115,000 | Albemarle Corp. | 3,982,209 | 5,071,500 | |||||||||
70,000 | Ashland Inc. | 2,095,232 | 7,043,400 | |||||||||
1,450,000 | Chemtura Corp.† | 31,620,144 | 41,499,000 | |||||||||
35,000 | Cytec Industries Inc. | 1,173,286 | 2,584,750 | |||||||||
2,307,100 | Ferro Corp.† | 15,212,349 | 25,262,745 | |||||||||
305,000 | H.B. Fuller Co. | 4,074,383 | 10,351,700 | |||||||||
90,000 | Hawkins Inc. | 3,293,886 | 3,465,000 | |||||||||
1,050,000 | Huntsman Corp. | 7,984,216 | 10,174,500 | |||||||||
16,000 | NewMarket Corp. | 1,655,130 | 5,712,000 | |||||||||
300,000 | OMNOVA Solutions Inc.† | 574,864 | 1,662,000 | |||||||||
13,000 | Quaker Chemical Corp. | 214,482 | 1,002,040 | |||||||||
250,000 | Sensient Technologies Corp. | 5,092,725 | 15,325,000 | |||||||||
|
|
|
| |||||||||
78,167,336 | 131,581,405 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 2.3% |
| |||||||||||
500,000 | AT&T Inc. | 7,928,205 | 16,290,000 | |||||||||
98,000 | Atlantic Tele-Network Inc. | 4,054,326 | 7,245,140 | |||||||||
2,800,000 | Cincinnati Bell Inc.† | 9,218,908 | 8,736,000 | |||||||||
65,000 | Consolidated Communications Holdings Inc. | 744,345 | 1,252,550 | |||||||||
899,700 | Gogo Inc.† | 15,692,799 | 13,747,416 | |||||||||
32,000 | Harris Corp. | 2,539,502 | 2,340,800 | |||||||||
250,000 | HC2 Holdings Inc.† | 1,000,923 | 1,752,500 | |||||||||
6,000 | IDT Corp., Cl. B | 48,867 | 85,800 | |||||||||
360,025 | Ixia† | 5,177,848 | 5,216,762 | |||||||||
33,000 | Loral Space & Communications Inc.† | 1,320,253 | 1,553,640 | |||||||||
140,000 | New ULM Telecom Inc. | 1,294,046 | 1,092,000 | |||||||||
40,000 | Pharol SGPS SA† | 16,517 | 11,934 | |||||||||
115,000 | Rogers Communications Inc., Cl. B | 555,319 | 3,965,200 | |||||||||
116,005 | Shenandoah Telecommunications Co. | 982,995 | 4,966,174 | |||||||||
705,000 | Sprint Corp.† | 3,684,619 | 2,707,200 | |||||||||
37,584 | Verizon Communications Inc. | 846,702 | 1,635,280 | |||||||||
808,000 | VimpelCom Ltd., ADR | 2,333,746 | 3,324,920 | |||||||||
|
|
|
| |||||||||
57,439,920 | 75,923,316 | |||||||||||
|
|
|
| |||||||||
Transportation — 0.8% |
| |||||||||||
490,000 | GATX Corp. | 15,218,669 | 21,633,500 | |||||||||
20,000 | Irish Continental Group plc | 14,688 | 97,214 | |||||||||
400,000 | ModusLink Global Solutions Inc.† | 1,498,623 | 1,144,000 | |||||||||
100,000 | Navigator Holdings Ltd.† | 2,026,275 | 1,335,000 | |||||||||
133,000 | Providence and Worcester Railroad Co. | 1,888,133 | 2,106,720 | |||||||||
|
|
|
| |||||||||
20,646,388 | 26,316,434 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
12
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Wireless Communications — 1.3% |
| |||||||||||
45,787,500 | Cable & Wireless Communications plc | $ | 39,094,468 | $ | 38,372,703 | |||||||
49,000 | Millicom International Cellular SA, SDR | 3,781,345 | 3,061,786 | |||||||||
50,000 | United States Cellular Corp.† | 1,991,054 | 1,771,500 | |||||||||
|
|
|
| |||||||||
44,866,867 | 43,205,989 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 1,740,924,128 | 3,056,118,953 | ||||||||||
|
|
|
| |||||||||
PREFERRED STOCKS — 0.1% |
| |||||||||||
Automotive: Parts and Accessories — 0.1% |
| |||||||||||
46,000 | Jungheinrich AG | 948,781 | 3,323,567 | |||||||||
|
|
|
| |||||||||
CONVERTIBLE PREFERRED STOCKS — 0.0% |
| |||||||||||
Diversified Industrial — 0.0% |
| |||||||||||
60,098 | Sevcon Inc., | 1,292,107 | 1,696,585 | |||||||||
|
|
|
| |||||||||
RIGHTS — 0.0% |
| |||||||||||
Business Services — 0.0% |
| |||||||||||
404,180 | Trans-Lux Corp., expire | 0 | 0 | |||||||||
|
|
|
| |||||||||
Health Care — 0.0% |
| |||||||||||
58,000 | Durata Therapeutics Inc., CVR† | 0 | 9,280 | |||||||||
300,000 | Sanofi, CVR, expire | 280,936 | 57,090 | |||||||||
|
|
|
| |||||||||
280,936 | 66,370 | |||||||||||
|
|
|
| |||||||||
Wireless Communications — 0.0% |
| |||||||||||
200,000 | Leap Wireless International Inc., CVR, expire | 463,948 | 504,000 | |||||||||
|
|
|
| |||||||||
TOTAL RIGHTS | 744,884 | 570,370 | ||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
WARRANTS — 0.0% |
| |||||||||||
Real Estate — 0.0% |
| |||||||||||
11,091 | Tejon Ranch Co., expire | $ | 66,494 | $ | 1,775 | |||||||
|
|
|
| |||||||||
Principal | ||||||||||||
CORPORATE BONDS — 0.0% |
| |||||||||||
Real Estate — 0.0% |
| |||||||||||
$ | 65,376 | Capital Properties Inc., | 65,376 | 65,049 | ||||||||
95,477 | Gyrodyne Co. of America Inc., Sub. Deb., | 95,477 | 66,412 | |||||||||
|
|
|
| |||||||||
TOTAL CORPORATE BONDS | 160,853 | 131,461 | ||||||||||
|
|
|
| |||||||||
U.S. GOVERNMENT OBLIGATIONS — 7.8% |
| |||||||||||
259,178,000 | U.S. Treasury Bills, 0.000% to 0.260%††, | 259,088,121 | 259,163,021 | |||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 99.9% | $ | 2,003,225,368 | 3,321,005,732 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — 0.1% |
| 2,320,736 | ||||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 3,323,326,468 | |||||||||
|
|
(a) | Security considered an affiliated holding because the Fund owns at least 5% of its outstanding shares. | |
† | Non-income producing security. | |
†† | Represents annualized yield at date of purchase. | |
ADR | American Depositary Receipt | |
CVR | Contingent Value Right | |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
13
The Gabelli Small Cap Growth Fund
Statement of Assets and Liabilities
September 30, 2015
|
Assets: | |||||
Investments, at value (cost $1,985,830,980) | $ | 3,297,266,006 | |||
Investments in affiliates, at value (cost $17,394,388) | 23,739,726 | ||||
Cash | 57,791 | ||||
Receivable for investments sold | 4,058,270 | ||||
Receivable for Fund shares sold | 3,268,073 | ||||
Dividends and interest receivable | 2,785,136 | ||||
Prepaid expenses | 68,900 | ||||
|
| ||||
Total Assets | 3,331,243,902 | ||||
|
| ||||
Liabilities: | |||||
Payable for Fund shares redeemed | 2,818,660 | ||||
Payable for investments purchased | 723,906 | ||||
Payable for investment advisory fees | 2,826,991 | ||||
Payable for distribution fees | 626,370 | ||||
Payable for accounting fees | 3,750 | ||||
Payable for shareholder services fees | 554,701 | ||||
Other accrued expenses | 363,056 | ||||
|
| ||||
Total Liabilities | 7,917,434 | ||||
|
| ||||
Net Assets | $ | 3,323,326,468 | |||
|
| ||||
Net Assets Consist of: | |||||
Paid-in capital | $ | 1,909,031,576 | |||
Accumulated net investment loss | (3,107,955 | ) | |||
Accumulated net realized gain on investments and foreign currency transactions | 99,629,145 | ||||
Net unrealized appreciation on investments | 1,317,780,364 | ||||
Net unrealized depreciation on foreign currency translations | (6,662 | ) | |||
|
| ||||
Net Assets | $ | 3,323,326,468 | |||
|
| ||||
Shares of Capital Stock, each at $0.001 par value: | |||||
Class AAA: |
Net Asset Value, offering, and redemption price per share ($1,784,050,036 ÷ 39,237,882 shares outstanding; 150,000,000 shares authorized) | $ | 45.47 | |||
|
| ||||
Class A: | |||||
Net Asset Value and redemption price per share ($276,603,265 ÷ 6,086,019 shares outstanding; 50,000,000 shares authorized) | $ | 45.45 | |||
|
| ||||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 48.22 | |||
|
| ||||
Class C: | |||||
Net Asset Value and offering price per share ($220,763,173 ÷ 5,343,921 shares outstanding; 50,000,000 shares authorized) | $ | 41.31 | (a) | ||
|
| ||||
Class I: | |||||
Net Asset Value, offering, and redemption price per share ($1,041,909,994 ÷ 22,556,200 shares outstanding; 50,000,000 shares authorized) | $ | 46.19 | |||
|
|
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2015
|
Investment Income: | |||||
Dividends - unaffiliated (net of foreign withholding taxes of $510,215) | $ | 47,190,472 | |||
Dividends - affiliated | 163,545 | ||||
Interest | 236,008 | ||||
|
| ||||
Total Investment Income | 47,590,025 | ||||
|
| ||||
Expenses: | |||||
Investment advisory fees | 36,978,479 | ||||
Distribution fees - Class AAA | 5,248,242 | ||||
Distribution fees - Class A | 764,542 | ||||
Distribution fees - Class C | 2,387,626 | ||||
Shareholder services fees | 3,409,912 | ||||
Shareholder communication expenses | 629,417 | ||||
Custodian fees | 386,089 | ||||
Registration expenses | 121,758 | ||||
Directors’ fees | 101,060 | ||||
Legal and audit fees | 72,887 | ||||
Accounting fees | 45,000 | ||||
Interest expense | 3,037 | ||||
Miscellaneous expenses | 157,985 | ||||
|
| ||||
Total Expenses | 50,306,034 | ||||
|
| ||||
Less: | |||||
Advisory fee reduction on unsupervised assets (See Note 3) | (74,166 | ) | |||
Expenses paid indirectly by broker (See Note 6) | (8,578 | ) | |||
|
| ||||
Total Reductions | (82,744 | ) | |||
|
| ||||
Net Expenses | 50,223,290 | ||||
|
| ||||
Net Investment Loss | (2,633,265 | ) | |||
|
| ||||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | |||||
Net realized gain on investments - unaffiliated | 125,570,590 | ||||
Net realized gain on investments - affiliated | 40,799 | ||||
Net realized loss on foreign currency transactions | (26,588 | ) | |||
|
| ||||
Net realized gain on investments and foreign currency transactions | 125,584,801 | ||||
|
| ||||
Net change in unrealized appreciation/depreciation: |
| ||||
on investments | (159,179,263 | ) | |||
on foreign currency translations | (6,707 | ) | |||
|
| ||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (159,185,970 | ) | |||
|
| ||||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (33,601,169 | ) | |||
|
| ||||
Net Decrease in Net Assets Resulting from Operations | $ | (36,234,434 | ) | ||
|
|
See accompanying notes to financial statements.
14
The Gabelli Small Cap Growth Fund
Statement of Changes in Net Assets
Year Ended September 30, 2015 | Year Ended September 30, 2014 | |||||||||
Operations: | ||||||||||
Net investment loss | $ | (2,633,265 | ) | $ | (10,076,017 | ) | ||||
Net realized gain on investments and foreign currency transactions | 125,584,801 | 67,998,353 | ||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (159,185,970 | ) | 119,217,026 | |||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (36,234,434 | ) | 177,139,362 | |||||||
|
|
|
| |||||||
Distributions to Shareholders: | ||||||||||
Net realized gain | ||||||||||
Class AAA | (40,491,589 | ) | (68,072,369 | ) | ||||||
Class A | (5,714,487 | ) | (9,652,279 | ) | ||||||
Class C | (4,769,460 | ) | (6,557,956 | ) | ||||||
Class I | (17,578,191 | ) | (17,986,622 | ) | ||||||
|
|
|
| |||||||
Total Distributions to Shareholders | (68,553,727 | ) | (102,269,226 | ) | ||||||
|
|
|
| |||||||
Capital Share Transactions: | ||||||||||
Class AAA | (275,000,296 | ) | (128,027,101 | ) | ||||||
Class A | (7,559,787 | ) | (22,094,719 | ) | ||||||
Class C | 7,660,328 | 34,143,378 | ||||||||
Class I | 184,769,629 | 327,375,183 | ||||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | (90,130,126 | ) | 211,396,741 | |||||||
|
|
|
| |||||||
Redemption Fees | 10,209 | 24,979 | ||||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets | (194,908,078 | ) | 286,291,856 | |||||||
Net Assets: | ||||||||||
Beginning of year | 3,518,234,546 | 3,231,942,690 | ||||||||
|
|
|
| |||||||
End of year (including undistributed net investment income of $0 and $0, respectively) | $ | 3,323,326,468 | $ | 3,518,234,546 | ||||||
|
|
|
|
See accompanying notes to financial statements.
15
The Gabelli Small Cap Growth Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratio to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||
Year Ended | Net Asset Value, Beginning | Net Investment Income | Net Realized and Unrealized Gain (Loss) on | Total from Investment | Net Investment | Net Realized Gain on | Total | Redemption | Net Asset Value, End of | Total | Net Assets End of Year | Net Investment | Operating | Portfolio Turnover | ||||||||||||||||
September 30 | of Year | (Loss) (a)(b) | Investments | Operations | Income | Investments | Distributions | Fees (b)(c) | Year | Return † | (in 000’s) | (Loss) (a) | Expenses (d) | Rate | ||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||
2015 | $46.91 | $(0.05) | $ (0.47) | $ (0.52) | — | $(0.92) | $(0.92) | $0.00 | $45.47 | (1.25)% | $1,784,050 | (0.10)% | 1.38%(e) | 9% | ||||||||||||||||
2014 | 45.82 | (0.14) | 2.65 | 2.51 | — | (1.42) | (1.42) | 0.00 | 46.91 | 5.47 | 2,103,544 | (0.28) | 1.38 | 5 | ||||||||||||||||
2013 | 35.84 | 0.20 | 10.87 | 11.07 | $(0.25) | (0.84) | (1.09) | 0.00 | 45.82 | 31.82 | 2,171,213 | 0.50 | 1.39 | 5 | ||||||||||||||||
2012 | 29.16 | (0.03) | 7.46 | 7.43 | — | (0.75) | (0.75) | 0.00 | 35.84 | 25.98 | 1,535,477 | (0.09) | 1.41 | 7 | ||||||||||||||||
2011 | 29.97 | (0.10) | (0.71) | (0.81) | — | — | — | 0.00 | 29.16 | (2.70) | 1,539,100 | (0.30) | 1.42 | 14 | ||||||||||||||||
Class A | ||||||||||||||||||||||||||||||
2015 | $46.89 | $(0.05) | $ (0.47) | $ (0.52) | — | $(0.92) | $(0.92) | $0.00 | $45.45 | (1.25)% | $ 276,603 | (0.10)% | 1.38%(e) | 9% | ||||||||||||||||
2014 | 45.80 | (0.14) | 2.65 | 2.51 | — | (1.42) | (1.42) | 0.00 | 46.89 | 5.47 | 292,796 | (0.28) | 1.38 | 5 | ||||||||||||||||
2013 | 35.84 | 0.17 | 10.89 | 11.06 | $(0.26) | (0.84) | (1.10) | 0.00 | 45.80 | 31.80 | 305,617 | 0.43 | 1.39 | 5 | ||||||||||||||||
2012 | 29.15 | (0.03) | 7.47 | 7.44 | — | (0.75) | (0.75) | 0.00 | 35.84 | 26.02 | 169,823 | (0.08) | 1.41 | 7 | ||||||||||||||||
2011 | 29.96 | (0.10) | (0.71) | (0.81) | — | — | — | 0.00 | 29.15 | (2.70) | 145,049 | (0.31) | 1.42 | 14 | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||
2015 | $43.01 | $(0.38) | $ (0.40) | $ (0.78) | — | $(0.92) | $(0.92) | $0.00 | $41.31 | (1.98)% | $ 220,763 | (0.85)% | 2.13%(e) | 9% | ||||||||||||||||
2014 | 42.43 | (0.46) | 2.46 | 2.00 | — | (1.42) | (1.42) | 0.00 | 43.01 | 4.68 | 222,684 | (1.03) | 2.13 | 5 | ||||||||||||||||
2013 | 33.27 | (0.12) | 10.12 | 10.00 | — | (0.84) | (0.84) | 0.00 | 42.43 | 30.80 | 186,540 | (0.32) | 2.14 | 5 | ||||||||||||||||
2012 | 27.31 | (0.26) | 6.97 | 6.71 | — | (0.75) | (0.75) | 0.00 | 33.27 | 25.08 | 102,214 | (0.83) | 2.16 | 7 | ||||||||||||||||
2011 | 28.28 | (0.34) | (0.63) | (0.97) | — | — | — | 0.00 | 27.31 | (3.43) | 81,289 | (1.05) | 2.17 | 14 | ||||||||||||||||
Class I | ||||||||||||||||||||||||||||||
2015 | $47.52 | $ 0.08 | $ (0.49) | $ (0.41) | — | $(0.92) | $(0.92) | $0.00 | $46.19 | (1.00)% | $1,041,910 | 0.17% | 1.13%(e) | 9% | ||||||||||||||||
2014 | 46.29 | (0.01) | 2.66 | 2.65 | — | (1.42) | (1.42) | 0.00 | 47.52 | 5.72 | 899,211 | (0.03) | 1.13 | 5 | ||||||||||||||||
2013 | 36.29 | 0.29 | 10.99 | 11.28 | $(0.44) | (0.84) | (1.28) | 0.00 | 46.29 | 32.14 | 568,573 | 0.71 | 1.14 | 5 | ||||||||||||||||
2012 | 29.44 | 0.08 | 7.52 | 7.60 | — | (0.75) | (0.75) | 0.00 | 36.29 | 26.31 | 344,869 | 0.24 | 1.16 | 7 | ||||||||||||||||
2011 | 30.18 | (0.02) | (0.72) | (0.74) | — | — | — | 0.00 | 29.44 | (2.45) | 164,494 | (0.05) | 1.17 | 14 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect the applicable sales charges. | |
(a) | Due to capital share activity throughout the period, net investment income (loss) per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. | |
(b) | Per share amounts have been calculated using the average shares outstanding method. | |
(c) | Amount represents less than $0.005 per share. | |
(d) | The ratios do not include a reduction of advisory fee on unsupervised assets for the years ended September 30, 2012 and 2011. Including such advisory fee reduction on unsupervised assets, the ratios of operating expenses to average net assets would have been 1.40% and 1.41% (Class AAA and Class A), 2.15% and 2.16% (Class C), and 1.15% and 1.16% (Class I), respectively. For the years ended September 30, 2015, 2014, and 2013, the effect was minimal. | |
(e) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the year ended September 30, 2015, there was no impact on the expense ratios. |
See accompanying notes to financial statements.
16
The Gabelli Small Cap Growth Fund
Notes to Financial Statements
1. Organization. The Gabelli Small Cap Growth Fund is a series of the Gabelli Equity Series Funds, Inc. (the “Corporation”). The Corporation was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and one of three separately managed portfolios of the Corporation. The Fund seeks to provide a high level of capital appreciation. Gabelli Funds, LLC (the “Adviser”) currently characterizes small capitalization companies for the Fund as those with total common stock market values of $3 billion or less at the time of investment. The Fund commenced investment operations on October 22, 1991.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its 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 the Adviser.
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty 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 fair valued as determined by the Board. Debt instruments having a maturity greater than sixty 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. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. 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 fair valued as determined by 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 with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S.
17
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
dollar value American Depositary Receipt 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.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of September 30, 2015 is as follows:
Valuation Inputs | ||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 9/30/15 | |||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Broadcasting | $ 30,619,078 | $ 825,920 | — | $ 31,444,998 | ||||||||||||
Business Services | 181,745,873 | 1,455,048 | — | 183,200,921 | ||||||||||||
Consumer Products | 46,358,220 | — | $ 262 | 46,358,482 | ||||||||||||
Diversified Industrial | 177,108,023 | 1,627,500 | — | 178,735,523 | ||||||||||||
Educational Services | 1,416,707 | — | 119 | 1,416,826 | ||||||||||||
Entertainment | 84,416,190 | 1,215,625 | — | 85,631,815 | ||||||||||||
Equipment and Supplies | 255,845,403 | 953,151 | — | 256,798,554 | ||||||||||||
Financial Services | 147,594,253 | 755,436 | 405 | 148,350,094 | ||||||||||||
Food and Beverage | 327,635,066 | — | 650,318 | 328,285,384 | ||||||||||||
Health Care | 156,905,112 | 500,500 | 70,000 | 157,475,612 | ||||||||||||
Manufactured Housing and Recreational Vehicles | 8,407,671 | 849,960 | — | 9,257,631 | ||||||||||||
Publishing | 28,121,832 | 596,760 | — | 28,718,592 | ||||||||||||
Real Estate | 34,149,022 | 729,184 | — | 34,878,206 | ||||||||||||
Retail | 223,199,755 | — | 735 | 223,200,490 | ||||||||||||
Telecommunications | 74,831,316 | 1,092,000 | — | 75,923,316 | ||||||||||||
Other Industries (a) | 1,266,442,509 | — | — | 1,266,442,509 | ||||||||||||
| ||||||||||||||||
Total Common Stocks | 3,044,796,030 | 10,601,084 | 721,839 | 3,056,118,953 | ||||||||||||
| ||||||||||||||||
Preferred Stocks (a) | 3,323,567 | — | — | 3,323,567 | ||||||||||||
Convertible Preferred Stocks (a) | — | 1,696,585 | — | 1,696,585 | ||||||||||||
Rights (a) | 57,090 | 0 | 513,280 | 570,370 | ||||||||||||
Warrants (a) | 1,775 | — | — | 1,775 | ||||||||||||
Corporate Bonds (a) | — | 131,461 | — | 131,461 | ||||||||||||
U.S. Government Obligations | — | 259,163,021 | — | 259,163,021 | ||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $3,048,178,462 | $271,592,151 | $1,235,119 | $3,321,005,732 | ||||||||||||
|
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have material transfers among Level 1, Level 2, and Level 3 during the year ended September 30, 2015. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.
18
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purposes of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or that, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.
The Fund’s derivative contracts held at September 30, 2015, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
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
19
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
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 fluctuations in the value of the contract, and are included in unrealized appreciation/depreciation on futures contracts. 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. During the year ended September 30, 2015, the Fund held no investments in futures contracts.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at 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 purchase 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 inability 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 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 Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted 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 saleable among qualified institutional investors under special rules adopted by 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
20
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
traded securities, and accordingly the Board will monitor their liquidity. At September 30, 2015, the Fund held no restricted securities.
Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(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 from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
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 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.
Distributions to Shareholders. 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 GAAP. 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 for federal income tax purposes 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 capital accounts in the period when the differences arise. Permanent differences were primarily due to the current year write-off of net operating loss, reclass of short term gains to ordinary income, and basis adjustments on investments no longer in passive foreign investment companies. These reclassifications have no impact on the NAV of the Fund. For the year ended September 30, 2015, reclassifications were made to decrease accumulated net investment loss by $8,439,685 and decrease accumulated net realized gain on investments and foreign currency transactions by $6,588,088, with an offsetting adjustment to paid-in capital.
The tax character of distributions paid during the years ended September 30, 2015 and 2014 was as follows:
Year Ended September 30, 2015 | Year Ended September 30, 2014 | |||||||||
Distributions paid from: | ||||||||||
Net long term capital gains | $68,553,727 | $102,269,226 | ||||||||
Total distributions paid | $68,553,727 | $102,269,226 |
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
21
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
At September 30, 2015, the components of accumulated earnings/losses on a tax basis were as follows:
Undistributed long term capital gains | $ | 119,610,973 | ||
Net unrealized appreciation on investments | 1,296,307,119 | |||
Qualified late year loss deferral | (1,623,200 | ) | ||
|
| |||
Total | $ | 1,414,294,892 | ||
|
|
The Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses.
At September 30, 2015, the temporary difference between book basis and tax basis net unrealized appreciation on investments was primarily due to wash sales for tax purposes, mark-to-market adjustments on investments in passive foreign investment companies, and basis adjustments on investments in partnerships.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2015:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Investments | $ | 2,024,691,951 | $ | 1,463,924,841 | $ | (167,611,060 | ) | $ | 1,296,313,781 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended September 30, 2015, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2015, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions. 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.
There was a reduction in the advisory fee paid to the Adviser relating to certain portfolio holdings, i.e., unsupervised assets of the Fund with respect to which the Adviser transferred dispositive and voting control to the Fund’s Proxy Voting Committee. During the year ended September 30, 2015, the Fund’s Proxy Voting Committee exercised control and discretion over all rights to vote or consent with respect to such securities, and the Adviser reduced its fee with respect to such securities by $74,166.
22
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
The Corporation pays each Director who is not considered an affiliated person an annual retainer of $18,000 plus $2,000 for each Board meeting attended, and they are reimbursed for any out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000 per meeting attended. The Chairman of the Audit Committee receives a $3,000 annual fee, and the Lead Director receives an annual fee of $2,000. A Director may receive a single meeting fee, allocated among the participating funds, for attending certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the “Plan”) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the “Distributor”) an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, 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 sales of securities during the year ended September 30, 2015, other than short term securities and U.S. Government obligations, aggregated $301,228,050 and $343,904,806, respectively.
6. Transactions with Affiliates and Other Arrangements. During the year ended September 30, 2015, the Fund paid brokerage commissions on security trades of $251,605 to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $117,701 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the year ended September 30, 2015, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during the year ended September 30, 2015 was $8,578.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the year ended September 30, 2015, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.
7. Line of Credit. The Fund participates in an unsecured line of credit of up to $75,000,000 under which it may borrow up to 15% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a variable rate per annum equal to the overnight rate plus a spread, as determined and quoted by the custodian in its sole discretion at the time of the request, which rate may be subject to change from time to time at the sole discretion of the custodian. The overnight rate is defined as of any day, the higher of (a) the federal funds rate as in effect on that day and (b) the overnight LIBOR rate as in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. During the year ended September 30, 2015, there were no borrowings under the line of credit.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%, and Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
23
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh 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 as an increase in paid-in capital. The redemption fees retained by the Fund during the years ended September 30, 2015 and 2014, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2015 | Year Ended September 30, 2014 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 3,319,959 | $ | 162,417,991 | 8,607,866 | $ | 412,503,378 | ||||||||||
Shares issued upon reinvestment of distributions | 809,664 | 39,560,198 | 1,416,168 | 66,545,971 | ||||||||||||
Shares redeemed | (9,736,323 | ) | (476,978,485 | ) | (12,569,645 | ) | (607,076,450 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (5,606,700 | ) | $ | (275,000,296 | ) | (2,545,611 | ) | $ | (128,027,101 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class A | ||||||||||||||||
Shares sold | 1,117,567 | $ | 54,900,120 | 2,163,826 | $ | 103,544,834 | ||||||||||
Shares issued upon reinvestment of distributions | 101,724 | 4,968,185 | 185,169 | 8,697,410 | ||||||||||||
Shares redeemed | (1,377,817 | ) | (67,428,092 | ) | (2,777,505 | ) | (134,336,963 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (158,526 | ) | $ | (7,559,787 | ) | (428,510 | ) | $ | (22,094,719 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 889,352 | $ | 39,843,004 | 1,310,446 | $ | 57,768,591 | ||||||||||
Shares issued upon reinvestment of distributions | 96,136 | 4,294,403 | 135,407 | 5,871,262 | ||||||||||||
Shares redeemed | (818,494 | ) | (36,477,079 | ) | (665,169 | ) | (29,496,475 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 166,994 | $ | 7,660,328 | 780,684 | $ | 34,143,378 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Class I | ||||||||||||||||
Shares sold | 9,409,515 | $ | 472,777,435 | 9,741,887 | $ | 477,704,273 | ||||||||||
Shares issued upon reinvestment of distributions | 311,616 | 15,434,375 | 317,573 | 15,084,692 | ||||||||||||
Shares redeemed | (6,086,578 | ) | (303,442,181 | ) | (3,421,567 | ) | (165,413,782 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 3,634,553 | $ | 184,769,629 | 6,637,893 | $ | 327,375,183 | ||||||||||
|
|
|
|
|
|
|
|
9. Transactions in Securities of Affiliated Issuers. The 1940 Act defines affiliated issuers as those in which a Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the Fund’s transactions in the securities of these issuers during the year ended September 30, 2015 is set forth below:
Beginning Shares | Shares Purchased | Shares Sold/Closed | Ending Shares | Dividend Income | Realized Gain | Value at September 30, 2015 | Percent Owned of Shares Outstanding | |||||||||||||||||||||||||||||||||
Bel Fuse Inc., Cl. A | 250,000 | 31,368 | — | 281,368 | $ | 62,175 | — | $ | 4,639,758 | 12.91 | % | |||||||||||||||||||||||||||||
Katy Industries Inc. | 500,000 | — | — | 500,000 | — | — | 1,627,500 | 6.29 | % | |||||||||||||||||||||||||||||||
Sevcon Inc. | 295,200 | 4,800 | — | 300,000 | — | — | 2,964,000 | 8.13 | % | |||||||||||||||||||||||||||||||
Strattec Security Corp. | 207,000 | 500 | (500 | ) | 207,000 | 101,370 | $ | 40,799 | 13,053,420 | 5.69 | % | |||||||||||||||||||||||||||||
Trans-Lux Corp.* | 404,180 | — | — | 404,180 | — | — | 1,455,048 | 23.92 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Total | $ | 163,545 | $ | 40,799 | $ | 23,739,726 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
* | The Fund also holds 404,180 rights of Trans-Lux Corp. For every 33 rights held, the holder is entitled to purchase 1 share of Series B Convertible Preferred Stock. |
24
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
10. 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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
25
The Gabelli Small Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
The Gabelli Small Cap Growth Fund
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Gabelli Small Cap Growth Fund (the “Fund”), a series of Gabelli Equity Series Funds, Inc., as of September 30, 2015, 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 five 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.
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 September 30, 2015, by correspondence with the Fund’s custodian and brokers. 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 Gabelli Small Cap Growth Fund, a series of Gabelli Equity Series Funds, Inc., at September 30, 2015, 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 its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York
November 27, 2015
26
The Gabelli Small Cap Growth Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Small Cap Growth Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director4 | ||||
INTERESTED DIRECTORS3: | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer Age: 73 | Since 1991 | 31 | Chairman, Chief Executive Officer, and Chief Investment Officer–Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer–Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/ GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc. | Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications); Director of RLJ Acquisition Inc. (blank check company) (2011-2012) | ||||
John D. Gabelli Director Age: 71 | Since 1991 | 10 | Senior Vice President of G.research, LLC | — | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Anthony J. Colavita Director Age: 79 | Since 1991 | 37 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director Age: 71 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director Age: 76 | Since 1991 | 6 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board, Belmont Savings Bank | ||||
Kuni Nakamura Director Age: 47 | Since 2009 | 18 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||
Anthony R. Pustorino Director Age: 90 | Since 1991 | 13 | Certified Public Accountant; Professor Emeritus, Pace University | Director of LGL Group, Inc. (diversified manufacturing) (2004-2011) | ||||
Anthonie C. van Ekris Director Age: 81 | Since 1991 | 22 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/ export company) | — | ||||
Salvatore J. Zizza Director Age: 69 | Since 2001 | 31 | President of Zizza & Associates Corp. (financial consulting); Chairman of Harbor Diversified, Inc. (pharmaceuticals); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Bergen Cove Realty Inc.; Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014) | Director and Vice Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals); Director, Chairman, and CEO of General Employment Enterprises (staffing services) (2009-2012) |
27
The Gabelli Small Cap Growth Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) Address1 | Term of Office and Length of | Principal Occupation(s) | ||||
and Age | Time Served2 | During Past Five Years | ||||
OFFICERS: | ||||||
Bruce N. Alpert President Age: 63 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of several registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008; Director of Teton Advisors, Inc., 1998-2012; Chairman of Teton Advisors, Inc., 2008-2010; President of Teton Advisors, Inc., 1998-2008 | ||||
Andrea R. Mango Secretary Age: 43 | Since 2013 | Counsel of Gabelli Funds, LLC since 2013; Secretary of all registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of all closed-end funds within the Gabelli/GAMCO Fund Complex since 2014; Corporate Vice President within the Corporate Compliance Department of New York Life Insurance Company, 2011-2013; Vice President and Counsel of Deutsche Bank, 2006-2011 | ||||
Agnes Mullady Treasurer Age: 57 | Since 2006 | President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex | ||||
Richard J. Walz Chief Compliance Officer Age: 56 | Since 2013 | Chief Compliance Officer of all of the registered investment companies within the Gabelli/ GAMCO Fund Complex since 2013; Chief Compliance Officer of AEGON USA Investment Management, 2011-2013; Chief Compliance Officer of Cutwater Asset Management, 2004- 2011 |
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 Fund’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. |
3 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’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, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
2015 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended September 30, 2015, the Fund paid to shareholders long term capital gains totaling $68,553,727, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
28
Gabelli/GAMCO 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 GAMCO Asset Management 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 fund shareholder?
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:
● | 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. |
● | 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. 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 website, 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.
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THE GABELLI SMALL CAP GROWTH FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Mario J. Gabelli, CFA, is Chairman and Chief Executive Officer of GAMCO Investors, Inc. that he founded in 1977 and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.
Morningstar Rating™ is based on risk-adjusted returns. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with a fund’s three, five, and ten year (if applicable) Morningstar Rating metrics. For funds with at least a three year history, a Morningstar Rating is based on a risk-adjusted return measure (including the effects of sales charges, loads, and redemption fees) placing more emphasis on downward variations and rewarding consistent performance. For each fund with at least a three year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure (including the effects of sales charges, loads, and redemption fees) that accounts for variation in a fund’s monthly performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the next 22.5% 2 stars, and the bottom 10% 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) Morningstar Rating is for the AAA Share class only; other classes may have different performance characteristics. Ratings reflect relative performance. Results for certain periods were negative. © 2015 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
We have separated the portfolio manager’s commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio manager’s commentary is unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com. |
Gabelli Equity Series Funds, Inc.
THE GABELLI SMALL CAP GROWTH FUND
One Corporate Center
Rye, New York 10580-1422
t | 800-GABELLI (800-422-3554) | |
f | 914-921-5118 | |
e | info@gabelli.com | |
GABELLI.COM |
Net Asset Value per share available daily
by calling 800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc.
Anthony J. Colavita President, Anthony J. Colavita, P.C.
Vincent D. Enright Former Senior Vice President and Chief Financial Officer, KeySpan Corp.
John D. Gabelli Senior Vice President, G.research, LLC
Robert J. Morrissey Partner, Morrissey, Hawkins & Lynch
Kuni Nakamura President, Advanced Polymer, Inc.
Anthony R. Pustorino Certified Public Accountant, Professor Emeritus, Pace University | Anthonie C. van Ekris Chairman, BALMAC International, Inc.
Salvatore J. Zizza Chairman, Zizza & Associates Corp.
OFFICERS
Bruce N. Alpert President
Andrea R. Mango Secretary
Agnes Mullady Treasurer
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR
G.distributors, LLC
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP |
This report is submitted for the general information of the shareholders of The Gabelli Small Cap Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
Overall Morningstar Rating TM
Morningstar® rated The Gabelli Small Cap Growth Fund Class AAA Shares 4 stars overall, 3 stars for the three and five year periods, and 5 stars for the ten year period ended September 30, 2015 among 645, 645, 577, and 383 Small Blend funds, respectively.
Morningstar RatingTM is based on risk-adjusted returns.
GAB443Q315AR
The Gabelli Focus Five Fund
Annual Report — September 30, 2015
To Our Shareholders,
For the year ended September 30, 2015, the net asset value (“NAV”) per Class AAA Share of The Gabelli Focus Five Fund decreased 14.1% compared with a decrease of 0.6%, for the Russell 1000 Index. The Russell 2500 Index increased 0.4%. The Blended Index which consists of 50% of the Russell 2500 Index, 25% of the Russell 1000 Index, and 25% of the MSCI AC World Ex-U.S. Index decreased 3.0%. See page 2 for additional performance information.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2015.
Performance Discussion (Unaudited)
The Focus Five Fund seeks to provide a high level of capital appreciation. Under normal circumstances, the Fund will invest in a concentrated portfolio of twenty-five to thirty-five equity securities. The Fund could potentially invest up to 50% of its net assets in five securities that represent the largest, and thus the highest conviction, positions. The balance of the Fund’s net assets will be held in short term high grade investments of cash and cash equivalents.
The Fund’s investment objective, seeking to provide a high level of capital appreciation, remains unchanged.
Some of the better performing investments during the fiscal year were Chemtura Corp. (8.4% of net assets as of September 30, 2015), a global developer, manufacturer, and marketer of engineered specialty chemicals; Post Holdings Inc. (2.8%) manufactures, markets and sells refrigerated, active nutrition and private label food products; and O’Reilly Automotive Inc. (1.5%) engages in the retail of automotive aftermarket parts, tools, supplies, equipment and accessories. Our weaker performing investments during the year were BioScrip Inc. (4.2%), the third largest provider of home infusion services in the United States; Jason Industries Inc. (2.0%) which produces finishing products including industrial brushes, buffing wheels and buffing compounds for use in various industrial and infrastructure applications; and Weatherford International plc. (0.5%) which provides equipment and services used in drilling, evaluation, completion, production, and intervention of oil and natural gas wells worldwide.
We appreciate your confidence and trust.
Comparative Results
Average Annual Returns through September 30, 2015 (a)(b) (Unaudited)
1 Year | 5 Year | 10 Year | Since January 1, 2012(c) | Since Inception (12/31/02) | ||||||||||||||||
Class AAA (GWSVX) | (14.11 | )% | 9.08 | % | 5.18 | % | 10.08 | % | 7.67 | % | ||||||||||
Russell 2500 Index | 0.38 | 12.69 | 7.40 | 13.79 | (d) | 10.88 | ||||||||||||||
Russell 1000 Index | (0.61 | ) | 13.42 | 6.95 | 14.52 | 8.85 | ||||||||||||||
MSCI AC World Ex-U.S. Index | (11.78 | ) | 2.27 | 3.49 | 5.07 | 8.14 | ||||||||||||||
Blended Index | (3.03 | ) | 10.15 | 6.30 | 11.70 | 9.68 | ||||||||||||||
Class A (GWSAX) | (14.11 | ) | 9.10 | 5.21 | 10.09 | 7.69 | ||||||||||||||
With sales charge (e) | (19.05 | ) | 7.82 | 4.57 | 8.36 | 7.18 | ||||||||||||||
Class C (GWSCX) | (14.74 | ) | 8.27 | 4.41 | 9.26 | 6.91 | ||||||||||||||
With contingent deferred sales charge (f) | (15.60 | ) | 8.27 | 4.41 | 9.26 | 6.91 | ||||||||||||||
Class I (GWSIX) | (13.90 | ) | 9.37 | 5.39 | 10.36 | 7.83 |
In the current prospectuses dated January 28, 2015, the expense ratios for Class AAA, A, C, and I Shares are 1.38%, 1.38%, 2.13%, and 1.13%, respectively. See page 9 for the expense ratios for the year ended September 30, 2015. Class AAA and Class I Shares have no sales charge. The maximum sales charge for Class A and C Shares is 5.75% and 1.00%, respectively.
(a) | Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price, reinvestment of 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. Visit www.gabelli.com for performance information as of the most recent month end. Returns would have been lower had the Adviser not reimbursed certain expenses of the Fund. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days after the date of purchase. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus, please visit our website at www.gabelli.com. The Class AAA Share NAVs are used to calculate performance for the periods prior to the issuance of Class I Shares on January 11, 2008. The actual performance of Class I Shares would have been higher due to lower expenses associated with this class of shares. The Russell 2500 Index is a market capitalization weighted index of 2,500 U.S. traded stocks of small and mid cap capitalization. The Russell 1000 Index is a market capitalization weighted index of 1,000 U.S. traded large capitalization stocks. The Morgan Stanley Capital International All Country World Index excluding the U.S (MSCI AC World Ex-U.S.) is a market capitalization weighted index of small, mid, and large capitalization stocks across developed and emerging markets, excluding U.S. stocks. The Blended Index consists of 50% of the Russell 2500 Index, 25% of the Russell 1000 Index, and 25% of the MSCI AC World Ex-U.S. Index. Dividends are considered reinvested. You cannot invest directly in an index. |
(b) | The Fund’s fiscal year ends September 30. |
(c) | On January 1, 2012, the Fund began operating under its current name. |
(d) | Russell 2500 Index performance are as of December 31, 2011. |
(e) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(f) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI FOCUS FIVE FUND CLASS AAA, THE BLENDED INDEX, AND THE RUSSELL 2500 INDEX
(Unaudited)
* | 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. |
3
The Gabelli Focus Five Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from April 1, 2015 through September 30, 2015 | 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 September 30, 2015.
Beginning Account Value 04/01/15 | Ending Account Value 09/30/15 | Annualized Expense Ratio | Expenses Paid During Period* | |||||||||||||
| ||||||||||||||||
The Gabelli Focus Five Fund |
| |||||||||||||||
| ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class AAA | $1,000.00 | $ 814.70 | 1.37% | $ 6.23 | ||||||||||||
Class A | $1,000.00 | $ 814.50 | 1.37% | $ 6.23 | ||||||||||||
Class C | $1,000.00 | $ 811.60 | 2.12% | $ 9.63 | ||||||||||||
Class I | $1,000.00 | $ 815.80 | 1.12% | $ 5.10 | ||||||||||||
Hypothetical 5% Return |
| |||||||||||||||
Class AAA | $1,000.00 | $1,018.20 | 1.37% | $ 6.93 | ||||||||||||
Class A | $1,000.00 | $1,018.20 | 1.37% | $ 6.93 | ||||||||||||
Class C | $1,000.00 | $1,014.44 | 2.12% | $10.71 | ||||||||||||
Class I | $1,000.00 | $1,019.45 | 1.12% | $ 5.67 |
* | 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 (183 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2015:
The Gabelli Focus Five Fund
Cable and Satellite | 16.8 | % | ||
Health Care | 14.1 | % | ||
Food and Beverage | 12.1 | % | ||
Specialty Chemicals | 11.3 | % | ||
Computer Software and Services | 8.5 | % | ||
Entertainment | 7.5 | % | ||
Diversified Industrial | 6.5 | % | ||
Business Services | 4.8 | % | ||
Retail | 4.4 | % | ||
Hotels and Gaming | 2.4 | % |
Consumer Products | 2.4 | % | ||
Financial Services | 2.3 | % | ||
Semiconductors | 2.2 | % | ||
Energy and Utilities | 2.2 | % | ||
Automotive | 1.5 | % | ||
U.S. Government Obligations | 1.2 | % | ||
Other Assets and Liabilities (Net) | (0.2 | )% | ||
|
| |||
|
100.0 |
% | ||
|
|
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. 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 SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
Portfolio Manager Biography
Daniel M. Miller has been the portfolio manager of The Gabelli Focus Five Fund since inception of the investment strategy on January 1, 2012. He is also a Managing Director of GAMCO Asset Management and Chairman of Gabelli & Company, the firm’s institutional research business. Mr. Miller joined the firm in 2002 and graduated magna cum laude with a degree in finance from the University of Miami in Coral Gables, Florida.
We have separated the portfolio manager’s commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio manager’s commentary is unrestricted. The financial statements and investment portfolio are mailed separately from the commentary. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.
5
The Gabelli Focus Five Fund
Schedule of Investments — September 30, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 99.0% | ||||||||||||
Automotive — 1.5% | ||||||||||||
20,000 | O’Reilly Automotive Inc.† | $ | 2,942,827 | $ | 5,000,000 | |||||||
|
|
|
| |||||||||
Business Services — 4.8% |
| |||||||||||
851,110 | The Interpublic Group of Companies Inc | 16,077,721 | 16,281,734 | |||||||||
|
|
|
| |||||||||
Cable and Satellite — 16.8% |
| |||||||||||
61,467 | Cablevision Systems Corp., Cl. A . | 1,451,133 | 1,995,833 | |||||||||
542,530 | EchoStar Corp., Cl. A† | 24,500,065 | 23,345,066 | |||||||||
778,613 | Liberty Global plc, Cl. C† | 26,580,311 | 31,938,705 | |||||||||
|
|
|
| |||||||||
52,531,509 | 57,279,604 | |||||||||||
|
|
|
| |||||||||
Computer Software and Services — 8.5% |
| |||||||||||
12,500 | Google Inc., Cl. C† | 7,566,982 | 7,605,250 | |||||||||
1,750,000 | Internap Corp.† | 12,889,568 | 10,727,500 | |||||||||
1,125,000 | RealD Inc.† | 10,936,665 | 10,811,250 | |||||||||
|
|
|
| |||||||||
31,393,215 | 29,144,000 | |||||||||||
|
|
|
| |||||||||
Consumer Products — 2.4% |
| |||||||||||
100,000 | Edgewell Personal Care Co. | 8,564,609 | 8,160,000 | |||||||||
|
|
|
| |||||||||
Diversified Industrial — 6.5% |
| |||||||||||
1,650,000 | API Technologies Corp.† | 3,613,908 | 3,580,500 | |||||||||
1,595,212 | Jason Industries Inc.†(a) | 13,544,607 | 6,987,028 | |||||||||
344,900 | Tyco International plc | 11,160,369 | 11,540,354 | |||||||||
|
|
|
| |||||||||
28,318,884 | 22,107,882 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities — 2.2% |
| |||||||||||
144,800 | CIRCOR International Inc. | 8,115,885 | 5,809,376 | |||||||||
200,000 | Weatherford International plc† | 2,037,394 | 1,696,000 | |||||||||
|
|
|
| |||||||||
10,153,279 | 7,505,376 | |||||||||||
|
|
|
| |||||||||
Entertainment — 7.5% |
| |||||||||||
895,475 | Take-Two Interactive Software Inc.† | 17,065,049 | 25,726,997 | |||||||||
|
|
|
| |||||||||
Financial Services — 2.3% |
| |||||||||||
85,000 | American International Group Inc. | 4,933,486 | 4,829,700 | |||||||||
79,600 | CIT Group Inc. | 2,970,259 | 3,186,388 | |||||||||
|
|
|
| |||||||||
7,903,745 | 8,016,088 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 12.1% |
| |||||||||||
1,925,000 | Boulder Brands Inc.† | 16,494,238 | 15,765,750 | |||||||||
970,000 | Maple Leaf Foods Inc. | 17,299,006 | 16,012,814 | |||||||||
163,899 | Post Holdings Inc.† | 5,658,030 | 9,686,431 | |||||||||
|
|
|
| |||||||||
39,451,274 | 41,464,995 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Health Care — 14.1% | ||||||||||||
409,800 | Alere Inc.† | $ | 15,689,395 | $ | 19,731,870 | |||||||
52,500 | Allergan plc† | 15,304,855 | 14,270,025 | |||||||||
7,639,940 | BioScrip Inc.†(a) | 40,168,998 | 14,286,688 | |||||||||
|
|
|
| |||||||||
71,163,248 | 48,288,583 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 2.4% |
| |||||||||||
450,000 | MGM Resorts International† | 8,911,872 | 8,302,500 | |||||||||
|
|
|
| |||||||||
Retail — 4.4% |
| |||||||||||
419,700 | Barnes & Noble Inc. | 6,609,562 | 5,082,567 | |||||||||
300,100 | CST Brands Inc. | 11,224,642 | 10,101,366 | |||||||||
|
|
|
| |||||||||
17,834,204 | 15,183,933 | |||||||||||
|
|
|
| |||||||||
Semiconductors — 2.2% |
| |||||||||||
375,000 | Integrated Device Technology Inc.† | 8,249,219 | 7,612,500 | |||||||||
|
|
|
| |||||||||
Specialty Chemicals — 11.3% |
| |||||||||||
1,000,100 | Chemtura Corp.† | 22,361,096 | 28,622,862 | |||||||||
300,000 | Methanex Corp. | 15,165,764 | 9,948,000 | |||||||||
|
|
|
| |||||||||
37,526,860 | 38,570,862 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS |
|
358,087,515 |
|
|
338,645,054 |
| ||||||
|
|
|
| |||||||||
Principal | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 1.2% | ||||||||||||
$3,990,000 | U.S. Treasury Bills, | 3,987,054 | 3,989,427 | |||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 100.2% | $ | 362,074,569 | 342,634,481 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — (0.2)% |
| (659,260 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0%. |
|
$ |
341,975,221 |
| ||||||||
|
|
(a) | Security considered an affiliated holding because the Fund owns at least 5% of its outstanding shares. |
† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
See accompanying notes to financial statements.
6
The Gabelli Focus Five Fund
Statement of Assets and Liabilities
September 30, 2015
Assets: | ||||
Investments, at value (cost $308,360,964) | $ | 321,360,765 | ||
Investments in affiliates, at value (cost $53,713,605) | 21,273,716 | |||
Cash | 51,398 | |||
Receivable for investments sold | 4,939,890 | |||
Receivable for Fund shares sold | 124,932 | |||
Dividends receivable | 18,756 | |||
Prepaid expenses | 36,654 | |||
|
| |||
Total Assets | 347,806,111 | |||
|
| |||
Liabilities: | ||||
Payable for Fund shares redeemed | 4,347,184 | |||
Payable for investments purchased | 971,913 | |||
Payable for investment advisory fees | 310,373 | |||
Payable for distribution fees | 84,434 | |||
Payable for accounting fees | 3,750 | |||
Other accrued expenses | 113,236 | |||
|
| |||
Total Liabilities | 5,830,890 | |||
|
| |||
Net Assets | $ | 341,975,221 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 367,431,252 | ||
Accumulated net investment loss | (3,069,864 | ) | ||
Accumulated net realized loss on investments, written options, and foreign currency transactions | (2,946,079 | ) | ||
Net unrealized depreciation on investments | (19,440,088 | ) | ||
|
| |||
Net Assets | $ | 341,975,221 | ||
|
| |||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($38,960,229 ÷ 3,247,784 shares outstanding; 100,000,000 shares authorized) | $ | 12.00 | ||
|
| |||
Class A: | ||||
Net Asset Value and redemption price per share ($57,987,257 ÷ 4,785,560 shares outstanding; 50,000,000 shares authorized) | $ | 12.12 | ||
|
| |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 12.86 | ||
|
| |||
Class C: | ||||
Net Asset Value and offering price per share ($70,273,781 ÷ 6,605,085 shares outstanding; 50,000,000 shares authorized) | $ | 10.64 | (a) | |
|
| |||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($174,753,954 ÷ 14,243,769 shares outstanding; 50,000,000 shares authorized) | $ | 12.27 | ||
|
|
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2015
Investment Income: | ||||
Dividends - unaffiliated (net of foreign withholding taxes of $97,993) | $ | 2,680,868 | ||
Interest | 7,013 | |||
|
| |||
Total Investment Income | 2,687,881 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 4,958,843 | |||
Distribution fees - Class AAA | 132,447 | |||
Distribution fees - Class A | 228,273 | |||
Distribution fees - Class C | 880,984 | |||
Shareholder services fees | 334,934 | |||
Registration expenses | 76,383 | |||
Shareholder communications expenses | 49,901 | |||
Custodian fees | 47,569 | |||
Accounting fees | 45,000 | |||
Directors’ fees | 14,413 | |||
Legal and audit fees | 6,500 | |||
Interest expense | 192 | |||
Miscellaneous expenses | 33,889 | |||
|
| |||
Total Expenses | 6,809,328 | |||
|
| |||
Expenses paid indirectly by broker (See Note 6) | (2,294 | ) | ||
|
| |||
Net Expenses | 6,807,034 | |||
|
| |||
Net Investment Loss | (4,119,153 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Written Options, and Foreign Currency: | ||||
Net realized loss on investments - unaffiliated | (146,059 | ) | ||
Net realized loss on investments - affiliated | (2,033,949 | ) | ||
Net realized gain on written options | 158,715 | |||
Net realized loss on foreign currency transactions | (2,902 | ) | ||
|
| |||
Net realized loss on investments, written options, and foreign currency transactions | (2,024,195 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation | (51,737,561 | ) | ||
on foreign currency translations | 200 | |||
|
| |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (51,737,361 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Written Options, and Foreign Currency | (53,761,556 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (57,880,709 | ) | |
|
|
See accompanying notes to financial statements.
7
The Gabelli Focus Five Fund
Statement of Changes in Net Assets
Year Ended | Year Ended | |||||||||||
September 30, 2015 | September 30, 2014 | |||||||||||
Operations: | ||||||||||||
Net investment loss | $ (4,119,153) | $ (3,147,592) | ||||||||||
Net realized gain/(loss) on investments, written options, and foreign currency transactions | (2,024,195) | 49,454,368 | ||||||||||
Net change in unrealized appreciation/depreciation on investments, written options, and foreign currency translations. | (51,737,361) | 7,201,953 | ||||||||||
|
| |||||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (57,880,709) | 53,508,729 | ||||||||||
|
| |||||||||||
Distributions to Shareholders: | ||||||||||||
Net realized gain | ||||||||||||
Class AAA | (4,590,959) | (613,993) | ||||||||||
Class A | (8,748,506) | (2,324,870) | ||||||||||
Class C | (8,227,387) | (788,409) | ||||||||||
Class I | (24,833,402) | (1,500,452) | ||||||||||
|
| |||||||||||
Total Distributions to Shareholders | (46,400,254) | (5,227,724) | ||||||||||
|
| |||||||||||
Capital Share Transactions: | ||||||||||||
Class AAA | (7,220,254) | 1,588,875 | ||||||||||
Class A | (28,863,265) | (112,908,016) | ||||||||||
Class C | 3,625,597 | 25,357,558 | ||||||||||
Class I | (90,452,273) | 198,370,157 | ||||||||||
|
| |||||||||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | (122,910,195) | 112,408,574 | ||||||||||
|
| |||||||||||
Redemption Fees | 4,497 | 5,655 | ||||||||||
|
| |||||||||||
Net Increase/(Decrease) in Net Assets | (227,186,661) | 160,695,234 | ||||||||||
Net Assets: | ||||||||||||
Beginning of year | 569,161,882 | 408,466,648 | ||||||||||
|
| |||||||||||
End of year (including undistributed net investment income of $0 and $0, respectively) | $341,975,221 | $569,161,882 | ||||||||||
|
|
See accompanying notes to financial statements.
8
The Gabelli Focus Five Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended 30 | Net Asset Beginning | Net Investment Loss (a)(b) | Net Realized and Investments | Total from Operations | Net Realized Gain on Investments | Total Distributions | Redemption Fees (b)(c) | Net Asset Value, End of Year | Total Return † | Net Assets End of Year | Net Investment Loss (a) | Expenses Reimburse- | Expenses Reimburse- | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $15.22 | $(0.12 | ) | $(1.81 | ) | $(1.93 | ) | $(1.29 | ) | $(1.29 | ) | $0.00 | $12.00 | (14.11 | )% | $38,960 | (0.83 | )% | 1.37 | % | 1.37%(e) | 73% | ||||||||||||||||||||||||||||||||
2014 | 13.72 | (0.09 | ) | 1.75 | 1.66 | (0.16 | ) | (0.16 | ) | 0.00 | 15.22 | 12.15 | 57,565 | (0.58 | ) | 1.38 | 1.38 | 94 | ||||||||||||||||||||||||||||||||||||
2013 | 11.11 | (0.14 | ) | 3.13 | 2.99 | (0.38 | ) | (0.38 | ) | 0.00 | 13.72 | 27.74 | 50,275 | (1.05 | ) | 1.54 | (f) | 1.54(f) | 69 | |||||||||||||||||||||||||||||||||||
2012 | 8.19 | (0.11 | ) | 3.10 | 2.99 | (0.07 | ) | (0.07 | ) | 0.00 | 11.11 | 36.71 | 11,714 | (1.09 | ) | 2.01 | 2.69(g) | 140 | ||||||||||||||||||||||||||||||||||||
2011 | 8.92 | (0.12 | ) | (0.61 | ) | (0.73 | ) | — | — | 0.00 | 8.19 | (8.18 | ) | 5,207 | (1.21 | ) | 2.01 | 2.80(g) | 40 | |||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $15.36 | $(0.12 | ) | $(1.83 | ) | $(1.95 | ) | $(1.29 | ) | $(1.29 | ) | $0.00 | $12.12 | (14.11 | )% | $57,987 | (0.83 | )% | 1.37 | % | 1.37%(e) | 73% | ||||||||||||||||||||||||||||||||
2014 | 13.85 | (0.09 | ) | 1.76 | 1.67 | (0.16 | ) | (0.16 | ) | 0.00 | 15.36 | 12.11 | 105,369 | (0.59 | ) | 1.38 | 1.38 | 94 | ||||||||||||||||||||||||||||||||||||
2013 | 11.21 | (0.14 | ) | 3.16 | 3.02 | (0.38 | ) | (0.38 | ) | 0.00 | 13.85 | 27.76 | 192,157 | (1.05 | ) | 1.54 | (f) | 1.54(f) | 69 | |||||||||||||||||||||||||||||||||||
2012 | 8.26 | (0.13 | ) | 3.15 | 3.02 | (0.07 | ) | (0.07 | ) | 0.00 | 11.21 | 36.76 | 7,574 | (1.20 | ) | 2.01 | 2.69(g) | 140 | ||||||||||||||||||||||||||||||||||||
2011 | 8.99 | (0.12 | ) | (0.61 | ) | (0.73 | ) | — | — | 0.00 | 8.26 | (8.12 | ) | 139 | (1.21 | ) | 2.01 | 2.80(g) | 40 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $13.73 | $(0.20 | ) | $(1.60 | ) | $(1.80 | ) | $(1.29 | ) | $(1.29 | ) | $0.00 | $10.64 | (14.74 | )% | $70,274 | (1.58 | )% | 2.12 | % | 2.12%(e) | 73% | ||||||||||||||||||||||||||||||||
2014 | 12.49 | (0.18 | ) | 1.58 | 1.40 | (0.16 | ) | (0.16 | ) | 0.00 | 13.73 | 11.25 | 87,443 | (1.31 | ) | 2.13 | 2.13 | 94 | ||||||||||||||||||||||||||||||||||||
2013 | 10.22 | (0.22 | ) | 2.87 | 2.65 | (0.38 | ) | (0.38 | ) | 0.00 | 12.49 | 26.80 | 55,865 | (1.79 | ) | 2.29 | (f) | 2.29(f) | 69 | |||||||||||||||||||||||||||||||||||
2012 | 7.59 | (0.17 | ) | 2.87 | 2.70 | (0.07 | ) | (0.07 | ) | 0.00 | 10.22 | 35.79 | 1,913 | (1.83 | ) | 2.76 | 3.44(g) | 140 | ||||||||||||||||||||||||||||||||||||
2011 | 8.33 | (0.18 | ) | (0.56 | ) | (0.74 | ) | — | — | 0.00 | 7.59 | (8.88 | ) | 192 | (1.96 | ) | 2.76 | 3.55(g) | 40 | |||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $15.50 | $(0.09 | ) | $(1.85 | ) | $(1.94 | ) | $(1.29 | ) | $(1.29 | ) | $0.00 | $12.27 | (13.90 | )% | $174,754 | (0.58 | )% | 1.12 | % | 1.12%(e) | 73% | ||||||||||||||||||||||||||||||||
2014 | 13.94 | (0.05 | ) | 1.77 | 1.72 | (0.16 | ) | (0.16 | ) | 0.00 | 15.50 | 12.39 | 318,785 | (0.30 | ) | 1.13 | 1.13 | 94 | ||||||||||||||||||||||||||||||||||||
2013 | 11.26 | (0.11 | ) | 3.17 | 3.06 | (0.38 | ) | (0.38 | ) | 0.00 | 13.94 | 28.00 | 110,170 | (0.79 | ) | 1.29 | (f) | 1.29(f) | 69 | |||||||||||||||||||||||||||||||||||
2012 | 8.27 | (0.09 | ) | 3.15 | 3.06 | (0.07 | ) | (0.07 | ) | 0.00 | 11.26 | 37.21 | 14,862 | (0.84 | ) | 1.76 | 2.44(g) | 140 | ||||||||||||||||||||||||||||||||||||
2011 | 8.98 | (0.10 | ) | (0.61 | ) | (0.71 | ) | — | — | 0.00 | 8.27 | (7.91 | ) | 82 | (0.96 | ) | 1.76 | 2.55(g) | 40 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect applicable sales charges. |
(a) | Due to capital share activity, net investment loss per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. |
(b) | Per share amounts have been calculated using the average shares outstanding method. |
(c) | Amount represents less than $0.005 per share. |
(d) | The Fund incurred interest expense during the year ended September 30, 2011. If interest expense had not been incurred, during the year the ratio of operating expenses to average net assets would have been 2.00% (Class AAA and Class A), 2.75% (Class C), and 1.75% (Class I), respectively. For the year ended September 30, 2013, there was no interest expense, and for the years ended September 30, 2015, 2014 and 2012, the effect of interest expense was minimal. |
(e) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the year ended September 30, 2015, there was no impact to the expense ratios. |
(f) | Under an expense deferral agreement with the Adviser, the Adviser recovered from the Fund $140,973 for the year ended September 30, 2013, representing previously reimbursed expenses from the Adviser. Had such payment not been made, the expense ratio would have been 1.48% (Class AAA and Class A), 2.23% (Class C), and 1.23% (Class I). |
(g) | During the years ended September 30, 2012 and 2011, expenses were voluntarily reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratio would have been as shown. |
See accompanying notes to financial statements.
9
The Gabelli Focus Five Fund
Notes to Financial Statements
1. Organization. The Gabelli Focus Five Fund is a series of Gabelli Equity Series Funds, Inc. (the “Corporation”).
The Corporation was incorporated on July 25, 1991 in Maryland. 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 three separately managed portfolios of the Corporation. The Fund seeks to provide a high level of capital appreciation. The Fund commenced investment operations on December 31, 2002.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its 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 a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty 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 fair valued as determined by the Board. Debt instruments having a maturity greater than sixty 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. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.
Securities and assets for which market quotations are not readily available are fair valued as determined by 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 with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt 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.
10
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of September 30, 2015 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 9/30/15 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $338,645,054 | — | $338,645,054 | |||||||||
U.S. Government Obligations | — | $3,989,427 | 3,989,427 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $338,645,054 | $3,989,427 | $342,634,481 | |||||||||
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have transfers between Level 1 and Level 2 during the year ended September 30, 2015.
The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.
There were no Level 3 investments held at September 30, 2015 or 2014.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding
11
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purposes of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or that, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.
The Fund’s derivative contracts held at September 30, 2015, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
Options. The Fund may purchase or write call or put options on securities or indices for the purpose of increasing the income of the Fund. As a writer of put options, the Fund receives a premium at the outset and then bears the risk of unfavorable changes in the price of the financial instrument underlying the option. The Fund would incur a loss if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. The Fund would realize a gain, to the extent of the premium, if the price of the financial instrument increases between those dates.
As a purchaser of put options, the Fund pays a premium for the right to sell to the seller of the put option the underlying security at a specified price. The seller of the put has the obligation to purchase the underlying security upon exercise at the exercise price. If the price of the underlying security declines, the Fund would realize a gain upon sale or exercise. If the price of the underlying security increases or stays the same, the Fund would realize a loss upon sale or at expiration date, but only to the extent of the premium paid.
If a written call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a written put option is exercised, the premium reduces the cost basis of the security. In the case of call options, the exercise prices are referred to as “in-the-money,” “at-the-money,” and “out-of-the-money,” respectively. The Fund may write (a) in-the-money call options when the Adviser expects that the price of the underlying security will remain stable or decline during the option period, (b) at-the-money call options when the Adviser expects that the price of the underlying
12
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
security will remain stable, decline, or advance moderately during the option period, and (c) out-of-the-money call options when the Adviser expects that the premiums received from writing the call option will be greater than the appreciation in the price of the underlying security above the exercise price. By writing a call option, the Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option. Out-of-the-money, at-the-money, and in-the-money put options (the reverse of call options as to the relation of exercise price to market price) may be utilized in the same market environments that such call options are used in equivalent transactions. At September 30, 2015, the Fund held no investments in equity options contracts.
The Fund’s volume of activity in equity options contracts during the year ended September 30, 2015 had an average monthly market value of approximately $38,167. Please refer to Note 5 for option activity during the year ended September 30, 2015.
For the year ended September 30, 2015, the effect of equity option positions can be found in the Statement of Operations under Net Realized and Unrealized Gain/(Loss) on Investments, Written Options, and Foreign Currency, within Net realized gain on written options.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at 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 purchase 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 inability 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 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/(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
13
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
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 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.
Distributions to Shareholders. 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 GAAP. 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. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to the write-off of current year net operating loss and the tax treatment of currency gains and losses. These reclassifications have no impact on the NAV of the Fund. For the year ended September 30, 2015, reclassifications were made to decrease accumulated net investment loss by $1,049,289 and decrease accumulated net realized loss on investments, written options, and foreign currency transactions by $2,901, with an offsetting adjustment to paid-in capital.
The tax character of distributions paid during the years ended September 30, 2015 and 2014 was as follows:
Year Ended September 30, 2015 | Year Ended September 30, 2014 | |||||||||
Distributions paid from: | ||||||||||
Ordinary income (inclusive of short term capital gains) | $ | 31,010,091 | $ | 3,953,466 | ||||||
Net long term capital gains | 15,390,163 | 1,274,258 | ||||||||
|
|
|
| |||||||
Total distributions paid | $ | 46,400,254 | $ | 5,227,724 | ||||||
|
|
|
|
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.
14
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
At September 30, 2015, the components of accumulated earnings/losses on a tax basis were as follows:
Net unrealized depreciation on investments | $ | (20,338,752 | ) | |
Qualified late year loss deferral | (5,117,279 | ) | ||
|
| |||
Total | $ | (25,456,031 | ) | |
|
|
The Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses.
At September 30, 2015, the temporary difference between book basis and tax basis net unrealized depreciation on investments was due to deferral of losses from wash sales for tax purposes.
The following summarizes the tax cost of investments and the related net unrealized depreciation at September 30, 2015:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation | |||||
Investments | $362,973,233 | $31,795,629 | $(52,134,381) | $(20,338,752) |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended September 30, 2015, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2015, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions. 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 Corporation pays each Director who is not considered an affiliated person an annual retainer of $18,000 plus $2,000 for each Board meeting attended, and they are reimbursed for any out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000 per meeting attended. The Chairman of the Audit Committee receives a $3,000 annual fee, and the Lead Director receives an annual fee of $2,000. A Director may receive a single meeting fee, allocated among the participating funds, for attending certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the “Plan”) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the “Distributor”), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, 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.
15
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
5. Portfolio Securities. Purchases and sales of securities during the year ended September 30, 2015, other than short term securities and U.S. Government obligations, aggregated $343,562,905 and $471,946,291, respectively.
Written options activity for the Fund for the year ended September 30, 2015 was as follows:
Number of Contracts | Premiums | |||||||||||||||
Options outstanding at September 30, 2014 | — | — | ||||||||||||||
Options written | 1,500 | $ | 230,305 | |||||||||||||
Options sold | (1,000 | ) | (175,825 | ) | ||||||||||||
Options expired | (20 | ) | (2,180 | ) | ||||||||||||
Options exercised | (480 | ) | (52,300 | ) | ||||||||||||
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|
|
| |||||||||||||
Options outstanding at September 30, 2015 | — | — | ||||||||||||||
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|
|
|
6. Transactions with Affiliates and Other Arrangements. During the year ended September 30, 2015, the Distributor retained a total of $73,668 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during the year ended September 30, 2015 was $2,294.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the year ended September 30, 2015, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.
7. Line of Credit. The Fund participates in an unsecured line of credit of up to $75,000,000 under which it may borrow up to 15% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a variable rate per annum equal to the overnight rate plus a spread, as determined and quoted by the custodian in its sole discretion at the time of the request, which rate may be subject to change from time to time at the sole discretion of the custodian. The overnight rate is defined as of any day, the higher of (a) the federal funds rate as in effect on that day and (b) the overnight LIBOR rate as in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At September 30, 2015, there were no borrowings under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the year ended September 30, 2015 was $12,337 with a weighted average interest rate of 1.16%. The maximum amount borrowed at any time during the year ended September 30, 2015 was $2,344,000.
8. Capital Stock. The Fund offers four classes of shares–Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%, and Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh 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 as an increase in paid-in capital.
16
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
The redemption fees retained by the Fund during the years ended September 30, 2015 and 2014, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2015 | Year Ended September 30, 2014 | |||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||
Shares sold | 613,887 | $ | 8,810,559 | 1,165,335 | $ | 17,210,697 | ||||||||||||||||||
Shares issued upon reinvestment of distributions | 305,052 | 4,411,053 | 40,471 | 591,275 | ||||||||||||||||||||
Shares redeemed | (1,454,097 | ) | (20,441,866 | ) | (1,086,847 | ) | (16,213,097 | ) | ||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||
Net increase/(decrease) | (535,158 | ) | $ | (7,220,254 | ) | 118,959 | $ | 1,588,875 | ||||||||||||||||
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| |||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 1,269,743 | $ | 18,577,441 | 5,805,861 | $ | 86,224,998 | ||||||||||||||||||
Shares issued upon reinvestment of distributions | 530,683 | 7,747,971 | 149,583 | 2,206,356 | ||||||||||||||||||||
Shares redeemed | (3,875,110 | ) | (55,188,677 | ) | (12,973,343 | ) | (201,339,370 | ) | ||||||||||||||||
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|
|
| |||||||||||||||||
Net decrease | (2,074,684 | ) | $ | (28,863,265 | ) | (7,017,899 | ) | $ | (112,908,016 | ) | ||||||||||||||
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|
| |||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 1,737,215 | $ | 22,450,442 | 2,603,836 | $ | 35,131,662 | ||||||||||||||||||
Shares issued upon reinvestment of distributions | 512,106 | 6,606,165 | 49,108 | 651,662 | ||||||||||||||||||||
Shares redeemed | (2,012,006 | ) | (25,431,010 | ) | (758,532 | ) | (10,425,766 | ) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Net increase | 237,315 | $ | 3,625,597 | 1,894,412 | $ | 25,357,558 | ||||||||||||||||||
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| |||||||||||||||||
Class I | ||||||||||||||||||||||||
Shares sold | 3,482,601 | $ | 51,033,834 | 15,518,313 | $ | 241,884,663 | ||||||||||||||||||
Shares issued upon reinvestment of distributions | 1,336,689 | 19,716,160 | 65,268 | 969,236 | ||||||||||||||||||||
Shares redeemed | (11,144,226 | ) | (161,202,267 | ) | (2,920,247 | ) | (44,483,742 | ) | ||||||||||||||||
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|
|
|
|
| |||||||||||||||||
Net increase/(decrease) | (6,324,936 | ) | $ | (90,452,273 | ) | 12,663,334 | $ | 198,370,157 | ||||||||||||||||
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9. Transactions in Securities of Affiliated Issuers. The 1940 Act defines affiliated issuers as those in which the Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the Fund’s transactions in the securities of these issuers during the year ended September 30, 2015 is set forth below:
Beginning Shares | Shares Purchased | Shares Sold | Ending Shares | Dividend Income | Realized Loss | Value at | Percent Owned of Shares Outstanding | |||||||||||||||||||||||||||||||
The Bon-Ton Stores Inc.* | 1,046,237 | — | (1,046,237) | — | — | — | — | — | ||||||||||||||||||||||||||||||
Bioscrip Inc.** | 1,700,000 | 6,100,000 | (160,060) | 7,639,940 | — | $ (795,838) | $14,286,688 | 11.12 | % | |||||||||||||||||||||||||||||
Jason Industries Inc.** | 1,018,200 | 806,765 | (229,753) | 1,595,212 | — | (1,238,111) | 6,987,028 | 7.19 | % | |||||||||||||||||||||||||||||
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|
| ||||||||||||||||||||||||||||||||||
— | $(2,033,949) | $21,273,716 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
* | Security is no longer considered affiliated at September 30, 2015. |
** | Security was not affiliated at September 30, 2014. |
10. 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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
17
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
11. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
18
The Gabelli Focus Five Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
The Gabelli Focus Five Fund
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Gabelli Focus Five Fund (the “Fund”), a series of Gabelli Equity Series Funds, Inc., as of September 30, 2015, 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 five 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.
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 September 30, 2015, by correspondence with the Fund’s custodian and brokers. 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 Gabelli Focus Five Fund, a series of Gabelli Equity Series Funds, Inc., at September 30, 2015, 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 its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York
November 27, 2015
19
The Gabelli Focus Five Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Focus Five Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office and Length of Time Served2 | Number of by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director4 | ||||
INTERESTED DIRECTORS3 : | ||||||||
Mario J. Gabelli, CFA Director and Age: 73 | Since 1991 | 31 | Chairman, Chief Executive Officer, and Chief Investment Officer–Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer–Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/ GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc. | Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications); Director of RLJ Acquisition Inc. (blank check company) (2011-2012) | ||||
John Gabelli Director Age: 71 | Since 1991 | 10 | Senior Vice President of G.research, LLC | — | ||||
INDEPENDENT DIRECTORS5 : | ||||||||
Anthony J. Colavita Director Age: 79 | Since 1991 | 37 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director Age: 71 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008- 2014); Director of LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director Age: 76 | Since 1991 | 6 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board, Belmont Savings Bank | ||||
Kuni Nakamura Director Age: 47 | Since 2009 | 18 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||
Anthony R. Pustorino Director Age: 90 | Since 1991 | 13 | Certified Public Accountant; Professor Emeritus, Pace University | Director of LGL Group, Inc. (diversified manufacturing) (2004-2011) | ||||
Anthonie C. van Ekris Director Age: 81 | Since 1991 | 22 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/ export company) | — | ||||
Salvatore J. Zizza Director Age: 69 | Since 2001 | 31 | President of Zizza & Associates Corp. (financial consulting); Chairman of Harbor Diversified, Inc. (pharmaceuticals); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Bergen Cove Realty Inc.; Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014) | Director and Vice Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals); Director, Chairman, and CEO of General Employment Enterprises (staffing services) (2009-2012) |
20
The Gabelli Focus Five Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) and Age | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
Bruce N. Alpert President Age: 63 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of several registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008; Director of Teton Advisors, Inc., 1998-2012; Chairman of Teton Advisors, Inc., 2008-2010; President of Teton Advisors, Inc., 1998-2008 | ||
Andrea R. Mango Secretary Age: 43 | Since 2013 | Counsel of Gabelli Funds, LLC since 2013; Secretary of all registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of all closed-end funds within the Gabelli/GAMCO Fund Complex since 2014; Corporate Vice President within the Corporate Compliance Department of New York Life Insurance Company, 2011-2013; Vice President and Counsel of Deutsche Bank, 2006-2011 | ||
Agnes Mullady Treasurer Age: 57 | Since 2006 | President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex | ||
Richard J. Walz Chief Compliance Officer Age: 56 | Since 2013 | Chief Compliance Officer of all of the registered investment companies within the Gabelli/ GAMCO Fund Complex since 2013; Chief Compliance Officer of AEGON USA Investment Management, 2011-2013; Chief Compliance Officer of Cutwater Asset Management, 2004- 2011 |
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 Fund’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. |
3 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’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, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
21
The Gabelli Focus Five Fund
Additional Fund Information (Unaudited) (Continued)
2015 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended September 30, 2015, the Fund paid to shareholders ordinary income distributions (comprised of short term capital gains) totaling $31,010,091 for each class of shares, and long term capital gains totaling $15,390,163, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors. For the year ended September 30, 2015, 11.21% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 13.00% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 100% of the ordinary income distribution as qualified short term gain pursuant to the American Jobs Creation Act of 2004.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
22
Gabelli/GAMCO 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 GAMCO Asset Management 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 fund shareholder?
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:
● | 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. |
● | 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. 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 website, 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 Equity Series Funds, Inc.
THE GABELLI FOCUS FIVE FUND
One Corporate Center
Rye, New York 10580-1422
t 800-GABELLI (800-422-3554)
f 914-921-5118
e info@gabelli.com
GABELLI.COM
Net Asset Value per share available daily
by calling 800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS |
Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc.
Anthony J. Colavita President, Anthony J. Colavita, P.C.
Vincent D. Enright Former Senior Vice President and Chief Financial Officer, KeySpan Corp.
John D. Gabelli Senior Vice President, G.research, LLC
Robert J. Morrissey Partner, Morrissey, Hawkins & Lynch
Kuni Nakamura President, Advanced Polymer, Inc.
Anthony R. Pustorino Certified Public Accountant, Professor Emeritus, Pace University | Anthonie C. van Ekris Chairman, BALMAC International, Inc.
Salvatore J. Zizza Chairman, Zizza & Associates Corp.
OFFICERS
Bruce N. Alpert President
Andrea R. Mango Secretary
Agnes Mullady Treasurer
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR
G.distributors, LLC
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP |
This report is submitted for the general information of the shareholders of The Gabelli Focus Five Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
GAB840Q315AR
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 Anthony R. Pustorino is qualified to serve as an audit committee financial expert serving on its audit committee and that he is “independent.” | ||||
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 $82,500 in 2014 and $84,900 in 2015. | |||
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 2014 and $0 in 2015. |
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 $10,500 in 2014 and $10,800 in 2015. 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 $34,145 in 2014 and $34,038 in 2015. The fees relate to Passive Foreign Investment Company identification database subscription fees billed on an annual basis. | |||
(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 registered public accounting firm to the registrant and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm 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 registered public accounting firm’s 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 permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (ii) 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) 100% | ||||
(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 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 $44,645 in 2014 and $44,838 in 2015. | |||
(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. Investments. |
(a) | 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. | |||
(b) | Not applicable. |
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 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) 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. | |||
(12.other) Not applicable. |
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) Gabelli Equity Series Funds, Inc.
By (Signature and Title)* /s/ Bruce N. Alpert
Bruce N. Alpert, Principal Executive Officer
Date 12/04/2015
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
Date 12/04/2015
By (Signature and Title)* /s/ Agnes Mullady
Agnes Mullady, Principal Financial Officer and Treasurer
Date 12/04/2015
* | Print the name and title of each signing officer under his or her signature. |