UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-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: March 31, 2019
FormN-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 Rule30e-1 under the Investment Company Act of 1940 (17 CFR270.30e-1). The Commission may use the information provided on FormN-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by FormN-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in FormN-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, 450 Fifth Street, NW, Washington, DC 20549-0609. 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
Semiannual Report — March 31, 2019
To Our Shareholders,
For the six months ended March 31, 2019, the net asset value (NAV) per Class AAA Share of The Gabelli Equity Income Fund decreased 2.4% compared with a decrease of 1.7% for the Standard & Poor’s (S&P) 500 Index. Other classes of shares are available. See below for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 2019.
Comparative Results
Average Annual Returns through March 31, 2019 (a)(b) (Unaudited) |
| Since | ||||||||||||||||||||||||||
Inception | ||||||||||||||||||||||||||||
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | (01/02/92) | |||||||||||||||||||||||
ClassAAA(GABEX) | (2.36 | )% | 2.37 | % | 4.99 | % | 12.59 | % | 7.34 | % | 9.59 | % | ||||||||||||||||
S&P 500 Index | (1.72 | ) | 9.50 | 10.91 | 15.92 | 8.57 | 9.48 | (c) | ||||||||||||||||||||
Nasdaq Composite Index | (3.38 | ) | 10.65 | 14.38 | 19.02 | 10.73 | 10.77 | (c) | ||||||||||||||||||||
Lipper Equity Income Fund Average | (0.52 | ) | 6.94 | 7.85 | 13.69 | 7.38 | 8.41 | |||||||||||||||||||||
Class A (GCAEX) | (2.37 | ) | 2.38 | 4.98 | 12.58 | 7.34 | 9.58 | |||||||||||||||||||||
With sales charge (d) | (7.99 | ) | (3.51 | ) | 3.75 | 11.92 | 6.91 | 9.34 | ||||||||||||||||||||
Class C (GCCEX) | (2.73 | ) | 1.64 | 4.20 | 11.76 | 6.55 | 9.13 | |||||||||||||||||||||
With contingent deferred sales charge (e) | (3.71 | ) | 0.64 | 4.20 | 11.76 | 6.55 | 9.13 | |||||||||||||||||||||
Class I (GCIEX) | (2.23 | ) | 2.64 | 5.25 | 12.87 | 7.55 | 9.70 | |||||||||||||||||||||
In the current prospectuses dated January 28, 2019, the expense ratios for Class AAA, A, C, and I Shares are 1.41%, 1.41%, 2.16%, and 1.16%, respectively. See page 11 for the expense ratios for the six months ended March 31, 2019. Class AAA and Class I Shares do not have a sales charge. The maximum sales charge for Class A Shares and Class 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 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 our website at www.gabelli.com.TheClass 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) S&P 500 Index and Nasdaq Composite Index since inception performance figures are as of December 31, 1991. (d) Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. (e) Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase.
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Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.gabelli.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. To elect to receive all future reports on paper free of charge, please contact your financial intermediary, or, if you invest directly with the Fund, you may call800-422-3554 or send an email request to info@gabelli.com.
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The Gabelli Equity Income Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2018 through March 31, 2019 | 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 informationabout 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’sactualreturn 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 providesinformation 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 isnot 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.
Beginning | Ending | Annualized | Expenses | |||||||||||||
Account Value | Account Value | Expense | Paid During | |||||||||||||
10/01/18 | 03/31/19 | Ratio | Period* | |||||||||||||
The Gabelli Equity Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class AAA | $1,000.00 | $ | 976.40 | 1.50 | % | $ | 7.39 | |||||||||
Class A | $1,000.00 | $ | 976.30 | 1.50 | % | $ | 7.39 | |||||||||
Class C | $1,000.00 | $ | 972.70 | 2.25 | % | $ | 11.07 | |||||||||
Class I | $1,000.00 | $ | 977.70 | 1.25 | % | $ | 6.16 | |||||||||
Hypothetical 5% Return |
| |||||||||||||||
Class AAA | $1,000.00 | $ | 1,017.45 | 1.50 | % | $ | 7.54 | |||||||||
Class A | $1,000.00 | $ | 1,017.45 | 1.50 | % | $ | 7.54 | |||||||||
Class C | $1,000.00 | $ | 1,013.71 | 2.25 | % | $ | 11.30 | |||||||||
Class I | $1,000.00 | $ | 1,018.70 | 1.25 | % | $ | 6.29 |
* | 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 (182 days), then divided by 365. |
2
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2019:
The Gabelli Equity Income Fund
Food and Beverage | 18.6 | % | ||
Financial Services | 14.6 | % | ||
Consumer Products | 6.1 | % | ||
Health Care | 5.4 | % | ||
Retail | 5.0 | % | ||
Diversified Industrial | 4.4 | % | ||
Telecommunications | 4.3 | % | ||
Energy and Utilities: Oil | 4.0 | % | ||
Business Services | 3.7 | % | ||
Automotive: Parts and Accessories | 3.6 | % | ||
Equipment and Supplies | 2.8 | % | ||
Broadcasting | 2.5 | % | ||
Aerospace | 2.2 | % | ||
Energy and Utilities: Natural Gas | 2.1 | % | ||
Building and Construction | 1.8 | % | ||
Machinery | 1.7 | % | ||
Computer Software and Services. | 1.6 | % | ||
Entertainment | 1.4 | % | ||
Energy and Utilities: Services | 1.2 | % | ||
Electronics. | 1.2 | % | ||
Transportation | 1.1 | % | ||
Energy and Utilities: Integrated. | 0.9 | % | ||
Computer Hardware | 0.9 | % |
Metals and Mining | 0.9 | % | ||
Environmental Services | 0.8 | % | ||
Specialty Chemicals | 0.8 | % | ||
Automotive | 0.8 | % | ||
Closed-End Funds. | 0.8 | % | ||
Wireless Communications | 0.8 | % | ||
Cable and Satellite | 0.7 | % | ||
Paper and Forest Products | 0.7 | % | ||
Hotels and Gaming | 0.6 | % | ||
Energy and Utilities: Electric | 0.6 | % | ||
Agriculture | 0.5 | % | ||
Aviation: Parts and Services | 0.4 | % | ||
Energy and Utilities: Water | 0.2 | % | ||
Communications Equipment | 0.2 | % | ||
Consumer Services | 0.2 | % | ||
Industrials | 0.1 | % | ||
Real Estate | 0.0 | %* | ||
Publishing | 0.0 | %* | ||
Other Assets and Liabilities (Net). | (0.2 | )% | ||
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100.0 | % | |||
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* | 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 FormN-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at800-GABELLI(800-422-3554). The Fund’s FormN-PORT 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 calling800-SEC-0330.
Proxy Voting
The Fund files FormN-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) calling800-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.
3
The Gabelli Equity Income Fund
Schedule of Investments — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||||||
COMMON STOCKS — 99.3% |
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Aerospace — 2.2% | ||||||||||||||||
60,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 327,628 | $ | 2,131,800 | |||||||||||
2,000 | Lockheed Martin Corp. | 47,350 | 600,320 | |||||||||||||
10,000 | Raytheon Co. | 279,200 | 1,820,800 | |||||||||||||
45,000 | Rockwell Automation Inc. | 1,419,242 | 7,895,700 | |||||||||||||
670,000 | Rolls-Royce Holdings plc | 4,496,695 | 7,881,737 | |||||||||||||
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6,570,115 | 20,330,357 | |||||||||||||||
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Agriculture — 0.5% | ||||||||||||||||
90,000 | Archer-Daniels-Midland Co. | 2,386,667 | 3,881,700 | |||||||||||||
12,000 | The Mosaic Co. | 186,246 | 327,720 | |||||||||||||
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2,572,913 | 4,209,420 | |||||||||||||||
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Automotive — 0.8% | ||||||||||||||||
161,000 | Navistar International Corp.† | 3,004,261 | 5,200,300 | |||||||||||||
30,000 | PACCAR Inc. | 1,348,822 | 2,044,200 | |||||||||||||
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4,353,083 | 7,244,500 | |||||||||||||||
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Automotive: Parts and Accessories — 3.6% |
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145,000 | Dana Inc. | 2,262,345 | 2,572,300 | |||||||||||||
10,500 | Garrett Motion Inc.† | 30,178 | 154,665 | |||||||||||||
265,000 | Genuine Parts Co. | 10,890,686 | 29,687,950 | |||||||||||||
300 | O’Reilly Automotive Inc.† | 7,524 | 116,490 | |||||||||||||
15,000 | Tenneco Inc., Cl. A | 224,084 | 332,400 | |||||||||||||
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13,414,817 | 32,863,805 | |||||||||||||||
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Aviation: Parts and Services — 0.4% |
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29,000 | United Technologies Corp. | 1,453,950 | 3,737,810 | |||||||||||||
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Broadcasting — 2.5% | ||||||||||||||||
347,000 | CBS Corp., Cl. A, Voting | 8,241,275 | 16,520,670 | |||||||||||||
65,000 | Liberty Global plc, Cl. A† | 1,470,230 | 1,619,800 | |||||||||||||
135,000 | Liberty Global plc, Cl. C† | 2,978,102 | 3,268,350 | |||||||||||||
36,000 | MSG Networks Inc., Cl. A† | 134,967 | 783,000 | |||||||||||||
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12,824,574 | 22,191,820 | |||||||||||||||
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Building and Construction — 1.8% |
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12,333 | Arcosa Inc. | 160,511 | 376,773 | |||||||||||||
164,000 | Fortune Brands Home & Security Inc. | 1,550,317 | 7,808,040 | |||||||||||||
45,800 | Herc Holdings Inc.† | 1,447,522 | 1,785,284 | |||||||||||||
160,000 | Johnson Controls International plc | 3,072,396 | 5,910,400 | |||||||||||||
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6,230,746 | 15,880,497 | |||||||||||||||
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Business Services — 3.7% |
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31,500 | Automatic Data Processing Inc. | 1,192,888 | 5,031,810 | |||||||||||||
86,500 | Mastercard Inc., Cl. A | 702,511 | 20,366,425 | |||||||||||||
2,400 | MSC Industrial Direct Co. Inc., Cl. A | 165,490 | 198,504 | |||||||||||||
40,000 | Pentair plc | 833,620 | 1,780,400 |
Shares | Cost | Market Value | ||||||||||||||
27,500 | S&P Global Inc. | $ | 1,131,167 | $ | 5,790,125 | |||||||||||
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4,025,676 | 33,167,264 | |||||||||||||||
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Cable and Satellite — 0.7% | ||||||||||||||||
10,000 | AMC Networks Inc., Cl. A† | 389,742 | 567,600 | |||||||||||||
165,000 | DISH Network Corp., Cl. A† | 3,263,481 | 5,228,850 | |||||||||||||
16,000 | EchoStar Corp., Cl. A† | 478,840 | 583,200 | |||||||||||||
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4,132,063 | 6,379,650 | |||||||||||||||
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Communications Equipment — 0.2% |
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46,000 | Corning Inc. | 527,588 | 1,522,600 | |||||||||||||
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Computer Hardware — 0.9% | ||||||||||||||||
17,000 | Apple Inc. | 1,245,086 | 3,229,150 | |||||||||||||
34,000 | International Business Machines Corp. | 2,670,123 | 4,797,400 | |||||||||||||
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3,915,209 | 8,026,550 | |||||||||||||||
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Computer Software and Services — 1.6% |
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50,000 | Fidelity National Information Services Inc. | 761,410 | 5,655,000 | |||||||||||||
190,000 | Hewlett Packard Enterprise Co. | 1,218,153 | 2,931,700 | |||||||||||||
48,000 | Microsoft Corp. | 1,341,120 | 5,661,120 | |||||||||||||
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3,320,683 | 14,247,820 | |||||||||||||||
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Consumer Products — 6.1% | ||||||||||||||||
44,000 | Altria Group Inc. | 517,039 | 2,526,920 | |||||||||||||
58,000 | Edgewell Personal Care Co.† | 1,998,705 | 2,545,620 | |||||||||||||
39,000 | Energizer Holdings Inc. | 819,610 | 1,752,270 | |||||||||||||
27,000 | Essity AB, Cl. A | 436,838 | 776,838 | |||||||||||||
2,000 | National Presto Industries Inc. | 60,046 | 217,100 | |||||||||||||
48,000 | Philip Morris International Inc. | 1,469,196 | 4,242,720 | |||||||||||||
56,000 | Reckitt Benckiser Group plc | 1,694,223 | 4,654,875 | |||||||||||||
678,000 | Swedish Match AB | 8,074,724 | 34,558,872 | |||||||||||||
70,000 | Unilever NV | 1,381,490 | 4,080,300 | |||||||||||||
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16,451,871 | 55,355,515 | |||||||||||||||
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Consumer Services — 0.2% | ||||||||||||||||
2,700 | Allegion plc | 37,048 | 244,917 | |||||||||||||
30,000 | Rollins Inc. | 44,741 | 1,248,600 | |||||||||||||
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81,789 | 1,493,517 | |||||||||||||||
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Diversified Industrial — 4.4% |
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80,000 | Crane Co. | 2,475,345 | 6,769,600 | |||||||||||||
68,000 | Eaton Corp. plc | 2,885,876 | 5,478,080 | |||||||||||||
33,000 | Honeywell International Inc. | 709,463 | 5,244,360 | |||||||||||||
50,000 | ITT Inc. | 1,004,526 | 2,900,000 | |||||||||||||
50,000 | Jardine Matheson Holdings Ltd. | 2,372,853 | 3,118,000 | |||||||||||||
178,000 | Jardine Strategic Holdings Ltd. | 4,191,229 | 6,662,540 | |||||||||||||
38,000 | nVent Electric plc | 365,955 | 1,025,240 | |||||||||||||
120,000 | Textron Inc. | 763,372 | 6,079,200 | |||||||||||||
300,000 | Toray Industries Inc. | 2,031,612 | 1,913,471 |
See accompanying notes to financial statements.
4
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||||||
COMMON STOCKS (Continued) |
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Diversified Industrial (Continued) |
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37,000 | Trinity Industries Inc. | $ | 462,238 | $ | 804,010 | |||||||||||
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17,262,469 | 39,994,501 | |||||||||||||||
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Electronics — 1.2% | ||||||||||||||||
35,000 | Sony Corp. | 897,245 | 1,466,886 | |||||||||||||
82,000 | Sony Corp., ADR | 1,940,881 | 3,463,680 | |||||||||||||
60,000 | TE Connectivity Ltd. | 1,996,558 | 4,845,000 | |||||||||||||
10,000 | Texas Instruments Inc. | 147,000 | 1,060,700 | |||||||||||||
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4,981,684 | 10,836,266 | |||||||||||||||
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Energy and Utilities: Electric — 0.6% |
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1,000 | American Electric Power Co. Inc. | 34,670 | 83,750 | |||||||||||||
6,000 | Avangrid Inc. | 117,823 | 302,100 | |||||||||||||
45,000 | El Paso Electric Co. | 351,450 | 2,646,900 | |||||||||||||
45,000 | Korea Electric Power Corp., ADR† | 574,378 | 585,450 | |||||||||||||
200,000 | Texas Competitive Electric Holdings Co. LLC, Escrow†(a) | 0 | 0 | |||||||||||||
100,000 | The AES Corp. | 419,608 | 1,808,000 | |||||||||||||
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1,497,929 | 5,426,200 | |||||||||||||||
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Energy and Utilities: Integrated — 0.9% |
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168,000 | Energy Transfer LP | 583,544 | 2,582,160 | |||||||||||||
29,000 | Eni SpA | 304,221 | 512,492 | |||||||||||||
6,500 | Iberdrola SA, ADR | 98,020 | 228,670 | |||||||||||||
60,000 | OGE Energy Corp. | 800,122 | 2,587,200 | |||||||||||||
56,000 | PNM Resources Inc. | 576,150 | 2,651,040 | |||||||||||||
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2,362,057 | 8,561,562 | |||||||||||||||
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Energy and Utilities: Natural Gas — 2.1% |
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1,200 | Atmos Energy Corp. | 31,565 | 123,516 | |||||||||||||
168,000 | National Fuel Gas Co. | 7,053,664 | 10,241,280 | |||||||||||||
14,000 | ONE Gas Inc. | 58,650 | 1,246,420 | |||||||||||||
89,000 | ONEOK Inc. | 812,110 | 6,215,760 | |||||||||||||
12,000 | Southwest Gas Holdings Inc. | 246,965 | 987,120 | |||||||||||||
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8,202,954 | 18,814,096 | |||||||||||||||
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Energy and Utilities: Oil — 4.0% |
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116,000 | Anadarko Petroleum Corp. | 5,260,786 | 5,275,680 | |||||||||||||
100,000 | Chevron Corp. | 3,963,114 | 12,318,000 | |||||||||||||
15,000 | ConocoPhillips | 274,713 | 1,001,100 | |||||||||||||
37,000 | Devon Energy Corp. | 1,040,962 | 1,167,720 | |||||||||||||
30,000 | Exxon Mobil Corp. | 581,525 | 2,424,000 | |||||||||||||
90,000 | Hess Corp. | 4,403,532 | 5,420,700 | |||||||||||||
21,000 | Marathon Petroleum Corp. | 287,339 | 1,256,850 | |||||||||||||
32,000 | Occidental Petroleum Corp. | 1,119,589 | 2,118,400 | |||||||||||||
74,000 | Royal Dutch Shell plc, Cl. A, ADR | 3,191,683 | 4,631,660 |
Shares | Cost | Market Value | ||||||||||||||
17,000 | TOTAL SA, ADR | $ | 282,789 | $ | 946,050 | |||||||||||
|
|
|
| |||||||||||||
20,406,032 | 36,560,160 | |||||||||||||||
|
|
|
| |||||||||||||
Energy and Utilities: Services — 1.2% |
| |||||||||||||||
340,000 | Halliburton Co. | 9,983,669 | 9,962,000 | |||||||||||||
50,000 | Oceaneering International Inc.† | 787,822 | 788,500 | |||||||||||||
10,000 | Schlumberger Ltd. | 206,840 | 435,700 | |||||||||||||
|
|
|
| |||||||||||||
10,978,331 | 11,186,200 | |||||||||||||||
|
|
|
| |||||||||||||
Energy and Utilities: Water — 0.2% |
| |||||||||||||||
14,000 | Aqua America Inc. | 103,154 | 510,160 | |||||||||||||
70,000 | Severn Trent plc | 1,834,583 | 1,801,558 | |||||||||||||
|
|
|
| |||||||||||||
1,937,737 | 2,311,718 | |||||||||||||||
|
|
|
| |||||||||||||
Entertainment — 1.4% | ||||||||||||||||
65,000 | Grupo Televisa SAB, ADR | 1,011,364 | 718,900 | |||||||||||||
12,000 | The Madison Square Garden Co., Cl. A† | 347,057 | 3,517,560 | |||||||||||||
260,000 | Viacom Inc., Cl. A | 10,056,475 | 8,437,000 | |||||||||||||
|
|
|
| |||||||||||||
11,414,896 | 12,673,460 | |||||||||||||||
|
|
|
| |||||||||||||
Environmental Services — 0.8% |
| |||||||||||||||
43,000 | Republic Services Inc. | 1,450,166 | 3,456,340 | |||||||||||||
38,000 | Waste Management Inc. | 1,145,946 | 3,948,580 | |||||||||||||
|
|
|
| |||||||||||||
2,596,112 | 7,404,920 | |||||||||||||||
|
|
|
| |||||||||||||
Equipment and Supplies — 2.8% |
| |||||||||||||||
17,000 | A.O. Smith Corp. | 50,180 | 906,440 | |||||||||||||
16,346 | Danaher Corp. | 476,946 | 2,157,999 | |||||||||||||
179,000 | Flowserve Corp. | 2,258,602 | 8,080,060 | |||||||||||||
60,000 | Graco Inc. | 1,006,940 | 2,971,200 | |||||||||||||
11,000 | Ingersoll-Rand plc | 222,627 | 1,187,450 | |||||||||||||
22,000 | Minerals Technologies Inc. | 757,033 | 1,293,380 | |||||||||||||
170,000 | Mueller Industries Inc. | 3,284,149 | 5,327,800 | |||||||||||||
16,000 | Parker-Hannifin Corp. | 835,168 | 2,745,920 | |||||||||||||
11,000 | Tenaris SA, ADR | 226,140 | 310,750 | |||||||||||||
|
|
|
| |||||||||||||
9,117,785 | 24,980,999 | |||||||||||||||
|
|
|
| |||||||||||||
Financial Services — 14.6% |
| |||||||||||||||
6,300 | Alleghany Corp.† | 969,808 | 3,858,120 | |||||||||||||
28,000 | AllianceBernstein Holding LP | 281,113 | 808,920 | |||||||||||||
64,000 | American Express Co.(b) | 1,322,537 | 6,995,200 | |||||||||||||
10,000 | American International Group Inc. | 228,336 | 430,600 | |||||||||||||
20,000 | Argo Group International Holdings Ltd. | 393,454 | 1,413,200 | |||||||||||||
5,195 | Banco Santander Chile, ADR | 29,250 | 154,551 | |||||||||||||
9,393 | Banco Santander SA, ADR | 33,997 | 43,490 | |||||||||||||
170,000 | Bank of America Corp. | 1,104,015 | 4,690,300 | |||||||||||||
13,056 | BNP Paribas SA | 580,935 | 624,051 | |||||||||||||
37,000 | Eaton Vance Corp. | 1,048,071 | 1,491,470 | |||||||||||||
28,000 | Fidelity Southern Corp. | 239,312 | 766,920 |
See accompanying notes to financial statements.
5
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||||||
COMMON STOCKS (Continued) |
| |||||||||||||||
Financial Services (Continued) |
| |||||||||||||||
50,000 | Interactive Brokers Group Inc., Cl. A | $ | 752,861 | $ | 2,594,000 | |||||||||||
15,000 | Jefferies Financial Group Inc. | 263,160 | 281,850 | |||||||||||||
23,000 | JPMorgan Chase & Co. | 446,329 | 2,328,290 | |||||||||||||
68,000 | Julius Baer Group Ltd. | 2,230,242 | 2,747,316 | |||||||||||||
80,000 | Kinnevik AB, Cl. A | 1,537,659 | 2,112,441 | |||||||||||||
120,000 | Legg Mason Inc. | 2,067,628 | 3,284,400 | |||||||||||||
100,000 | Loews Corp. | 3,791,680 | 4,793,000 | |||||||||||||
40,000 | M&T Bank Corp. | 3,327,363 | 6,280,800 | |||||||||||||
77,000 | Marsh & McLennan Cos. Inc. | 2,236,745 | 7,230,300 | |||||||||||||
160,000 | Morgan Stanley | 3,425,606 | 6,752,000 | |||||||||||||
150,000 | Navient Corp. | 1,199,502 | 1,735,500 | |||||||||||||
10,000 | Och-Ziff Capital Management Group LLC, Cl. A | 207,844 | 164,100 | |||||||||||||
38,000 | Oritani Financial Corp. | 380,000 | 631,940 | |||||||||||||
10,000 | Popular Inc. | 178,910 | 521,300 | |||||||||||||
175,000 | SLM Corp. | 854,604 | 1,734,250 | |||||||||||||
134,000 | State Street Corp. | 6,111,131 | 8,818,540 | |||||||||||||
275,000 | Sterling Bancorp | 2,964,139 | 5,123,250 | |||||||||||||
8,000 | T. Rowe Price Group Inc. | 148,674 | 800,960 | |||||||||||||
76,000 | TD Ameritrade Holding Corp. | 1,268,664 | 3,799,240 | |||||||||||||
425,000 | The Bank of New York Mellon Corp.(b) | 10,849,321 | 21,432,750 | |||||||||||||
18,500 | The Goldman Sachs Group Inc. | 2,239,746 | 3,551,815 | |||||||||||||
64,000 | The Hartford Financial Services Group Inc. | 2,008,157 | 3,182,080 | |||||||||||||
96,000 | The PNC Financial Services Group Inc. | 4,938,114 | 11,775,360 | |||||||||||||
5,000 | The Travelers Companies Inc. | 198,991 | 685,800 | |||||||||||||
51,000 | Waddell & Reed Financial Inc., Cl. A | 841,409 | 881,790 | |||||||||||||
145,000 | Wells Fargo & Co. | 4,161,050 | 7,006,400 | |||||||||||||
|
|
|
| |||||||||||||
64,860,357 | 131,526,294 | |||||||||||||||
|
|
|
| |||||||||||||
Food and Beverage — 18.6% |
| |||||||||||||||
2,000 | Ajinomoto Co. Inc. | 32,542 | 31,923 | |||||||||||||
1,000 | Anheuser-Busch InBev SA/NV | 15,876 | 83,862 | |||||||||||||
348,000 | Brown-Forman Corp., Cl. A | 5,247,982 | 17,807,160 | |||||||||||||
3,000 | Brown-Forman Corp., Cl. B | 55,604 | 158,340 | |||||||||||||
146,000 | Campbell Soup Co. | 4,572,584 | 5,566,980 | |||||||||||||
80,000 | Coca-Cola Amatil Ltd., ADR | 246,845 | 488,800 | |||||||||||||
20,000 | Coca-Cola European Partners plc | 450,000 | 1,034,800 | |||||||||||||
13,500 | Coca-Cola Femsa SAB de CV, ADR | 496,715 | 891,000 | |||||||||||||
7,500 | Constellation Brands Inc., Cl. A | 93,025 | 1,314,975 | |||||||||||||
78,000 | Danone SA | 3,676,981 | 6,010,163 | |||||||||||||
810,000 | Davide Campari-Milano SpA | 2,747,502 | 7,950,441 | |||||||||||||
84,000 | Diageo plc, ADR | 4,605,739 | 13,743,240 |
Shares | Cost | Market Value | ||||||||||||||
110,000 | Fomento Economico Mexicano SAB de CV, ADR | $ | 2,587,702 | $ | 10,150,800 | |||||||||||
190,000 | General Mills Inc. | 4,880,395 | 9,832,500 | |||||||||||||
2,150,000 | Grupo Bimbo SAB de CV, Cl. A | 1,721,513 | 4,484,924 | |||||||||||||
130,000 | Heineken NV | 6,009,568 | 13,719,516 | |||||||||||||
180,000 | ITO EN Ltd. | 3,454,318 | 9,338,627 | |||||||||||||
35,500 | Kellogg Co. | 1,826,705 | 2,036,990 | |||||||||||||
2,000 | McCormick & Co. Inc., Cl. V | 137,120 | 299,700 | |||||||||||||
22,000 | McCormick & Co. Inc.,Non-Voting | 1,051,556 | 3,313,860 | |||||||||||||
335,000 | Mondelēz International Inc., Cl. A | 6,068,284 | 16,723,200 | |||||||||||||
52,000 | Nestlé SA | 1,066,266 | 4,955,862 | |||||||||||||
95,000 | Nissin Foods Holdings Co. Ltd. | 3,080,973 | 6,514,482 | |||||||||||||
55,000 | PepsiCo Inc. | 3,540,723 | 6,740,250 | |||||||||||||
44,000 | Pernod Ricard SA | 3,604,760 | 7,897,158 | |||||||||||||
59,000 | Remy Cointreau SA | 3,673,430 | 7,869,226 | |||||||||||||
36,000 | Sapporo Holdings Ltd. | 810,532 | 785,094 | |||||||||||||
14,000 | The Coca-Cola Co. | 291,760 | 656,040 | |||||||||||||
1,000 | The Hershey Co. | 36,300 | 114,830 | |||||||||||||
65,000 | The Kraft Heinz Co. | 1,817,290 | 2,122,250 | |||||||||||||
37,000 | Tootsie Roll Industries Inc. | 646,534 | 1,377,880 | |||||||||||||
50,000 | Yakult Honsha Co. Ltd. | 1,225,418 | 3,491,834 | |||||||||||||
|
|
|
| |||||||||||||
69,772,542 | 167,506,707 | |||||||||||||||
|
|
|
| |||||||||||||
Health Care — 5.4% |
| |||||||||||||||
10,000 | Abbott Laboratories | 227,205 | 799,400 | |||||||||||||
6,000 | AbbVie Inc. | 149,060 | 483,540 | |||||||||||||
4,000 | Allergan plc | 576,000 | 585,640 | |||||||||||||
78,000 | Baxter International Inc. | 1,729,585 | 6,342,180 | |||||||||||||
7,000 | Bio-Rad Laboratories Inc., Cl. A† | 687,624 | 2,139,760 | |||||||||||||
263,000 | Bristol-Myers Squibb Co. | 6,373,703 | 12,547,730 | |||||||||||||
16,000 | Covetrus Inc.† | 109,185 | 509,600 | |||||||||||||
74,000 | Demant A/S† | 716,237 | 2,188,178 | |||||||||||||
1,000 | Eli Lilly & Co. | 34,133 | 129,760 | |||||||||||||
11,000 | GlaxoSmithKline plc, ADR | 465,416 | 459,690 | |||||||||||||
40,000 | Henry Schein Inc.† | 392,797 | 2,404,400 | |||||||||||||
30,000 | Johnson & Johnson | 1,742,774 | 4,193,700 | |||||||||||||
61,000 | Merck & Co. Inc. | 1,342,146 | 5,073,370 | |||||||||||||
25,000 | Novartis AG, ADR | 1,386,000 | 2,403,500 | |||||||||||||
45,000 | Pfizer Inc. | 758,228 | 1,911,150 | |||||||||||||
45,000 | Roche Holding AG, ADR | 826,666 | 1,547,550 | |||||||||||||
45,000 | Wright Medical Group NV† | 926,550 | 1,415,250 | |||||||||||||
18,000 | Zimmer Biomet Holdings Inc. | 900,232 | 2,298,600 | |||||||||||||
15,000 | Zoetis Inc. | 443,584 | 1,510,050 | |||||||||||||
|
|
|
| |||||||||||||
19,787,125 | 48,943,048 | |||||||||||||||
|
|
|
| |||||||||||||
Hotels and Gaming — 0.6% |
| |||||||||||||||
7,500 | Las Vegas Sands Corp. | 18,435 | 457,200 | |||||||||||||
75,000 | MGM Resorts International | 763,041 | 1,924,500 | |||||||||||||
35,000 | Ryman Hospitality Properties Inc., REIT | 1,333,639 | 2,878,400 |
See accompanying notes to financial statements.
6
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||||||
COMMON STOCKS (Continued) | ||||||||||||||||
Hotels and Gaming (Continued) | ||||||||||||||||
3,000 | Wynn Resorts Ltd. | $ | 114,952 | $ | 357,960 | |||||||||||
|
|
|
| |||||||||||||
2,230,067 | 5,618,060 | |||||||||||||||
|
|
|
| |||||||||||||
Industrials — 0.1% | ||||||||||||||||
30,000 | Arconic Inc. | 530,857 | 573,300 | |||||||||||||
|
|
|
| |||||||||||||
Machinery — 1.7% | ||||||||||||||||
6,000 | Caterpillar Inc. | 35,181 | 812,940 | |||||||||||||
75,000 | Deere & Co. | 2,938,460 | 11,988,000 | |||||||||||||
32,000 | Xylem Inc. | 785,008 | 2,529,280 | |||||||||||||
|
|
|
| |||||||||||||
3,758,649 | 15,330,220 | |||||||||||||||
|
|
|
| |||||||||||||
Metals and Mining — 0.9% | ||||||||||||||||
200,000 | Freeport-McMoRan Inc. | 2,171,089 | 2,578,000 | |||||||||||||
150,000 | Newmont Mining Corp. | 3,559,052 | 5,365,500 | |||||||||||||
|
|
|
| |||||||||||||
5,730,141 | 7,943,500 | |||||||||||||||
|
|
|
| |||||||||||||
Paper and Forest Products — 0.7% | ||||||||||||||||
7,000 | International Paper Co. | 217,070 | 323,890 | |||||||||||||
25,000 | Svenska Cellulosa AB, Cl. A | 101,961 | 243,350 | |||||||||||||
220,000 | Weyerhaeuser Co., REIT | 3,602,978 | 5,794,800 | |||||||||||||
|
|
|
| |||||||||||||
3,922,009 | 6,362,040 | |||||||||||||||
|
|
|
| |||||||||||||
Publishing — 0.0% | ||||||||||||||||
3,000 | Value Line Inc. | 41,976 | 74,070 | |||||||||||||
|
|
|
| |||||||||||||
Real Estate — 0.0% | ||||||||||||||||
9,000 | Griffin Industrial Realty Inc. | 219,808 | 313,650 | |||||||||||||
|
|
|
| |||||||||||||
Retail — 5.0% | ||||||||||||||||
16,000 | Cie Financiere Richemont SA | 540,728 | 1,165,594 | |||||||||||||
49,000 | Copart Inc.† | 431,941 | 2,968,910 | |||||||||||||
27,000 | Costco Wholesale Corp. | 1,287,576 | 6,537,780 | |||||||||||||
135,000 | CVS Health Corp. | 4,425,855 | 7,280,550 | |||||||||||||
98,000 | Ingles Markets Inc., Cl. A | 1,743,398 | 2,706,760 | |||||||||||||
85,000 | J.C. Penney Co. Inc.† | 263,474 | 126,650 | |||||||||||||
184,000 | Macy’s Inc. | 1,860,345 | 4,421,520 | |||||||||||||
84,000 | Seven & i Holdings Co. Ltd. | 2,505,480 | 3,165,064 | |||||||||||||
53,000 | The Home Depot Inc. | 1,473,446 | 10,170,170 | |||||||||||||
8,500 | Tractor Supply Co. | 67,015 | 830,960 | |||||||||||||
77,000 | Walgreens Boots Alliance Inc. | 2,262,738 | 4,871,790 | |||||||||||||
2,000 | Walmart Inc. | 86,680 | 195,060 | |||||||||||||
10,000 | Weis Markets Inc. | 300,480 | 408,100 | |||||||||||||
|
|
|
| |||||||||||||
17,249,156 | 44,848,908 | |||||||||||||||
|
|
|
| |||||||||||||
Specialty Chemicals — 0.8% |
| |||||||||||||||
10,000 | Albemarle Corp. | 102,314 | 819,800 | |||||||||||||
3,000 | Ashland Global Holdings Inc. | 67,390 | 234,390 | |||||||||||||
70,000 | Ferro Corp.† | 123,575 | 1,325,100 | |||||||||||||
8,000 | FMC Corp. | 161,197 | 614,560 | |||||||||||||
46,000 | H.B. Fuller Co. | 950,216 | 2,237,440 | |||||||||||||
1,300 | International Flavors & Fragrances Inc. | 58,410 | 167,427 | |||||||||||||
2,400 | NewMarket Corp. | 9,263 | 1,040,544 |
Shares | Cost | Market Value | ||||||||||||
1,000 | Quaker Chemical Corp. | $ | 10,797 | $ | 200,330 | |||||||||
19,000 | The Chemours Co. | 198,828 | 706,040 | |||||||||||
|
|
|
| |||||||||||
1,681,990 | 7,345,631 | |||||||||||||
|
|
|
| |||||||||||
Telecommunications — 4.2% |
| |||||||||||||
2,000 | AT&T Inc. | 47,800 | 62,720 | |||||||||||
218,000 | BCE Inc. | 4,123,859 | 9,677,020 | |||||||||||
20,000 | BT Group plc, ADR | 277,705 | 295,800 | |||||||||||
220,000 | Deutsche Telekom AG, ADR | 3,030,053 | 3,648,700 | |||||||||||
33,000 | Loral Space & Communications Inc.† | 1,317,447 | 1,189,650 | |||||||||||
16,000 | Orange SA, ADR | 206,327 | 260,800 | |||||||||||
13,000 | Proximus SA | 318,676 | 374,924 | |||||||||||
24,500 | Telefonica SA, ADR | 80,420 | 204,820 | |||||||||||
178,000 | Telephone & Data Systems Inc. | 4,834,364 | 5,469,940 | |||||||||||
47,000 | TELUS Corp. | 713,431 | 1,740,880 | |||||||||||
250,000 | Verizon Communications Inc. | 8,246,313 | 14,782,500 | |||||||||||
|
|
|
| |||||||||||
23,196,395 | 37,707,754 | |||||||||||||
|
|
|
| |||||||||||
Transportation — 1.1% | ||||||||||||||
127,000 | GATX Corp. | 4,025,968 | 9,698,990 | |||||||||||
|
|
|
| |||||||||||
Wireless Communications — 0.8% |
| |||||||||||||
6,000 | Millicom International Cellular SA | 291,776 | 367,620 | |||||||||||
33,000 | Millicom International Cellular SA, SDR | 2,130,301 | 2,003,646 | |||||||||||
200,000 | NTT DoCoMo Inc. | 2,898,164 | 4,423,893 | |||||||||||
20,000 | Turkcell Iletisim Hizmetleri A/S, ADR | 91,562 | 107,200 | |||||||||||
3,000 | Vodafone Group plc, ADR | 70,658 | 54,540 | |||||||||||
|
|
|
| |||||||||||
5,482,461 | 6,956,899 | |||||||||||||
|
|
|
| |||||||||||
TOTAL COMMON STOCKS | 393,122,564 | 896,150,278 | ||||||||||||
|
|
|
| |||||||||||
CLOSED-END FUNDS — 0.8% | ||||||||||||||
95,000 | Altaba Inc.† | 1,530,947 | 7,041,400 | |||||||||||
|
|
|
| |||||||||||
CONVERTIBLE PREFERRED STOCKS — 0.1% |
| |||||||||||||
Telecommunications — 0.1% | ||||||||||||||
20,000 | Cincinnati Bell Inc., 6.750%, Ser. B(c) | 404,371 | 779,900 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
7
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||||||
WARRANTS — 0.0% | ||||||||||||||||
Retail — 0.0% | ||||||||||||||||
105 | Sears Holdings Corp., expire 12/15/19† | $ | 522 | $ | 12 | |||||||||||
TOTALINVESTMENTS — 100.2% | $ | 395,058,404 | 903,971,590 | |||||||||||||
|
| |||||||||||||||
Other Assets and Liabilities (Net) — (0.2)%. |
| (1,533,211 | ) | |||||||||||||
|
| |||||||||||||||
NET ASSETS — 100.0% | $ | 902,438,379 | ||||||||||||||
|
|
(a) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(b) | Securities, or a portion thereof, with a value of $22,904,500 were deposited with Pershing LLC. |
(c) | Security is perpetual and has no stated maturity date. |
† | Non-income producing security. |
ADR | American Depositary Receipt |
REIT | Real Estate Investment Trust |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
8
The Gabelli Equity Income Fund
Statement of Assets and Liabilities | |||||
March 31, 2019 (Unaudited) |
| ||||
Assets: | |||||
Investments, at value (cost $395,058,404) | $903,971,590 | ||||
Foreign currency, at value (cost $11,579) | 11,553 | ||||
Cash | 133,374 | ||||
Receivable for investments sold | 4,579,875 | ||||
Receivable for Fund shares sold | 411,141 | ||||
Dividends receivable | 2,752,410 | ||||
Prepaid expenses | 45,883 | ||||
|
| ||||
Total Assets | 911,905,826 | ||||
|
| ||||
Liabilities: | |||||
Payable for Fund shares redeemed | 1,974,859 | ||||
Payable for investment advisory fees | 770,739 | ||||
Payable for distribution fees | 226,372 | ||||
Payable for accounting fees | 7,500 | ||||
Line of credit payable | 6,072,000 | ||||
Other accrued expenses | 415,977 | ||||
|
| ||||
Total Liabilities. | 9,467,447 | ||||
|
| ||||
Net Assets | |||||
(applicable to 51,554,250 shares outstanding) | $902,438,379 | ||||
|
| ||||
Net Assets Consist of: | |||||
Paid-in capital | $297,403,306 | ||||
Total distributable earnings | 605,035,073 | ||||
|
| ||||
Net Assets | $902,438,379 | ||||
|
| ||||
Shares of Capital Stock, each at $0.001 par value: | |||||
Class AAA: |
Net Asset Value, offering, and redemption price per share ($430,109,665 ÷ 23,878,953 shares outstanding; 150,000,000 shares authorized) | $18.01 | ||||
|
| ||||
Class A: | |||||
Net Asset Value and redemption price per share ($77,709,932 ÷ 4,342,664 shares outstanding; 50,000,000 shares authorized) | $17.89 | ||||
|
| ||||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $18.98 | ||||
|
| ||||
Class C: | |||||
Net Asset Value and offering price per share ($137,604,402 ÷ 9,837,558 shares outstanding; 50,000,000 shares authorized) | $13.99 | (a) | |||
|
| ||||
Class I: | |||||
Net Asset Value, offering, and redemption price per share ($257,014,380 ÷ 13,495,075 shares outstanding; 50,000,000 shares authorized) | $19.05 | ||||
|
|
(a) | Redemption price varies based on the length of time held. |
Statement of Operations | ||||
For the Six Months Ended March 31, 2019 (Unaudited) |
| |||
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $172,350) | $ | 10,224,147 | ||
Interest | 108 | |||
|
| |||
Total Investment Income | 10,224,255 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 4,762,548 | |||
Distribution fees - Class AAA | 555,961 | |||
Distribution fees - Class A | 94,818 | |||
Distribution fees - Class C | 742,691 | |||
Shareholder services fees | 473,203 | |||
Interest expense | 341,737 | |||
Shareholder communication expenses | 103,871 | |||
Custodian fees | 87,371 | |||
Registration expenses | 51,227 | |||
Legal and audit fees | 25,520 | |||
Accounting fees | 22,500 | |||
Directors’ fees | 21,619 | |||
Miscellaneous expenses | 45,650 | |||
|
| |||
Total Expenses | 7,328,716 | |||
|
| |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (4,206 | ) | ||
|
| |||
Net Expenses. | 7,324,510 | |||
|
| |||
Net Investment Income | 2,899,745 | |||
|
| |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments | 134,345,026 | |||
Net realized loss on foreign currency transactions | (16,790 | ) | ||
|
| |||
Net realized gain on investments and foreign currency transactions | 134,328,236 | |||
|
| |||
Net change in unrealized appreciation/depreciation: |
| |||
on investments | (175,764,355 | ) | ||
on foreign currency translations | 4,661 | |||
|
| |||
Net change in unrealized appreciation/ depreciation on investments and foreign currency translations | (175,759,694 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency | (41,431,458 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (38,531,713 | ) | |
|
|
See accompanying notes to financial statements.
9
The Gabelli Equity Income Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2019 (Unaudited) | Year Ended September 30, 2018 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,899,745 | $ | 10,241,486 | ||||
Net realized gain on investments and foreign currency transactions | 134,328,236 | 212,502,993 | ||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (175,759,694 | ) | (135,349,398 | ) | ||||
|
|
|
| |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (38,531,713 | ) | 87,395,081 | |||||
|
|
|
| |||||
Distributions to Shareholders: | ||||||||
Class AAA | (14,993,693 | )* | (98,781,156 | ) | ||||
Class A | (2,589,534 | )* | (17,203,694 | ) | ||||
Class C | (6,398,434 | )* | (41,334,525 | ) | ||||
Class I | (8,965,912 | )* | (65,782,800 | ) | ||||
|
|
|
| |||||
(32,947,573 | ) | (223,102,175 | ) | |||||
|
|
|
| |||||
Return of capital | ||||||||
Class AAA | — | (25,622,488 | ) | |||||
Class A | — | (3,971,454 | ) | |||||
Class C | — | (10,578,318 | ) | |||||
Class I | — | (16,237,915 | ) | |||||
Class T** | — | (50 | ) | |||||
|
|
|
| |||||
— | (56,410,225 | ) | ||||||
|
|
|
| |||||
Total Distributions to Shareholders | (32,947,573 | ) | (279,512,400 | ) | ||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Class AAA | (60,092,172 | ) | (56,588,389 | ) | ||||
Class A | (3,580,720 | ) | (15,035,802 | ) | ||||
Class C | (25,738,147 | ) | (31,440,340 | ) | ||||
Class I | (78,469,293 | ) | (32,023,271 | ) | ||||
Class T** | — | (1,063 | ) | |||||
|
|
|
| |||||
Net Decrease in Net Assets from Capital Share Transactions | (167,880,332 | ) | (135,088,865 | ) | ||||
|
|
|
| |||||
RedemptionFees | 2,462 | 607 | ||||||
|
|
|
| |||||
NetDecreasein Net Assets | (239,357,156 | ) | (327,205,577 | ) | ||||
Net Assets: | ||||||||
Beginning of year | 1,141,795,535 | 1,469,001,112 | ||||||
|
|
|
| |||||
End of period | $ | 902,438,379 | $ | 1,141,795,535 | ||||
|
|
|
|
* | Based on year to date book income. Amounts are subject to change and recharacterization at year end. |
** | Class T Shares were liquidated on September 21, 2018. |
See accompanying notes to financial statements.
10
The Gabelli Equity Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gain/(Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain Investments | Return of Capital | Total | Redemption | Net Asset Value, End of | Total Return † | Net Assets End of Period (in 000’s) | Net Investment | Operating | Portfolio | |||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||
2019(d) | $19.09 | $ 0.06 | $(0.54) | $(0.48) | $(0.50) | $(0.10) | — | $(0.60) | $0.00 | $18.01 | (2.36) | % | $430,110 | 0.65 | %(e) | 1.50 | %(e)(f) | 0 | %(g) | |||||||||||||||||||
2018 | 22.84 | 0.19 | 1.34 | 1.53 | (0.20) | (3.68) | $(1.40) | (5.28) | 0.00 | 19.09 | 6.77 | 521,485 | 0.82 | 1.40 | (f) | 0 | (g) | |||||||||||||||||||||
2017 | 24.06 | 0.24 | 2.97 | 3.21 | (0.25) | (3.33) | (0.85) | (4.43) | 0.00 | 22.84 | 13.91 | 662,696 | 0.97 | 1.39 | (f) | 1 | ||||||||||||||||||||||
2016 | 25.08 | 0.26 | 2.72 | 2.98 | (0.26) | (2.35) | (1.39) | (4.00) | 0.00 | 24.06 | 11.31 | 833,154 | 0.99 | 1.39 | (f) | 1 | ||||||||||||||||||||||
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 | (f) | 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 | |||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||
2019(d) | $18.97 | $ 0.06 | $(0.54) | $(0.48) | $(0.50) | $(0.10) | — | $(0.60) | $0.00 | $17.89 | (2.37) | % | $77,710 | 0.66 | %(e) | 1.50 | %(e)(f) | 0 | %(g) | |||||||||||||||||||
2018 | 22.73 | 0.19 | 1.33 | 1.52 | (0.20) | (3.68) | $(1.40) | (5.28) | 0.00 | 18.97 | 6.76 | 86,332 | 0.82 | 1.40 | (f) | 0 | (g) | |||||||||||||||||||||
2017 | 23.96 | 0.24 | 2.96 | 3.20 | (0.25) | (3.33) | (0.85) | (4.43) | 0.00 | 22.73 | 13.92 | 115,702 | 0.96 | 1.39 | (f) | 1 | ||||||||||||||||||||||
2016 | 24.99 | 0.26 | 2.71 | 2.97 | (0.26) | (2.35) | (1.39) | (4.00) | 0.00 | 23.96 | 11.31 | 160,593 | 0.99 | 1.39 | (f) | 1 | ||||||||||||||||||||||
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 | (f) | 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 | |||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||
2019(d) | $15.03 | $(0.01) | $(0.43) | $(0.44) | $(0.50) | $(0.10) | — | $(0.60) | $0.00 | $13.99 | (2.73) | % | $137,604 | (0.10 | %)(e) | 2.25 | %(e)(f) | 0 | %(g) | |||||||||||||||||||
2018 | 19.17 | 0.01 | 1.13 | 1.14 | (0.07) | (3.68) | $(1.53) | (5.28) | 0.00 | 15.03 | 6.02 | 176,167 | 0.07 | 2.15 | (f) | 0 | (g) | |||||||||||||||||||||
2017 | 20.99 | 0.05 | 2.56 | 2.61 | (0.10) | (3.33) | (1.00) | (4.43) | 0.00 | 19.17 | 13.04 | 246,690 | 0.22 | 2.14 | (f) | 1 | ||||||||||||||||||||||
2016 | 22.48 | 0.06 | 2.45 | 2.51 | (0.09) | (2.35) | (1.56) | (4.00) | 0.00 | 20.99 | 10.51 | 306,349 | 0.24 | 2.14 | (f) | 1 | ||||||||||||||||||||||
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 | (f) | 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 | |||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||
2019(d) | $20.13 | $ 0.08 | $(0.56) | $(0.48) | $(0.50) | $(0.10) | — | $(0.60) | $0.00 | $19.05 | (2.23) | % | $257,014 | 0.90 | %(e) | 1.25 | %(e)(f) | 0 | %(g) | |||||||||||||||||||
2018 | 23.75 | 0.26 | 1.40 | 1.66 | (0.26) | (3.68) | $(1.34) | (5.28) | 0.00 | 20.13 | 7.07 | 357,812 | 1.08 | 1.15 | (f) | 0 | (g) | |||||||||||||||||||||
2017 | 24.80 | 0.31 | 3.07 | 3.38 | (0.31) | (3.33) | (0.79) | (4.43) | 0.00 | 23.75 | 14.19 | 443,912 | 1.21 | 1.14 | (f) | 1 | ||||||||||||||||||||||
2016 | 25.68 | 0.33 | 2.79 | 3.12 | (0.32) | (2.35) | (1.33) | (4.00) | 0.00 | 24.80 | 11.59 | 484,305 | 1.24 | 1.14 | (f) | 1 | ||||||||||||||||||||||
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 | (f) | 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 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period and sold at the end of the period including reinvestment of distributions and does not reflect applicable sales charges. Total return for a period of less than one year is not annualized. |
(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 incurred interest expense during the six months ended March 31, 2019 and the fiscal years ended September 30, 2018 and 2017. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.42%, 1.39%, and 1.38% (Class AAA and Class A), 2.17%, 2.14%, and 2.13% (Class C), and 1.17%, 1.14%, and 1.13% (Class I), respectively. For the fiscal years ended September 30, 2016, 2015, and 2014, the effect of interest expense was minimal. |
(d) | For the six months ended March 31, 2019, unaudited. |
(e) | Annualized. |
(f) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the six months ended March 31, 2019 and the fiscal years ended September 30, 2018, 2017, 2016, and 2015, there was no impact on the expense ratios. |
(g) | Amount represents less than 0.5%. |
See accompanying notes to financial statements.
11
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited)
1.Organization.The Gabelli Equity Income Fund is a series of the Gabelli Equity Series Funds, Inc. (theCorporation). The Corporation was incorporated on July 25, 1991 in Maryland. The Fund is a diversifiedopen-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and one of four 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 companyaccounting 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.
New Accounting Pronouncements.To improve the effectiveness of fair value disclosure requirements, theFinancial Accounting Standards Board recently issued Accounting Standard Update (ASU)2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU2018-13), which adds, removes, and modifies certain aspects relating to fair value disclosure. ASU2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption of the additions relating to ASU2018-13 is not required, even if early adoption is elected for the removals under ASU2018-13. Management has early adopted the removals set forth in ASU2018-13 in these financial statements and has not early adopted the additions set forth in ASU2018-13.
Security Valuation.Portfolio securities listed or traded on a nationally recognized securities exchange or tradedin 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 obligations 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 securities are valued using the closing bid price, 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. 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. OTC futures and options on futures for which market quotations are readily available will be valued by quotations
12
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.
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 andnon-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.
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 and other financial instruments by inputs used to value the Fund’s investments as of March 31, 2019 is as follows:
Valuation Inputs | ||||||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Other Significant Observable Inputs | Total Market Value at 3/31/19 | |||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||
ASSETS (Market Value): | �� | |||||||||||||||||||
Common Stocks: | ||||||||||||||||||||
Energy and Utilities: Electric | $ | 5,426,200 | — | $ | 0 | $ | 5,426,200 | |||||||||||||
Other Industries (a) | 890,724,078 | — | — | 890,724,078 | ||||||||||||||||
Total Common Stocks | 896,150,278 | — | 0 | 896,150,278 | ||||||||||||||||
Closed-End Funds | 7,041,400 | — | — | 7,041,400 | ||||||||||||||||
Convertible Preferred Stocks (a) | — | $779,900 | — | 779,900 | ||||||||||||||||
Warrants (a) | 12 | — | — | 12 | ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 903,191,690 | $779,900 | $ | 0 | $ | 903,971,590 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have transfers into or out of Level 3 during the six months ended March 31, 2019. 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 withthe 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
13
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are 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 or preferred equities, warrants, options, rights, or fixedincome 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. When fair valuing a security, factors to consider include 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 may include backtesting 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 investingin 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 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.
Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded derivatives, while collateral terms are contract specific for derivatives tradedover-the-counter. Securities pledged to cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported separately in the Statement of Assets and Liabilities.
The Fund’s derivative contracts held at March 31, 2019, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
14
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
Options.The Fund may purchase or write call or put options on securities or indices for the purpose ofincreasing 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 call options, the Fund pays a premium for the right to buy the underlying security at a specified price. The seller of the call has the obligation to sell the underlying security upon exercise at the exercise price. If the price of the underlying security declines, the Fund would realize a loss upon sale or exercise. If the price of the underlying security increases or stays the same, the Fund would realize a gain upon sale or at expiration date, but only to the extent of the premium paid.
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 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, andin-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 March 31, 2019, the Fund held no option positions.
Securities Sold Short.The Fund may enter into short sale transactions. Short selling involves selling securitiesthat 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 theex-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. During the six months ended March 31, 2019, there were no short sales.
15
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
Foreign Currency Translations.The books and records of the Fund are maintained in U.S. dollars. Foreigncurrencies, 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 offoreign 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 marketsare 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 the sale of securities eligible for trading on national securities exchanges or in theover-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 traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2019, the Fund held no restricted securities.
Securities Transactions and Investment Income.Securities transactions are accounted for on the trade datewith 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 theex-dividend date, except for certain dividends from foreign securities that are recorded as soon after theex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses.Certain administrative expenses are commonto, 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.
16
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
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 theex-dividend date. The characterizationof distributions to shareholders is 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. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2018 was as follows:
Distributions paid from: | ||||
Ordinary income | $ | 11,254,231 | ||
Net long term capital gains | 211,847,944 | |||
Return of capital | 56,410,225 | |||
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Total distributions paid | $ | 279,512,400 | ||
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The Fund has a fixed distribution policy. Under the policy, the Fund declares and pays monthly distributions from net investment income, capital gains, andpaid-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, and may cause such gains to be treated as ordinary income. Distributions sourced frompaid-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.
17
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Investments | $398,184,908 | $511,481,391 | $(5,694,709) | $505,786,682 |
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 themore-likely-than-not threshold. During the six months ended March 31, 2019, the Fund did not incur any income tax, interest, or penalties. As of March 31, 2019, 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 investmentadvisory 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 for each class of shares, except forClass I Shares, pursuant to Rule12b-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 six months ended March 31, 2019, otherthan short term securities and U.S. Government obligations, aggregated to $2,273,239 and $250,894,791, respectively.
6.Transactions with Affiliates and Other Arrangements.During the six months ended March 31, 2019, theFund paid $95,585 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $31,976 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
18
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
During the six months ended March 31, 2019, 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 this period was $4,206.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2019, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
7. Line of Credit.The Fund participates in an unsecured line of credit, which expires on March 4, 2020 andmay be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the overnight Federal Funds rate plus 125 basis points or the 30 day ICE LIBOR plus 125 basis points in effect on that day. This amount, if any, would be included in “interest expense” in the Statement of Operations. At March 31, 2019, there was $6,072,000 outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the six months ended March 31, 2019 was $16,612,093 with a weighted average interest rate of 3.64%. The maximum amount borrowed at any time during the six months ended March 31, 2019 was $58,934,000.
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 maximumfront-end sales charge of 5.75%. 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 inpaid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2019 and the fiscal year ended September 30, 2018, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
19
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
Transactions in shares of capital stock were as follows:
Six Months Ended | ||||||||||||||||
March 31, 2019 | Year Ended | |||||||||||||||
(Unaudited) | September 30, 2018 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 297,877 | $ | 5,243,786 | 679,572 | $ | 15,716,026 | ||||||||||
Shares issued upon reinvestment of distributions | 834,123 | 14,505,948 | 6,035,921 | 120,316,691 | ||||||||||||
Shares redeemed | (4,566,446 | ) | (79,841,906 | ) | (8,414,843 | ) | (192,621,106 | ) | ||||||||
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Net decrease | (3,434,446 | ) | $ | (60,092,172 | ) | (1,699,350 | ) | $ | (56,588,389 | ) | ||||||
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Class A | ||||||||||||||||
Shares sold | 557,475 | $ | 9,725,525 | 644,832 | $ | 14,727,628 | ||||||||||
Shares issued upon reinvestment of distributions | 139,712 | 2,414,921 | 996,100 | 19,748,656 | ||||||||||||
Shares redeemed | (904,962 | ) | (15,721,166 | ) | (2,180,983 | ) | (49,512,086 | ) | ||||||||
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Net decrease | (207,775 | ) | $ | (3,580,720 | ) | (540,051 | ) | $ | (15,035,802 | ) | ||||||
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Class C | ||||||||||||||||
Shares sold | 1,163,224 | $ | 15,992,709 | 1,174,177 | $ | 21,686,613 | ||||||||||
Shares issued upon reinvestment of distributions | 428,423 | 5,820,442 | 2,942,702 | 46,752,707 | ||||||||||||
Shares redeemed | (3,478,338 | ) | (47,551,298 | ) | (5,259,907 | ) | (99,879,660 | ) | ||||||||
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Net decrease | (1,886,691 | ) | $ | (25,738,147 | ) | (1,143,028 | ) | $ | (31,440,340 | ) | ||||||
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Class I | ||||||||||||||||
Shares sold | 941,399 | $ | 17,548,164 | 2,734,591 | $ | 65,019,434 | ||||||||||
Shares issued upon reinvestment of distributions | 454,013 | 8,338,081 | 3,605,793 | 75,575,488 | ||||||||||||
Shares redeemed | (5,678,939 | ) | (104,355,538 | ) | (7,251,786 | ) | (172,618,193 | ) | ||||||||
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Net decrease | (4,283,527 | ) | $ | (78,469,293 | ) | (911,402 | ) | $ | (32,023,271 | ) | ||||||
Class T * | ||||||||||||||||
Shares issued upon reinvestment of distributions | — | — | 2 | $ | 36 | |||||||||||
Shares redeemed | — | — | (47 | ) | (1,099 | ) | ||||||||||
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Net decrease | — | — | (45 | ) | $ | (1,063 | ) | |||||||||
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* | Class T Shares were liquidated on September 21, 2018. |
9.Indemnifications.The Fund enters into contracts that contain a variety of indemnifications. The Fund’smaximum 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.
10.Subsequent Events.Management has evaluated the impact on the Fund of all subsequent events occurringthrough the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
20
The Gabelli Equity Income Fund
Board Consideration andRe-Approval of Advisory Agreement (Unaudited)
During the six months ended March 31, 2019, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the Directors (the Independent Board Members) who are not “interested persons” of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services.The Independent Board Members considered information regardingthe portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance.The Independent Board Members reviewed the short, medium, and long term performance(as of December 31, 2018) of the Fund against a peer group of eight other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional equity income funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Equity Income Index. The Independent Board Members noted that the Fund’s performance was in the fourth quartile for the one, three, and five year periods, as measured against the Adviser Peer Group. The Independent Board Members noted that, although the Fund’s performance was in the lower quartiles, the Fund’s performance for the one year period was just over one percentage point below the median of the Adviser Peer Group, and for the five year period was below the median of the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the fifth quintile for the one year, three year, and five year periods, and further noted that, despite the low quintile rankings, the Fund’s absolute performance relative to the Broadridge Peer Group for the one and five year periods was generally comparable with the Fund’s absolute performance relative to the Adviser Peer Group.
Profitability.The Independent Board Members reviewed summary data regarding the profitability of the Fundto the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale.The Independent Board Members discussed the major elements of the Adviser’s coststructure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale.The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons.The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a peer group of seven other equity income funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratio was above average
21
The Gabelli Equity Income Fund
Board Consideration and Re-Approval of Advisory Agreement (Unaudited) (Continued)
within this group. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
Conclusions.The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable performance record. The Independent Board Members also concluded that the Fund’s expense ratios and the profitability to the Adviser of managing the Fund were reasonable, particularly in light of the Fund’s performance, and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the investment management agreements to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
22
GABELLI EQUITY INCOME FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Mario J. Gabelli, CFA,is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios ofGAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, 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 calling800-GABELLI after 7:00 P.M. | ||
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc. Executive Chairman, Associated Capital Group, 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
John C. Ball Treasurer
Agnes Mullady Vice President
Andrea R. Mango Secretary
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR G.distributors, LLC
CUSTODIAN State Street Bank and Trust Company
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT DST Asset Manager Solutions, Inc.
LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP
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This report is submitted for the general information of the shareholders of The Gabelli Equity Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
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GAB444Q119SR |
The Gabelli Small Cap Growth Fund
Semiannual Report — March 31, 2019
To Our Shareholders,
For the six months ended March 31, 2019, the net asset value (NAV) per Class AAA Share of The Gabelli Small Cap Growth Fund decreased 6.5% compared with a decrease of 8.6% for the Russell 2000 Index. Other classes of shares are available. See below for performance information for all classes of shares.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 2019.
Comparative Results
Average Annual Returns through March 31, 2019 (a)(b) (Unaudited) | Since | |||||||||||||||||||||
Inception | ||||||||||||||||||||||
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | (10/22/91) | |||||||||||||||||
Class AAA (GABSX) | (6.55)% | (1.12 | )% | 5.72% | 14.39% | 9.11% | 12.05% | |||||||||||||||
Russell 2000 Index | (8.56) | 2.05 | 7.05 | 15.36 | 8.04 | 9.57 | ||||||||||||||||
S&P SmallCap 600 Index | (10.83) | 1.57 | 8.45 | 17.00 | 9.56 | N/A(e) | ||||||||||||||||
LipperSmall-Cap Core Funds Average | (7.74) | 1.63 | 6.77 | 15.07 | 8.13 | N/A(f) | ||||||||||||||||
Class A (GCASX) | (6.55) | (1.13 | ) | 5.72 | 14.38 | 9.11 | 12.05 | |||||||||||||||
With sales charge (c) | (11.93) | (6.81 | ) | 4.47 | 13.71 | 8.68 | 11.81 | |||||||||||||||
Class C (GCCSX) | (6.90) | (1.86 | ) | 4.93 | 13.53 | 8.30 | 11.59 | |||||||||||||||
With contingent deferred sales charge (d) | (7.83) | (2.84 | ) | 4.93 | 13.53 | 8.30 | 11.59 | |||||||||||||||
Class I (GACIX) | (6.44) | (0.87 | ) | 5.98 | 14.68 | 9.32 | 12.17 | |||||||||||||||
In the current prospectuses dated January 28, 2019, the expense ratios for Class AAA, A, C, and I, Shares are 1.36%, 1.36%, 2.11%, and 1.11%, respectively. See page 14 for the expense ratios for the six months ended March 31, 2019. Class AAA and Class I Shares have no sales charge. The maximum sales charge for Class A Shares and Class 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 of purchase. Performance returns for periods 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 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. | ||||||||||||||||||||||
(e) S&P SmallCap 600 Index inception date as of December 31, 1994. | ||||||||||||||||||||||
(f) LipperSmall-Cap Core Funds Average inception date as of December 31, 1991.
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Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.gabelli.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. To elect to receive all future reports on paper free of charge, please contact your financial intermediary, or, if you invest directly with the Fund, you may call800-422-3554 or send an email request to info@gabelli.com. |
The Gabelli Small Cap Growth Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2018 through March 31, 2019 | 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 informationabout 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’sactualreturn 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 providesinformation 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 isnot 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.
Beginning Account Value 10/01/18 | Ending Account Value 03/31/19 | Annualized Expense Ratio | Expenses Paid During Period* | |||||||||||||||||
The Gabelli Small Cap Growth Fund |
| |||||||||||||||||||
Actual Fund Return |
| |||||||||||||||||||
Class AAA | $1,000.00 | $ 934.50 | 1.39% | $ 6.70 | ||||||||||||||||
Class A | $1,000.00 | $ 934.50 | 1.39% | $ 6.70 | ||||||||||||||||
Class C | $1,000.00 | $ 931.00 | 2.14% | $10.30 | ||||||||||||||||
Class I | $1,000.00 | $ 935.60 | 1.14% | $ 5.50 | ||||||||||||||||
Hypothetical 5% Return |
| |||||||||||||||||||
Class AAA | $1,000.00 | $1,018.00 | 1.39% | $ 6.99 | ||||||||||||||||
Class A | $1,000.00 | $1,018.00 | 1.39% | $ 6.99 | ||||||||||||||||
Class C | $1,000.00 | $1,014.26 | 2.14% | $10.75 | ||||||||||||||||
Class I | $1,000.00 | $1,019.25 | 1.14% | $ 5.74 |
* | 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 (182 days), then divided by 365. |
2
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2019:
The Gabelli Small Cap Growth Fund
Equipment and Supplies | 10.8 | % | ||
Food and Beverage | 9.8 | % | ||
Diversified Industrial | 7.0 | % | ||
Energy and Utilities | 6.8 | % | ||
Health Care | 5.9 | % | ||
Retail | 5.0 | % | ||
Business Services | 4.5 | % | ||
Automotive: Parts and Accessories | 4.4 | % | ||
Aviation: Parts and Services | 4.3 | % | ||
Hotels and Gaming | 4.1 | % | ||
Financial Services | 3.8 | % | ||
Building and Construction | 3.8 | % | ||
Specialty Chemicals | 3.5 | % | ||
Entertainment | 2.6 | % | ||
Computer Software and Services | 2.5 | % | ||
Consumer Services | 2.0 | % | ||
Consumer Products | 1.9 | % | ||
Machinery | 1.7 | % | ||
Real Estate | 1.6 | % | ||
Broadcasting | 1.6 | % | ||
Electronics | 1.6 | % |
Telecommunications | 1.4 | % | ||
Aerospace | 1.4 | % | ||
Automotive | 1.4 | % | ||
Cable | 1.3 | % | ||
Transportation | 1.2 | % | ||
Publishing | 1.0 | % | ||
Environmental Services | 0.9 | % | ||
Metals and Mining | 0.9 | % | ||
Manufactured Housing and Recreational Vehicles | 0.5 | % | ||
Home Furnishings | 0.3 | % | ||
Wireless Communications | 0.3 | % | ||
Closed-End Funds | 0.1 | % | ||
Communications Equipment | 0.1 | % | ||
Educational Services | 0.0 | %* | ||
Agriculture | 0.0 | %* | ||
Other Assets and Liabilities (Net) | (0.0 | )%** | ||
|
| |||
100.0 | % | |||
|
|
* | Amount represents less than 0.05%. |
** | Amount represents greater 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 FormN-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at800-GABELLI(800-422-3554). The Fund’s FormN-PORT 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 calling800-SEC-0330.
Proxy Voting
The Fund files FormN-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) calling800-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.
3
The Gabelli Small Cap Growth Fund
Schedule of Investments — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 99.6% |
| |||||||||||
Aerospace — 1.4% |
| |||||||||||
1,250,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 8,355,778 | $ | 44,412,500 | |||||||
15,000 | Embraer SA, ADR | 242,470 | 285,150 | |||||||||
40,000 | Innovative Solutions & Support Inc.† | 130,088 | 120,400 | |||||||||
|
|
|
| |||||||||
8,728,336 | 44,818,050 | |||||||||||
|
|
|
| |||||||||
Agriculture — 0.0% |
| |||||||||||
12,000 | Cadiz Inc.† | 93,950 | 116,160 | |||||||||
4,000 | Limoneira Co. | 93,848 | 94,120 | |||||||||
|
|
|
| |||||||||
187,798 | 210,280 | |||||||||||
|
|
|
| |||||||||
Automotive — 1.4% |
| |||||||||||
1,300,000 | Navistar International Corp.† | 35,148,401 | 41,990,000 | |||||||||
15,000 | PACCAR Inc. | 627,598 | 1,022,100 | |||||||||
|
|
|
| |||||||||
35,775,999 | 43,012,100 | |||||||||||
|
|
|
| |||||||||
Automotive: Parts and Accessories — 4.2% |
| |||||||||||
231,000 | BorgWarner Inc. | 1,259,065 | 8,872,710 | |||||||||
1,270,000 | Brembo SpA | 2,438,328 | 14,403,002 | |||||||||
88,022 | China Automotive Systems Inc.† | 420,368 | 283,431 | |||||||||
32,000 | Cooper Tire & Rubber Co. | 741,560 | 956,480 | |||||||||
1,185,000 | Dana Inc. | 10,629,525 | 21,021,900 | |||||||||
20,000 | Garrett Motion Inc.† | 333,558 | 294,600 | |||||||||
1,600 | Lear Corp. | 218,349 | 217,136 | |||||||||
700,000 | Modine Manufacturing Co.† | 8,442,756 | 9,709,000 | |||||||||
22,000 | Monro Muffler Brake Inc. | 150,657 | 1,903,440 | |||||||||
109,000 | O’Reilly Automotive Inc.† | 2,680,265 | 42,324,700 | |||||||||
45,000 | Puradyn Filter Technologies Inc.† | 11,732 | 2,025 | |||||||||
185,000 | SORL Auto Parts Inc.† | 1,037,077 | 532,800 | |||||||||
85,375 | Spartan Motors Inc. | 468,270 | 753,861 | |||||||||
200,000 | �� | Standard Motor Products Inc. | 1,551,316 | 9,820,000 | ||||||||
208,000 | Strattec Security Corp.(a) | 4,455,293 | 6,111,040 | |||||||||
361,600 | Superior Industries International Inc. | 5,819,304 | 1,721,216 | |||||||||
455,000 | Tenneco Inc., Cl. A | 3,570,884 | 10,082,800 | |||||||||
24,000 | Thor Industries Inc. | 222,371 | 1,496,880 | |||||||||
260,000 | Uni-Select Inc. | 4,177,690 | 2,696,599 | |||||||||
|
|
|
| |||||||||
48,628,368 | 133,203,620 | |||||||||||
|
|
|
| |||||||||
Aviation: Parts and Services — 4.3% |
| |||||||||||
27,500 | AAR Corp. | 389,643 | 894,025 | |||||||||
9,500 | Astronics Corp.† | 13,628 | 310,840 | |||||||||
22,700 | Astronics Corp., Cl. B† | 31,898 | 737,069 | |||||||||
8,950,000 | BBA Aviation plc | 20,248,342 | 29,025,893 | |||||||||
316,500 | Curtiss-Wright Corp. | 7,931,575 | 35,872,110 | |||||||||
44,000 | Ducommun Inc.† | 868,225 | 1,914,880 | |||||||||
860,000 | Kaman Corp. | 16,109,881 | 50,258,400 | |||||||||
90,000 | Moog Inc., Cl. A | 1,139,951 | 7,825,500 | |||||||||
16,500 | Moog Inc., Cl. B | 496,050 | 1,409,677 |
Shares | Cost | Market Value | ||||||||||
65,000 | Woodward Inc. | $ | 959,980 | $ | 6,167,850 | |||||||
|
|
|
| |||||||||
48,189,173 | 134,416,244 | |||||||||||
|
|
|
| |||||||||
Broadcasting — 1.6% |
| |||||||||||
370,000 | Beasley Broadcast Group Inc., Cl. A | 2,178,106 | 1,472,600 | |||||||||
10,000 | Cogeco Communications Inc. | 340,851 | 638,605 | |||||||||
23,300 | Cogeco Inc. | 592,837 | 1,371,132 | |||||||||
200,000 | Corus Entertainment Inc., Cl. B | 737,530 | 885,995 | |||||||||
40,000 | Fox Corp., Cl. A† | 1,662,000 | 1,468,400 | |||||||||
25,000 | Gray Television Inc.† | 73,674 | 534,000 | |||||||||
72,350 | Gray Television Inc., Cl. A† | 386,480 | 1,520,073 | |||||||||
1,000,000 | ITV plc | 2,568,460 | 1,655,422 | |||||||||
20,000 | Liberty Broadband Corp., Cl. A† | 124,003 | 1,832,800 | |||||||||
37,200 | Liberty Broadband Corp., Cl. C† | 214,014 | 3,412,728 | |||||||||
20,000 | Liberty Media Corp.-Liberty Formula One, Cl. A† | 66,962 | 680,800 | |||||||||
40,000 | Liberty Media Corp.-Liberty Formula One, Cl. C† | 139,035 | 1,402,000 | |||||||||
72,000 | Liberty Media Corp.-Liberty SiriusXM, Cl. A† | 242,910 | 2,748,960 | |||||||||
72,000 | Liberty Media Corp.-Liberty SiriusXM, Cl. C† | 230,482 | 2,753,280 | |||||||||
360,000 | MSG Networks Inc., Cl. A† | 2,378,357 | 7,830,000 | |||||||||
83,000 | Nexstar Media Group Inc., Cl. A | 5,092,050 | 8,994,710 | |||||||||
490,000 | Salem Media Group Inc. | 735,816 | 1,251,950 | |||||||||
169,000 | Sinclair Broadcast Group Inc., Cl. A | 1,323,964 | 6,503,120 | |||||||||
755,280 | Sirius XM Holdings Inc. | 1,397,696 | 4,282,438 | |||||||||
|
|
|
| |||||||||
20,485,227 | 51,239,013 | |||||||||||
|
|
|
| |||||||||
Building and Construction — 3.8% |
| |||||||||||
86,666 | Arcosa Inc. | 1,086,760 | 2,647,646 | |||||||||
202,667 | Armstrong Flooring Inc.† | 3,524,685 | 2,756,271 | |||||||||
55,000 | Beazer Homes USA Inc.† | 924,311 | 633,050 | |||||||||
280,000 | D.R. Horton Inc. | 3,272,733 | 11,586,400 | |||||||||
52,000 | Gibraltar Industries Inc.† | 1,113,797 | 2,111,720 | |||||||||
472,906 | Herc Holdings Inc.† | 16,120,515 | 18,433,876 | |||||||||
24,000 | Hovnanian Enterprises Inc., Cl. A† | 1,422,515 | 263,280 | |||||||||
5,000 | JELD-WEN Holding Inc.† | 99,999 | 88,300 | |||||||||
135,000 | Johnson Controls International plc | 2,609,395 | 4,986,900 | |||||||||
200,000 | KB Home | 2,123,861 | 4,834,000 | |||||||||
489,000 | Lennar Corp., Cl. B | 13,141,150 | 19,129,680 | |||||||||
495,000 | Louisiana-Pacific Corp. | 4,123,575 | 12,068,100 | |||||||||
146,000 | MDC Holdings Inc. | 2,973,120 | 4,242,760 | |||||||||
150,000 | Meritage Homes Corp.† | 3,332,016 | 6,706,500 | |||||||||
2,700 | NVR Inc.† | 1,908,453 | 7,470,900 |
See accompanying notes to financial statements.
4
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Building and Construction (Continued) |
| |||||||||||
335,000 | PulteGroup Inc. | $ | 2,364,900 | $ | 9,366,600 | |||||||
65,000 | Titan Machinery Inc.† | 1,078,654 | 1,011,400 | |||||||||
365,000 | Toll Brothers Inc. | 7,125,596 | 13,213,000 | |||||||||
|
|
|
| |||||||||
68,346,035 | 121,550,383 | |||||||||||
|
|
|
| |||||||||
Business Services — 4.5% |
| |||||||||||
36,000 | ACCO Brands Corp. | 266,315 | 308,160 | |||||||||
700,012 | Clear Channel Outdoor Holdings Inc., Cl. A† | 2,230,266 | 3,745,064 | |||||||||
562,000 | Diebold Nixdorf Inc.† | 6,111,311 | 6,221,340 | |||||||||
138,000 | Element Solutions Inc.† | 1,380,871 | 1,393,800 | |||||||||
95,000 | GP Strategies Corp.† | 791,180 | 1,154,250 | |||||||||
25,000 | GSE Systems Inc.† | 87,955 | 70,000 | |||||||||
1,460,000 | Internap Corp.†(a) | 11,113,581 | 7,241,600 | |||||||||
695,000 | Live Nation Entertainment Inc.† | 6,529,495 | 44,160,300 | |||||||||
180,000 | Loomis AB, Cl. B | 1,860,625 | 6,195,347 | |||||||||
208,000 | Macquarie Infrastructure Corp. | 1,129,353 | 8,573,760 | |||||||||
94,000 | McGrath RentCorp. | 2,555,092 | 5,317,580 | |||||||||
62,000 | Scientific Games Corp.† | 524,533 | 1,266,040 | |||||||||
20,000 | Sealed Air Corp. | 587,044 | 921,200 | |||||||||
115,000 | Sohgo Security Services Co. Ltd. | 1,389,979 | 5,001,353 | |||||||||
17,000 | Stamps.com Inc.† | 147,469 | 1,383,970 | |||||||||
345,000 | Team Inc.† | 5,376,189 | 6,037,500 | |||||||||
33,000 | The Brink’s Co. | 613,158 | 2,488,530 | |||||||||
1,540,000 | The Interpublic Group of Companies Inc. | 9,881,134 | 32,355,400 | |||||||||
25,000 | TransAct Technologies Inc. | 115,198 | 228,500 | |||||||||
1,588,200 | Trans-Lux Corp.†(a) | 3,038,111 | 1,461,144 | |||||||||
47,000 | United Rentals Inc.† | 587,456 | 5,369,750 | |||||||||
14,444 | Vectrus Inc.† | 306,666 | 384,066 | |||||||||
|
|
|
| |||||||||
56,622,981 | 141,278,654 | |||||||||||
|
|
|
| |||||||||
Cable — 1.3% |
| |||||||||||
160,000 | AMC Networks Inc., Cl. A† | 1,836,742 | 9,081,600 | |||||||||
50,000 | DISH Network Corp., Cl. A† | 968,420 | 1,584,500 | |||||||||
36,000 | EchoStar Corp., Cl. A† | 708,109 | 1,312,200 | |||||||||
297,990 | Liberty Global plc, Cl. A† | 7,607,076 | 7,425,911 | |||||||||
734,391 | Liberty Global plc, Cl. C† | 18,704,379 | 17,779,606 | |||||||||
260,000 | WideOpenWest Inc.† | 3,452,827 | 2,366,000 | |||||||||
|
|
|
| |||||||||
33,277,553 | 39,549,817 | |||||||||||
|
|
|
| |||||||||
Communications Equipment — 0.1% |
| |||||||||||
260,500 | Communications Systems Inc. | 1,816,419 | 690,325 | |||||||||
46,000 | Fortinet Inc.† | 931,008 | 3,862,620 | |||||||||
|
|
|
| |||||||||
2,747,427 | 4,552,945 | |||||||||||
|
|
|
| |||||||||
Computer Software and Services — 2.5% |
| |||||||||||
50,000 | 3D Systems Corp.† | 629,043 | 538,000 |
Shares | Cost | Market Value | ||||||||||
140,000 | Activision Blizzard Inc. | $ | 2,116,260 | $ | 6,374,200 | |||||||
694,164 | Alithya Group Inc., Cl. A† | 2,687,484 | 2,179,675 | |||||||||
200,000 | Avid Technology Inc.† | 1,247,416 | 1,490,000 | |||||||||
155,000 | comScore Inc.† | 3,681,162 | 3,138,750 | |||||||||
419,600 | GTY Govtech Inc.† | 4,124,226 | 3,692,480 | |||||||||
40,000 | InterXion Holding NV† | 630,985 | 2,669,200 | |||||||||
20,000 | MKS Instruments Inc. | 364,304 | 1,861,000 | |||||||||
134,000 | NCR Corp.† | 1,163,995 | 3,656,860 | |||||||||
3,996 | NetScout Systems Inc.† | 14,188 | 112,168 | |||||||||
100,000 | Rockwell Automation Inc. | 2,731,906 | 17,546,000 | |||||||||
10,000 | SecureWorks Corp., Cl. A† | 127,406 | 184,000 | |||||||||
132,000 | Stratasys Ltd.† | 3,329,965 | 3,144,240 | |||||||||
158,500 | Tyler Technologies Inc.† | 464,818 | 32,397,400 | |||||||||
|
|
|
| |||||||||
23,313,158 | 78,983,973 | |||||||||||
|
|
|
| |||||||||
Consumer Products — 1.9% |
| |||||||||||
190,000 | 1-800-FLOWERS.COM Inc., Cl. A† | 510,010 | 3,463,700 | |||||||||
78,000 | Brunswick Corp. | 2,094,741 | 3,925,740 | |||||||||
33,500 | Chofu Seisakusho Co. Ltd. | 484,644 | 693,093 | |||||||||
69,000 | Church & Dwight Co. Inc. | 117,444 | 4,914,870 | |||||||||
20,000 | Energizer Holdings Inc. | 857,799 | 898,600 | |||||||||
75,000 | Ginko International Co. Ltd. | 806,645 | 566,993 | |||||||||
2,000 | Harley-Davidson Inc. | 4,713 | 71,320 | |||||||||
147,300 | Hunter Douglas NV | 6,420,817 | 9,881,027 | |||||||||
2,800 | Kobayashi Pharmaceutical Co. Ltd. | 115,862 | 235,965 | |||||||||
13,000 | LCI Industries | 218,598 | 998,660 | |||||||||
270,000 | Marine Products Corp. | 170,928 | 3,636,900 | |||||||||
9,500 | National Presto Industries Inc. | 283,874 | 1,031,225 | |||||||||
60,000 | Newell Brands Inc. | 1,084,410 | 920,400 | |||||||||
425,000 | Sally Beauty Holdings Inc.† | 2,879,800 | 7,824,250 | |||||||||
220,000 | Samick Musical Instruments Co. Ltd. | 299,584 | 375,033 | |||||||||
13,000 | Shimano Inc. | 1,500,919 | 2,111,342 | |||||||||
2,000 | Spectrum Brands Holdings Inc. | 94,080 | 109,560 | |||||||||
14,000 | Steven Madden Ltd. | 34,457 | 473,760 | |||||||||
150,000 | Swedish Match AB | 2,992,162 | 7,645,768 | |||||||||
28,000 | The ScottsMiracle-Gro Co. | 1,024,590 | 2,200,240 | |||||||||
21,000 | WD-40 Co. | 576,931 | 3,558,240 | |||||||||
95,000 | Wolverine World Wide Inc. | 462,375 | 3,394,350 | |||||||||
|
|
|
| |||||||||
23,035,383 | 58,931,036 | |||||||||||
|
|
|
| |||||||||
Consumer Services — 2.0% |
| |||||||||||
53,000 | Bowlin Travel Centers Inc.† | 53,947 | 126,935 | |||||||||
2,750 | Collectors Universe Inc. | 0 | 48,180 | |||||||||
20,000 | GCI Liberty Inc., Cl. A† | 180,509 | 1,112,200 | |||||||||
16,000 | IAC/InterActiveCorp.† | 177,210 | 3,361,760 | |||||||||
264,000 | KAR Auction Services Inc. | 3,557,582 | 13,545,840 | |||||||||
20,000 | Liberty Expedia Holdings Inc., Cl. A† | 257,948 | 856,000 |
See accompanying notes to financial statements.
5
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Consumer Services (Continued) |
| |||||||||||
25,000 | Liberty TripAdvisor Holdings Inc., Cl. A† | $ | 258,728 | $ | 354,750 | |||||||
130,000 | Qurate Retail Inc.† | 1,957,980 | 2,077,400 | |||||||||
1,015,000 | Rollins Inc. | 1,670,309 | 42,244,300 | |||||||||
|
|
|
| |||||||||
8,114,213 | 63,727,365 | |||||||||||
|
|
|
| |||||||||
Diversified Industrial — 7.0% |
| |||||||||||
15,700 | Acuity Brands Inc. | 161,657 | 1,884,157 | |||||||||
30,000 | Aegion Corp.† | 561,304 | 527,100 | |||||||||
85,000 | Albany International Corp., Cl. A | 1,804,512 | 6,085,150 | |||||||||
12,000 | Altra Industrial Motion Corp. | 524,605 | 372,600 | |||||||||
160,000 | Ampco-Pittsburgh Corp.† | 1,419,876 | 528,000 | |||||||||
6,000 | Anixter International Inc.† | 57,120 | 336,660 | |||||||||
4,500 | Ardagh Group SA | 59,446 | 58,500 | |||||||||
73,037 | Burnham Holdings Inc., Cl. A | 1,322,546 | 1,088,251 | |||||||||
400,000 | Crane Co. | 9,478,082 | 33,848,000 | |||||||||
140,000 | EnPro Industries Inc. | 8,043,562 | 9,023,000 | |||||||||
115,000 | Greif Inc., Cl. A | 2,267,516 | 4,743,750 | |||||||||
117,970 | Greif Inc., Cl. B | 5,709,954 | 5,767,553 | |||||||||
1,598,000 | Griffon Corp. | 20,204,258 | 29,531,040 | |||||||||
21,000 | Haynes International Inc. | 893,892 | 689,430 | |||||||||
190,000 | Jardine Strategic Holdings Ltd. | 3,487,637 | 7,111,700 | |||||||||
8,000 | JSP Corp. | 259,990 | 176,342 | |||||||||
840,000 | Katy Industries Inc.†(a) | 2,604 | 3,066 | |||||||||
176,000 | Kimball International Inc., Cl. B | 1,768,660 | 2,488,640 | |||||||||
50,000 | L.B. Foster Co., Cl. A† | 642,804 | 941,000 | |||||||||
80,000 | Lawson Products Inc.† | 1,171,587 | 2,508,800 | |||||||||
92,000 | Lincoln Electric Holdings Inc. | 2,465,097 | 7,716,040 | |||||||||
57,000 | Lindsay Corp. | 1,321,951 | 5,517,030 | |||||||||
27,000 | Lydall Inc.† | 286,221 | 633,420 | |||||||||
41,021 | Matthews International Corp., Cl. A | 1,256,622 | 1,515,726 | |||||||||
1,000,000 | Myers Industries Inc. | 14,177,334 | 17,110,000 | |||||||||
19,000 | nVent Electric plc | 231,864 | 512,620 | |||||||||
121,500 | Oil-Dri Corp. of America | 1,286,709 | 3,783,510 | |||||||||
120,000 | Olin Corp. | 2,318,113 | 2,776,800 | |||||||||
309,000 | Park-Ohio Holdings Corp. | 3,012,238 | 10,005,420 | |||||||||
19,000 | Pentair plc | 495,270 | 845,690 | |||||||||
98,000 | Raven Industries Inc. | 2,426,663 | 3,760,260 | |||||||||
23,000 | Roper Technologies Inc. | 434,338 | 7,865,310 | |||||||||
90,000 | Sonoco Products Co. | 2,728,053 | 5,537,700 | |||||||||
57,000 | Standex International Corp. | 1,528,709 | 4,183,800 | |||||||||
475,042 | Steel Connect Inc.† | 1,639,126 | 954,834 | |||||||||
285,046 | Steel Partners Holdings LP† | 4,817,329 | 3,984,943 | |||||||||
17,000 | T Hasegawa Co. Ltd. | 324,463 | 273,798 | |||||||||
8,000 | Terex Corp. | 190,480 | 257,040 | |||||||||
390,000 | Textron Inc. | 2,523,213 | 19,757,400 | |||||||||
535,200 | Tredegar Corp. | 9,111,174 | 8,638,128 |
Shares | Cost | Market Value | ||||||||||
260,000 | Trinity Industries Inc. | $ | 3,129,614 | $ | 5,649,800 | |||||||
55,000 | Ultra Electronics Holdings plc | 1,112,708 | 1,143,296 | |||||||||
|
|
|
| |||||||||
116,658,901 | 220,135,304 | |||||||||||
|
|
|
| |||||||||
Educational Services — 0.0% |
| |||||||||||
59,000 | Career Education Corp.† | 416,169 | 974,680 | |||||||||
70,000 | Universal Technical Institute Inc.† | 714,397 | 238,700 | |||||||||
|
|
|
| |||||||||
1,130,566 | 1,213,380 | |||||||||||
|
|
|
| |||||||||
Electronics — 1.6% |
| |||||||||||
187,000 | Badger Meter Inc. | 2,625,172 | 10,404,680 | |||||||||
281,652 | Bel Fuse Inc., Cl. A(a) | 6,359,535 | 6,035,802 | |||||||||
545,000 | CTS Corp. | 5,245,019 | 16,006,650 | |||||||||
400,000 | Cypress Semiconductor Corp. | 2,974,430 | 5,968,000 | |||||||||
40,000 | Daktronics Inc. | 362,126 | 298,000 | |||||||||
1,167 | Fortive Corp. | 4,776 | 97,900 | |||||||||
233,500 | Gentex Corp. | 2,873,870 | 4,828,780 | |||||||||
40,000 | IMAX Corp.† | 583,383 | 907,200 | |||||||||
70,000 | KEMET Corp. | 270,334 | 1,187,900 | |||||||||
10,000 | Park Electrochemical Corp. | 79,205 | 157,000 | |||||||||
60,000 | Renesas Electronics Corp.† | 389,832 | 277,181 | |||||||||
130,000 | Stoneridge Inc.† | 923,021 | 3,751,800 | |||||||||
|
|
|
| |||||||||
22,690,703 | 49,920,893 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities — 6.8% |
| |||||||||||
57,000 | Avangrid Inc. | 2,237,235 | 2,869,950 | |||||||||
60,000 | Avista Corp. | 1,939,815 | 2,437,200 | |||||||||
159,000 | Black Hills Corp. | 3,866,924 | 11,777,130 | |||||||||
700,000 | Black Ridge Oil and Gas Inc.† | 7,560 | 25,200 | |||||||||
278,000 | Callon Petroleum Co.† | 2,134,907 | 2,098,900 | |||||||||
46,000 | Chesapeake Utilities Corp. | 838,953 | 4,195,660 | |||||||||
5,000 | Clean Energy Fuels Corp.† | 39,414 | 15,450 | |||||||||
38,000 | CMS Energy Corp. | 197,906 | 2,110,520 | |||||||||
21,000 | Connecticut Water Service Inc. | 421,740 | 1,441,650 | |||||||||
11,000 | Consolidated Water Co. Ltd. | 141,093 | 141,570 | |||||||||
150,000 | Covanta Holding Corp. | 212,840 | 2,596,500 | |||||||||
94,000 | Diamondback Energy Inc. | 4,888,629 | 9,543,820 | |||||||||
50,000 | Dril-Quip Inc.† | 2,070,723 | 2,292,500 | |||||||||
400,000 | El Paso Electric Co. | 5,784,699 | 23,528,000 | |||||||||
80,000 | Energy Recovery Inc.† | 352,081 | 698,400 | |||||||||
140,000 | Evergy Inc. | 2,173,050 | 8,127,000 | |||||||||
108,000 | Hawaiian Electric Industries Inc. | 2,733,599 | 4,403,160 | |||||||||
41,111 | KLX Energy Services Holdings Inc.† | 1,203,652 | 1,033,530 | |||||||||
31,000 | Landis+Gyr Group AG | 1,947,001 | 1,961,336 | |||||||||
38,231 | Marathon Petroleum Corp. | 230,748 | 2,288,125 | |||||||||
40,000 | Middlesex Water Co. | 682,891 | 2,239,600 | |||||||||
95,000 | National Fuel Gas Co. | 5,556,830 | 5,791,200 | |||||||||
15,000 | Northwest Natural Holding Co. | 715,241 | 984,450 |
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Energy and Utilities (Continued) |
| |||||||||||
71,000 | NorthWestern Corp. | $ | 2,133,407 | $ | 4,999,110 | |||||||
80,000 | Oceaneering International Inc.† | 1,366,984 | 1,261,600 | |||||||||
231,000 | Otter Tail Corp. | 5,148,898 | 11,508,420 | |||||||||
16,000 | Patterson-UTI Energy Inc. | 298,931 | 224,320 | |||||||||
1,220,000 | PNM Resources Inc. | 13,924,461 | 57,754,800 | |||||||||
54,000 | Rowan Companies plc, Cl. A† | 1,874,340 | 582,660 | |||||||||
1,970,000 | RPC Inc. | 1,179,814 | 22,477,700 | |||||||||
20,000 | Siemens Gamesa Renewable Energy SA† | 117,491 | 318,466 | |||||||||
98,000 | SJW Group | 1,838,479 | 6,050,520 | |||||||||
156,000 | Southwest Gas Holdings Inc. | 3,483,170 | 12,832,560 | |||||||||
15,000 | Spire Inc. | 594,172 | 1,234,350 | |||||||||
41,000 | The York Water Co. | 573,821 | 1,407,120 | |||||||||
13,500 | Vestas Wind Systems A/S | 125,317 | 1,135,920 | |||||||||
|
|
|
| |||||||||
73,036,816 | 214,388,397 | |||||||||||
|
|
|
| |||||||||
Entertainment — 2.6% |
| |||||||||||
4,000 | AMC Entertainment Holdings Inc., Cl. A | 56,832 | 59,400 | |||||||||
50,000 | Discovery Inc., Cl. A† | 863,334 | 1,351,000 | |||||||||
100,000 | Discovery Inc., Cl. C† | 926,160 | 2,542,000 | |||||||||
432,612 | Dover Motorsports Inc. | 1,597,821 | 873,876 | |||||||||
140,000 | Entertainment One Ltd. | 655,486 | 814,713 | |||||||||
22,000 | Eros International plc† | 238,814 | 201,080 | |||||||||
96,010 | Inspired Entertainment Inc.† | 620,693 | 639,907 | |||||||||
65,000 | International Speedway Corp., Cl. A | 2,040,899 | 2,835,950 | |||||||||
6,814 | International Speedway Corp., Cl. B | 167,786 | 301,247 | |||||||||
78,334 | Liberty Media Corp.- Liberty Braves, Cl. A† | 1,724,567 | 2,188,652 | |||||||||
255,000 | Liberty Media Corp.- Liberty Braves, Cl. C† | 3,948,720 | 7,081,350 | |||||||||
14,000 | Lions Gate Entertainment Corp., Cl. A | 286,293 | 218,960 | |||||||||
33,000 | Lions Gate Entertainment Corp., Cl. B | 770,966 | 498,300 | |||||||||
30,000 | Manchester United plc, Cl. A | 481,746 | 576,600 | |||||||||
94,000 | Take-Two Interactive Software Inc.† | 779,947 | 8,870,780 | |||||||||
124,000 | The Madison Square Garden Co., Cl. A† | 6,688,655 | 36,348,120 | |||||||||
39,500 | The Walt Disney Co. | 226,513 | 4,385,685 | |||||||||
154,000 | Universal Entertainment Corp. | 2,014,869 | 4,640,982 | |||||||||
96,500 | World Wrestling Entertainment Inc., Cl. A | 1,059,418 | 8,374,270 | |||||||||
|
|
|
| |||||||||
25,149,519 | 82,802,872 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Environmental Services — 0.9% |
| |||||||||||
90,000 | Evoqua Water Technologies Corp.† | $ | 1,310,582 | $ | 1,132,200 | |||||||
348,000 | Republic Services Inc. | 4,279,036 | 27,972,240 | |||||||||
|
|
|
| |||||||||
5,589,618 | 29,104,440 | |||||||||||
|
|
|
| |||||||||
Equipment and Supplies — 10.8% |
| |||||||||||
85,000 | A.O. Smith Corp. | 314,204 | 4,532,200 | |||||||||
500,000 | AMETEK Inc. | 862,107 | 41,485,000 | |||||||||
50,000 | AZZ Inc. | 1,714,863 | 2,046,500 | |||||||||
59,000 | Chart Industries Inc.† | 1,984,077 | 5,340,680 | |||||||||
533,000 | CIRCOR International Inc.† | 15,381,645 | 17,375,800 | |||||||||
390,062 | Core Molding Technologies Inc. | 1,259,494 | 2,878,658 | |||||||||
158,000 | Crown Holdings Inc.† | 638,464 | 8,622,060 | |||||||||
2,335 | Danaher Corp. | 15,131 | 308,267 | |||||||||
175,000 | Donaldson Co. Inc. | 1,507,907 | 8,760,500 | |||||||||
195,000 | Entegris Inc. | 1,015,400 | 6,959,550 | |||||||||
770,000 | Federal Signal Corp. | 5,022,030 | 20,012,300 | |||||||||
300,000 | Flowserve Corp. | 2,954,946 | 13,542,000 | |||||||||
312,000 | Franklin Electric Co. Inc. | 1,483,719 | 15,940,080 | |||||||||
690,000 | Graco Inc. | 7,635,882 | 34,168,800 | |||||||||
93,000 | IDEX Corp. | 705,777 | 14,111,820 | |||||||||
384,000 | Interpump Group SpA | 2,210,588 | 12,526,328 | |||||||||
60,000 | Itron Inc.† | 2,399,315 | 2,799,000 | |||||||||
28,500 | Littelfuse Inc. | 488,645 | 5,200,680 | |||||||||
55,000 | Maezawa Kyuso Industries Co. Ltd. | 359,609 | 943,878 | |||||||||
80,000 | Minerals Technologies Inc. | 3,960,234 | 4,703,200 | |||||||||
6,000 | MSA Safety Inc. | 179,592 | 620,400 | |||||||||
750,000 | Mueller Industries Inc. | 20,150,712 | 23,505,000 | |||||||||
825,000 | Mueller Water Products Inc., Cl. A | 7,338,553 | 8,283,000 | |||||||||
10,000 | Plantronics Inc. | 262,977 | 461,100 | |||||||||
4,000 | Teleflex Inc. | 60,933 | 1,208,640 | |||||||||
275,000 | Tennant Co. | 5,621,091 | 17,074,750 | |||||||||
872,000 | The Gorman-Rupp Co. | 14,719,297 | 29,595,680 | |||||||||
110,000 | The Greenbrier Companies Inc. | 1,383,138 | 3,545,300 | |||||||||
277,096 | The L.S. Starrett Co., Cl. A† | 3,217,579 | 2,133,639 | |||||||||
35,000 | The Manitowoc Co. Inc.† | 419,374 | 574,350 | |||||||||
74,000 | The Middleby Corp.† | 1,077,388 | 9,622,220 | |||||||||
40,000 | The Timken Co. | 1,374,376 | 1,744,800 | |||||||||
48,000 | The Toro Co. | 845,248 | 3,304,320 | |||||||||
7,500 | Valmont Industries Inc. | 172,236 | 975,750 | |||||||||
33,000 | Vicor Corp.† | 165,582 | 1,023,660 | |||||||||
7,875 | Watsco Inc., Cl. B | 23,627 | 1,134,866 | |||||||||
155,000 | Watts Water Technologies Inc., Cl. A | 3,553,514 | 12,527,100 | |||||||||
|
|
|
| |||||||||
112,479,254 | 339,591,876 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Financial Services — 3.7% |
| |||||||||||
10,000 | Alleghany Corp.† | $ | 1,595,952 | $ | 6,124,000 | |||||||
32,000 | Argo Group International Holdings Ltd. | 679,502 | 2,261,120 | |||||||||
9,970 | BKF Capital Group Inc.† | 171,188 | 104,685 | |||||||||
26,000 | Cadence BanCorp. | 591,804 | 482,300 | |||||||||
12,500 | Capitol Federal Financial Inc. | 125,000 | 166,875 | |||||||||
22,000 | Crazy Woman Creek Bancorp Inc. | 343,564 | 381,920 | |||||||||
10,000 | Eagle Bancorp Inc.† | 508,636 | 502,000 | |||||||||
636,000 | Energy Transfer LP | 0 | 9,775,320 | |||||||||
125 | Farmers & Merchants Bank of Long Beach | 819,428 | 1,025,000 | |||||||||
65,000 | Federated Investors Inc., Cl. B | 1,555,108 | 1,905,150 | |||||||||
10,300 | Fidelity Southern Corp. | 71,898 | 282,117 | |||||||||
500,093 | Flushing Financial Corp. | 8,835,466 | 10,967,039 | |||||||||
66,000 | FNB Corp. | 659,922 | 699,600 | |||||||||
575,000 | GAM Holding AG. | 5,326,934 | 1,795,883 | |||||||||
310,000 | Hope Bancorp Inc. | 3,512,655 | 4,054,800 | |||||||||
455,800 | Huntington Bancshares Inc. | 4,363,341 | 5,779,544 | |||||||||
435,000 | Janus Henderson Group plc | 8,195,733 | 10,866,300 | |||||||||
750,072 | KKR & Co. Inc., Cl. A | 3,285,150 | 17,619,191 | |||||||||
150,000 | Legg Mason Inc. | 3,098,475 | 4,105,500 | |||||||||
5,000 | Manning & Napier Inc. | 24,758 | 10,500 | |||||||||
100,000 | Medallion Financial Corp.† | 521,993 | 690,000 | |||||||||
20,000 | Och-Ziff Capital Management Group LLC, Cl. A | 539,537 | 328,200 | |||||||||
165,000 | Oritani Financial Corp. | 1,685,540 | 2,743,950 | |||||||||
120,000 | PJT Partners Inc., Cl. A | 3,728,384 | 5,016,000 | |||||||||
56,000 | Pzena Investment Management Inc., Cl. A | 507,537 | 453,040 | |||||||||
3,000 | Rafael Holdings Inc., Cl. B† | 9,542 | 37,950 | |||||||||
39,072 | Sandy Spring Bancorp Inc. | 1,365,728 | 1,222,172 | |||||||||
843 | South State Corp. | 62,077 | 57,611 | |||||||||
20,000 | State Auto Financial Corp. | 523,760 | 658,400 | |||||||||
427,000 | Sterling Bancorp | 4,700,044 | 7,955,010 | |||||||||
94,700 | Synovus Financial Corp. | 2,818,961 | 3,253,892 | |||||||||
10,500 | T. Rowe Price Group Inc. | 312,410 | 1,051,260 | |||||||||
24,000 | TFS Financial Corp. | 353,694 | 395,280 | |||||||||
145,000 | The Charles Schwab Corp. | 2,314,814 | 6,200,200 | |||||||||
15,000 | Thomasville Bancshares Inc. | 570,703 | 581,250 | |||||||||
40,782 | Value Line Inc . | 570,979 | 1,006,908 | |||||||||
414,000 | Waddell & Reed Financial Inc., Cl. A | 6,989,968 | 7,158,060 | |||||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 2,500 | |||||||||
490,000 | Wright Investors’ Service Holdings Inc.† | 971,719 | 220,500 | |||||||||
|
|
|
| |||||||||
72,313,277 | 117,941,027 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Food and Beverage — 9.8% |
| |||||||||||
575,000 | Arca Continental SAB de CV | $ | 1,132,490 | $ | 3,199,340 | |||||||
112,500 | Brown-Forman Corp., Cl. A | 867,033 | 5,756,625 | |||||||||
24,000 | Brown-Forman Corp., Cl. B | 162,341 | 1,266,720 | |||||||||
21,000 | Bull-Dog Sauce Co. Ltd. | 120,234 | 396,770 | |||||||||
3,900,000 | China Tontine Wines Group Ltd.† | 672,138 | 68,561 | |||||||||
220,000 | Chr. Hansen Holding A/S | 9,205,103 | 22,299,486 | |||||||||
620,000 | Cott Corp. | 4,874,545 | 9,058,200 | |||||||||
350,000 | Crimson Wine Group Ltd.† | 3,112,381 | 2,880,500 | |||||||||
3,800,000 | Davide Campari-Milano SpA | 12,727,117 | 37,298,364 | |||||||||
225,000 | Denny’s Corp.† | 718,072 | 4,128,750 | |||||||||
3,500,000 | Dynasty Fine Wines Group Ltd.†(b) | 1,246,520 | 0 | |||||||||
110,000 | Farmer Brothers Co.† | 1,983,969 | 2,201,100 | |||||||||
510,000 | Flowers Foods Inc. | 1,347,594 | 10,873,200 | |||||||||
103,000 | Ingredion Inc. | 2,069,581 | 9,753,070 | |||||||||
180,000 | ITO EN Ltd. | 3,741,497 | 9,338,627 | |||||||||
135,000 | Iwatsuka Confectionery Co. Ltd. | 6,518,006 | 5,158,576 | |||||||||
23,000 | J & J Snack Foods Corp. | 509,737 | 3,653,320 | |||||||||
146,000 | Kameda Seika Co. Ltd. | 5,952,869 | 6,995,037 | |||||||||
1,155,000 | Kikkoman Corp. | 11,777,305 | 56,588,018 | |||||||||
68,000 | Lifeway Foods Inc.† | 547,282 | 164,560 | |||||||||
870,000 | Maple Leaf Foods Inc. | 15,336,470 | 20,123,246 | |||||||||
6,000 | MEIJI Holdings Co. Ltd. | 117,526 | 486,691 | |||||||||
38,000 | MGP Ingredients Inc. | 88,817 | 2,931,700 | |||||||||
90,000 | Morinaga Milk Industry Co. Ltd. | 1,808,850 | 3,049,265 | |||||||||
27,000 | National Beverage Corp. | 1,162,091 | 1,558,710 | |||||||||
85,000 | Nissin Foods Holdings Co. Ltd. | 2,907,986 | 5,828,747 | |||||||||
190,000 | Post Holdings Inc.† | 6,167,514 | 20,786,000 | |||||||||
310,000 | Rock Field Co. Ltd. | 2,420,094 | 4,573,220 | |||||||||
24,200 | The Boston Beer Co. Inc., Cl. A† | 514,747 | 7,132,466 | |||||||||
392,000 | The Hain Celestial Group Inc.† | 3,415,282 | 9,063,040 | |||||||||
78,000 | The J.M. Smucker Co. | 2,824,921 | 9,087,000 | |||||||||
750,000 | Tingyi (Cayman Islands) Holding Corp. | 1,647,589 | 1,236,314 | |||||||||
339,001 | Tootsie Roll Industries Inc. | 5,822,917 | 12,624,397 | |||||||||
72,100 | United Natural Foods Inc.† | 1,663,229 | 953,162 | |||||||||
440,000 | Vina Concha y Toro SA | 820,659 | 916,525 | |||||||||
1,400,000 | Vitasoy International Holdings Ltd. | 1,028,189 | 6,777,113 | |||||||||
20,000 | Willamette Valley Vineyards Inc.† | 73,225 | 144,200 | |||||||||
148,000 | Yakult Honsha Co. Ltd. | 3,691,177 | 10,335,830 | |||||||||
|
|
|
| |||||||||
120,797,097 | 308,686,450 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
8
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Health Care — 5.9% |
| |||||||||||
25,000 | Achaogen Inc.† | $ | 115,892 | $ | 11,407 | |||||||
4,500 | Align Technology Inc.† | 31,390 | 1,279,485 | |||||||||
8,000 | Allergan plc | 1,305,913 | 1,171,280 | |||||||||
28,000 | AngioDynamics Inc.† | 282,900 | 640,080 | |||||||||
6,000 | Anika Therapeutics Inc.† | 50,333 | 181,440 | |||||||||
10,000 | Bio-Rad Laboratories Inc., Cl. A† | 615,285 | 3,056,800 | |||||||||
18,000 | Bruker Corp. | 164,975 | 691,920 | |||||||||
100,000 | Cantel Medical Corp. | 1,090,357 | 6,689,000 | |||||||||
42,000 | Cardiovascular Systems Inc.† | 1,223,149 | 1,623,720 | |||||||||
5,000 | Cassava Sciences Inc.† | 18,175 | 6,450 | |||||||||
68,000 | Chemed Corp. | 1,055,185 | 21,764,760 | |||||||||
45,000 | CONMED Corp. | 1,089,884 | 3,743,100 | |||||||||
34,400 | Covetrus Inc.† | 183,588 | 1,095,640 | |||||||||
460,000 | Cutera Inc.† | 7,178,671 | 8,123,600 | |||||||||
54,000 | DexCom Inc.† | 389,482 | 6,431,400 | |||||||||
93,000 | Evolent Health Inc., Cl. A† | 1,491,751 | 1,169,940 | |||||||||
12,000 | Global Blood Therapeutics Inc.† | 601,602 | 635,160 | |||||||||
192,000 | Globus Medical Inc., Cl. A† | 4,431,625 | 9,486,720 | |||||||||
86,000 | Henry Schein Inc.† | 660,463 | 5,169,460 | |||||||||
4,000 | Heska Corp.† | 30,737 | 340,480 | |||||||||
39,000 | ICU Medical Inc.† | 1,644,265 | 9,333,870 | |||||||||
10,000 | Lexicon Pharmaceuticals Inc.† | 99,692 | 55,600 | |||||||||
30,000 | LivaNova plc† | 1,570,817 | 2,917,500 | |||||||||
100,000 | Masimo Corp.† | 2,571,721 | 13,828,000 | |||||||||
1,600 | Melinta Therapeutics Inc.† | 9,950 | 5,680 | |||||||||
165,000 | Meridian Bioscience Inc. | 3,185,047 | 2,905,650 | |||||||||
25,733 | Neogen Corp.† | 549,687 | 1,476,817 | |||||||||
150,000 | NuVasive Inc.† | 4,579,482 | 8,518,500 | |||||||||
25,500 | Nuvectra Corp.† | 174,575 | 280,755 | |||||||||
14,000 | Ophthotech Corp.† | 75,912 | 19,740 | |||||||||
238,800 | OPKO Health Inc.† | 940,497 | 623,268 | |||||||||
158,000 | Orthofix Medical Inc.† | 3,874,811 | 8,912,780 | |||||||||
43,700 | Owens & Minor Inc. | 584,381 | 179,170 | |||||||||
56,000 | Patterson Cos. Inc. | 1,258,401 | 1,223,600 | |||||||||
505,000 | Quidel Corp.† | 5,220,064 | 33,062,350 | |||||||||
200,000 | RTI Surgical Holdings Inc.† | 965,135 | 1,202,000 | |||||||||
25,000 | Seikagaku Corp. | 292,810 | 270,459 | |||||||||
50,000 | STERIS plc | 3,727,000 | 6,401,500 | |||||||||
2,000 | Straumann Holding AG | 179,710 | 1,631,936 | |||||||||
3,000 | Stryker Corp. | 142,188 | 592,560 | |||||||||
35,000 | SurModics Inc.† | 716,119 | 1,521,800 | |||||||||
32,000 | Teladoc Health Inc.† | 1,074,935 | 1,779,200 | |||||||||
70,000 | Tetraphase Pharmaceuticals Inc.† | 291,487 | 93,800 | |||||||||
7,700 | The Cooper Companies Inc. | 284,171 | 2,280,509 | |||||||||
45,000 | United-Guardian Inc. | 406,324 | 861,750 |
Shares | Cost | Market Value | ||||||||||
381,000 | Wright Medical Group NV† | $ | 7,836,733 | $ | 11,982,450 | |||||||
|
|
|
| |||||||||
64,267,271 | 185,273,086 | |||||||||||
|
|
|
| |||||||||
Home Furnishings — 0.3% |
| |||||||||||
276,500 | Bassett Furniture Industries Inc. | 4,260,221 | 4,537,365 | |||||||||
19,000 | Ethan Allen Interiors Inc. | 451,789 | 363,470 | |||||||||
162,000 | La-Z-Boy Inc. | 2,976,583 | 5,344,380 | |||||||||
|
|
|
| |||||||||
7,688,593 | 10,245,215 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 4.1% |
| |||||||||||
495,000 | Boyd Gaming Corp. | 4,085,890 | 13,543,200 | |||||||||
190,000 | Canterbury Park Holding Corp. | 1,954,657 | 2,758,800 | |||||||||
210,000 | Churchill Downs Inc. | 2,232,181 | 18,954,600 | |||||||||
160,000 | Formosa International Hotels Corp. | 1,164,055 | 822,829 | |||||||||
559,930 | Full House Resorts Inc.† | 1,644,192 | 1,131,059 | |||||||||
110,000 | Gaming and Leisure Properties Inc., REIT | 1,158,505 | 4,242,700 | |||||||||
1,000,000 | Genting Singapore Ltd. | 969,758 | 767,386 | |||||||||
171,000 | Golden Entertainment Inc.† | 1,549,180 | 2,421,360 | |||||||||
115,000 | International Game Technology plc | 1,971,010 | 1,493,850 | |||||||||
161,000 | Las Vegas Sands Corp. | 778,719 | 9,814,560 | |||||||||
3,000,000 | Mandarin Oriental International Ltd. | 4,216,476 | 5,850,000 | |||||||||
120,000 | Penn National Gaming Inc.† | 2,707,425 | 2,412,000 | |||||||||
530,000 | Ryman Hospitality Properties Inc., REIT | 14,775,092 | 43,587,200 | |||||||||
2,950,000 | The Hongkong & Shanghai Hotels Ltd. | 3,184,911 | 4,246,524 | |||||||||
370,000 | The Marcus Corp. | 4,661,841 | 14,818,500 | |||||||||
22,000 | Wynn Resorts Ltd. | 153,485 | 2,625,040 | |||||||||
|
|
|
| |||||||||
47,207,377 | 129,489,608 | |||||||||||
|
|
|
| |||||||||
Machinery — 1.7% |
| |||||||||||
457,000 | Astec Industries Inc. | 16,645,800 | 17,256,320 | |||||||||
1,700,000 | CNH Industrial NV | 5,782,380 | 17,340,000 | |||||||||
2,000 | Disco Corp. | 156,366 | 284,580 | |||||||||
230,000 | Kennametal Inc. | 4,431,503 | 8,452,500 | |||||||||
6,000 | Nordson Corp. | 107,171 | 795,120 | |||||||||
173,000 | The Eastern Co. | 3,390,979 | 4,760,960 | |||||||||
200,000 | Twin Disc Inc.† | 3,702,523 | 3,330,000 | |||||||||
114,000 | Welbilt Inc.† | 718,414 | 1,867,320 | |||||||||
|
|
|
| |||||||||
34,935,136 | 54,086,800 | |||||||||||
|
|
|
| |||||||||
Manufactured Housing and Recreational |
| |||||||||||
90,200 | Cavco Industries Inc.† | 2,503,846 | 10,601,206 | |||||||||
87,100 | Nobility Homes Inc. | 1,121,881 | 1,959,750 | |||||||||
85,000 | Skyline Champion Corp. | 500,100 | 1,615,000 | |||||||||
55,000 | Winnebago Industries Inc. | 637,722 | 1,713,250 | |||||||||
|
|
|
| |||||||||
4,763,549 | 15,889,206 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
9
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Metals and Mining — 0.9% |
| |||||||||||
270,000 | Allegheny Technologies Inc.† | $ | 4,521,924 | $ | 6,903,900 | |||||||
80,000 | Century Aluminum Co.† | 678,742 | 710,400 | |||||||||
25,500 | Constellium NV, Cl. A† | 165,390 | 203,490 | |||||||||
45,000 | Ivanhoe Mines Ltd., Cl. A† | 117,783 | 107,756 | |||||||||
120,000 | Kinross Gold Corp.† | 636,310 | 412,800 | |||||||||
284,000 | Materion Corp. | 5,872,292 | 16,205,040 | |||||||||
375,000 | TimkenSteel Corp.† | 5,574,456 | 4,072,500 | |||||||||
189,000 | Turquoise Hill Resources Ltd.† | 517,636 | 313,740 | |||||||||
|
|
|
| |||||||||
18,084,533 | 28,929,626 | |||||||||||
|
|
|
| |||||||||
Publishing — 1.0% |
| |||||||||||
3,000 | Graham Holdings Co., Cl. B | 1,379,851 | 2,049,540 | |||||||||
35,000 | Il Sole 24 Ore SpA† | 101,603 | 20,023 | |||||||||
12,000 | John Wiley & Sons Inc., Cl. B | 46,500 | 524,400 | |||||||||
50,000 | Meredith Corp. | 1,444,765 | 2,763,000 | |||||||||
65,000 | News Corp., Cl. A | 91,837 | 808,600 | |||||||||
1,188,000 | The E.W. Scripps Co., Cl. A | 9,786,496 | 24,948,000 | |||||||||
|
|
|
| |||||||||
12,851,052 | 31,113,563 | |||||||||||
|
|
|
| |||||||||
Real Estate — 1.6% |
| |||||||||||
79,000 | Capital Properties Inc., Cl. A | 948,311 | 1,224,500 | |||||||||
182,000 | Cohen & Steers Inc. | 4,506,189 | 7,693,140 | |||||||||
272,000 | Griffin Industrial Realty Inc.(a) | 5,222,057 | 9,479,200 | |||||||||
6,967 | Gyrodyne LLC† | 201,352 | 125,476 | |||||||||
19,500 | Lamar Advertising Co., Cl. A, REIT | 164,976 | 1,545,570 | |||||||||
98,500 | Morguard Corp. | 1,251,535 | 14,649,512 | |||||||||
99,995 | Reading International Inc., Cl. A† | 1,588,434 | 1,595,920 | |||||||||
2,537 | Reading International Inc., Cl. B† | 51,354 | 64,059 | |||||||||
24,000 | Seritage Growth Properties, Cl. A, REIT | 999,473 | 1,066,560 | |||||||||
195,000 | Tejon Ranch Co.† | 4,923,720 | 3,432,000 | |||||||||
620,000 | The St. Joe Co.† | 10,305,110 | 10,223,800 | |||||||||
11,234 | Twin River Worldwide Holdings Inc.† | 427,247 | 336,458 | |||||||||
|
|
|
| |||||||||
30,589,758 | 51,436,195 | |||||||||||
|
|
|
| |||||||||
Retail — 5.0% | ||||||||||||
144,000 | Aaron’s Inc. | 178,599 | 7,574,400 | |||||||||
200,000 | AutoNation Inc.† | 3,399,442 | 7,144,000 | |||||||||
21,024 | Barnes & Noble Education Inc.† | 156,313 | 88,301 | |||||||||
34,000 | Barnes & Noble Inc. | 301,001 | 184,620 | |||||||||
56,000 | Big 5 Sporting Goods Corp. | 403,479 | 178,080 | |||||||||
2,350 | Biglari Holdings Inc., Cl. A† | 2,172,759 | 1,728,261 | |||||||||
22,400 | Biglari Holdings Inc., Cl. B† | 4,210,470 | 3,166,464 | |||||||||
87,000 | Casey’s General Stores Inc. | 3,308,248 | 11,202,990 |
Shares | Cost | Market Value | ||||||||||
164,000 | Copart Inc.† | $ | 1,407,742 | $ | 9,936,760 | |||||||
2,500 | Dunkin’ Brands Group Inc. | 47,500 | 187,750 | |||||||||
107,000 | GNC Holdings Inc., Cl. A† | 363,080 | 292,110 | |||||||||
960,000 | Hertz Global Holdings Inc.† | 19,186,256 | 16,675,200 | |||||||||
658,500 | Ingles Markets Inc., Cl. A | 10,882,131 | 18,187,770 | |||||||||
50,000 | J.C. Penney Co. Inc.† | 306,718 | 74,500 | |||||||||
79,000 | Lands’ End Inc.† | 1,395,182 | 1,312,190 | |||||||||
170,000 | Macy’s Inc. | 2,290,516 | 4,085,100 | |||||||||
85,000 | Movado Group Inc. | 1,429,062 | 3,092,300 | |||||||||
10,000 | Murphy USA Inc.† | 382,075 | 856,200 | |||||||||
157,000 | Nathan’s Famous Inc. | 262,984 | 10,738,800 | |||||||||
100,000 | Penske Automotive Group Inc. | 1,476,842 | 4,465,000 | |||||||||
100,000 | Pets at Home Group plc | 171,753 | 206,570 | |||||||||
1,590,000 | Rite Aid Corp.† | 3,148,321 | 1,009,650 | |||||||||
290,000 | Rush Enterprises Inc., Cl. B | 3,282,048 | 12,043,700 | |||||||||
8,000 | Salvatore Ferragamo SpA | 164,935 | 171,584 | |||||||||
400,000 | The Cheesecake Factory Inc. | 11,497,228 | 19,568,000 | |||||||||
187,000 | Tractor Supply Co. | 1,706,422 | 18,281,120 | |||||||||
47,000 | Village Super Market Inc., Cl. A | 1,218,234 | 1,284,510 | |||||||||
100,000 | Vitamin Shoppe, Inc.† | 613,619 | 704,000 | |||||||||
57,000 | Weis Markets Inc. | 1,831,840 | 2,326,170 | |||||||||
600 | Winmark Corp. | 41,191 | 113,154 | |||||||||
|
|
|
| |||||||||
77,235,990 | 156,879,254 | |||||||||||
|
|
|
| |||||||||
Specialty Chemicals — 3.5% |
| |||||||||||
90,000 | Albemarle Corp. | 2,886,363 | 7,378,200 | |||||||||
71,000 | Ashland Global Holdings Inc. | 1,073,756 | 5,547,230 | |||||||||
2,150,000 | Ferro Corp.† | 12,219,512 | 40,699,500 | |||||||||
201,370 | GCP Applied Technologies Inc.† | 5,934,538 | 5,960,552 | |||||||||
91,200 | General Chemical Group Inc.† | 1,186 | 2,554 | |||||||||
305,000 | H.B. Fuller Co. | 4,074,383 | 14,835,200 | |||||||||
37,550 | Hawkins Inc. | 1,274,328 | 1,382,967 | |||||||||
138,000 | Huntsman Corp. | 469,175 | 3,103,620 | |||||||||
15,000 | NewMarket Corp. | 1,547,224 | 6,503,400 | |||||||||
300,200 | OMNOVA Solutions Inc.† | 576,530 | 2,107,404 | |||||||||
12,000 | Quaker Chemical Corp. | 196,457 | 2,403,960 | |||||||||
210,000 | Sensient Technologies Corp. | 4,210,758 | 14,235,900 | |||||||||
26,102 | SGL Carbon SE† | 257,302 | 230,580 | |||||||||
10,000 | Takasago International Corp. | 271,028 | 301,814 | |||||||||
300,000 | Valvoline Inc. | 3,472,249 | 5,568,000 | |||||||||
|
|
|
| |||||||||
38,464,789 | 110,260,881 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 1.4% |
| |||||||||||
71,000 | ATN International Inc. | 3,013,519 | 4,003,690 | |||||||||
380,000 | Cincinnati Bell Inc.† | 5,319,957 | 3,625,200 | |||||||||
61,000 | Consolidated Communications Holdings Inc. | 471,527 | 665,510 | |||||||||
170,000 | Gogo Inc.† | 1,253,032 | 763,300 | |||||||||
298,000 | HC2 Holdings Inc.† | 1,193,020 | 730,100 | |||||||||
6,000 | IDT Corp., Cl. B | 25,437 | 39,840 |
See accompanying notes to financial statements.
10
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Telecommunications (Continued) |
| |||||||||||
120,000 | Iridium Communications Inc.† | $ | 1,180,541 | $ | 3,172,800 | |||||||
95,000 | Liberty Latin America Ltd., Cl. A† | 2,830,097 | 1,837,300 | |||||||||
239,000 | Liberty Latin America Ltd., Cl. C† | 7,098,689 | 4,648,550 | |||||||||
55,000 | Loral Space & Communications Inc.† | 2,193,920 | 1,982,750 | |||||||||
35,000 | NII Holdings Inc.† | 135,190 | 68,600 | |||||||||
130,000 | Nuvera Communications Inc. | 1,161,754 | 2,468,700 | |||||||||
40,000 | Pharol SGPS SA† | 16,517 | 8,660 | |||||||||
105,000 | Rogers Communications Inc., Cl. B | 416,392 | 5,651,100 | |||||||||
176,500 | Shenandoah Telecommunications Co. | 628,938 | 7,829,540 | |||||||||
760,000 | Sprint Corp.† | 4,015,269 | 4,294,000 | |||||||||
831,000 | VEON Ltd., ADR | 2,426,656 | 1,736,790 | |||||||||
22,000 | Verizon Communications Inc. | 107,086 | 1,300,860 | |||||||||
|
|
|
| |||||||||
33,487,541 | 44,827,290 | |||||||||||
|
|
|
| |||||||||
Transportation — 1.2% |
| |||||||||||
490,000 | GATX Corp. | 15,218,669 | 37,421,300 | |||||||||
20,000 | Irish Continental Group plc | 14,688 | 108,249 | |||||||||
165,000 | Navigator Holdings Ltd.† | 2,188,120 | 1,815,000 | |||||||||
|
|
|
| |||||||||
17,421,477 | 39,344,549 | |||||||||||
|
|
|
| |||||||||
Wireless Communications — 0.3% |
| |||||||||||
104,000 | Millicom International Cellular SA, SDR | 6,258,179 | 6,314,521 | |||||||||
62,000 | United States Cellular Corp.† | 2,412,889 | 2,846,420 | |||||||||
|
|
|
| |||||||||
8,671,068 | 9,160,941 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 1,322,965,536 | 3,146,194,333 | ||||||||||
|
|
|
| |||||||||
CLOSED-END FUNDS — 0.1% |
| |||||||||||
75,000 | MVC Capital Inc. | 687,702 | 680,250 | |||||||||
84,960 | The Central Europe, Russia, and Turkey Fund Inc. | 2,420,869 | 2,043,373 | |||||||||
31,977 | The European Equity Fund Inc. | 318,173 | 278,839 | |||||||||
119,278 | The New Germany Fund Inc. | 1,661,850 | 1,666,314 | |||||||||
|
|
|
| |||||||||
TOTALCLOSED-END FUNDS | 5,088,594 | 4,668,776 | ||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
PREFERRED STOCKS — 0.3% |
| |||||||||||
Automotive: Parts and Accessories — 0.2% |
| |||||||||||
135,000 | Jungheinrich AG | $ | 927,856 | $ | 4,394,701 | |||||||
|
|
|
| |||||||||
Financial Services — 0.1% |
| |||||||||||
183,500 | Steel Partners Holdings LP Ser. A, 6.000% | 4,898,076 | 3,969,105 | |||||||||
|
|
|
| |||||||||
TOTAL PREFERRED STOCKS | 5,825,932 | 8,363,806 | ||||||||||
|
|
|
| |||||||||
RIGHTS — 0.0% | ||||||||||||
Entertainment — 0.0% |
| |||||||||||
1,680,000 | Media General Inc., CVR†(b) | 2 | 2 | |||||||||
|
|
|
| |||||||||
Health Care — 0.0% |
| |||||||||||
290,000 | Sanofi, CVR† | 256,986 | 130,500 | |||||||||
|
|
|
| |||||||||
Specialty Chemicals — 0.0% |
| |||||||||||
65,000 | A. Schulman Inc., | 33,995 | 33,995 | |||||||||
|
|
|
| |||||||||
TOTAL RIGHTS | 290,983 | 164,497 | ||||||||||
|
|
|
| |||||||||
Principal | ||||||||||||
CONVERTIBLE CORPORATE BONDS — 0.0% |
| |||||||||||
Telecommunications — 0.0% |
| |||||||||||
$ 280,000 | Gogo Inc., 6.000%, 05/15/22(c) | 280,000 | 272,488 | |||||||||
|
|
|
| |||||||||
TOTAL | $ | 1,334,451,045 | 3,159,663,900 | |||||||||
|
| |||||||||||
Other Assets and Liabilities |
| (736,279 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 3,158,927,621 | |||||||||
|
|
(a) | Security considered an affiliated holding because the Fund owns at least 5% of its outstanding shares. |
(b) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(c) | 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 March 31, 2019, the market value of the Rule 144A security amounted to $272,488 or 0.01% of net assets. |
† | Non-income producing security. |
ADR | American Depositary Receipt |
CVR | Contingent Value Right |
REIT | Real Estate Investment Trust |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
11
The Gabelli Small Cap Growth Fund
Statement of Assets and Liabilities |
| |||
March 31, 2019 (Unaudited) |
| |||
Assets: | ||||
Investments, at value (cost $1,304,259,864) | $ | 3,129,332,048 | ||
Investments in affiliates, at value | 30,331,852 | |||
Foreign currency, at value (cost $103,984) | 104,576 | |||
Cash | 226,292 | |||
Receivable for investments sold | 8,621,259 | |||
Receivable for Fund shares sold | 2,066,513 | |||
Dividends and interest receivable | 3,006,375 | |||
Prepaid expenses | 75,928 | |||
|
| |||
Total Assets | 3,173,764,843 | |||
|
| |||
Liabilities: | ||||
Payable for Fund shares redeemed | 2,624,416 | |||
Payable for investments purchased | 76,010 | |||
Payable for investment advisory fees | 2,695,083 | |||
Payable for distribution fees | 486,493 | |||
Payable for accounting fees | 7,500 | |||
Line of credit payable | 7,981,000 | |||
Other accrued expenses | 966,720 | |||
|
| |||
Total Liabilities | 14,837,222 | |||
|
| |||
Net Assets | ||||
(applicable to 58,966,163 shares outstanding) | $ | 3,158,927,621 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 1,209,070,928 | ||
Total distributable earnings | 1,949,856,693 | |||
|
| |||
Net Assets | $ | 3,158,927,621 | ||
|
| |||
Shares of Capital Stock, each at $0.001 | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($1,390,725,069 ÷ 26,019,547 shares outstanding; 150,000,000 shares authorized) | $53.45 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($174,499,695 ÷ 3,266,262 shares outstanding; 50,000,000 shares authorized) | $53.42 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $56.68 | |||
Class C: | ||||
Net Asset Value and offering price per share ($172,599,540 ÷ 3,719,785 shares outstanding; 50,000,000 shares authorized) | $46.40 | (a) | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($1,421,103,317 ÷ 25,960,569 shares outstanding; 50,000,000 shares authorized) | $54.74 | |||
(a) | Redemption price varies based on the length of time held. |
Statement of Operations For the Six Months Ended March 31, 2019 (Unaudited) |
| |||
Investment Income: | ||||
Dividends - unaffiliated (net of foreign withholding taxes of $209,400) | $ | 24,207,676 | ||
Dividends - affiliated | 214,708 | |||
Interest | 49,015 | |||
|
| |||
Total Investment Income | 24,471,399 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 16,132,317 | |||
Distribution fees - Class AAA | 1,817,279 | |||
Distribution fees - Class A | 224,968 | |||
Distribution fees - Class C | 908,006 | |||
Shareholder services fees | 1,417,710 | |||
Shareholder communication expenses | 265,392 | |||
Custodian fees | 190,057 | |||
Interest expense | 121,837 | |||
Directors’ fees | 71,479 | |||
Registration expenses | 71,347 | |||
Legal and audit fees | 26,309 | |||
Accounting fees | 22,500 | |||
Miscellaneous expenses | 93,413 | |||
|
| |||
Total Expenses | 21,362,614 | |||
|
| |||
Less: | ||||
Advisory fee reduction on unsupervised assets (See Note 3) | (69,489 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (12,783 | ) | ||
|
| |||
Total Reductions | (82,272 | ) | ||
|
| |||
Net Expenses | 21,280,342 | |||
|
| |||
Net Investment Income | 3,191,057 | |||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized gain on investments - unaffiliated | 161,606,129 | |||
Net realized loss on investments - affiliated | (867,326 | ) | ||
Net realized loss on foreign currency transactions | (8,863 | ) | ||
|
| |||
Net realized gain on investments and foreign currency transactions | 160,729,940 | |||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (423,893,604 | ) | ||
on foreign currency translations | (5,630 | ) | ||
|
| |||
Net change in unrealized appreciation/ depreciation on investments and foreign currency translations | (423,899,234 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (263,169,294 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (259,978,237 | ) | |
|
|
See accompanying notes to financial statements.
12
The Gabelli Small Cap Growth Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2019 (Unaudited) | Year Ended September 30, 2018 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 3,191,057 | $ | 8,421,373 | ||||||
Net realized gain on investments and foreign currency transactions | 160,729,940 | 118,161,846 | ||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (423,899,234 | ) | 138,475,243 | |||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (259,978,237 | ) | 265,058,462 | |||||||
|
|
|
| |||||||
Distributions to Shareholders: | ||||||||||
Net investment income and net realized gain | ||||||||||
Class AAA | (62,112,537 | ) | (97,375,048 | ) | ||||||
Class A | (7,573,003 | ) | (11,913,171 | ) | ||||||
Class C | (8,527,032 | ) | (13,818,420 | ) | ||||||
Class I | (61,933,596 | ) | (75,491,783 | ) | ||||||
Class T* | — | (57 | ) | |||||||
|
|
|
| |||||||
Distributions to Shareholders | (140,146,168 | ) | (198,598,479 | ) | ||||||
|
|
|
| |||||||
Capital Share Transactions: | ||||||||||
Class AAA | (138,617,822 | ) | (201,418,340 | ) | ||||||
Class A | (12,770,959 | ) | (24,283,403 | ) | ||||||
Class C | (18,903,121 | ) | (18,302,979 | ) | ||||||
Class I | (32,199,667 | ) | 188,547,456 | |||||||
Class T* | — | (1,104 | ) | |||||||
|
|
|
| |||||||
Net Decrease in Net Assets from Capital Share Transactions | (202,491,569 | ) | (55,458,370 | ) | ||||||
|
|
|
| |||||||
Redemption Fees | 1,313 | 9,649 | ||||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets | (602,614,661 | ) | 11,011,262 | |||||||
Net Assets: | ||||||||||
Beginning of year | 3,761,542,282 | 3,750,531,020 | ||||||||
|
|
|
| |||||||
End of period | $ | 3,158,927,621 | $ | 3,761,542,282 | ||||||
|
|
|
|
* | Class T Shares were liquidated on September 21, 2018. |
See accompanying notes to financial statements.
13
The Gabelli Small Cap Growth Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) | Ratio to Average Net Assets/ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
from Investment Operations | Distributions | Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss) (a)(b) | Net Realized and Unrealized Gain (Loss) on Investments | Total from | Net Investment Income | Net | Total | Redemption | Net Asset Value, End of Period | Total | Net Assets Period (in 000’s) | Net Investment Income (Loss) (a) | Operating | Portfolio Turnover | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $59.61 | $0.03 | $(3.97 | ) | $(3.94 | ) | $(0.09 | ) | $(2.13 | ) | $(2.22 | ) | $0.00 | $53.45 | (6.55 | )% | $1,390,725 | 0.13%(e) | 1.39%(e)(f)(g) | 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 58.63 | 0.09 | 4.01 | 4.10 | — | (3.12 | ) | (3.12 | ) | 0.00 | 59.61 | 7.21 | 1,711,850 | 0.16 | 1.36(g) | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 50.13 | 0.02 | 10.47 | 10.49 | — | (1.99 | ) | (1.99 | ) | 0.00 | 58.63 | 21.56 | 1,882,823 | 0.04 | 1.38(g) | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 45.47 | 0.02 | 6.36 | 6.38 | — | (1.72 | ) | (1.72 | ) | 0.00 | 50.13 | 14.26 | 1,779,333 | 0.05 | 1.39(g)(h) | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(g) | 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $59.58 | $0.03 | $(3.97 | ) | $(3.94 | ) | $(0.09 | ) | $(2.13 | ) | $(2.22 | ) | $0.00 | $53.42 | (6.55 | )% | $174,500 | 0.13%(e) | 1.39%(e)(f)(g) | 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 58.60 | 0.09 | 4.01 | 4.10 | — | (3.12 | ) | (3.12 | ) | 0.00 | 59.58 | 7.21 | 208,947 | 0.16 | 1.36(g) | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 50.11 | 0.01 | 10.47 | 10.48 | — | (1.99 | ) | (1.99 | ) | 0.00 | 58.60 | 21.55 | 229,282 | 0.02 | 1.38(g) | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 45.45 | 0.02 | 6.36 | 6.38 | — | (1.72 | ) | (1.72 | ) | 0.00 | 50.11 | 14.26 | 270,163 | 0.05 | 1.39(g)(h) | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(g) | 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $52.16 | $(0.14 | ) | $(3.49 | ) | $(3.63 | ) | — | $(2.13 | ) | $(2.13 | ) | $0.00 | $46.40 | (6.90 | )% | $172,600 | (0.62)%(e) | 2.14%(e)(f)(g) | 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 52.05 | (0.30 | ) | 3.53 | 3.23 | — | (3.12 | ) | (3.12 | ) | 0.00 | 52.16 | 6.41 | 215,939 | (0.59) | 2.11(g) | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 45.04 | (0.34 | ) | 9.34 | 9.00 | — | (1.99 | ) | (1.99 | ) | 0.00 | 52.05 | 20.65 | 233,786 | (0.71) | 2.13(g) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 41.31 | (0.30 | ) | 5.75 | 5.45 | — | (1.72 | ) | (1.72 | ) | 0.00 | 45.04 | 13.41 | 227,464 | (0.70) | 2.14(g)(h) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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(g) | 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $61.09 | $0.10 | $(4.07 | ) | $(3.97 | ) | $(0.25 | ) | $(2.13 | ) | $(2.38 | ) | $0.00 | $54.74 | (6.44) | % | $1,421,103 | 0.38%(e) | 1.14%(e)(f)(g) | 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 59.86 | 0.25 | 4.10 | 4.35 | — | (3.12 | ) | (3.12 | ) | 0.00 | 61.09 | 7.49 | 1,624,806 | 0.43 | 1.11(g) | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 51.09 | 0.16 | 10.67 | 10.83 | (0.07 | ) | (1.99 | ) | (2.06 | ) | 0.00 | 59.86 | 21.84 | 1,404,639 | 0.30 | 1.13(g) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 46.19 | 0.13 | 6.49 | 6.62 | — | (1.72 | ) | (1.72 | ) | 0.00 | 51.09 | 14.56 | 1,138,299 | 0.29 | 1.14(g)(h) | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(g) | 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 |
† | 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 period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(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) | For the six months ended March 31, 2019, unaudited. |
(e) | Annualized. |
(f) | The Fund incurred interest expense during the six months ended March 31, 2019. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.38% (Class AAA and Class A), 2.13% (Class C), and 1.13% (Class I). For the years ended September 30, 2018, 2017, 2016, 2015, and 2014, the effect of interest expense was minimal. |
(g) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the six months ended March 31, 2019 and the years ended September 30, 2018, 2017, 2016, and 2015, there was no impact on the expense ratios. |
(h) | During the year ended September 30, 2016, the Fund received a reimbursement of custody expenses paid in prior years. Had such reimbursement (allocated by relative net asset values of the Fund’s share classes) been included in that period, the expense ratios would have been 1.38% (Class AAA and Class A), 2.13% (Class C), and 1.13% (Class I). |
See accompanying notes to financial statements.
14
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
1. Organization.The Gabelli Small Cap Growth Fund is a series of the Gabelli Equity Series Funds, Inc. (theCorporation), which was incorporated on July 25, 1991 in Maryland. The Fund is a diversifiedopen-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and one of four 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 companyaccounting 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.
New Accounting Pronouncements.To improve the effectiveness of fair value disclosure requirements, theFinancial Accounting Standards Board recently issued Accounting Standard Update (ASU)2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU2018-13), which adds, removes, and modifies certain aspects relating to fair value disclosure. ASU2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption of the additions relating to ASU2018-13 is not required, even if early adoption is elected for the removals under ASU2018-13. Management has early adopted the removals set forth in ASU2018-13 in these financial statements and has not early adopted the additions set forth in ASU2018-13.
Security Valuation.Portfolio securities listed or traded on a nationally recognized securities exchange or tradedin 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 obligations 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 securities are valued using the closing bid price, 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. 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. OTC futures and options on futures for which market quotations are readily available will be valued by quotations
15
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.
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 andnon-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.
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). |
16
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
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 March 31, 2019 is as follows:
Valuation Inputs | ||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 3/31/19 | |||||||||||||
INVESTMENTS IN SECURITIES: |
| |||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Aviation: Parts and Services | $ 133,006,567 | $1,409,677 | — | $ 134,416,244 | ||||||||||||
Broadcasting | 49,718,940 | 1,520,073 | — | 51,239,013 | ||||||||||||
Building and Construction | 121,287,103 | 263,280 | — | 121,550,383 | ||||||||||||
Business Services | 139,817,510 | 1,461,144 | — | 141,278,654 | ||||||||||||
Consumer Services | 63,600,430 | 126,935 | — | 63,727,365 | ||||||||||||
Diversified Industrial | 220,132,238 | 3,066 | — | 220,135,304 | ||||||||||||
Entertainment | 82,501,625 | 301,247 | — | 82,802,872 | ||||||||||||
Equipment and Supplies | 338,457,010 | 1,134,866 | — | 339,591,876 | ||||||||||||
Financial Services | 116,870,672 | 1,067,855 | $ 2,500 | 117,941,027 | ||||||||||||
Food and Beverage | 308,686,450 | — | 0 | 308,686,450 | ||||||||||||
Real Estate | 49,875,237 | 1,560,958 | — | 51,436,195 | ||||||||||||
Specialty Chemicals | 110,258,327 | 2,554 | — | 110,260,881 | ||||||||||||
Other Industries (a) | 1,403,128,069 | — | — | 1,403,128,069 | ||||||||||||
Total Common Stocks | 3,137,340,178 | 8,851,655 | 2,500 | 3,146,194,333 | ||||||||||||
Closed-End Funds | 4,668,776 | — | — | 4,668,776 | ||||||||||||
Convertible Corporate Bonds (a) | — | 272,488 | — | 272,488 | ||||||||||||
Preferred Stocks (a) | 8,363,806 | — | — | 8,363,806 | ||||||||||||
Rights (a) | 130,500 | — | 33,997 | 164,497 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $3,150,503,260 | $9,124,143 | $36,497 | $3,159,663,900 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have transfers into or out of Level 3 during the six months ended March 31, 2019.
17
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
Additional Information to Evaluate Qualitative Information.
General.The Fund uses recognized industry pricing services – approved by the Board and unaffiliated withthe 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 are 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 or preferred equities, warrants, options, rights, orfixed 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. When fair valuing a security, factors to consider include 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 may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Foreign Currency Translations.The books and records of the Fund are maintained in U.S. dollars. Foreigncurrencies, 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 offoreign 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.
18
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
Foreign Taxes.The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation,a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities.The Fund may invest up to 15% of its net assets in securities for which the marketsare 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 the sale of securities eligible for trading on national securities exchanges or in theover-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 traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2019, the Fund held no restricted securities.
Investments in other Investment Companies.The Fund may invest, from time to time, in shares of otherinvestment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the Acquired Funds) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata port on of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the six months ended March 31, 2019, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was less than one basis point.
Securities Transactions and Investment Income.Securities transactions are accounted for on the trade datewith 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 theex-dividend date, except for certain dividends from foreign securities that are recorded as soon after theex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses.Certain administrative expenses are commonto, 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 theex-dividend date. Distributionsto 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.
19
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2018 was as follows:
Distributions paid from: | ||||
Ordinary income (inclusive of short term capital gains) | $ | 4,525,464 | ||
Net long term capital gains | 194,073,015 | |||
|
| |||
Total distributions paid | $ | 198,598,479 | ||
|
|
Provision for Income Taxes.The Fund intends to continue to qualify as a regulated investment companyunder 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.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||
Investments | $1,344,459,193 | $1,888,945,086 | $(73,740,379) | $1,815,204,707 |
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 themore-likely-than-not threshold. During the six months ended March 31, 2019, the Fund did not incur any income tax, interest, or penalties. As of March 31, 2019, 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 investmentadvisory 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 six months ended March 31, 2019, 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 $69,489.
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
20
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
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 for each class of shares, except forClass I Shares, pursuant to Rule12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share plans, payments are authorized to G.distributors, LLC (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 six months ended March 31, 2019, otherthan short term securities and U.S. Government obligations, aggregated to $23,913,731 and $336,032,739, respectively.
6.Transactions with Affiliates and Other Arrangements.During the six months ended March 31, 2019, theFund paid $166,946 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $22,143 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the six months ended March 31, 2019, 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 this period was $12,783.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2019, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
7. Line of Credit.The Fund participates in an unsecured line of credit, which expires on March 4, 2020 andmay be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the overnight Federal Funds rate plus 125 basis points or the 30 day LIBOR plus 125 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At March 31, 2019, there was $7,981,000 outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the six months ended March 31, 2019 was $8,054,346 with a weighted average interest rate of 3.70%. The maximum amount borrowed at any time during the six months ended March 31, 2019 was $34,080,000.
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 maximumfront-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. Class T Shares were liquidated on September 21, 2018.
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
21
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
otherwise payable to the redeeming shareholders and is retained by the Fund as an increase inpaid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2019 and the fiscal year ended September 30, 2018, 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:
Six Months Ended March 31, 2019 (Unaudited) | Year Ended September 30, 2018 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 587,624 | $ | 30,718,354 | 1,530,595 | $ | 89,175,188 | ||||||||||
Shares issued upon reinvestment of distributions | 1,153,352 | 60,504,247 | 1,662,328 | 95,267,987 | ||||||||||||
Shares redeemed | (4,438,391 | ) | (229,840,423 | ) | (6,589,735 | ) | (385,861,515 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (2,697,415 | ) | $ | (138,617,822 | ) | (3,396,812 | ) | $ | (201,418,340 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class A | ||||||||||||||||
Shares sold | 231,967 | $ | 12,117,492 | 495,292 | $ | 28,763,236 | ||||||||||
Shares issued upon reinvestment of distributions | 134,467 | 7,051,472 | 194,678 | 11,151,169 | ||||||||||||
Shares redeemed | (606,975 | ) | (31,939,923 | ) | (1,095,555 | ) | (64,197,808 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (240,541 | ) | $ | (12,770,959 | ) | (405,585 | ) | $ | (24,283,403 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 124,032 | $ | 5,546,733 | 456,064 | $ | 23,361,343 | ||||||||||
Shares issued upon reinvestment of distributions | 176,834 | 8,074,235 | 258,736 | 13,055,827 | ||||||||||||
Shares redeemed | (721,171 | ) | (32,524,089 | ) | (1,066,442 | ) | (54,720,149 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (420,305 | ) | $ | (18,903,121 | ) | (351,642 | ) | $ | (18,302,979 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class I | ||||||||||||||||
Shares sold | 2,712,081 | $ | 144,260,768 | 7,765,503 | $ | 465,165,615 | ||||||||||
Shares issued upon reinvestment of distributions | 1,072,371 | 57,564,894 | 1,175,566 | 68,888,197 | ||||||||||||
Shares redeemed | (4,421,745 | ) | (234,025,329 | ) | (5,806,937 | ) | (345,506,356 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase/(decrease) | (637,293 | ) | $ | (32,199,667 | ) | 3,134,132 | $ | 188,547,456 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Class T * | ||||||||||||||||
Shares sold | — | — | — | — | ||||||||||||
Shares issued upon reinvestment of distributions | — | — | 1 | $ | 57 | |||||||||||
Shares redeemed | — | — | (19 | ) | (1,161 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | — | — | (18 | ) | $ | (1,104 | ) | |||||||||
|
|
|
|
|
|
|
|
* | Class T Shares were liquidated on September 21, 2018. |
22
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
9. Transactions in Securities of Affiliated Issuers.The 1940 Act defines affiliated issuers as those in whicha 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 six months ended March 31, 2019 is set forth below:
Beginning Shares | Shares Purchased/ Acquired | Shares Sold/ Reduced | Ending Shares | Dividends | Realized Loss | Value at March 31, 2019 | Change in Unrealized Appreciation/ (Depreciation) | Percent Owned of Shares Outstanding | |||||||||||||||||||||||||||||||||||||
Bel Fuse Inc., Cl. A | 281,652 | — | — | 281,652 | $ | 33,798 | — | $ | 6,035,802 | $ | 84,495 | 12.95 | % | ||||||||||||||||||||||||||||||||
Griffin Industrial Realty Inc. | 272,600 | — | (600 | ) | 272,000 | 122,670 | $ | (865 | ) | 9,479,200 | (1,129,388 | ) | 5.37 | % | |||||||||||||||||||||||||||||||
Internap Corp. | 1,494,237 | — | (34,237 | ) | 1,460,000 | — | (866,461 | ) | 7,241,600 | (10,599,969 | ) | 5.75 | % | ||||||||||||||||||||||||||||||||
Katy Industries Inc. | 840,000 | — | — | 840,000 | — | — | 3,066 | 420 | 10.56 | % | |||||||||||||||||||||||||||||||||||
Strattec Security Corp. | 208,000 | — | — | 208,000 | 58,240 | — | 6,111,040 | (1,304,160 | ) | 5.56 | % | ||||||||||||||||||||||||||||||||||
Trans-Lux Corp. | 113,500 | 1,474,700 | * | — | 1,588,200 | — | — | 1,461,144 | (1,530,251 | ) | 20.28 | % | |||||||||||||||||||||||||||||||||
Trans-Lux Cv. Pfd., Ser. B** | 14,747 | — | (14,747 | )* | — | — | — | — | 2,845,729 | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total | $ | 214,708 | $ | (867,326 | ) | $ | 30,331,852 | $ | (11,633,124 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
* | Trans-Lux Convertible Preferred shares were converted intoTrans-Lux Common shares during the period. |
** | Security was not held as of March 31, 2019. |
10.Indemnifications.The Fund enters into contracts that contain a variety of indemnifications. The Fund’smaximum 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 occurringthrough 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 Small Cap Growth Fund
Board Consideration andRe-Approval of Advisory Agreement (Unaudited)
During the six months ended March 31, 2019, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the Directors (the Independent Board Members) who are not “interested persons” of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services.The Independent Board Members considered information regardingthe portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance.The Independent Board Members reviewed the short, medium, and long term performance(as of December 31, 2018) of the Fund against a peer group of ten other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutionalsmall-cap core funds, regardless of asset size or primary channel of distribution, as represented by the LipperSmall-Cap Core Index. The Independent Board Members noted that the Fund’s performance was in the third quartile for the one year period, in the second quartile for the three year period and in the first quartile in the five year period, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the fourth quintile for the one year period and in the third quintile for the three year and five year periods. The Independent Board Members noted the Fund’s better than average performance during the one year period as measured against both peer groups.
Profitability.The Independent Board Members reviewed summary data regarding the profitability of the Fundto the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale.The Independent Board Members discussed the major elements of the Adviser’s coststructure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment managementfee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investmentmanagement fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a peer group of seven other small cap core funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratio was above average within this group, and the Fund’s size was above average within this group. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds.
24
The Gabelli Small Cap Growth Fund
Board Consideration andRe-Approval of Advisory Agreement (Unaudited) (Continued)
The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fees with the fees for other types of accounts managed by affiliates of the Adviser.
Conclusions.The Independent Board Members concluded that the Fund enjoyed highly experienced portfoliomanagement services, good ancillary services, and an acceptable performance record. The Independent Board Members also concluded that the Fund’s expense ratios and the profitability to the Adviser of managing the Fund were reasonable in light of the Fund’s performance and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the investment management agreement to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
25
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, which is affiliated with GAMCO Investors, Inc., a publicly held company with subsidiaries and affiliates that provide investment advisory services for a variety of clients.
What kind ofnon-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 somenon-public information about yourself. Thenon-public information we collect about you is:
● Information you give us on your application form.This could include your name, address, telephonenumber, 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 thatyou 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 anynon-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 tonon-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.
|
THE GABELLI SMALL CAP GROWTH FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Mario J. Gabelli, CFA,is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios ofGAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, 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 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 calling800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc. Executive Chairman, Associated Capital Group, 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
John C. Ball Treasurer
Agnes Mullady Vice President
Andrea R. Mango Secretary
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR
G.distributors, LLC
CUSTODIAN
State Street Bank and Trust Company
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
DST Asset Manager Solutions, Inc.
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.
GAB443Q119SR
The Gabelli Focus Five Fund
Semiannual Report — March 31, 2019
To Our Shareholders,
For the six months ended March 31, 2019, the net asset value (NAV) per Class I Share of The Gabelli Focus Five Fund decreased 11.7% compared with the Fund’s benchmark, the Blended Index, which decreased 3.8%. The Blended Index consists of 50% of the Russell 2500 Index, 25% of the Russell 1000 Index, and 25% of the MSCI AC WorldEx-U.S. Index. Other classes of shares are available. See below for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 2019.
Comparative Results
Average Annual Returns through March 31, 2019 (a)(b) (Unaudited)
Six Months | 1 Year | 3 Year | 5 Year | Since January 1, 2012(c) | 10 Year | Since Inception (12/31/02) | |||||||||||||||||||||||||||||
Class I (GWSIX) | (11.70 | )% | (10.00 | )% | (0.36 | )% | (1.69 | )% | 5.86 | % | 10.53 | % | 6.38 | % | |||||||||||||||||||||
Class AAA (GWSVX) | (11.78 | ) | (10.22 | ) | (0.59 | ) | (1.93 | ) | 5.59 | 10.25 | 6.19 | ||||||||||||||||||||||||
S&P MidCap 400 Index | (5.29 | ) | 2.59 | 11.24 | 8.29 | 12.93 | (d) | 16.28 | 11.15 | ||||||||||||||||||||||||||
Russell 2500 Index | (5.59 | ) | 4.48 | 12.56 | 7.79 | 12.84 | (d) | 16.23 | 11.08 | ||||||||||||||||||||||||||
Russell 1000 Index | (1.76 | ) | 9.30 | 13.52 | 10.63 | 14.22 | 16.05 | 9.92 | |||||||||||||||||||||||||||
MSCI AC WorldEx-U.S. Index | (2.16 | ) | (3.74 | ) | 8.61 | 3.05 | 6.59 | 9.35 | 8.17 | ||||||||||||||||||||||||||
Blended Index | (3.76 | ) | 3.57 | 11.80 | 7.28 | 11.57 | 14.43 | 10.06 | |||||||||||||||||||||||||||
Class A (GWSAX) | (11.73 | ) | (10.19 | ) | (0.59 | ) | (1.92 | ) | 5.60 | 10.25 | 6.21 | ||||||||||||||||||||||||
With sales charge (e) | (16.81 | ) | (15.35 | ) | (2.53 | ) | (3.08 | ) | 4.74 | 9.60 | 5.82 | ||||||||||||||||||||||||
Class C (GWSCX) | (12.12 | ) | (10.92 | ) | (1.35 | ) | (2.68 | ) | 4.80 | 9.44 | 5.43 | ||||||||||||||||||||||||
With contingent deferred sales charge (f) | (12.99 | ) | (11.82 | ) | (1.35 | ) | (2.68 | ) | 4.80 | 9.44 | 5.43 |
In the current prospectuses dated January 28, 2019, the expense ratios for Class AAA, A, C, and I Shares are 1.53%, 1.53%, 2.28%, and 1.28%, respectively. See page 7 for the expense ratios for the six months ended March 31, 2019. Class AAA and Class I Shares have no sales charge. The maximum sales charge for Class A and Class 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 of purchase. Performance returns for period 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 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 S&P MidCap 400 Index is an index comprised of U.S. stocks in the middle capitalization range, which is generally considered to be between $200 million and $5 billion in market value. The Russell 2500 Index is a market capitalization weighted index of 2,500 U.S. traded stocks of small and mid capitalization stocks. 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 ACWIEx-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% Russell 2500 Index, 25% Russell 1000 Index, and 25% MSCI ACWIEx-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) | S&P MidCap 400 Index performance and 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. |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.gabelli.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. To elect to receive all future reports on paper free of charge, please contact your financial intermediary, or, if you invest directly with the Fund, you may call800-422-3554 or send an email request to info@gabelli.com.
The Gabelli Focus Five Fund | ||||
Disclosure of Fund Expenses (Unaudited) | ||||
For the Six Month Period from October 1, 2018 through March 31, 2019 | 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’sactualreturn 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 isnotthe 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.
Beginning Account Value 10/01/18 | Ending Account Value 03/31/19 | Annualized Ratio | Expense Paid During Period* | |||||||||||
The Gabelli Focus Five Fund |
| |||||||||||||
Actual Fund Return | ||||||||||||||
Class AAA | $1,000.00 | $ 882.20 | 1.71% | $ 8.02 | ||||||||||
Class A | $1,000.00 | $ 882.70 | 1.71% | $ 8.03 | ||||||||||
Class C | $1,000.00 | $ 878.80 | 2.46% | $ 11.52 | ||||||||||
Class I | $1,000.00 | $ 883.00 | 1.46% | $ 6.85 | ||||||||||
Hypothetical 5% Return |
| |||||||||||||
Class AAA | $1,000.00 | $1,016.40 | 1.71% | $ 8.60 | ||||||||||
Class A | $1,000.00 | $1,016.40 | 1.71% | $ 8.60 | ||||||||||
Class C | $1,000.00 | $1,012.67 | 2.46% | $ 12.34 | ||||||||||
Class I | $1,000.00 | $1,017.65 | 1.46% | $ 7.34 |
* | 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 (182 days), then divided by 365. |
2
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2019:
The Gabelli Focus Five Fund
Food and Beverage | 11.8 | % | ||
Building and Construction | 11.0 | % | ||
Cable and Satellite | 8.3 | % | ||
Computer Software and Services | 7.9 | % | ||
Hotels and Gaming | 6.8 | % | ||
Automotive: Parts and Accessories | 6.7 | % | ||
Health Care Equipment and Services | 6.4 | % | ||
U.S. Government Obligations | 6.3 | % | ||
Equipment and Supplies | 6.2 | % | ||
Telecommunications | 5.1 | % | ||
Diversified Industrial | 4.5 | % |
Retail | 3.7 | % | ||
Consumer Services | 3.6 | % | ||
Financial Services | 3.1 | % | ||
Entertainment | 2.7 | % | ||
Health Care | 2.6 | % | ||
Energy and Utilities | 1.9 | % | ||
Electronics | 1.1 | % | ||
Business Services | 1.0 | % | ||
Other Assets and Liabilities (Net) | (0.7 | )% | ||
|
| |||
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 FormN-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at800-GABELLI(800-422-3554). The Fund’s FormN-PORT 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 calling800-SEC-0330.
Proxy Voting
The Fund files FormN-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) calling800-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.
3
The Gabelli Focus Five Fund
Schedule of Investments — March 31, 2019 (Unaudited)
Shares | Cost | Market Value | ||||||||||||||
COMMON STOCKS — 94.4% |
| |||||||||||||||
Automotive: Parts and Accessories — 6.7% |
| |||||||||||||||
50,400 | Aptiv plc | $ | 3,594,865 | $ | 4,006,296 | |||||||||||
|
|
|
| |||||||||||||
Building and Construction — 11.0% |
| |||||||||||||||
123,400 | Herc Holdings Inc.† | 4,602,836 | 4,810,132 | |||||||||||||
130,000 | PGT Innovations Inc.† | 2,106,816 | 1,800,500 | |||||||||||||
|
|
|
| |||||||||||||
6,709,652 | 6,610,632 | |||||||||||||||
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|
|
| |||||||||||||
Business Services — 1.0% |
| |||||||||||||||
15,000 | Macquarie Infrastructure Corp. | 592,388 | 618,300 | |||||||||||||
|
|
|
| |||||||||||||
Cable and Satellite — 8.3% |
| |||||||||||||||
35,000 | EchoStar Corp., Cl. A† | 1,310,305 | 1,275,750 | |||||||||||||
110,000 | Liberty Media Corp.- | 3,326,079 | 3,744,400 | |||||||||||||
|
|
|
| |||||||||||||
4,636,384 | 5,020,150 | |||||||||||||||
|
|
|
| |||||||||||||
Computer Software and Services — 7.9% |
| |||||||||||||||
2,075 | Alphabet Inc., Cl. C† | 1,253,598 | 2,434,618 | |||||||||||||
454,276 | Internap Corp.† | 3,325,009 | 2,253,209 | |||||||||||||
700 | Lyft Inc., Cl. A† | 50,400 | 54,803 | |||||||||||||
|
|
|
| |||||||||||||
4,629,007 | 4,742,630 | |||||||||||||||
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|
|
| |||||||||||||
Consumer Services — 3.6% |
| |||||||||||||||
20,000 | GCI Liberty Inc., Cl. A† | 860,191 | 1,112,200 | |||||||||||||
300,000 | Groupon Inc.† | 945,923 | 1,065,000 | |||||||||||||
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|
| |||||||||||||
1,806,114 | 2,177,200 | |||||||||||||||
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|
| |||||||||||||
Diversified Industrial — 4.5% |
| |||||||||||||||
20,000 | Colfax Corp.† | 480,479 | 593,600 | |||||||||||||
32,500 | EnPro Industries Inc. | 2,086,110 | 2,094,625 | |||||||||||||
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|
|
| |||||||||||||
2,566,589 | 2,688,225 | |||||||||||||||
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|
| |||||||||||||
Electronics — 1.1% |
| |||||||||||||||
35,000 | Resideo Technologies Inc.† | 661,482 | 675,150 | |||||||||||||
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|
|
| |||||||||||||
Energy and Utilities — 1.9% |
| |||||||||||||||
25,000 | California Resources Corp.† | 406,553 | 642,750 | |||||||||||||
750,000 | Weatherford International plc† | 529,540 | 523,500 | |||||||||||||
|
|
|
| |||||||||||||
936,093 | 1,166,250 | |||||||||||||||
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|
|
| |||||||||||||
Entertainment — 2.7% |
| |||||||||||||||
288,000 | Sirius XM Holdings Inc. | 962,372 | 1,632,960 | |||||||||||||
|
|
|
| |||||||||||||
Equipment and Supplies — 6.2% |
| |||||||||||||||
45,000 | CIRCOR International Inc.† | 1,146,729 | 1,467,000 | |||||||||||||
225,000 | Mueller Water Products Inc., Cl. A | 2,435,654 | 2,259,000 | |||||||||||||
|
|
|
| |||||||||||||
3,582,383 | 3,726,000 | |||||||||||||||
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|
|
Shares | Cost | Market Value | ||||||||||||||
Financial Services — 3.1% |
| |||||||||||||||
50,000 | New York Community | $ | 579,570 | $ | 578,500 | |||||||||||
40,000 | Synchrony Financial | 1,076,666 | 1,276,000 | |||||||||||||
|
|
|
| |||||||||||||
1,656,236 | 1,854,500 | |||||||||||||||
|
|
|
| |||||||||||||
Food and Beverage — 11.8% |
| |||||||||||||||
35,000 | Conagra Brands Inc. | 793,034 | 970,900 | |||||||||||||
87,500 | Maple Leaf Foods Inc. | 1,390,383 | 2,023,890 | |||||||||||||
30,000 | Mondelēz International Inc., | 1,230,203 | 1,497,600 | |||||||||||||
24,000 | Post Holdings Inc.† | 799,044 | 2,625,600 | |||||||||||||
|
|
|
| |||||||||||||
4,212,664 | 7,117,990 | |||||||||||||||
|
|
|
| |||||||||||||
Health Care — 2.6% |
| |||||||||||||||
50,000 | Covetrus Inc.† | 1,730,987 | 1,592,500 | |||||||||||||
|
|
|
| |||||||||||||
Health Care Equipment and Services — 6.4% |
| |||||||||||||||
1,925,000 | BioScrip Inc.† | 2,961,871 | 3,850,000 | |||||||||||||
|
|
|
| |||||||||||||
Hotels and Gaming — 6.8% | �� | |||||||||||||||
160,000 | MGM Resorts International | 3,031,893 | 4,105,600 | |||||||||||||
|
|
|
| |||||||||||||
Retail — 3.7% |
| |||||||||||||||
70,000 | PetIQ Inc.† | 1,915,750 | 2,198,700 | |||||||||||||
|
|
|
| |||||||||||||
Telecommunications — 5.1% |
| |||||||||||||||
145,000 | CenturyLink Inc. | 2,000,219 | 1,738,550 | |||||||||||||
295,000 | Gogo Inc.† | 1,142,670 | 1,324,550 | |||||||||||||
|
|
|
| |||||||||||||
3,142,889 | 3,063,100 | |||||||||||||||
|
|
|
| |||||||||||||
TOTAL COMMON STOCKS | 49,329,619 | 56,846,183 | ||||||||||||||
|
|
|
| |||||||||||||
Principal | ||||||||||||||||
Amount | ||||||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 6.3% |
| |||||||||||||||
$ 3,855,000 | U.S. Treasury Bills, | 3,837,431 | 3,837,747 | |||||||||||||
|
|
|
| |||||||||||||
TOTAL INVESTMENTS — 100.7% | $ | 53,167,050 | 60,683,930 | |||||||||||||
|
| |||||||||||||||
Other Assets and Liabilities |
| (451,060 | ) | |||||||||||||
|
| |||||||||||||||
NET ASSETS — 100.0% | $ | 60,232,870 | ||||||||||||||
|
|
† | Non-income producing security. |
†† | Represents annualized yields at dates of purchase. |
See accompanying notes to financial statements.
4
The Gabelli Focus Five Fund
Statement of Assets and Liabilities
March 31, 2019 (Unaudited)
Assets: | ||||||
Investments, at value (cost $53,167,050) | $ | 60,683,930 | ||||
Foreign currency, at value (cost $8,024) | 8,070 | |||||
Cash | 1,472 | |||||
Receivable for Fund shares sold | 3,179 | |||||
Dividends receivable | 7,733 | |||||
Prepaid expenses | 26,122 | |||||
|
| |||||
Total Assets | 60,730,506 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 207,915 | |||||
Payable for Fund shares redeemed | 128,532 | |||||
Payable for investment advisory fees | 53,655 | |||||
Payable for distribution fees | 19,331 | |||||
Payable for accounting fees | 7,500 | |||||
Payable for shareholder communications expenses | 29,434 | |||||
Other accrued expenses | 51,269 | |||||
|
| |||||
Total Liabilities | 497,636 | |||||
|
| |||||
Net Assets | ||||||
(applicable to 5,082,255 shares outstanding) | $ | 60,232,870 | ||||
|
| |||||
Net Assets Consist of: | ||||||
Paid-in capital | $ | 62,328,516 | ||||
Total accumulated loss | (2,095,646 | ) | ||||
|
| |||||
Net Assets | $ | 60,232,870 | ||||
|
|
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($13,195,055 ÷ 1,081,447 shares outstanding; 100,000,000 shares authorized) | $ | 12.20 | ||
|
| |||
Class A: | ||||
Net Asset Value and redemption price per share ($10,733,232 ÷ 870,731 shares outstanding; 50,000,000 shares authorized) | $ | 12.33 | ||
|
| |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 13.08 | ||
|
| |||
Class C: | ||||
Net Asset Value and offering price per share ($15,741,021 ÷ 1,497,155 shares outstanding; 50,000,000 shares authorized) | $ | 10.51 | (a) | |
|
| |||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($20,563,562 ÷ 1,632,922 shares outstanding; 50,000,000 shares authorized) | $ | 12.59 | ||
|
|
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Six Months Ended March 31, 2019 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $2,719) | $ | 279,125 | ||
Interest | 47,357 | |||
|
| |||
Total Investment Income | 326,482 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 355,271 | |||
Distribution fees - Class AAA | 17,663 | |||
Distribution fees - Class A | 15,219 | |||
Distribution fees - Class C | 95,200 | |||
Registration expenses | 40,590 | |||
Shareholder services fees | 35,200 | |||
Shareholder communications expenses | 28,195 | |||
Accounting fees | 22,500 | |||
Legal and audit fees | 17,866 | |||
Custodian fees | 7,999 | |||
Directors’ fees | 1,659 | |||
Interest expense | 105 | |||
Miscellaneous expenses | 7,903 | |||
|
| |||
Total Expenses | 645,370 | |||
|
| |||
Net Investment Loss | (318,888 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized loss on investments | (6,365,238 | ) | ||
Net realized loss on foreign currency transactions | (331 | ) | ||
|
| |||
Net realized loss on investments and foreign currency transactions | (6,365,569 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (4,722,635 | ) | ||
on foreign currency translations | 5 | |||
|
| |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (4,722,630 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (11,088,199 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (11,407,087 | ) | |
|
|
See accompanying notes to financial statements.
5
The Gabelli Focus Five Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2019 (Unaudited) | Year Ended September 30, 2018 | |||||||||
Operations: | ||||||||||
Net investment loss | $ | (318,888 | ) | $ | (912,721 | ) | ||||
Net realized gain/(loss) on investments and foreign currency transactions | (6,365,569 | ) | 7,190,442 | |||||||
Net change in unrealized appreciation/depreciation on investments and foreign | (4,722,630 | ) | (13,632,137 | ) | ||||||
|
|
|
| |||||||
Net Decrease in Net Assets Resulting from Operations | (11,407,087 | ) | (7,354,416 | ) | ||||||
|
|
|
| |||||||
Distributions to Shareholders: | ||||||||||
Class AAA | (11,941 | ) | (108,381 | ) | ||||||
Class A | (10,607 | ) | (140,046 | ) | ||||||
Class C | (20,011 | ) | (202,789 | ) | ||||||
Class I | (22,594 | ) | (333,454 | ) | ||||||
Class T* | — | (5 | ) | |||||||
|
|
|
| |||||||
Total Distributions to Shareholders | (65,153 | ) | (784,675 | ) | ||||||
|
|
|
| |||||||
Capital Share Transactions: | ||||||||||
Class AAA | (1,422,833 | ) | (4,746,985 | ) | ||||||
Class A | (2,499,484 | ) | (12,711,472 | ) | ||||||
Class C | (5,974,195 | ) | (9,997,783 | ) | ||||||
Class I | (10,104,601 | ) | (32,916,453 | ) | ||||||
Class T* | — | (1,005 | ) | |||||||
|
|
|
| |||||||
Net Decrease in Net Assets from Capital Share Transactions | (20,001,113 | ) | (60,373,698 | ) | ||||||
|
|
|
| |||||||
Redemption Fees | — | 343 | ||||||||
|
|
|
| |||||||
Net Decrease in Net Assets | (31,473,353 | ) | (68,512,446 | ) | ||||||
Net Assets: | ||||||||||
Beginning of year | 91,706,223 | 160,218,669 | ||||||||
|
|
|
| |||||||
End of period | $ | 60,232,870 | $ | 91,706,223 | ||||||
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|
|
|
* | Class T Shares were liquidated on September 21, 2018. |
See accompanying notes to financial statements.
6
The Gabelli Focus Five Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period: |
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Income (Loss) | Ratios to Average Net Assets/ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
from Investment Operations | Distributions | Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Realized and | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset | Unrealized | Net | Asset | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value, | Net | Gain (Loss) | Total from | Realized | Value, | Assets | Net | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended | Beginning | Investment | on | Investment | Gain on | Total | Redemption | End of | Total | End of Period | Investment | Operating | Turnover | ||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30 | of Period | Loss (a)(b) | Investments | Operations | Investments | Distributions | Fees (b) | Period | Return † | (in 000’s) | Loss (a) | Expenses(c) | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $ | 13.84 | $ | (0.05 | ) | $ | (1.58 | ) | $ | (1.63 | ) | $ | (0.01 | ) | $ | (0.01 | ) | — | $ | 12.20 | (11.78 | )% | $ | 13,195 | (0.78 | )%(e) | 1.71 | %(e) | 41 | % | |||||||||||||||||||||||||||||||||||
2018 | 14.61 | (0.09 | ) | (0.61 | ) | (0.70 | ) | (0.07 | ) | (0.07 | ) | $ | 0.00 | (f) | 13.84 | (4.78 | ) | 16,630 | (0.63 | ) | 1.53 | 105 | |||||||||||||||||||||||||||||||||||||||||||
2017 | 13.70 | (0.15 | ) | 1.21 | 1.06 | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 14.61 | 7.88 | 22,542 | (1.08 | ) | 1.43 | (g) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 12.00 | (0.14 | ) | 1.84 | 1.70 | — | — | 0.00 | (f) | 13.70 | 14.17 | 33,695 | (1.11 | ) | 1.42 | (g) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 15.22 | (0.12 | ) | (1.81 | ) | (1.93 | ) | (1.29 | ) | (1.29 | ) | 0.00 | (f) | 12.00 | (14.11 | ) | 38,960 | (0.83 | ) | 1.37 | (g) | 73 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 13.72 | (0.09 | ) | 1.75 | 1.66 | (0.16 | ) | (0.16 | ) | 0.00 | (f) | 15.22 | 12.15 | 57,565 | (0.58 | ) | 1.38 | 94 | |||||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $ | 13.98 | $ | (0.05 | ) | $ | (1.59 | ) | $ | (1.64 | ) | $ | (0.01 | ) | $ | (0.01 | ) | — | $ | 12.33 | (11.73 | )% | $ | 10,733 | (0.78 | )%(e) | 1.71 | %(e) | 41 | % | |||||||||||||||||||||||||||||||||||
2018 | 14.76 | (0.09 | ) | (0.62 | ) | (0.71 | ) | (0.07 | ) | (0.07 | ) | $ | 0.00 | (f) | 13.98 | (4.80 | ) | 15,137 | (0.65 | ) | 1.53 | 105 | |||||||||||||||||||||||||||||||||||||||||||
2017 | 13.84 | (0.15 | ) | 1.22 | 1.07 | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 14.76 | 7.87 | 29,391 | (1.08 | ) | 1.43 | (g) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 12.12 | (0.14 | ) | 1.86 | 1.72 | — | — | 0.00 | (f) | 13.84 | 14.19 | 43,775 | (1.10 | ) | 1.42 | (g) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 15.36 | (0.12 | ) | (1.83 | ) | (1.95 | ) | (1.29 | ) | (1.29 | ) | 0.00 | (f) | 12.12 | (14.11 | ) | 57,987 | (0.83 | ) | 1.37 | (g) | 73 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 13.85 | (0.09 | ) | 1.76 | 1.67 | (0.16 | ) | (0.16 | ) | 0.00 | (f) | 15.36 | 12.11 | 105,369 | (0.59 | ) | 1.38 | 94 | |||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $ | 11.97 | $ | (0.08 | ) | $ | (1.37 | ) | $ | (1.45 | ) | $ | (0.01 | ) | $ | (0.01 | ) | — | $ | 10.51 | (12.12 | )% | $ | 15,741 | (1.54 | )%(e) | 2.46 | %(e) | 41 | % | |||||||||||||||||||||||||||||||||||
2018 | 12.74 | (0.17 | ) | (0.53 | ) | (0.70 | ) | (0.07 | ) | (0.07 | ) | $ | 0.00 | (f) | 11.97 | (5.48 | ) | 24,992 | (1.38 | ) | 2.28 | 105 | |||||||||||||||||||||||||||||||||||||||||||
2017 | 12.06 | (0.22 | ) | 1.05 | 0.83 | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 12.74 | 7.04 | 37,147 | (1.83 | ) | 2.18 | (g) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 10.64 | (0.21 | ) | 1.63 | 1.42 | — | — | 0.00 | (f) | 12.06 | 13.35 | 57,796 | (1.85 | ) | 2.17 | (g) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 13.73 | (0.20 | ) | (1.60 | ) | (1.80 | ) | (1.29 | ) | (1.29 | ) | 0.00 | (f) | 10.64 | (14.74 | ) | 70,274 | (1.58 | ) | 2.12 | (g) | 73 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 12.49 | (0.18 | ) | 1.58 | 1.40 | (0.16 | ) | (0.16 | ) | 0.00 | (f) | 13.73 | 11.25 | 87,443 | (1.31 | ) | 2.13 | 94 | |||||||||||||||||||||||||||||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019(d) | $ | 14.27 | $ | (0.03 | ) | $ | (1.64 | ) | $ | (1.67 | ) | $ | (0.01 | ) | $ | (0.01 | ) | — | $ | 12.59 | (11.70 | )% | $ | 20,564 | (0.54 | )%(e) | 1.46 | %(e) | 41 | % | |||||||||||||||||||||||||||||||||||
2018 | 15.02 | (0.06 | ) | (0.62 | ) | (0.68 | ) | (0.07 | ) | (0.07 | ) | $ | 0.00 | (f) | 14.27 | (4.50 | ) | 34,947 | (0.39 | ) | 1.28 | 105 | |||||||||||||||||||||||||||||||||||||||||||
2017 | 14.05 | (0.11 | ) | 1.23 | 1.12 | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 15.02 | 8.11 | 71,138 | (0.83 | ) | 1.18 | (g) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 12.27 | (0.11 | ) | 1.89 | 1.78 | — | — | 0.00 | (f) | 14.05 | 14.51 | 103,490 | (0.85 | ) | 1.17 | (g) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 15.50 | (0.09 | ) | (1.85 | ) | (1.94 | ) | (1.29 | ) | (1.29 | ) | 0.00 | (f) | 12.27 | (13.90 | ) | 174,754 | (0.58 | ) | 1.12 | (g) | 73 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 13.94 | (0.05 | ) | 1.77 | 1.72 | (0.16 | ) | (0.16 | ) | 0.00 | (f) | 15.50 | 12.39 | 318,785 | (0.30 | ) | 1.13 | 94 |
† | 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 period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(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) | The Fund incurred interest expense during the six months ended March 31, 2019 and the fiscal years ended September 30, 2018, 2017, 2016, 2015, and 2014, and the effect of interest expense was minimal. |
(d) | For the six months ended March 31, 2019, unaudited. |
(e) | Annualized. |
(f) | Amount represents less than $0.005 per share. |
(g) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the fiscal years ended September 30, 2017, 2016, and 2015, there was no impact to the expense ratios. |
See accompanying notes to financial statements.
7
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited)
1. Organization.The Gabelli Focus Five Fund is a series of the Gabelli Equity Series Funds, Inc. (the Corporation), which was incorporated on July 25, 1991 in Maryland. The Fund is anon-diversifiedopen-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and one of four 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.
New Accounting Pronouncements.To improve the effectiveness of fair value disclosure requirements, the Financial Accounting Standards Board recently issued Accounting Standard Update (ASU)2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU2018-13), which adds, removes, and modifies certain aspects relating to fair value disclosure. ASU2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption of the additions relating to ASU2018-13 is not required, even if early adoption is elected for the removals under ASU2018-13. Management has early adopted the removals set forth in ASU2018-13 in these financial statements and has not early adopted the additions set forth in ASU2018-13.
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 obligations 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, 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. 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. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.
8
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (Continued)
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 andnon-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.
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. At March 31, 2019, the Fund did not hold any Level 3 securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of March 31, 2019 is as follows:
Valuation Inputs | ||||||||||||
Level 1 | Level 2 Other Significant | Total Market Value | ||||||||||
Quoted Prices | Observable Inputs | at 3/31/19 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $56,846,183 | — | $56,846,183 | |||||||||
U.S. Government Obligations | — | $3,837,747 | 3,837,747 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $56,846,183 | $3,837,747 | $60,683,930 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
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 are 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 or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available,
9
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (Continued)
such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing a security, factors to consider 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 may include backtesting 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 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, 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.
Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded derivatives, while collateral terms are contract specific for derivatives tradedover-the-counter. Securities pledged to cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported, separately as Deposit at brokers, in the Statement of Assets and Liabilities.
The Fund’s derivative contracts held at March 31, 2019, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments.
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
10
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (Continued)
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 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, andin-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 March 31, 2019, the Fund held no option positions.
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
11
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (Continued)
theex-dividend date, except for certain dividends from foreign securities that are recorded as soon after theex-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 theex-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 current yearwrite-off of net operating loss. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2018 was as follows:
Distributions paid from: | ||||
Net long term capital gains | $ | 784,675 | ||
|
| |||
Total distributions paid | $ | 784,675 | ||
|
|
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.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2019:
Gross | Gross | |||||||
Unrealized | Unrealized | Net Unrealized | ||||||
Cost | Appreciation | Depreciation | Appreciation | |||||
Investments | $53,271,132 | $9,513,471 | $(2,100,673) | $7,412,798 |
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 themore-likely-than-not threshold. For the six months ended March 31, 2019, the Fund did not incur excise tax. As of March 31, 2019, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets
12
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (Continued)
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 for each class of shares, except for Class I Shares, pursuant to Rule12b-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 six months ended March 31, 2019, other than short term securities and U.S. Government obligations, aggregated to $28,218,096 and $50,110,097, respectively.
6. Transactions with Affiliates and Other Arrangements.During the six months ended March 31, 2019, the Fund paid $800 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $2,485 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2019, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
7. Line of Credit.The Fund participates in an unsecured line of credit, which expires on March 4, 2020 and may be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the overnight Federal Funds rate plus 125 basis points or the 30 day ICE LIBOR plus 125 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. During the six months ended March 31, 2019, there were no borrowings outstanding under the line of credit.
13
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (Continued)
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 maximumfront-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 inpaid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2019 and the fiscal year ended September 30, 2018, 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:
Six Months Ended | ||||||||||||||||||||
March 31, 2019 | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Class AAA | ||||||||||||||||||||
Shares sold | 25,779 | $ | 316,116 | 33,479 | $ | 471,631 | ||||||||||||||
Shares issued upon reinvestment of distributions | 903 | 11,337 | 7,545 | 104,193 | ||||||||||||||||
Shares redeemed | (146,780 | ) | (1,750,286 | ) | (382,512 | ) | (5,322,809 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (120,098 | ) | $ | (1,422,833 | ) | (341,488 | ) | $ | (4,746,985 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class A | ||||||||||||||||||||
Shares sold | 36,767 | $ | 470,685 | 177,619 | $ | 2,527,290 | ||||||||||||||
Shares issued upon reinvestment of distributions | 789 | 10,014 | 9,556 | 133,310 | ||||||||||||||||
Shares redeemed | (249,399 | ) | (2,980,183 | ) | (1,096,053 | ) | (15,372,072 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (211,843 | ) | $ | (2,499,484 | ) | (908,878 | ) | $ | (12,711,472 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class C | ||||||||||||||||||||
Shares sold | 34,875 | $ | 364,894 | 137,743 | $ | 1,693,578 | ||||||||||||||
Shares issued upon reinvestment of distributions | 1,719 | 18,647 | 15,559 | 187,019 | ||||||||||||||||
Shares redeemed | (626,746 | ) | (6,357,736 | ) | (980,921 | ) | (11,878,380 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (590,152 | ) | $ | (5,974,195 | ) | (827,619 | ) | $ | (9,997,783 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class I | ||||||||||||||||||||
Shares sold | 117,048 | $ | 1,490,188 | 418,637 | $ | 6,054,038 | ||||||||||||||
Shares issued upon reinvestment of distributions | 1,617 | 20,936 | 21,972 | 312,000 | ||||||||||||||||
Shares redeemed | (935,243 | ) | (11,615,725 | ) | (1,608,707 | ) | (23,099,547 | ) | ||||||||||||
Shares redeemedin-kind. | — | — | (1,118,379 | ) | (16,182,944 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (816,578 | ) | $ | (10,104,601 | ) | (2,286,477 | ) | $ | (32,916,453 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class T * | ||||||||||||||||||||
Shares issued upon reinvestment of distributions | — | — | — | $ | 5 | |||||||||||||||
Shares redeemed | — | — | (71 | ) | (1,010 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | — | — | (71 | ) | $ | (1,005 | ) | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
* Class T Shares were liquidated on September 21, 2018. |
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.
14
The Gabelli Focus Five Fund
Notes to Financial Statements (Unaudited) (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.
15
The Gabelli Focus Five Fund
Board Consideration andRe-Approval of Advisory Agreement (Unaudited)
During the six months ended March 31, 2019, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the Directors (the Independent Board Members) who are not “interested persons” of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services.The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance.The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2018) of the Fund against eight other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retailmid-cap core funds, regardless of asset size or primary channel of distribution, as represented by the LipperMid-Cap Core Index. The Independent Board Members noted that the Fund’s performance was in the fourth quartile for the one year, three year, and five year periods, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the fifth quintile for the one year, three year, and five year periods.
Profitability.The Independent Board Members reviewed summary data regarding the historical lack of profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that an affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale.The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale.The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop or any losses or diminished profitability to the Adviser in prior years.
Service and Cost Comparisons.The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a peer group of eight other small cap core funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratios were above average within each peer group and that the Fund’s size was below average within the Adviser Peer Group and above average within the peer group of comparable funds selected by Broadridge. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
16
The Gabelli Focus Five Fund
Board Consideration andRe-Approval of Advisory Agreement (Unaudited) (Continued)
Conclusions.The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable performance record that had begun to improve over the past year. The Independent Board Members also concluded that the Fund’s expense ratios were reasonable given the size of the Fund relative to its peers and the unique nature of the Fund’s “best ideas” investment strategy and that economies of scale were not a factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreements to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor asall-important or controlling.
17
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THE GABELLI FOCUS FIVE FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Daniel M. Millerhas 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 Investors, Inc. 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. 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 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 calling800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS
Mario J. Gabelli, CFA
Chairman and
Chief Executive Officer,
GAMCO Investors, Inc.,
Executive Chairman,
Associated Capital Group, 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
John C. Ball
Treasurer
Agnes Mullady
Vice President
Andrea R. Mango
Secretary
Richard J. Walz
Chief Compliance Officer
DISTRIBUTOR
G.distributors, LLC
CUSTODIAN
State Street Bank and Trust
Company
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
DST Asset Manager
Solutions, Inc.
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.
GAB840Q119SR
The Gabelli Global Financial Services Fund
Semiannual Report — March 31, 2019 |
Ian Lapey, Portfolio Manager |
To Our Shareholders,
For the six months ended March 31, 2019, the net asset value (NAV) per Class AAA Share of The Gabelli Global Financial Services Fund decreased 9.1% compared with decreases of 6.3% and 1.7% for the Morgan Stanley Capital International (MSCI) World Financials Index and the Standard & Poor’s (S&P) 500 Index, respectively. Other classes of shares are available. See below for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 2019.
Comparative Results
Total Returns through March 31, 2019 (a)(b) (Unaudited) |
| ||||||||||||||
Quarter | Since Inception (10/1/18) | ||||||||||||||
Class AAA (GAFSX) | 7.35 | % | (9.06 | )% | |||||||||||
MSCI World Financials Index | 8.57 | (6.35 | ) | ||||||||||||
S&P 500 Index | 13.65 | (1.72 | ) | ||||||||||||
Class A (GGFSX) | 7.34 | (9.01 | ) | ||||||||||||
With sales charge (c) | 1.17 | (14.25 | ) | ||||||||||||
Class C (GCFSX) | 7.10 | (9.39 | ) | ||||||||||||
With contingent deferred sales charge (d) | 6.10 | (10.30 | ) | ||||||||||||
Class I (GFSIX) | 7.46 | (8.91 | ) |
In the current prospectuses dated January 28, 2019, the gross expense ratios for Class AAA, A, C, and I Shares are 2.38%, 2.38%, 3.13%, and 2.13%, respectively, and the net expense ratios for these share classes after contractual reimbursements by Gabelli Funds, LLC, (the Adviser) are 1.25%, 1.25%, 2.00%, and 1.00%, respectively. See page 7 for the expense ratios for the six months ended March 31, 2019. The contractual reimbursements are in effect through January 31, 2020. Class AAA and Class I Shares do not have a sales charge. The maximum sales charge for Class A Shares and Class 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, reinvestmentof distributions, and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may beworth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com forperformance information as of the most recent month end. Returns would have been lower had the Adviser not reimbursed certain expenses of the Fund. TheFund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. Performance returns for periods of less than one year are notannualized. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses containinformation about these and other matters and should be read carefully before investing. To obtain a prospectus, please visit our website at www.gabelli.com. Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic, and political risks. Funds investing in a single sector, such as financial services, may be subject to more volatility than funds that invest more broadly. The financial services industry can be significantly affected by domestic and foreign government regulation. The MSCI World Financials Index captures large and mid cap securities in the Financials sector across 23 Developed Markets countries. 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. 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. |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.gabelli.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. To elect to receive all future reports on paper free of charge, please contact your financial intermediary, or, if you invest directly with the Fund, you may call800-422-3554 or send an email request to info@gabelli.com.
|
The Gabelli Global Financial Services Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from October 1, 2018 through March 31, 2019 | 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’sactualreturn 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 isnotthe 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.
Beginning Account Value 10/01/18 | Ending Account Value 03/31/19 | Annualized Expense Ratio | Expenses Paid During Period* | |||||||||||||||||
The Gabelli Financial Services Fund |
| |||||||||||||||||||
Actual Fund Return |
| |||||||||||||||||||
Class AAA | $1,000.00 | $ 909.40 | 1.25 | % | $ 5.95 | |||||||||||||||
Class A | $1,000.00 | $ 909.90 | 1.25 | % | $ 5.95 | |||||||||||||||
Class C | $1,000.00 | $ 906.10 | 2.00 | % | $ 9.50 | |||||||||||||||
Class I | $1,000.00 | $ 910.90 | 1.00 | % | $ 4.76 | |||||||||||||||
Hypothetical 5% Return |
| |||||||||||||||||||
Class AAA | $1,000.00 | $1,018.70 | 1.25 | % | $ 6.29 | |||||||||||||||
Class A | $1,000.00 | $1,018.70 | 1.25 | % | $ 6.29 | |||||||||||||||
Class C | $1,000.00 | $1,014.96 | 2.00 | % | $10.05 | |||||||||||||||
Class I | $1,000.00 | $1,019.95 | 1.00 | % | $ 5.04 |
* | 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 (182 days), then divided by 365. |
2
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2019:
The Gabelli Global Financial Services Fund
Banks | 20.7 | % | ||
Diversified Banks | 20.1 | % | ||
Investment Management | 10.5 | % | ||
Consumer Finance | 8.4 | % | ||
Automobiles | 8.0 | % | ||
Life Insurance | 7.2 | % | ||
Institutional Brokerage | 6.7 | % | ||
Homebuilders | 5.0 | % | ||
Real Estate Owners and Developers | 5.0 | % |
Institutional Trust, Fiduciary, and Custody | 4.0 | % | ||
Investment Companies | 2.1 | % | ||
U.S. Government Obligations | 1.5 | % | ||
Other Assets and Liabilities (Net) | 0.8 | % | ||
|
| |||
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 FormN-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at800-GABELLI(800-422-3554). The Fund’s FormN-PORT 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 calling800-SEC-0330.
Proxy Voting
The Fund files FormN-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) calling800-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.
3
The Gabelli Global Financial Services Fund
Schedule of Investments — March 31, 2019 (Unaudited)
Shares | Cost | Market | ||||||||||
COMMON STOCKS — 97.7% | ||||||||||||
Automobiles — 8.0% | ||||||||||||
9,500 | Daimler AG | $ | 579,601 | $ | 556,811 | |||||||
3,600 | Toyota Motor Corp., ADR | 432,394 | 424,872 | |||||||||
|
|
|
| |||||||||
1,011,995 | 981,683 | |||||||||||
|
|
|
| |||||||||
Banks — 20.7% | ||||||||||||
73,000 | Commerzbank AG† | 665,922 | 565,028 | |||||||||
77,500 | Dah Sing Financial Holdings Ltd. | 459,889 | 406,261 | |||||||||
20,000 | Japan Post Bank Co. Ltd. | 234,243 | 218,172 | |||||||||
29,700 | Mediobanca Banca di Credito Finanziario SpA | 272,554 | 308,574 | |||||||||
1,570 | Shinhan Financial Group Co. Ltd. | 58,501 | 58,092 | |||||||||
8,300 | Shinhan Financial Group Co. Ltd., ADR | 320,067 | 308,345 | |||||||||
25,500 | Shinsei Bank Ltd. | 377,234 | 362,379 | |||||||||
23,700 | UniCredit SpA | 313,753 | 303,820 | |||||||||
|
|
|
| |||||||||
2,702,163 | 2,530,671 | |||||||||||
|
|
|
| |||||||||
Consumer Finance — 8.4% | ||||||||||||
25,900 | Ally Financial Inc. | 662,422 | 711,991 | |||||||||
3,800 | Capital One Financial Corp. | 309,710 | 310,422 | |||||||||
|
|
|
| |||||||||
972,132 | 1,022,413 | |||||||||||
|
|
|
| |||||||||
Diversified Banks — 20.1% | ||||||||||||
181,000 | Barclays plc | 394,836 | 364,650 | |||||||||
6,400 | Citigroup Inc. | 395,255 | 398,208 | |||||||||
41,500 | Credit Agricole SA | 558,714 | 501,374 | |||||||||
115,000 | Royal Bank of Scotland Group plc | 359,184 | 369,963 | |||||||||
12,800 | Societe Generale SA | 483,185 | 370,089 | |||||||||
58,000 | Standard Chartered plc | 446,964 | 446,683 | |||||||||
|
|
|
| |||||||||
2,638,138 | 2,450,967 | |||||||||||
|
|
|
| |||||||||
Homebuilders — 5.0% | ||||||||||||
3,500 | Cavco Industries Inc.† | 649,598 | 411,355 | |||||||||
16,700 | Legacy Housing Corp.† | 197,929 | 198,730 | |||||||||
|
|
|
| |||||||||
847,527 | 610,085 | |||||||||||
|
|
|
| |||||||||
Institutional Brokerage — 6.7% |
| |||||||||||
64,600 | Daiwa Securities Group Inc. | 373,384 | 314,169 | |||||||||
27,100 | Jefferies Financial Group Inc. | 567,314 | 509,209 | |||||||||
|
|
|
| |||||||||
940,698 | 823,378 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Institutional Trust, Fiduciary, and Custody — 4.0% |
| |||||||||||
9,800 | The Bank of New York Mellon Corp. | $ | 499,289 | $ | 494,214 | |||||||
|
|
|
| |||||||||
Investment Companies — 2.1% |
| |||||||||||
164,881 | Atlas Mara Ltd.† | 338,217 | 253,917 | |||||||||
|
|
|
| |||||||||
Investment Management — 10.5% |
| |||||||||||
4,000 | Diamond Hill Investment Group Inc. | 639,961 | 560,000 | |||||||||
15,500 | Franklin Resources Inc. | 470,160 | 513,670 | |||||||||
6,000 | Westwood Holdings Group Inc. | 278,417 | 211,620 | |||||||||
|
|
|
| |||||||||
1,388,538 | 1,285,290 | |||||||||||
|
|
|
| |||||||||
Life Insurance — 7.2% |
| |||||||||||
83,000 | Aegon NV | 483,977 | 398,865 | |||||||||
11,500 | NN Group NV | 496,491 | 477,694 | |||||||||
|
|
|
| |||||||||
980,468 | 876,559 | |||||||||||
|
|
|
| |||||||||
Real Estate Owners and Developers — 5.0% |
| |||||||||||
84,000 | Hang Lung Group Ltd. | 216,957 | 269,658 | |||||||||
42,000 | Henderson Land Development Co. Ltd. | 206,680 | 266,983 | |||||||||
1,878 | Homefed Corp.† | 75,959 | 71,364 | |||||||||
|
|
|
| |||||||||
499,596 | 608,005 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 12,818,761 | 11,937,182 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 1.5% |
| |||||||||||
$ 185,000 | U.S. Treasury Bill, | 184,194 | 184,201 | |||||||||
|
|
|
| |||||||||
TOTAL | $ | 13,002,955 | 12,121,383 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — 0.8% |
| 94,735 | ||||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 12,216,118 | |||||||||
|
|
† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
4
The Gabelli Global Financial Services Fund
Statement of Assets and Liabilities
March 31, 2019 (Unaudited)
Assets: | ||||
Investments, at value (cost $13,002,955) | $ | 12,121,383 | ||
Cash | 288 | |||
Receivable for Fund shares sold | 127,609 | |||
Receivable for investments sold | 12,442 | |||
Receivable from Adviser | 7,357 | |||
Dividends receivable | 57,822 | |||
Prepaid expenses | 5,745 | |||
|
| |||
Total Assets | 12,332,646 | |||
|
| |||
Liabilities: | ||||
Payable for investments purchased | 65,034 | |||
Payable for investment advisory fees | 19,238 | |||
Payable for distribution fees | 28 | |||
Payable for shareholder communications expenses | 11,332 | |||
Payable for legal and audit fees | 9,599 | |||
Payable for custodian fees | 7,156 | |||
Other accrued expenses. | 4,141 | |||
|
| |||
Total Liabilities | 116,528 | |||
|
| |||
Net Assets | ||||
(applicable to 1,347,529 shares outstanding) | $ | 12,216,118 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 13,088,046 | ||
Total accumulated loss(a) | (871,928 | ) | ||
|
| |||
Net Assets | $ | 12,216,118 | ||
|
|
Shares of Capital Stock, each at $0.001 par value: |
| |||||||
Class AAA: | ||||||||
Net Asset Value, offering, and redemption price per share ($115,463 ÷ 12,746 shares outstanding; 150,000,000 shares authorized) | $ | 9.06 | ||||||
|
| |||||||
Class A: | ||||||||
Net Asset Value and redemption price per share ($9,928 ÷ 1,095 shares outstanding; 50,000,000 shares authorized) | $ | 9.07 | ||||||
|
| |||||||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 9.62 | ||||||
|
| |||||||
Class C: | ||||||||
Net Asset Value and offering price per share ($906 ÷ 100.13 shares outstanding; 50,000,000 shares authorized) | $ | 9.05 | (b) | |||||
|
| |||||||
Class I: | ||||||||
Net Asset Value, offering, and redemption price per share ($12,089,821 ÷ 1,333,588 shares outstanding; 50,000,000 shares authorized) | $ | 9.07 | ||||||
|
|
(a) | Effective March 31, 2019, the Fund has adopted disclosure requirements conforming to SEC Rule6-04.17 of RegulationS-X and discloses total distributable earnings/accumulated loss. See Note 2 for further details. |
(b) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Six Months Ended March 31, 2019 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $3,553) | $ | 126,936 | ||
Interest | 9,054 | |||
|
| |||
Total Investment Income | 135,990 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 52,726 | |||
Distribution fees - Class AAA | 114 | |||
Distribution fees - Class A | 3 | |||
Distribution fees - Class C | 5 | |||
Shareholder communication expenses | 18,226 | |||
Shareholder services fees | 11,872 | |||
Custodian fees | 10,234 | |||
Legal and audit fees | 10,113 | |||
Registration expenses | 3,093 | |||
Directors’ fees | 217 | |||
Miscellaneous expenses | 3,610 | |||
|
| |||
Total Expenses | 110,213 | |||
|
| |||
Less: | ||||
Expense reimbursements (See Note 3) | (57,366 | ) | ||
|
| |||
Net Expenses | 52,847 | |||
|
| |||
Net Investment Income. | 83,143 | |||
|
| |||
Net Realized and Unrealized Loss on Investments and Foreign Currency: | ||||
Net realized loss on investments | (27,902 | ) | ||
Net realized loss on foreign currency transactions | (141 | ) | ||
|
| |||
Net realized loss on investments and foreign currency transactions | (28,043 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (881,572 | ) | ||
on foreign currency translations | (577 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation on investments and foreign currency transactions | (882,149 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (910,192 | ) | ||
|
|
Net Decrease in Net Assets Resulting from Operations | $ | (827,049 | ) | |
|
|
See accompanying notes to financial statements.
5
The Gabelli Global Financial Services Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2019 (Unaudited)(a) | |||||
Operations: | |||||
Net investment income | $ | 83,143 | |||
Net realized loss on investments and foreign currency transactions | (28,043 | ) | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (882,149 | ) | |||
|
| ||||
Net Decrease in Net Assets Resulting from Operations | (827,049 | ) | |||
|
| ||||
Distributions to Shareholders: | |||||
Class AAA | (310 | ) | |||
Class A | (3 | ) | |||
Class C | (1 | ) | |||
Class I | (44,565 | ) | |||
|
| ||||
Total Distributions to Shareholders(b) | (44,879 | ) | |||
|
| ||||
Capital Share Transactions: | |||||
Class AAA | 120,259 | ||||
Class A | 10,263 | ||||
Class C | 1,001 | ||||
Class I | 12,956,523 | ||||
|
| ||||
Net Increase in Net Assets from Capital Share Transactions | 13,088,046 | ||||
|
| ||||
Net Increase in Net Assets | 12,216,118 | ||||
Net Assets: | |||||
Beginning of period | — | ||||
|
| ||||
End of period | $ | 12,216,118 | |||
|
|
(a) | The Fund commenced investment operations on October 1, 2018. |
(b) | Effective March 31, 2019, the Fund has adopted disclosure requirements conforming to SEC Rule6-04.17 of RegulationS-X. See Note 2 for further details. |
See accompanying notes to financial statements.
6
The Gabelli Global Financial Services Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout the period:
Income from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2019(a) | Net Asset | Net | Net Realized | Total from | Net Investment Income | Total Distributions | Net Asset Value, End of Period | Total Return † | Net Assets | Net | Operating Before | Operating Expenses Net of | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $ | 10.00 | $ | 0.07 | $ | (0.98 | ) | $ | (0.91 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | 9.06 | (9.06 | )% | $ | 115 | 1.45 | % | 2.34 | % | 1.25 | % | 9 | % | |||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $ | 10.00 | $ | 0.14 | $ | (1.04 | ) | $ | (0.90 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | 9.07 | (9.01 | )% | $ | 10 | 2.95 | % | 2.35 | % | 1.25 | % | 9 | % | |||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $ | 10.00 | $ | 0.02 | $ | (0.96 | ) | $ | (0.94 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | 9.05 | (9.39 | )% | $ | 1 | 0.51 | % | 3.09 | % | 2.00 | % | 9 | % | |||||||||||||||||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $ | 10.00 | $ | 0.07 | $ | (0.96 | ) | $ | (0.89 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | 9.07 | (8.91 | )% | $ | 12,090 | 1.58 | % | 2.09 | % | 1.00 | % | 9 | % |
† | 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 period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | For the six months ended March 31, 2019, unaudited. |
(b) | The Fund commenced investment operations on October 1, 2018. |
(c) | Per share amounts have been calculated using the average shares outstanding method. |
(d) | Annualized. |
(e) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed expenses of $57,366 during the six months ended March 31, 2019. |
See accompanying notes to financial statements.
7
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited)
1. Organization.The Gabelli Financial Services Fund is a series of the Gabelli Equity Series Funds, Inc. (theCorporation). The Corporation was incorporated on July 25, 1991 in Maryland. The Fund is anon-diversifiedopen-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and one of four separately managed portfolios of the Corporation. The Fund seeks to provide capital appreciation. The Fund commenced investment operations on October 1, 2018.
2. Significant Accounting Policies.As an investment company, the Fund follows the investment companyaccounting 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.
New Accounting Pronouncements.The SEC recently adopted changes to RegulationS-X to simplify thereporting of information by registered investment companies in financial statements. The amendments require presentation of the total, rather than the components, of distributable earnings on the Statement of Assets and Liabilities and also require presentation of the total, rather than the components, of distributions to shareholders, except for tax return of capital distributions, if any, on the Statement of Changes in Net Assets. The amendments also removed the requirement for parenthetical disclosure of undistributed net investment income on the Statement of Changes in Net Assets. These RegulationS-X amendments are reflected in the Fund’s financial statements for the six months ended March 31, 2019.
To improve the effectiveness of fair value disclosure requirements, the Financial Accounting Standards Board recently issued Accounting Standard Update (ASU)2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU2018-13), which adds, removes, and modifies certain aspects relating to fair value disclosure. ASU2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption of the additions relating to ASU2018-13 is not required, even if early adoption is elected for the removals under ASU2018-13. Management has early adopted the removals set forth in ASU2018-13 in these financial statements and has not early adopted the additions set forth in ASU2018-13.
Security Valuation.Portfolio securities listed or traded on a nationally recognized securities exchange or tradedin 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 obligations for which market quotations are readily
8
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the securities are valued using the closing bid price, 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. 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. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.
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 andnon-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.
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. At March 31, 2019, the Fund did not hold any Level 3 securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of March 31, 2019 is as follows:
Valuation Inputs | |||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 3/31/19 | |||||||||||||
INVESTMENTS IN SECURITIES: | |||||||||||||||
ASSETS (Market Value): | |||||||||||||||
Common Stocks (a) | $ | 11,937,182 | — | $ | 11,937,182 | ||||||||||
U.S. Government Obligations | — | $ | 184,201 | 184,201 | |||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 11,937,182 | $ | 184,201 | $ | 12,121,383 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
9
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (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 are 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 or preferred equities, warrants, options, rights, or 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. When fair valuing a security, factors to consider include 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 may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
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.
10
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
Foreign Taxes.The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation,a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities.The Fund may invest up to 15% of its net assets in securities for which the marketsare 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 the sale of securities eligible for trading on national securities exchanges or in theover-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 traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2019, the Fund held no restricted securities.
Investments in other Investment Companies.The Fund may invest, from time to time, in shares of otherinvestment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the Acquired Funds) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata port on of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the six months ended March 31, 2019, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was less than 1%.
Securities Transactions and Investment Income.Securities transactions are accounted for on the trade datewith 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 theex-dividend date, except for certain dividends from foreign securities that are recorded as soon after theex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses.Certain administrative expenses are commonto, 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 theex-dividend date. The characterizationof distributions to shareholders is 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, 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
11
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.
Provision for Income Taxes.The Fund intends 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.
The following summarizes the tax cost of investments and the related net unrealized depreciation at March 31, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation | |||||||||||
Investments | $13,002,955 | $257,355 | $(1,138,927) | $(881,572) |
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 themore-likely-than-not threshold. During the six months ended March 31, 2019, the Fund did not incur any income tax, interest, or penalties. As of March 31, 2019, the Adviser has reviewed the current tax period and concluded that there was no impact to the Fund’s net assets or results of operations. 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 investmentadvisory agreement (the Advisory Agreement) with the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, at the annual rate of 1.00% of the value of its average daily net assets. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Directors of the Fund who are affiliated persons of the Adviser.
The Adviser has contractually agreed to waive its investment advisory fees and/or to reimburse expenses of the Fund to the extent necessary to maintain the annualized total operating expenses of the Fund (excluding brokerage costs, acquired fund fees and expenses, interest, taxes, and extraordinary expenses) at no more than an annual rate of 1.25%, 1.25%, 2.00%, and 1.00% for Class AAA, Class A, Class C, and Class I shares, respectively. This arrangement is in effect through January 31, 2020. For the six months ended March 31, 2019, the Adviser reimbursed the Fund in the amount of $57,366. In addition, the Fund has also agreed, during the two year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent, that after giving effect to the repayments, such adjusted annualized total operating expenses of the Fund would not exceed the foregoing expense limitations of the value of the Fund’s average daily net assets for Class AAA, Class A, Class C, and Class I Shares. At March 31, 2019, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $57,366.
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
12
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
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 Rule12b-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 six months ended March 31, 2019, otherthan short term securities and U.S. Government obligations, aggregated $13,660,975 and $814,619, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2019, theFund paid $3,438 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. The Adviser did not seek a reimbursement during the six months ended March 31, 2019.
7. Line of Credit.The Fund participates in an unsecured line of credit, which expires on March 6, 2019 andmay be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the overnight Federal Funds rate plus 125 basis points or the 30 day ICE LIBOR plus 125 basis points in effect on that day. This amount, if any, would be included in “interest expense” in the Statement of Operations. During the six months ended March 31, 2019, 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 maximumfront-end sales charge of 5.75%. 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 inpaid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2019, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
13
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
Transactions in shares of capital stock were as follows:
Six Months Ended March 31, 2019 (Unaudited)(a) | ||||||||
Shares | Amount | |||||||
Class AAA | ||||||||
Shares sold | 17,302 | $ | 161,323 | |||||
Shares issued upon reinvestment of distributions | 37 | 310 | ||||||
Shares redeemed | (4,593 | ) | (41,374 | ) | ||||
|
|
|
| |||||
Net increase | 12,746 | $ | 120,259 | |||||
|
|
|
| |||||
Class A | ||||||||
Shares sold | 1,095 | $ | 10,260 | |||||
Shares issued upon reinvestment of distributions | 0* | 3 | ||||||
|
|
|
| |||||
Net increase | 1,095 | $ | 10,263 | |||||
|
|
|
| |||||
Class C | ||||||||
Shares sold | 100 | $ | 1,000 | |||||
Shares issued upon reinvestment of distributions | 0* | 1 | ||||||
|
|
|
| |||||
Net increase | 100 | $ | 1,001 | |||||
|
|
|
| |||||
Class I | ||||||||
Shares sold | 1,328,225 | $ | 12,911,958 | |||||
Shares issued upon reinvestment of distributions | 5,363 | 44,565 | ||||||
|
|
|
| |||||
Net increase | 1,333,588 | $ | 12,956,523 | |||||
|
|
|
|
(a) | The Fund commenced investment operations on October 1, 2018. |
* | Represents fewer than 0.50 shares. |
9. Significant Shareholder.As of March 31, 2019, approximately 96.9% of the Fund was beneficially ownedby the Adviser and its affiliates.
10. Indemnifications.The Fund enters into contracts that contain a variety of indemnifications. The Fund’smaximum 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 occurringthrough the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
14
THE GABELLI GLOBAL FINANCIAL SERVICES FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Ian Lapeyhas been the portfolio manager of The Gabelli Global Financial Services Fund since inception of theinvestment strategy on October 1, 2018 and a portfolio manager of Gabelli Funds, LLC. Prior to joining Gabelli, Mr. Lapey was a research analyst and partner at Moerus Capital Management LLC. Prior to joining Moerus, he was a partner, research analyst, and a portfolio manager at Third Avenue Management. Mr. Lapey holds an MBA in Finance and Statistics from the Stern School of Business at New York University. He also holds a Master’s degree in Accounting from Northeastern University and a BA in Economics from Williams College.
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 GLOBAL FINANCIAL SERVICES 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 calling800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc. Executive Chairman, Associated Capital Group, 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
John C. Ball Treasurer
Agnes Mullady Vice President
Andrea R. Mango Secretary
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR
G.distributors, LLC
CUSTODIAN
State Street Bank and Trust Company
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
DST Asset Manager Solutions, Inc.
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP | |
This report is submitted for the general information of the shareholders of The Gabelli Global Financial Services Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
| ||
GAB3630Q119SR |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
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 forClosed-End Management Investment Companies. |
Not applicable.
Item 8. Portfolio Managers ofClosed-End Management Investment Companies.
Not applicable.
Item 9. | Purchases of Equity Securities byClosed-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 RegulationS-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR240.14a-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 Rule30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR270.30a-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 Rule30a-3(b) under the 1940 Act (17 CFR270.30a-3(b)) and Rules13a-15(b) or15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR240.13a-15(b) or240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule30a-3(d) under the 1940 Act (17 CFR270.30a-3(d)) that occurred during the registrant’s last fiscal quarterthat has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | Disclosure of Securities Lending Activities forClosed-End Management Investment Companies. |
Not applicable.
Item 13. | Exhibits. |
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Gabelli Equity Series Funds, Inc.
By (Signature and Title)* /s/ Bruce N. Alpert
Bruce N. Alpert, Principal Executive Officer
Date 6/04/2019
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 6/04/2019
By (Signature and Title)* /s/ John C. Ball
John C. Ball, Principal Financial Officer and Treasurer
Date 6/04/2019
* Print the name and title of each signing officer under his or her signature.