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: September 30, 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
Annual Report — September 30, 2019
To Our Shareholders,
For the fiscal year ended September 30, 2019, the net asset value (NAV) per Class AAA Share of The Gabelli Equity Income Fund decreased 1.1% compared with an increase of 4.3% for the Standard & Poor’s (S&P) 500 Index. Other classes of shares are available. See page 3 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2019.
Performance Discussion (Unaudited)
Our stock selection process is based on the investment principles of Graham and Dodd, the first investors to articulate the fundamentals of value investing. Their work provided the framework for value investing, and we contributed to this framework with the discipline of Private Market Value with a Catalyst™. This proprietary research and valuation method identifies companies whose shares are selling at a discount to intrinsic value, with an identifiable path to realizing, or surfacing, that private market value. We define private market value as the price an informed acquirer would pay for an entire enterprise. The catalyst comprises identifiable events or circumstances that might reasonably result in the narrowing of the difference between the public market price of the stock and our estimate of the private market value. This realization of value can take place gradually or suddenly, with company specific changes such as management changes or restructurings, sale of assets or of the business as a whole, or industry changes such as changes in regulation or changes in competition.
The Fund will seek to achieve its investment objective through a combination of capital appreciation and current income by investing, under normal market conditions, at least 80% of its net assets in income producing equity securities. Income producing equity securities include, for example, common stock, preferred stock, and convertible securities.
For the fourth calendar quarter of 2018, the S&P 500 fell 13% on a total return basis although growth stocks continued to outperform value stocks. U.S. companies continued to increase their dividends, as the dividend payout ratio stood at about 40%.
The market recovered in the first calendar quarter of 2019, with the S&P 500 up about 13.7%. Growth stocks were up 15% on a total return basis and value stocks up 12%. Technology, Real Estate, and Industrials were the top performing sectors of the quarter, with Materials, Financials, and Healthcare as the detractors. Since the Federal Reserve began its taper in 2014, the ten year U.S. Treasury rate continued to fall, hitting just 2.4% by the end of March 2019.
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 (https://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 S&P 500 rose even higher in the second calendar quarter of 2019, noting that eleven sectors within the index were up. The bull market in U.S. equities also celebrated its tenth anniversary, becoming the longest bull market since World War II.
The end of September marked the 123rd month of the U.S. economy’s expansion, which is the longest economic expansion since such statistics were first started during the time of the American civil war. During the third calendar quarter of 2019, the Federal Reserve lowered the Federal Funds target rate from 2.5% to 2.0%. So far throughout 2019, U.S. companies continued to increase their dividends and currently about 56% of the stocks in the S&P 500 have a dividend yield greater than the 10 year U.S. treasury yield; this is the highest percentage in over 30 years.
Among our better performing stocks for the fiscal year were Mastercard (2.9% of net assets as of September 30, 2019), Brown-Forman (2.7%), and Mondelez International (0.7%). Mastercard finalized its acquisition of Transfast in early July. The deal strengthened Mastercard’s wide range of payment solutions and its global network, with Transfast reaching 90% of the population and over 90% of the world’s bank accounts. Brown-Forman, one of the largest American owned spirits and wine businesses, aided the portfolio’s performance due to the growing global demand for American whiskey and tequila, like the Jack Daniel’s and el Jimador brands. Mondelēz, a snack company with broad global distribution, relies on popular household names like Oreo, Cadbury, Nutter Butter, and Trident for most of its revenue. In early 2019, it entered the growing nutrition bars sector of snacking with its acquisition of Perfect Snacks.
A few of our weaker performers were Halliburton (0.5%), Swedish Match (3.6%), and CBS (2.0%). Halliburton, a large energy services company that serves the oil and natural gas industries, faced lower pressure pumping activity and reduced drilling and wireline activity in North America. Swedish Match is a tobacco company based in Stockholm that sells Snus and moist snuff, and it was the largest portion in our portfolio as of the end of September. Through June of 2019, U.S. cigar and chewing tobacco sales were down compared with 2018 figures. CBS operates the CBS television network and the premium cable network Showtime. It also owns 29 local television stations and 130 radio stations. On August 13, 2019, CBS and Viacom reached an agreement to merge.
We appreciate your confidence and trust.
2
Comparative Results
Average Annual Returns through September 30, 2019 (a)(b) (Unaudited) | ||||||||||||||||||||
1 Year | 5 Year | 10 Year | 15 Year | Since Inception (01/02/92) | ||||||||||||||||
Class AAA (GABEX) | (1.09)% | 4.84% | 9.17% | 7.37% | 9.46% | |||||||||||||||
S&P 500 Index | 4.25 | 10.84 | 13.24 | 9.01 | 9.54(c) | |||||||||||||||
Nasdaq Composite Index | 0.55 | 13.59 | 15.58 | 11.38 | 10.53(c) | |||||||||||||||
Lipper Equity Income Fund Average | 5.87 | 8.26 | 11.10 | 7.72 | 8.49 | |||||||||||||||
Class A (GCAEX) | (1.08) | 4.85 | 9.17 | 7.37 | 9.45 | |||||||||||||||
With sales charge (d) | (6.77) | 3.61 | 8.53 | 6.95 | 9.22 | |||||||||||||||
Class C (GCCEX) | (1.87) | 4.06 | 8.36 | 6.58 | 8.99 | |||||||||||||||
With contingent deferred sales charge (e) | (2.85) | 4.06 | 8.36 | 6.58 | 8.99 | |||||||||||||||
Class I (GCIEX) | (0.86) | 5.11 | 9.45 | 7.59 | 9.57 | |||||||||||||||
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 12 for the expense ratios for the fiscal year ended September 30, 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. 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 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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* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
3
The Gabelli Equity Income Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from April 1, 2019 through September 30, 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. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2019.
Beginning Account Value 04/01/19 | Ending Account Value 09/30/19 | Annualized Expense Ratio | Expenses Paid During Period* | |||||
The Gabelli Equity Income Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $1,012.90 | 1.39% | $ 7.01 | ||||
Class A | $1,000.00 | $1,013.20 | 1.40% | $ 7.07 | ||||
Class C | $1,000.00 | $1,008.80 | 2.14% | $10.78 | ||||
Class I | $1,000.00 | $1,014.00 | 1.14% | $ 5.76 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,018.10 | 1.39% | $ 7.03 | ||||
Class A | $1,000.00 | $1,018.05 | 1.40% | $ 7.08 | ||||
Class C | $1,000.00 | $1,014.34 | 2.14% | $10.81 | ||||
Class I | $1,000.00 | $1,019.35 | 1.14% | $ 5.77 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2019:
The Gabelli Equity Income Fund
Food and Beverage | 19.1% | |||
Financial Services | 16.5% | |||
Consumer Products | 6.0% | |||
Health Care | 5.4% | |||
Retail | 5.4% | |||
Telecommunications | 4.9% | |||
Diversified Industrial | 4.7% | |||
Business Services | 4.6% | |||
Automotive: Parts and Accessories | 3.7% | |||
Equipment and Supplies | 3.2% | |||
Energy and Utilities: Oil | 2.9% | |||
Broadcasting | 2.5% | |||
Aerospace | 2.4% | |||
Energy and Utilities: Natural Gas | 2.2% | |||
Machinery | 2.0% | |||
Building and Construction | 1.9% | |||
Electronics | 1.7% | |||
Computer Software and Services | 1.7% | |||
Entertainment | 1.4% | |||
Transportation | 1.3% | |||
Energy and Utilities: Integrated | 1.1% | |||
Computer Hardware | 1.0% |
Metals and Mining | 1.0 | % | ||
Cable and Satellite | 0.9 | % | ||
Automotive | 0.8 | % | ||
Specialty Chemicals | 0.8 | % | ||
Paper and Forest Products | 0.7 | % | ||
Wireless Communications | 0.7 | % | ||
Hotels and Gaming | 0.7 | % | ||
Environmental Services | 0.7 | % | ||
Energy and Utilities: Electric | 0.7 | % | ||
Energy and Utilities: Services | 0.7 | % | ||
Aviation: Parts and Services | 0.5 | % | ||
Agriculture | 0.5 | % | ||
Energy and Utilities: Water | 0.3 | % | ||
Communications Equipment | 0.2 | % | ||
Consumer Services | 0.2 | % | ||
Real Estate | 0.0 | %* | ||
Publishing | 0.0 | %* | ||
Other Assets and Liabilities (Net) | (5.0 | )% | ||
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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.
5
The Gabelli Equity Income Fund
Schedule of Investments — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS — 104.9% |
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Aerospace — 2.4% |
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58,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 311,528 | $ | 2,929,580 | |||||||
2,000 | Lockheed Martin Corp. | 47,350 | 780,120 | |||||||||
10,000 | Raytheon Co. | 279,200 | 1,961,900 | |||||||||
45,000 | Rockwell Automation Inc. | 1,419,242 | 7,416,000 | |||||||||
500,000 | Rolls-Royce Holdings plc | 3,518,590 | 4,871,451 | |||||||||
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5,575,910 | 17,959,051 | |||||||||||
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Agriculture — 0.5% |
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90,000 | Archer-Daniels-Midland Co. | 2,386,667 | 3,696,300 | |||||||||
12,000 | The Mosaic Co. | 186,246 | 246,000 | |||||||||
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2,572,913 | 3,942,300 | |||||||||||
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Automotive — 0.8% |
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161,000 | Navistar International Corp.† | 3,004,261 | 4,525,710 | |||||||||
26,500 | PACCAR Inc. | 1,178,103 | 1,855,265 | |||||||||
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4,182,364 | 6,380,975 | |||||||||||
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Automotive: Parts and Accessories — 3.7% |
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140,000 | Dana Inc. | 2,166,245 | 2,021,600 | |||||||||
10,500 | Garrett Motion Inc.† | 30,178 | 104,580 | |||||||||
263,000 | Genuine Parts Co.(a) | 10,827,491 | 26,192,170 | |||||||||
300 | O’Reilly Automotive Inc.† | 7,524 | 119,553 | |||||||||
6,000 | Tenneco Inc., Cl. A | 79,742 | 75,120 | |||||||||
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13,111,180 | 28,513,023 | |||||||||||
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Aviation: Parts and Services — 0.5% |
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29,000 | United Technologies Corp. | 1,453,950 | 3,959,080 | |||||||||
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Broadcasting — 2.5% |
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346,500 | CBS Corp., Cl. A, Voting | 8,210,045 | 15,020,775 | |||||||||
50,200 | Liberty Global plc, Cl. A† | 1,073,097 | 1,242,450 | |||||||||
80,000 | Liberty Global plc, Cl. C† | 1,772,070 | 1,903,200 | |||||||||
36,000 | MSG Networks Inc., Cl. A† | 134,967 | 583,920 | |||||||||
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11,190,179 | 18,750,345 | |||||||||||
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Building and Construction — 1.9% |
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11,000 | Arcosa Inc. | 144,627 | 376,310 | |||||||||
160,000 | Fortune Brands Home & Security Inc. | 1,526,312 | 8,752,000 | |||||||||
45,800 | Herc Holdings Inc.† | 1,447,522 | 2,130,158 | |||||||||
70,000 | Johnson Controls International plc | 1,197,528 | 3,072,300 | |||||||||
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4,315,989 | 14,330,768 | |||||||||||
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Business Services — 4.6% |
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30,000 | Automatic Data Processing Inc. | 1,140,889 | 4,842,600 | |||||||||
80,000 | Mastercard Inc., Cl. A(a) | 672,320 | 21,725,600 | |||||||||
2,400 | MSC Industrial Direct Co. Inc., Cl. A | 165,490 | 174,072 | |||||||||
40,000 | Pentair plc | 833,620 | 1,512,000 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
27,000 | S&P Global Inc. | $ | 1,116,960 | $ | 6,614,460 | |||||||
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3,929,279 | 34,868,732 | |||||||||||
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Cable and Satellite — 0.9% |
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10,000 | AMC Networks Inc., Cl. A† | 389,742 | 491,600 | |||||||||
167,763 | DISH Network Corp., Cl. A† | 3,326,177 | 5,715,685 | |||||||||
16,000 | EchoStar Corp., Cl. A† | 389,202 | 633,920 | |||||||||
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4,105,121 | 6,841,205 | |||||||||||
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Communications Equipment — 0.2% |
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46,000 | Corning Inc. | 527,588 | 1,311,920 | |||||||||
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Computer Hardware — 1.0% |
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16,000 | Apple Inc. | 1,171,846 | 3,583,520 | |||||||||
27,000 | International Business Machines Corp. | 2,143,760 | 3,926,340 | |||||||||
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3,315,606 | 7,509,860 | |||||||||||
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Computer Software and Services — 1.7% |
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27,000 | Fidelity National Information Services Inc. | 400,738 | 3,584,520 | |||||||||
175,000 | Hewlett Packard Enterprise Co. | 1,110,495 | 2,654,750 | |||||||||
48,000 | Microsoft Corp. | 1,341,120 | 6,673,440 | |||||||||
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2,852,353 | 12,912,710 | |||||||||||
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Consumer Products — 6.0% |
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44,000 | Altria Group Inc. | 517,039 | 1,799,600 | |||||||||
37,000 | Edgewell Personal Care Co.† | 999,364 | 1,202,130 | |||||||||
53,000 | Energizer Holdings Inc. | 1,441,783 | 2,309,740 | |||||||||
27,000 | Essity AB, Cl. A | 436,838 | 796,776 | |||||||||
1,500 | National Presto Industries Inc. | 45,698 | 133,635 | |||||||||
46,500 | Philip Morris International Inc. | 1,445,213 | 3,530,745 | |||||||||
53,000 | Reckitt Benckiser Group plc | 1,599,253 | 4,134,119 | |||||||||
375 | Spectrum Brands Holdings Inc. | 18,794 | 19,817 | |||||||||
660,000 | Swedish Match AB | 7,883,004 | 27,294,254 | |||||||||
70,000 | Unilever NV | 1,381,490 | 4,202,100 | |||||||||
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15,768,476 | 45,422,916 | |||||||||||
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Consumer Services — 0.2% |
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2,700 | Allegion plc | 37,048 | 279,855 | |||||||||
30,000 | Rollins Inc. | 44,741 | 1,022,100 | |||||||||
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81,789 | 1,301,955 | |||||||||||
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Diversified Industrial — 4.7% |
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80,000 | Crane Co. | 2,475,345 | 6,450,400 | |||||||||
68,000 | Eaton Corp. plc | 2,706,356 | 5,654,200 | |||||||||
18,000 | Honeywell International Inc. | 385,923 | 3,045,600 | |||||||||
50,000 | ITT Inc. | 1,004,526 | 3,059,500 | |||||||||
50,000 | Jardine Matheson Holdings Ltd. | 2,372,853 | 2,675,000 | |||||||||
178,000 | Jardine Strategic Holdings Ltd. | 4,191,229 | 5,318,640 | |||||||||
38,000 | nVent Electric plc | 365,955 | 837,520 | |||||||||
120,000 | Textron Inc. | 763,372 | 5,875,200 | |||||||||
290,000 | Toray Industries Inc. | 1,971,603 | 2,151,297 |
See accompanying notes to financial statements.
6
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) |
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Diversified Industrial (Continued) |
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37,000 | Trinity Industries Inc. | $ | 462,238 | $ | 728,160 | |||||||
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16,699,400 | 35,795,517 | |||||||||||
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Electronics — 1.7% |
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35,000 | Sony Corp. | 897,245 | 2,054,520 | |||||||||
73,000 | Sony Corp., ADR | 1,746,659 | 4,316,490 | |||||||||
60,000 | TE Connectivity Ltd. | 1,996,558 | 5,590,800 | |||||||||
10,000 | Texas Instruments Inc. | 147,000 | 1,292,400 | |||||||||
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4,787,462 | 13,254,210 | |||||||||||
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Energy and Utilities: Electric — 0.7% |
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1,000 | American Electric Power Co. Inc. | 34,670 | 93,690 | |||||||||
6,000 | Avangrid Inc. | 117,823 | 313,500 | |||||||||
40,000 | El Paso Electric Co. | 313,700 | 2,683,200 | |||||||||
40,000 | Korea Electric Power Corp., ADR† | 502,228 | 433,600 | |||||||||
200,000 | Texas Competitive Electric Holdings Co. LLC, Escrow†(b) | 0 | 0 | |||||||||
100,000 | The AES Corp. | 419,608 | 1,634,000 | |||||||||
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|
| |||||||||
1,388,029 | 5,157,990 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Integrated — 1.1% |
| |||||||||||
164,000 | Energy Transfer LP | 469,610 | 2,145,120 | |||||||||
29,000 | Eni SpA | 304,221 | 443,596 | |||||||||
6,500 | Iberdrola SA, ADR | 98,020 | 270,205 | |||||||||
60,000 | OGE Energy Corp. | 800,122 | 2,722,800 | |||||||||
56,000 | PNM Resources Inc. | 576,150 | 2,916,480 | |||||||||
|
|
|
| |||||||||
2,248,123 | 8,498,201 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Natural Gas — 2.2% |
| |||||||||||
1,000 | Atmos Energy Corp. | 26,304 | 113,890 | |||||||||
162,600 | National Fuel Gas Co. | 6,786,905 | 7,629,192 | |||||||||
14,000 | ONE Gas Inc. | 58,650 | 1,345,540 | |||||||||
86,000 | ONEOK Inc. | 551,296 | 6,337,340 | |||||||||
11,000 | Southwest Gas Holdings Inc. | 226,655 | 1,001,440 | |||||||||
|
|
|
| |||||||||
7,649,810 | 16,427,402 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Oil — 2.9% |
| |||||||||||
69,000 | Chevron Corp. | 2,577,902 | 8,183,400 | |||||||||
7,000 | ConocoPhillips | 128,274 | 398,860 | |||||||||
37,000 | Devon Energy Corp. | 1,040,962 | 890,220 | |||||||||
15,000 | Exxon Mobil Corp. | 364,150 | 1,059,150 | |||||||||
75,000 | Hess Corp. | 3,678,524 | 4,536,000 | |||||||||
18,000 | Marathon Petroleum Corp. | 234,717 | 1,093,500 | |||||||||
24,000 | Occidental Petroleum Corp. | 841,133 | 1,067,280 | |||||||||
70,000 | Royal Dutch Shell plc, Cl. A, ADR | 3,024,284 | 4,119,500 | |||||||||
17,000 | TOTAL SA, ADR | 282,789 | 884,000 | |||||||||
|
|
|
| |||||||||
12,172,735 | 22,231,910 | |||||||||||
|
|
|
|
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
Energy and Utilities: Services — 0.7% |
| |||||||||||
220,000 | Halliburton Co. | $ | 6,337,392 | $ | 4,147,000 | |||||||
45,000 | Oceaneering International Inc.† | 723,561 | 609,750 | |||||||||
10,000 | Schlumberger Ltd. | 206,840 | 341,700 | |||||||||
|
|
|
| |||||||||
7,267,793 | 5,098,450 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities: Water — 0.3% |
| |||||||||||
10,000 | Aqua America Inc. | 73,706 | 448,300 | |||||||||
70,000 | Severn Trent plc | 1,834,583 | 1,863,373 | |||||||||
|
|
|
| |||||||||
1,908,289 | 2,311,673 | |||||||||||
|
|
|
| |||||||||
Entertainment — 1.4% |
| |||||||||||
50,000 | Grupo Televisa SAB, ADR | 739,441 | 489,000 | |||||||||
12,000 | The Madison Square Garden Co., Cl. A† | 347,057 | 3,162,240 | |||||||||
256,300 | Viacom Inc., Cl. A | 9,897,499 | 6,730,438 | |||||||||
|
|
|
| |||||||||
10,983,997 | 10,381,678 | |||||||||||
|
|
|
| |||||||||
Environmental Services — 0.7% |
| |||||||||||
38,000 | Republic Services Inc. | 1,284,375 | 3,288,900 | |||||||||
16,500 | Waste Management Inc. | 508,261 | 1,897,500 | |||||||||
|
|
|
| |||||||||
1,792,636 | 5,186,400 | |||||||||||
|
|
|
| |||||||||
Equipment and Supplies — 3.2% |
| |||||||||||
16,000 | A.O. Smith Corp. | 46,539 | 763,360 | |||||||||
16,000 | Danaher Corp. | 467,288 | 2,310,880 | |||||||||
179,000 | Flowserve Corp. | 2,258,602 | 8,361,090 | |||||||||
60,000 | Graco Inc. | 1,006,940 | 2,762,400 | |||||||||
10,000 | Ingersoll-Rand plc | 207,634 | 1,232,100 | |||||||||
22,000 | Minerals Technologies Inc. | 757,033 | 1,167,980 | |||||||||
170,000 | Mueller Industries Inc. | 3,284,149 | 4,875,600 | |||||||||
16,000 | Parker-Hannifin Corp. | 835,168 | 2,889,760 | |||||||||
|
|
|
| |||||||||
8,863,353 | 24,363,170 | |||||||||||
|
|
|
| |||||||||
Financial Services — 16.5% |
| |||||||||||
6,300 | Alleghany Corp.† | 969,808 | 5,025,888 | |||||||||
28,000 | AllianceBernstein Holding LP | 251,713 | 821,800 | |||||||||
62,000 | American Express Co.(a) | 1,262,330 | 7,333,360 | |||||||||
22,400 | Ameris Bancorp | 239,312 | 901,376 | |||||||||
14,000 | Argo Group International | 272,947 | 983,360 | |||||||||
5,195 | Banco Santander Chile, ADR | 29,250 | 145,460 | |||||||||
9,393 | Banco Santander SA, ADR | 33,997 | 37,760 | |||||||||
170,000 | Bank of America Corp. | 1,104,015 | 4,958,900 | |||||||||
13,056 | BNP Paribas SA | 580,935 | 635,674 | |||||||||
33,000 | Eaton Vance Corp. | 938,796 | 1,482,690 | |||||||||
50,000 | Interactive Brokers Group Inc., Cl. A | 752,861 | 2,689,000 | |||||||||
15,000 | Jefferies Financial Group Inc. | 263,160 | 276,000 | |||||||||
21,000 | JPMorgan Chase & Co. | 407,518 | 2,471,490 | |||||||||
68,000 | Julius Baer Group Ltd. | 2,230,242 | 3,012,835 | |||||||||
70,000 | Kinnevik AB, Cl. A | 1,388,431 | 1,923,497 | |||||||||
80,000 | Legg Mason Inc. | 1,378,661 | 3,055,200 |
See accompanying notes to financial statements.
7
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Financial Services (Continued) |
| |||||||||||
92,000 | Loews Corp. | $ | 3,458,569 | $ | 4,736,160 | |||||||
24,600 | M&T Bank Corp. | 2,071,971 | 3,886,062 | |||||||||
58,000 | Marsh & McLennan Cos. Inc. | 1,666,935 | 5,802,900 | |||||||||
126,000 | Morgan Stanley | 2,829,514 | 5,376,420 | |||||||||
108,000 | Navient Corp. | 882,518 | 1,382,400 | |||||||||
36,000 | Oritani Financial Corp. | 360,000 | 637,020 | |||||||||
9,000 | Popular Inc. | 158,611 | 486,720 | |||||||||
10,000 | Sculptor Capital Management Inc. | 207,844 | 194,800 | |||||||||
175,000 | SLM Corp. | 854,604 | 1,544,375 | |||||||||
128,000 | State Street Corp. | 5,838,401 | 7,576,320 | |||||||||
275,000 | Sterling Bancorp | 2,964,139 | 5,516,500 | |||||||||
8,000 | T. Rowe Price Group Inc. | 148,674 | 914,000 | |||||||||
74,000 | TD Ameritrade Holding Corp. | 1,236,284 | 3,455,800 | |||||||||
400,000 | The Bank of New York Mellon Corp.(a) | 10,196,037 | 18,084,000 | |||||||||
18,500 | The Goldman Sachs Group Inc. | 2,239,746 | 3,833,755 | |||||||||
60,000 | The Hartford Financial Services Group Inc. | 1,884,230 | 3,636,600 | |||||||||
96,000 | The PNC Financial Services Group Inc.(a) | 4,938,114 | 13,455,360 | |||||||||
4,500 | The Travelers Companies Inc. | 179,092 | 669,105 | |||||||||
51,000 | Waddell & Reed Financial Inc., Cl. A | 841,409 | 876,180 | |||||||||
145,000 | Wells Fargo & Co. | 4,161,050 | 7,313,800 | |||||||||
|
|
|
| |||||||||
59,221,718 | 125,132,567 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 19.1% |
| |||||||||||
2,000 | Ajinomoto Co. Inc. | 32,542 | 37,734 | |||||||||
1,000 | Anheuser-Busch InBev SA/NV | 15,876 | 95,284 | |||||||||
344,000 | Brown-Forman Corp., Cl. A | 5,172,356 | 20,554,000 | |||||||||
126,000 | Campbell Soup Co. | 3,897,570 | 5,911,920 | |||||||||
80,000 | Coca-Cola Amatil Ltd., ADR | 246,845 | 572,400 | |||||||||
20,000 | Coca-Cola European Partners plc | 450,000 | 1,109,000 | |||||||||
12,500 | Coca-Cola Femsa SAB de CV, ADR | 470,364 | 757,750 | |||||||||
7,200 | Constellation Brands Inc., Cl. A | 89,304 | 1,492,416 | |||||||||
70,000 | Danone SA | 3,243,577 | 6,166,305 | |||||||||
740,000 | Davide Campari-Milano SpA | 2,505,623 | 6,686,431 | |||||||||
78,000 | Diageo plc, ADR | 4,378,680 | 12,754,560 | |||||||||
106,000 | Fomento Economico Mexicano SAB de CV, ADR | 2,530,276 | 9,707,480 | |||||||||
60,000 | General Mills Inc. | 1,747,617 | 3,307,200 | |||||||||
2,000,000 | Grupo Bimbo SAB de CV, Cl. A | 1,603,236 | 3,648,525 | |||||||||
130,000 | Heineken NV | 6,009,568 | 14,050,378 | |||||||||
175,000 | ITO EN Ltd. | 3,329,969 | 8,238,150 | |||||||||
35,000 | Kellogg Co. | 1,801,735 | 2,252,250 | |||||||||
2,000 | McCormick & Co. Inc., Cl. V | 137,120 | 314,860 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
22,000 | McCormick & Co. Inc.,Non-Voting | $ | 1,051,556 | $ | 3,438,600 | |||||||
91,000 | Mondelēz International Inc., Cl. A | 1,641,524 | 5,034,120 | |||||||||
44,000 | Nestlé SA | 900,190 | 4,773,629 | |||||||||
95,000 | Nissin Foods Holdings Co. Ltd. | 3,080,973 | 6,853,179 | |||||||||
50,000 | PepsiCo Inc. | 3,230,424 | 6,855,000 | |||||||||
40,000 | Pernod Ricard SA | 3,283,681 | 7,123,939 | |||||||||
56,000 | Remy Cointreau SA | 3,460,958 | 7,434,358 | |||||||||
36,000 | Sapporo Holdings Ltd. | 810,532 | 896,962 | |||||||||
10,000 | The Coca-Cola Co. | 208,400 | 544,400 | |||||||||
1,000 | The Hershey Co. | 36,300 | 154,990 | |||||||||
40,000 | The Kraft Heinz Co. | 1,115,278 | 1,117,400 | |||||||||
26,000 | Tootsie Roll Industries Inc. | 452,984 | 965,640 | |||||||||
48,000 | Yakult Honsha Co. Ltd. | 1,179,493 | 2,681,341 | |||||||||
|
|
|
| |||||||||
58,114,551 | 145,530,201 | |||||||||||
|
|
|
| |||||||||
Health Care — 5.4% |
| |||||||||||
10,000 | Abbott Laboratories | 227,205 | 836,700 | |||||||||
4,000 | AbbVie Inc. | 99,413 | 302,880 | |||||||||
4,000 | Alcon Inc.† | 133,378 | 233,160 | |||||||||
2,000 | Allergan plc | 288,000 | 336,580 | |||||||||
78,000 | Baxter International Inc. | 1,729,585 | 6,822,660 | |||||||||
6,500 | Bio-Rad Laboratories Inc., Cl. A† | 638,135 | 2,162,810 | |||||||||
220,000 | Bristol-Myers Squibb Co. | 5,346,349 | 11,156,200 | |||||||||
17,000 | Covetrus Inc.† | 133,426 | 202,130 | |||||||||
74,000 | Demant A/S† | 716,237 | 1,895,386 | |||||||||
1,000 | Eli Lilly & Co. | 34,133 | 111,830 | |||||||||
8,000 | GlaxoSmithKline plc, ADR | 327,365 | 341,440 | |||||||||
38,000 | Henry Schein Inc.† | 376,001 | 2,413,000 | |||||||||
25,000 | Johnson & Johnson | 1,448,045 | 3,234,500 | |||||||||
44,000 | Merck & Co. Inc. | 932,242 | 3,703,920 | |||||||||
17,000 | Novartis AG, ADR | 829,108 | 1,477,300 | |||||||||
23,000 | Pfizer Inc. | 387,539 | 826,390 | |||||||||
45,000 | Roche Holding AG, ADR | 826,666 | 1,640,250 | |||||||||
45,000 | Wright Medical Group NV† | 926,550 | 928,350 | |||||||||
9,000 | Zimmer Biomet Holdings Inc. | 473,429 | 1,235,430 | |||||||||
8,000 | Zoetis Inc. | 237,714 | 996,720 | |||||||||
|
|
|
| |||||||||
16,110,520 | 40,857,636 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 0.7% |
| |||||||||||
5,000 | Las Vegas Sands Corp. | 12,746 | 288,800 | |||||||||
75,000 | MGM Resorts International | 763,041 | 2,079,000 | |||||||||
34,500 | Ryman Hospitality | 1,317,052 | 2,822,445 | |||||||||
3,000 | Wynn Resorts Ltd. | 114,952 | 326,160 | |||||||||
|
|
|
| |||||||||
2,207,791 | 5,516,405 | |||||||||||
|
|
|
| |||||||||
Machinery — 2.0% |
| |||||||||||
6,000 | Caterpillar Inc. | 35,181 | 757,860 | |||||||||
74,500 | Deere & Co. | 2,905,386 | 12,566,660 |
See accompanying notes to financial statements.
8
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Machinery (Continued) |
| |||||||||||
20,000 | Xylem Inc. | $ | 488,988 | $ | 1,592,400 | |||||||
|
|
|
| |||||||||
3,429,555 | 14,916,920 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 1.0% |
| |||||||||||
170,000 | Freeport-McMoRan Inc. | 1,896,884 | 1,626,900 | |||||||||
150,000 | Newmont Goldcorp Corp. | 3,559,052 | 5,688,000 | |||||||||
|
|
|
| |||||||||
5,455,936 | 7,314,900 | |||||||||||
|
|
|
| |||||||||
Paper and Forest Products — 0.7% |
| |||||||||||
25,000 | Svenska Cellulosa AB, Cl. A | 101,961 | 232,882 | |||||||||
200,000 | Weyerhaeuser Co., REIT | 3,292,177 | 5,540,000 | |||||||||
|
|
|
| |||||||||
3,394,138 | 5,772,882 | |||||||||||
|
|
|
| |||||||||
Publishing — 0.0% |
| |||||||||||
3,000 | Value Line Inc. | 41,976 | 68,250 | |||||||||
|
|
|
| |||||||||
Real Estate — 0.0% |
| |||||||||||
9,000 | Griffin Industrial Realty Inc. | 219,808 | 341,550 | |||||||||
|
|
|
| |||||||||
Retail — 5.4% |
| |||||||||||
16,000 | Cie Financiere Richemont SA | 540,728 | 1,173,809 | |||||||||
39,000 | Copart Inc.† | 345,409 | 3,132,870 | |||||||||
21,000 | Costco Wholesale Corp. | 1,001,537 | 6,050,310 | |||||||||
133,500 | CVS Health Corp. | 4,380,355 | 8,419,845 | |||||||||
88,300 | Ingles Markets Inc., Cl. A | 1,502,948 | 3,431,338 | |||||||||
150,000 | Macy’s Inc. | 1,568,118 | 2,331,000 | |||||||||
84,000 | Seven & i Holdings Co. Ltd. | 2,505,480 | 3,210,062 | |||||||||
33,000 | The Home Depot Inc. | 915,580 | 7,656,660 | |||||||||
6,000 | Tractor Supply Co. | 47,305 | 542,640 | |||||||||
77,000 | Walgreens Boots Alliance Inc. | 2,262,738 | 4,258,870 | |||||||||
2,000 | Walmart Inc. | 86,680 | 237,360 | |||||||||
9,500 | Weis Markets Inc. | 285,456 | 362,330 | |||||||||
|
|
|
| |||||||||
15,442,334 | 40,807,094 | |||||||||||
|
|
|
| |||||||||
Specialty Chemicals — 0.8% |
| |||||||||||
10,000 | Albemarle Corp. | 102,314 | 695,200 | |||||||||
3,000 | Ashland Global Holdings Inc. | 67,390 | 231,150 | |||||||||
70,000 | Ferro Corp.† | 123,575 | 830,200 | |||||||||
8,000 | FMC Corp. | 161,197 | 701,440 | |||||||||
46,000 | H.B. Fuller Co. | 950,216 | 2,141,760 | |||||||||
2,400 | NewMarket Corp. | 9,263 | 1,133,016 | |||||||||
1,000 | Quaker Chemical Corp. | 10,797 | 158,140 | |||||||||
|
|
|
| |||||||||
1,424,752 | 5,890,906 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 4.8% |
| |||||||||||
2,000 | AT&T Inc. | 47,800 | 75,680 | |||||||||
208,000 | BCE Inc. | 3,927,823 | 10,069,280 | |||||||||
20,000 | BT Group plc, ADR(b) | 277,705 | 216,600 | |||||||||
185,000 | Deutsche Telekom AG, ADR | 2,454,999 | 3,091,350 | |||||||||
28,000 | Loral Space & Communications Inc.† | 1,078,282 | 1,159,200 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
16,000 | Orange SA, ADR | $ | 206,327 | $ | 249,120 | |||||||
13,000 | Proximus SA | 318,676 | 386,116 | |||||||||
24,500 | Telefonica SA, ADR | 80,420 | 186,200 | |||||||||
178,000 | Telephone & Data Systems Inc. | 4,834,364 | 4,592,400 | |||||||||
47,000 | TELUS Corp. | 713,431 | 1,674,140 | |||||||||
248,000 | Verizon Communications Inc.(a) | 8,172,858 | 14,969,280 | |||||||||
|
|
|
| |||||||||
22,112,685 | 36,669,366 | |||||||||||
|
|
|
| |||||||||
Transportation — 1.3% |
| |||||||||||
127,000 | GATX Corp. | 4,025,968 | 9,846,310 | |||||||||
|
|
|
| |||||||||
Wireless Communications — 0.7% |
| |||||||||||
6,000 | Millicom International Cellular SA | 291,776 | 292,020 | |||||||||
4,000 | Millicom International Cellular SA, SDR | 173,654 | 194,066 | |||||||||
200,000 | NTT DOCOMO Inc. | 2,898,164 | 5,092,254 | |||||||||
20,000 | Turkcell Iletisim Hizmetleri A/S, ADR | 91,562 | 115,600 | |||||||||
|
|
|
| |||||||||
3,455,156 | 5,693,940 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 343,401,212 | 797,070,368 | ||||||||||
|
|
|
| |||||||||
CONVERTIBLE PREFERRED STOCKS — 0.1% |
| |||||||||||
Telecommunications — 0.1% |
| |||||||||||
20,000 | Cincinnati Bell Inc., 6.750%, Ser. B | 353,746 | 649,998 | |||||||||
|
|
|
| |||||||||
WARRANTS — 0.0% |
| |||||||||||
Retail — 0.0% |
| |||||||||||
105 | Sears Holdings Corp., expire 12/15/19† | 522 | 16 | |||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 105.0% | $ | 343,755,480 | 797,720,382 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — (5.0)% |
| (37,993,317 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 759,727,065 | |||||||||
|
|
(a) | Securities, or a portion thereof, with a value of $40,320,950 were deposited with Pershing LLC. |
(b) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
† | Non-income producing security. |
ADR | American Depositary Receipt |
REIT | Real Estate Investment Trust |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
9
The Gabelli Equity Income Fund
Statement of Assets and Liabilities
September 30, 2019
Assets: | ||||
Investments, at value (cost $343,755,480) | $ | 797,720,382 | ||
Receivable for Fund shares sold | 1,579,641 | |||
Receivable for investments sold | 955,534 | |||
Dividends receivable | 2,437,755 | |||
Prepaid expenses | 33,871 | |||
|
| |||
Total Assets | 802,727,183 | |||
|
| |||
Liabilities: | ||||
Line of credit payable | 35,740,000 | |||
Payable to custodian | 4,619,433 | |||
Payable for Fund shares redeemed | 1,506,051 | |||
Payable for investment advisory fees | 657,011 | |||
Payable for distribution fees | 187,063 | |||
Payable for accounting fees | 7,500 | |||
Other accrued expenses | 283,060 | |||
|
| |||
Total Liabilities | 43,000,118 | |||
|
| |||
Net Assets | ||||
(applicable to 57,959,227 shares outstanding) | $ | 759,727,065 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 310,202,765 | ||
Total distributable earnings | 449,524,300 | |||
|
| |||
Net Assets | $ | 759,727,065 | ||
|
| |||
Shares of Capital Stock, each at $0.001 par value: |
| |||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($377,588,593 ÷ 27,738,301 shares outstanding; 150,000,000 shares authorized) | $13.61 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($72,777,704 ÷ 5,394,883 shares outstanding; 50,000,000 shares authorized) | $13.49 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $14.31 | |||
Class C: | ||||
Net Asset Value and offering price per share ($100,467,400 ÷ 10,595,608 shares outstanding; 50,000,000 shares authorized) | $ 9.48 | (a) | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($208,893,368 ÷ 14,230,435 shares outstanding; 50,000,000 shares authorized) | $14.68 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2019
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $570,916) | $ | 19,827,307 | ||
Non-cash dividends | 18,750 | |||
Interest | 4,877 | |||
|
| |||
Total Investment Income | 19,850,934 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 9,025,911 | |||
Distribution fees - Class AAA | 1,069,195 | |||
Distribution fees - Class A | 194,572 | |||
Distribution fees - Class C | 1,362,744 | |||
Shareholder services fees | 755,377 | |||
Interest expense | 415,594 | |||
Shareholder communication expenses | 184,433 | |||
Custodian fees | 133,701 | |||
Registration expenses | 85,650 | |||
Legal and audit fees | 55,757 | |||
Accounting fees | 45,000 | |||
Directors’ fees | 42,391 | |||
Miscellaneous expenses | 69,284 | |||
|
| |||
Total Expenses | 13,439,609 | |||
|
| |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (7,402 | ) | ||
|
| |||
Net Expenses | 13,432,207 | |||
|
| |||
Net Investment Income | 6,418,727 | |||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized gain on investments | 196,788,740 | |||
Net realized loss on foreign currency transactions | (26,522 | ) | ||
|
| |||
Net realized gain on investments and foreign currency transactions | 196,762,218 | |||
|
| |||
Net change in unrealized appreciation/depreciation: on investments | (230,712,639 | ) | ||
on foreign currency translations | 9,333 | |||
|
| |||
Net change in unrealized appreciation/ depreciation on investments and foreign currency translations | (230,703,306 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (33,941,088 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (27,522,361 | ) | |
|
|
See accompanying notes to financial statements.
10
The Gabelli Equity Income Fund
Statement of Changes in Net Assets
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income | $ | 6,418,727 | $ | 10,241,486 | ||||||||||||||||||||
Net realized gain on investments and foreign currency transactions | 196,762,218 | 212,502,993 | ||||||||||||||||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (230,703,306 | ) | (135,349,398 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (27,522,361 | ) | 87,395,081 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
Class AAA | (92,298,815 | ) | (98,781,156 | ) | ||||||||||||||||||||
Class A | (16,960,746 | ) | (17,203,694 | ) | ||||||||||||||||||||
Class C | (36,745,051 | ) | (41,334,525 | ) | ||||||||||||||||||||
Class I | (53,493,080 | ) | (65,782,800 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
(199,497,692 | ) | (223,102,175 | ) | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Return of capital | ||||||||||||||||||||||||
Class AAA | (24,603,802 | ) | (25,622,488 | ) | ||||||||||||||||||||
Class A | (5,770,903 | ) | (3,971,454 | ) | ||||||||||||||||||||
Class C | (6,210,850 | ) | (10,578,318 | ) | ||||||||||||||||||||
Class I | (9,279,754 | ) | (16,237,915 | ) | ||||||||||||||||||||
Class T* | — | (50 | ) | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
(45,865,309 | ) | (56,410,225 | ) | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total Distributions to Shareholders | (245,363,001 | ) | (279,512,400 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Capital Share Transactions: | ||||||||||||||||||||||||
Class AAA | (15,978,648 | ) | (56,588,389 | ) | ||||||||||||||||||||
Class A | 10,674,357 | (15,035,802 | ) | |||||||||||||||||||||
Class C | (27,546,923 | ) | (31,440,340 | ) | ||||||||||||||||||||
Class I | (76,334,869 | ) | (32,023,271 | ) | ||||||||||||||||||||
Class T* | — | (1,063 | ) | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Decrease in Net Assets from Capital Share Transactions | (109,186,083 | ) | (135,088,865 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Redemption Fees | 2,975 | 607 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Decrease in Net Assets | (382,068,470 | ) | (327,205,577 | ) | ||||||||||||||||||||
Net Assets: | ||||||||||||||||||||||||
Beginning of year | 1,141,795,535 | 1,469,001,112 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
End of year | $ | 759,727,065 | $ | 1,141,795,535 | ||||||||||||||||||||
|
|
|
|
* | Class T Shares were liquidated on September 21, 2018. |
See accompanying notes to financial statements.
11
The Gabelli Equity Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a) | Net Realized | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Return of Capital | Total Distributions | Redemption Fees (a)(b) | Net Asset Value, End of Year | Total Return† | Net Assets End of Year (in 000’s) | Net Investment Income (Loss) | Operating Expenses(c)(d) | Portfolio Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $19.09 | $0.13 | $(0.38 | ) | $(0.25 | ) | $(0.15 | ) | $(3.72 | ) | $(1.36 | ) | $(5.23 | ) | $0.00 | $13.61 | (1.09 | )% | $377,589 | 0.76 | % | 1.45 | % | 1 | % | |||||||||||||||||||||||||||||||||||
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 | 0 | (e) | ||||||||||||||||||||||||||||||||||||||||
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 | 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 | 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 | 3 | |||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $18.97 | $0.13 | $(0.38 | ) | $(0.25 | ) | $(0.15 | ) | $(3.72 | ) | $(1.36 | ) | $(5.23 | ) | $0.00 | $13.49 | (1.08 | )% | $ 72,778 | 0.76 | % | 1.45 | % | 1 | % | |||||||||||||||||||||||||||||||||||
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 | 0 | (e) | ||||||||||||||||||||||||||||||||||||||||
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 | 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 | 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 | 3 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $15.03 | $(0.00 | )(b) | $(0.32 | ) | $(0.32 | ) | $(0.05 | ) | $(3.72 | ) | $(1.46 | ) | $(5.23 | ) | $0.00 | $ 9.48 | (1.87 | )% | $100,467 | (0.00 | )%(f) | 2.20 | % | 1 | % | ||||||||||||||||||||||||||||||||||
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 | 0 | (e) | ||||||||||||||||||||||||||||||||||||||||
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 | 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 | 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 | 3 | |||||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $20.13 | $0.19 | $(0.41 | ) | $(0.22 | ) | $(0.19 | ) | $(3.72 | ) | $(1.32 | ) | $(5.23) | $0.00 | $14.68 | (0.86 | )% | $208,893 | 1.00 | % | 1.20 | % | 1 | % | ||||||||||||||||||||||||||||||||||||
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 | 0 | (e) | ||||||||||||||||||||||||||||||||||||||||
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 | 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 | 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 | 3 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect applicable sales charges. |
(a) | 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 fiscal years ended September 30, 2019, 2018 and 2017. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.40%, 1.39%, and 1.38% (Class AAA and Class A), 2.15%, 2.14%, and 2.13% (Class C), and 1.15%, 1.14%, and 1.13% (Class I), respectively. For the fiscal years ended September 30, 2016, and 2015, the effect of interest expense was minimal. |
(d) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the fiscal years ended September 30, 2019, 2018, 2017, 2016, and 2015, there was no impact on the expense ratios. |
(e) | Amount represents less than 0.5%. |
(f) | Amount represents less than 0.005%. |
See accompanying notes to financial statements.
12
The Gabelli Equity Income Fund
Notes to Financial Statements
1. Organization.The Gabelli Equity Income Fund is a series of the Gabelli Equity Series Funds, Inc. (the Corporation). The Corporation was incorporated on July 25, 1991 in Maryland. The Fund is a 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 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 and modifications under ASU2018-13. Management has early adopted the removals and modifications 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 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
13
The Gabelli Equity Income Fund
Notes to Financial Statements (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 September 30, 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 9/30/19 | |||||||||||||
INVESTMENTS IN SECURITIES: |
| |||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Energy and Utilities: Electric | $ 5,157,990 | — | $ 0 | $ 5,157,990 | ||||||||||||
Food and Beverage | 145,215,341 | $314,860 | — | 145,530,201 | ||||||||||||
Telecommunications | 36,452,766 | — | 216,600 | 36,669,366 | ||||||||||||
Other Industries (a) | 609,712,811 | — | — | 609,712,811 | ||||||||||||
Total Common Stocks | 796,538,908 | 314,860 | 216,600 | 797,070,368 | ||||||||||||
Convertible Preferred Stocks (a) | 649,998 | — | — | 649,998 | ||||||||||||
Warrants (a) | 16 | — | — | 16 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $797,188,922 | $314,860 | $216,600 | $797,720,382 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have material transfers into or out of Level 3 during the fiscal year ended September 30, 2019.
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
14
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
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.
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 in the Statement of Assets and Liabilities.
The Fund’s derivative contracts held at September 30, 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.
15
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
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 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 September 30, 2019, the Fund held no option positions.
Securities Sold Short.The Fund may enter into short sale transactions. Short selling involves selling securities that may or may not be owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of an open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on 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 fiscal year ended September 30, 2019, there were no short sales.
16
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
Foreign Currency Translations.The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities.The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
Foreign Taxes.The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities.The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than 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 September 30, 2019, the Fund held no restricted securities.
Securities Transactions and Investment Income.Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on 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.
17
The Gabelli Equity Income Fund
Notes to Financial Statements (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 characterization of 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. Permanent differences were primarily due to the tax treatment of currency gains and losses, basis adjustments on investments in partnerships, and reclassification of REIT distributions. These reclassifications have no impact on the NAV of the Fund. For the fiscal year ended September 30, 2019, reclassifications were made to decreasepaid-in capital of $29,994 with an offsetting adjustment to total distributable earnings.
The tax character of distributions paid during the fiscal years ended September 30, 2019 and 2018 was as follows:
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||
Distributions paid from: | ||||||||||
Ordinary income | $ | 7,210,893 | $ | 11,254,231 | ||||||
Net long term capital gains | 192,286,799 | 211,847,944 | ||||||||
Return of capital | 45,865,309 | 56,410,225 | ||||||||
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Total distributions paid | $ | 245,363,001 | $ | 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. 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.
18
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
Provision for Income Taxes.The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
At September 30, 2019, the components of accumulated earnings/losses on a tax basis were as follows:
Net unrealized appreciation on investments | $ | 449,536,745 | ||
Qualified late year loss deferral* | (12,445 | ) | ||
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Total | $ | 449,524,300 | ||
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* | Under the current law, qualified late year ordinary losses realized after December 31 or post October capital losses realized after October 31 and prior to the Fund’s year end may be elected as occurring on the first day of the following year. For the fiscal year ended September 30, 2019, the Fund elected to defer $12,445 of post October capital losses. |
At September 30, 2019, the temporary difference between book basis and tax basis net unrealized appreciation on investments was due to deferral of losses from wash sales for tax purposes and tax basis adjustments on investments in partnerships.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||||||||||||||
Investments | $ | 348,178,974 | $ | 468,988,525 | $ | (19,447,117 | ) | $449,541,408 |
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 fiscal year ended September 30, 2019, the Fund did not incur any income tax, interest, or penalties. As of September 30, 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 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.
19
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
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 fiscal year ended September 30, 2019, other than short term securities and U.S. Government obligations, aggregated to $5,236,543 and $366,591,906, respectively.
6. Transactions with Affiliates and Other Arrangements.During the fiscal year ended September 30, 2019, the Fund paid $144,664 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $55,768 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the fiscal year ended September 30, 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 $7,402.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the fiscal year ended September 30, 2019, the Fund accrued $45,000 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. At September 30, 2019, there was $35,740,000 outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the fiscal year ended September 30, 2019 was $10,714,455 with a weighted average interest rate of 3.64%. The maximum amount borrowed at any time during the fiscal year ended September 30, 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.
20
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
The redemption fees retained by the Fund during the fiscal years ended September 30, 2019 and 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:
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||
Class AAA | ||||||||||||||||||
Shares sold | 551,364 | $ | 9,573,175 | 679,572 | $ | 15,716,026 | ||||||||||||
Shares issued upon reinvestment of distributions | 7,879,869 | 113,070,696 | 6,035,921 | 120,316,691 | ||||||||||||||
Shares redeemed | (8,006,331 | ) | (138,622,519 | ) | (8,414,843 | ) | (192,621,106 | ) | ||||||||||
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Net increase/(decrease) | 424,902 | $ | (15,978,648 | ) | (1,699,350 | ) | $ | (56,588,389 | ) | |||||||||
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Class A | ||||||||||||||||||
Shares sold | 1,344,564 | $ | 23,616,884 | 644,832 | $ | 14,727,628 | ||||||||||||
Shares issued upon reinvestment of distributions | 1,513,270 | 21,444,473 | 996,100 | 19,748,656 | ||||||||||||||
Shares redeemed | (2,013,390 | ) | (34,387,000 | ) | (2,180,983 | ) | (49,512,086 | ) | ||||||||||
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Net increase/(decrease) | 844,444 | $ | 10,674,357 | (540,051 | ) | $ | (15,035,802 | ) | ||||||||||
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Class C | ||||||||||||||||||
Shares sold | 1,736,090 | $ | 22,864,320 | 1,174,177 | $ | 21,686,613 | ||||||||||||
Shares issued upon reinvestment of distributions | 3,798,546 | 39,055,202 | 2,942,702 | 46,752,707 | ||||||||||||||
Shares redeemed | (6,663,277 | ) | (89,466,445 | ) | (5,259,907 | ) | (99,879,660 | ) | ||||||||||
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Net decrease | (1,128,641 | ) | $ | (27,546,923 | ) | (1,143,028 | ) | $ | (31,440,340 | ) | ||||||||
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Class I | ||||||||||||||||||
Shares sold | 1,730,545 | $ | 31,554,186 | 2,734,591 | $ | 65,019,434 | ||||||||||||
Shares issued upon reinvestment of distributions | 3,787,581 | 58,581,403 | 3,605,793 | 75,575,488 | ||||||||||||||
Shares redeemed | (9,066,293 | ) | (166,470,458 | ) | (7,251,786 | ) | (172,618,193 | ) | ||||||||||
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Net decrease | (3,548,167 | ) | $ | (76,334,869 | ) | (911,402 | ) | $ | (32,023,271 | ) | ||||||||
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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’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.
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.
21
The Gabelli Equity Income Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Equity Income Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Equity Income Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the schedule of investments, as of September 30, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2019, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli/GAMCO Funds investment companies since 1992.
Philadelphia, Pennsylvania
November 25, 2019
22
The Gabelli Equity Income Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling800-GABELLI(800-422-3554) or by writing to The Gabelli Equity Income Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) | Term of Office | Number of Funds | ||||||
Address1 | and Length of | in Fund Complex | Principal Occupation(s) | Other Directorships | ||||
and Age | Time Served2 | Overseen by Director | During Past Five Years | Held by Director3 | ||||
INTERESTED DIRECTORS4: | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer Age: 77 | Since 1991 | 33 | Chairman, Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer– Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/ GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chairman of Associated Capital Group, Inc. | Director of Morgan Group Holdings, Inc. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013- 2018) | ||||
John D. Gabelli Director Age: 75 | Since 1991 | 12 | Senior Vice President of G.research, LLC | — | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Elizabeth C. Bogan Director Age: 75 | Since 2019 | 8 | Senior Lecturer in Economics at Princeton University | — | ||||
Anthony J. Colavita6 Director Age: 83 | Since 1991 | 20 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director Age: 75 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008- 2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director Age: 80 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||
Kuni Nakamura Director Age: 51 | Since 2009 | 33 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||
Anthonie C. van Ekris6 Director Age: 85 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/ export company) | — | ||||
Salvatore J. Zizza7 Director Age: 73 | Since 2001 | 31 | President of Zizza & Associates Corp. (private holding company); President of Bergen Cove Realty Inc. (2000-2018); Chairman of Harbor Diversified, Inc. (pharmaceuticals) (2009-2018); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005- 2014) | Director and Chairman ofTrans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018) |
23
The Gabelli Equity Income Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) | Term of Office | |||||
Address1 | and Length of | Principal Occupation(s) | ||||
and Age | Time Served2 | During Past Five Years | ||||
OFFICERS: | ||||||
Bruce N. Alpert President Age: 67 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008 | ||||
John C. Ball Treasurer Age: 43 | Since 2017 | Treasurer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017; Vice President of State Street Corporation, 2007-2014 | ||||
Agnes Mullady Vice President Age: 61 | Since 2006 | Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2006; President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2015; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Executive Vice President of Associated Capital Group, Inc. since 2016 | ||||
Andrea R. Mango Secretary Age: 47 | Since 2013 | Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President ofclosed-end funds within the Gabelli/GAMCO Fund Complex since 2014 | ||||
Richard J. Walz Chief Compliance Officer Age: 60 | Since 2013 | Chief Compliance Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election orre-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’sBy-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messers. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli/GAMCO Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
24
THE GABELLI EQUITY INCOME FUND
2019 TAX NOTICE TO SHAREHOLDERS(Unaudited)
During the fiscal year ended September 30, 2019, the Fund paid to shareholders ordinary income distributions totaling $0.1456, $0.1460, $0.0505, and $0.1904 for each of Class AAA, Class A, Class C,and Class I, respectively, and long term capital gains totaling $192,286,799, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors. For the fiscal year ended September 30, 2019, 100% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 0.02% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
Portfolio Manager Biography
Mario J.Gabelli, CFA,is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO 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/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, telephone number, social security number, bank account number, and other information. |
● | Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you.This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them. |
What information do we disclose and to whom do we disclose it?
We do not disclose 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.
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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.
Elizabeth C. Bogan Senior Lecturer, Princeton University
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.
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 Equity Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||
GAB444Q319AR |
The Gabelli Small Cap Growth Fund
Annual Report — September 30, 2019
To Our Shareholders,
For the fiscal year ended September 30, 2019, the net asset value (NAV) per Class AAA Share of The Gabelli Small Cap Growth Fund decreased 5.7% compared with a decrease of 8.9% for the Russell 2000 Index. Other classes of shares are available. See page 2 for performance information for all classes of shares.
Enclosed are the financial statements, including the summary schedule of investments, as of September 30, 2019.
Performance Discussion
The Fund invests primarily in small cap companies, that throughbottom-up fundamental research, the portfolio manager believes are attractively priced relative to their earnings growth potential or private market value. The Fund characterizes small capitalization companies as those companies with a market capitalization of $3 billion or less at the time of the Fund’s initial investment.
The fiscal year began with a narrative change from the largely uninterrupted upward trajectory of the stock market. Uncertainty over a trade deal with China and fears of potential recession from an inverted yield curve (situations in which a short term yield exceeds a longer term yield) further fueled the decline. However, many economic indicators remained strong with 3.7% unemployment (the lowest since 1969), record consumer net worth ($109 trillion), and interest rates and inflation that remained relatively tame.
The second and third fiscal quarters saw continued trade war tension between the U.S. and China. Perhaps more important, the Federal Reserve made an about-face on its tightening stance which saw the U.S. ten year treasury, which yielded over 3.2% at one point in the fourth quarter of 2018, yield less than 2.4% at one point in the first half of 2019. U.S. stocks posted the best quarterly return since 2009 and the best calendar year first quarter since 1998. Small capitalization stocks and economically sensitive industrials were among the best performers.
After climbing in July, stocks fell sharply in August. September saw a slight gain, but beneath the surface, many dynamics were at play: momentum stocks declined, and “value” stocks rose sharply, in an abrupt reversal of trends of the last several years. A steady stream of headlines affected the market such as the ongoing China/U.S. trade war, Brexit, Saudi oil field attacks, central bank easing, negative interest rates, U.S. recession concerns, and a formal impeachment inquiry of President Trump by Congressional Democrats. Despite all of this, the U.S. economic picture continued to be relatively solid.
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 (https://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
Among the better performing stocks for the fiscal year were Aerojet Rocketdyne Holdings (2.1% of net assets as of September 30, 2019), a manufacturer of aerospace and defense products and systems successfully restructured, cutting costs and increasing product development. PNM Resources Inc. (1.6%), an investor-owned holding company with 2 regulated utilities providing electricity and electric services to New Mexico and Texas saw good results driven by extreme weather and an increased demand for oil and gas. Griffon Corp. (1.3%), a management and holding company that conducts business through its subsidiaries saw strong growth in its home building products and defense electronics segments.
Our weaker performing stocks during the year were: Ferro Corp. (0.9%), a supplier of technology-based functional coatings and color solutions saw decreasing sales volume and smaller margins led by global economic uncertainty, slowing growth outside the U.S., and currency exchange headwinds. RPC Inc. (0.4%), a holding company for oilfield service companies saw intensified competition in the U.S. and a slowdown in demand for pressure pumping services in shale regions. Kikkoman Corp. (1.9%), a manufacturer of food products in Japan, North America, as well as internationally saw negative impacts from the increased costs of raw materials and distribution expenses as well as increased advertising costs.
We appreciate your confidence and trust.
Comparative Results
Average Annual Returns through September 30, 2019 (a)(b) (Unaudited)
| ||||||||||||||||||||
1 Year | 5 Year | 10 Year | 15 Year | Since Inception (10/22/91) | ||||||||||||||||
Class AAA (GABSX) | (5.72)% | 6.75% | 10.62% | 9.14% | 11.86% | |||||||||||||||
Russell 2000 Index. | (8.89) | 8.19 | 11.19 | 8.19 | 9.38 | |||||||||||||||
S&P SmallCap 600 Index | (9.34) | 9.89 | 13.02 | 9.52 | N/A(e) | |||||||||||||||
LipperSmall-Cap Core Funds Average | (6.21) | 8.12 | 11.03 | 8.24 | N/A(f) | |||||||||||||||
Class A (GCASX) | (5.73) | 6.75 | 10.61 | 9.14 | 11.86 | |||||||||||||||
With sales charge (c) | (11.15) | 5.49 | 9.96 | 8.71 | 11.62 | |||||||||||||||
Class C (GCCSX) | (6.44) | 5.95 | 9.79 | 8.33 | 11.39 | |||||||||||||||
With contingent deferred sales charge (d) | (7.38) | 5.95 | 9.79 | 8.33 | 11.39 | |||||||||||||||
Class I (GACIX) | (5.50) | 7.02 | 10.89 | 9.36 | 11.98 | |||||||||||||||
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 11 for the expense ratios for the year ended September 30, 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 shareprice, 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 theperformance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Returns would have beenlower had the Adviser not reimbursed certain expenses of the Fund. The Fund imposes a 2% redemption fee on shares sold or exchangedwithin seven days of purchase. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fundbefore investing. The prospectuses contain information about these and other matters and should be read carefully before investing. Toobtain 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 and the S&P SmallCap 600 Index are unmanaged indicators which measure the performance of the small cap segment of the U.S. equity market. The LipperSmall-Cap Core Funds Average reflects the average performance of mutual funds classified in this particular category. Dividends are considered reinvested. You cannot invest directly in an index. (b) The Fund’s fiscal year end is 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.
|
|
2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI SMALL CAP GROWTH FUND CLASS AAA AND THE RUSSELL 2000 INDEX (Unaudited)
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
3
The Gabelli Small Cap Growth Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from April 1, 2019 through September 30, 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. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the year ended September 30, 2019.
Beginning Account Value 04/01/19 | Ending Account Value 09/30/19 | Annualized Expense Ratio | Expenses Period* | |||||
The Gabelli Small Cap Growth Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $1,008.80 | 1.39% | $ 7.00 | ||||
Class A | $1,000.00 | $1,008.80 | 1.39% | $ 7.00 | ||||
Class C | $1,000.00 | $1,005.00 | 2.14% | $10.76 | ||||
Class I | $1,000.00 | $1,010.00 | 1.15% | $ 5.79 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,018.10 | 1.39% | $ 7.03 | ||||
Class A | $1,000.00 | $1,018.10 | 1.39% | $ 7.03 | ||||
Class C | $1,000.00 | $1,014.34 | 2.14% | $10.81 | ||||
Class I | $1,000.00 | $1,019.30 | 1.15% | $ 5.82 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2019:
The Gabelli Small Cap Growth Fund
Equipment and Supplies | 12.2% | |||
Food and Beverage | 9.1% | |||
Diversified Industrial | 8.6% | |||
Health Care | 5.9% | |||
Energy and Utilities | 5.2% | |||
Retail | 5.1% | |||
Business Services | 4.7% | |||
Aviation: Parts and Services | 4.6% | |||
Building and Construction | 4.6% | |||
Hotels and Gaming | 4.3% | |||
Financial Services | 4.0% | |||
Automotive: Parts and Accessories | 3.2% | |||
Specialty Chemicals | 3.0% | |||
Computer Software and Services | 2.7% | |||
Entertainment | 2.5% | |||
Aerospace | 2.2% | |||
Consumer Products | 2.1% | |||
Real Estate | 2.0% | |||
Broadcasting | 1.8% | |||
Machinery | 1.7% | |||
Electronics | 1.7% |
Consumer Services | 1.6 | % | ||
Transportation | 1.5 | % | ||
Automotive | 1.4 | % | ||
Telecommunications | 1.2 | % | ||
Cable | 1.0 | % | ||
Manufactured Housing and Recreational Vehicles | 1.0 | % | ||
Environmental Services | 0.9 | % | ||
Publishing | 0.8 | % | ||
Home Furnishings | 0.3 | % | ||
Wireless Communications | 0.3 | % | ||
Closed-End Funds | 0.2 | % | ||
Metals and Mining | 0.2 | % | ||
Communications Equipment | 0.1 | % | ||
Educational Services | 0.0 | %* | ||
Miscellaneous Investments | 0.0 | %* | ||
Agriculture | 0.0 | %* | ||
Other Assets and Liabilities (Net) | (1.7 | )% | ||
|
| |||
100.0 | % | |||
|
|
* | Amount represents less than 0.05%. |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on 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.
5
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS* — 101.4% |
| |||||||||||
Aerospace — 2.2% |
| |||||||||||
1,028,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 5,467,203 | $ | 51,924,280 | |||||||
67,000 | Various Securities | 811,821 | 963,870 | |||||||||
|
|
|
| |||||||||
6,279,024 | 52,888,150 | |||||||||||
|
|
|
| |||||||||
Agriculture — 0.0% |
| |||||||||||
16,000 | Various Securities | 187,798 | 223,320 | |||||||||
|
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|
| |||||||||
Automotive — 1.4% |
| |||||||||||
1,210,000 | Navistar International Corp.† | 32,003,282 | 34,013,100 | |||||||||
13,000 | Various Securities | 521,581 | 910,130 | |||||||||
|
|
|
| |||||||||
32,524,863 | 34,923,230 | |||||||||||
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|
| |||||||||
Automotive: Parts and Accessories — 3.1% |
| |||||||||||
1,180,000 | Dana Inc. | 10,511,396 | 17,039,200 | |||||||||
200,000 | Strattec Security Corp.(a) | 4,016,784 | 3,996,000 | |||||||||
3,508,122 | Various Securities | 24,980,989 | 55,646,977 | |||||||||
|
|
|
| |||||||||
39,509,169 | 76,682,177 | |||||||||||
|
|
|
| |||||||||
Aviation: Parts and Services — 4.6% |
| |||||||||||
7,075,000 | BBA Aviation plc | 15,217,291 | 27,158,341 | |||||||||
132,400 | Curtiss-Wright Corp. | 2,178,812 | 17,128,588 | |||||||||
854,000 | Kaman Corp. | 15,871,571 | 50,778,840 | |||||||||
259,700 | Various Securities | 3,482,207 | 18,037,930 | |||||||||
|
|
|
| |||||||||
36,749,881 | 113,103,699 | |||||||||||
|
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| |||||||||
Broadcasting — 1.8% |
| |||||||||||
2,927,150 | Various Securities | 16,794,783 | 43,464,881 | |||||||||
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| |||||||||
Building and Construction — 4.6% |
| |||||||||||
468,000 | Herc Holdings Inc.† | 15,841,745 | 21,766,680 | |||||||||
410,000 | Lennar Corp., Cl. B | 10,106,006 | 18,191,700 | |||||||||
1,803,700 | Various Securities | 24,478,067 | 72,551,465 | |||||||||
|
|
|
| |||||||||
50,425,818 | 112,509,845 | |||||||||||
|
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|
| |||||||||
Business Services — 4.7% |
| |||||||||||
500,000 | Live Nation Entertainment Inc.† | 4,454,869 | 33,170,000 | |||||||||
895,000 | The Interpublic Group of Companies Inc. | 4,715,390 | 19,296,200 | |||||||||
3,240,500 | Trans-Lux Corp.†(a) | 4,679,964 | 1,660,756 | |||||||||
3,778,012 | Various Securities | 31,270,809 | 60,977,646 | |||||||||
|
|
|
| |||||||||
45,121,032 | 115,104,602 | |||||||||||
|
|
|
| |||||||||
Cable — 1.0% |
| |||||||||||
941,057 | Various Securities | 17,851,816 | 25,178,312 | |||||||||
|
|
|
| |||||||||
Communications Equipment — 0.1% |
| |||||||||||
264,300 | Various Securities | 1,908,833 | 1,785,371 | |||||||||
|
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|
| |||||||||
Computer Software and Services — 2.7% |
| |||||||||||
74,000 | Rockwell Automation Inc. | 1,803,807 | 12,195,200 | |||||||||
117,900 | Tyler Technologies Inc.† | 316,120 | 30,948,750 | |||||||||
1,631,400 | Various Securities | 13,671,112 | 21,922,653 | |||||||||
|
|
|
| |||||||||
15,791,039 | 65,066,603 | |||||||||||
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|
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
Consumer Products — 2.1% |
| |||||||||||
1,784,300 | Various Securities | $ | 20,401,056 | $ | 51,890,768 | |||||||
|
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| |||||||||
Consumer Services — 1.6% |
| |||||||||||
855,000 | Rollins Inc. | 1,380,863 | 29,129,850 | |||||||||
361,750 | Various Securities | 1,869,894 | 11,056,905 | |||||||||
|
|
|
| |||||||||
3,250,757 | 40,186,755 | |||||||||||
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|
| |||||||||
Diversified Industrial — 8.6% |
| |||||||||||
398,000 | Crane Co. | 9,369,728 | 32,090,740 | |||||||||
1,516,400 | Griffon Corp. | 18,226,171 | 31,798,908 | |||||||||
840,000 | Katy Industries Inc.†(a)(b) | 2,604 | 7,560 | |||||||||
975,000 | Myers Industries Inc. | 13,675,708 | 17,208,750 | |||||||||
375,000 | Textron Inc. | 2,313,053 | 18,360,000 | |||||||||
3,680,946 | Various Securities | 61,482,958 | 111,210,944 | |||||||||
|
|
|
| |||||||||
105,070,222 | 210,676,902 | |||||||||||
|
|
|
| |||||||||
Educational Services — 0.0% |
| |||||||||||
66,000 | Various Securities | 339,051 | 860,640 | |||||||||
|
|
|
| |||||||||
Electronics — 1.7% |
| |||||||||||
257,000 | Bel Fuse Inc., Cl. A(a) | 5,467,652 | 3,523,470 | |||||||||
545,000 | CTS Corp. | 5,245,019 | 17,636,200 | |||||||||
614,000 | Various Securities | 6,024,637 | 19,066,324 | |||||||||
|
|
|
| |||||||||
16,737,308 | 40,225,994 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities — 5.2% |
| |||||||||||
200,000 | El Paso Electric Co. | 2,654,561 | 13,416,000 | |||||||||
740,000 | PNM Resources Inc. | 7,108,826 | 38,539,200 | |||||||||
3,964,411 | Various Securities | 29,400,029 | 73,989,097 | |||||||||
|
|
|
| |||||||||
39,163,416 | 125,944,297 | |||||||||||
|
|
|
| |||||||||
Entertainment — 2.5% |
| |||||||||||
101,472 | The Madison Square Garden Co., Cl. A† | 3,913,524 | 26,739,901 | |||||||||
980,658 | Various Securities | 11,092,837 | 33,424,613 | |||||||||
|
|
|
| |||||||||
15,006,361 | 60,164,514 | |||||||||||
|
|
|
| |||||||||
Environmental Services — 0.9% |
| |||||||||||
260,000 | Republic Services Inc. | 2,460,898 | 22,503,000 | |||||||||
16,000 | Various Securities | 142,093 | 272,320 | |||||||||
|
|
|
| |||||||||
2,602,991 | 22,775,320 | |||||||||||
|
|
|
| |||||||||
Equipment and Supplies — 12.2% |
| |||||||||||
469,000 | AMETEK Inc. | 798,046 | 43,063,580 | |||||||||
620,000 | Federal Signal Corp. | 3,671,528 | 20,298,800 | |||||||||
260,000 | Flowserve Corp. | 1,838,240 | 12,144,600 | |||||||||
285,000 | Franklin Electric Co. Inc. | 1,124,451 | 13,625,850 | |||||||||
654,000 | Graco Inc. | 6,724,688 | 30,110,160 | |||||||||
75,000 | IDEX Corp. | 391,583 | 12,291,000 | |||||||||
731,000 | Mueller Industries Inc. | 19,524,027 | 20,965,080 | |||||||||
247,000 | Tennant Co. | 4,823,743 | 17,462,900 | |||||||||
850,000 | The Gorman-Rupp Co. | 14,113,525 | 29,571,500 | |||||||||
2,954,080 | Various Securities | 31,039,326 | 98,485,509 | |||||||||
|
|
|
| |||||||||
84,049,157 | 298,018,979 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market | ||||||||||
COMMON STOCKS* (Continued) |
| |||||||||||
Financial Services — 4.0% |
| |||||||||||
740,000 | KKR & Co. Inc., Cl. A | $ | 3,198,906 | $ | 19,869,000 | |||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 2,500 | |||||||||
3,917,679 | Various Securities | 49,013,170 | 77,795,539 | |||||||||
|
|
|
| |||||||||
52,213,449 | 97,667,039 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 9.1% |
| |||||||||||
212,000 | Chr. Hansen Holding A/S | 8,849,385 | 17,993,825 | |||||||||
2,140,000 | Davide Campari-Milano SpA | 5,743,398 | 19,336,436 | |||||||||
968,000 | Kikkoman Corp. | 9,527,667 | 46,195,422 | |||||||||
764,000 | Maple Leaf Foods Inc. | 13,395,888 | 17,138,604 | |||||||||
9,885,640 | Various Securities | 50,404,406 | 121,184,564 | |||||||||
|
|
|
| |||||||||
87,920,744 | 221,848,851 | |||||||||||
|
|
|
| |||||||||
Health Care — 5.9% |
| |||||||||||
456,000 | Cutera Inc.† | 6,991,983 | 13,328,880 | |||||||||
432,000 | Quidel Corp.† | 4,226,525 | 26,503,200 | |||||||||
2,141,933 | Various Securities | 39,725,867 | 105,221,858 | |||||||||
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|
|
| |||||||||
50,944,375 | 145,053,938 | |||||||||||
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|
| |||||||||
Home Furnishings — 0.3% |
| |||||||||||
325,000 | Various Securities | 4,386,440 | 6,866,100 | |||||||||
|
|
|
| |||||||||
Hotels and Gaming — 4.3% |
| |||||||||||
185,000 | Churchill Downs Inc. | 1,906,491 | 22,839,175 | |||||||||
452,000 | Ryman Hospitality Properties Inc., REIT | 11,256,699 | 36,978,120 | |||||||||
8,994,000 | Various Securities | 24,158,593 | 46,193,339 | |||||||||
|
|
|
| |||||||||
37,321,783 | 106,010,634 | |||||||||||
|
|
|
| |||||||||
Machinery — 1.7% |
| |||||||||||
1,630,000 | CNH Industrial NV | 5,353,904 | 16,544,500 | |||||||||
994,659 | Various Securities | 23,001,348 | 25,827,494 | |||||||||
|
|
|
| |||||||||
28,355,252 | 42,371,994 | |||||||||||
|
|
|
| |||||||||
Manufactured Housing and Recreational Vehicles — 1.0% |
| |||||||||||
89,800 | Cavco Industries Inc.† | 2,470,478 | 17,249,682 | |||||||||
220,000 | Various Securities | 2,109,029 | 6,551,700 | |||||||||
|
|
|
| |||||||||
4,579,507 | 23,801,382 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 0.2% |
| |||||||||||
563,500 | Various Securities | 5,152,691 | 4,610,602 | |||||||||
|
|
|
| |||||||||
Publishing — 0.8% |
| |||||||||||
1,105,000 | The E.W. Scripps Co., Cl. A | 8,535,622 | 14,674,400 | |||||||||
126,000 | Various Securities | 2,859,424 | 5,111,330 | |||||||||
|
|
|
| |||||||||
11,395,046 | 19,785,730 | |||||||||||
|
|
|
| |||||||||
Real Estate — 2.0% |
| |||||||||||
262,157 | Griffin Industrial Realty Inc.(a) | 4,872,521 | 9,948,858 | |||||||||
94,500 | Morguard Corp. | 1,199,459 | 14,729,403 | |||||||||
1,199,468 | Various Securities | 20,327,799 | 24,090,547 | |||||||||
|
|
|
| |||||||||
26,399,779 | 48,768,808 | |||||||||||
|
|
|
|
Shares | Cost | Market | ||||||||||
Retail — 5.1% |
| |||||||||||
891,223 | Hertz Global Holdings Inc.† | $ | 14,022,881 | $ | 12,334,526 | |||||||
631,400 | Ingles Markets Inc., Cl. A | 10,214,164 | 24,536,204 | |||||||||
379,000 | The Cheesecake Factory Inc. | 10,539,726 | 15,796,720 | |||||||||
1,785,224 | Various Securities | 21,602,559 | 73,149,056 | |||||||||
|
|
|
| |||||||||
56,379,330 | 125,816,506 | |||||||||||
|
|
|
| |||||||||
Specialty Chemicals — 3.0% |
| |||||||||||
1,870,000 | Ferro Corp.† | 9,443,558 | 22,178,200 | |||||||||
300,000 | H.B. Fuller Co. | 3,956,963 | 13,968,000 | |||||||||
901,702 | Various Securities | 15,676,421 | 37,092,601 | |||||||||
|
|
|
| |||||||||
29,076,942 | 73,238,801 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 1.2% |
| |||||||||||
2,449,000 | Various Securities | 16,023,454 | 28,125,745 | |||||||||
|
|
|
| |||||||||
Transportation — 1.5% |
| |||||||||||
460,000 | GATX Corp. | 13,731,576 | 35,663,800 | |||||||||
152,600 | Various Securities | 1,616,301 | 1,515,862 | |||||||||
|
|
|
| |||||||||
15,347,877 | 37,179,662 | |||||||||||
|
|
|
| |||||||||
Wireless Communications — 0.3% |
| |||||||||||
136,000 | Various Securities | 6,444,156 | 5,963,936 | |||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 981,705,200 | 2,478,784,087 | ||||||||||
|
|
|
| |||||||||
CLOSED-END FUNDS* — 0.2% |
| |||||||||||
304,477 | Various Securities | 4,808,644 | 4,654,575 | |||||||||
|
|
|
| |||||||||
PREFERRED STOCKS* — 0.1% |
| |||||||||||
Automotive: Parts and Accessories — 0.1% |
| |||||||||||
125,500 | Various Securities | 861,591 | 2,705,691 | |||||||||
|
|
|
| |||||||||
RIGHTS* — 0.0% |
| |||||||||||
Entertainment — 0.0% |
| |||||||||||
1,680,000 | Media General Inc., CVR†(b) | 2 | 2 | |||||||||
|
|
|
| |||||||||
Health Care — 0.0% |
| |||||||||||
290,000 | Various Securities | 256,986 | 165,300 | |||||||||
|
|
|
| |||||||||
Specialty Chemicals — 0.0% |
| |||||||||||
65,000 | A. Schulman Inc., CVR†(b) | 33,995 | 33,995 | |||||||||
|
|
|
| |||||||||
TOTAL RIGHTS | 290,983 | 199,297 | ||||||||||
|
|
|
| |||||||||
TOTAL MISCELLANEOUS INVESTMENTS — 0.0%(c) | 502,233 | 515,100 | ||||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 101.7% | $ | 988,168,651 | 2,486,858,750 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — (1.7)% |
| (40,650,648 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 2,446,208,102 | |||||||||
|
|
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — September 30, 2019
This Summary Schedule of Investments does not reflect the complete portfolio holdings of the Fund. It includes the Fund’s 50 largest holdings, each investment of any issuer that exceeds 1% of the Fund’s net assets, and affiliated or Level 3 securities, if any.
* | “Various Securities” consist of issuers not identified as a top 50 holding, issues or issuers not exceeding 1% of net assets individually or in the aggregate, any issuers that are not affiliated or level 3 securities, if any as of September 30, 2019. The complete Schedule of Investments is available (i) without charge , upon request, by calling800-GABELLI(800-422-3554); and (ii) on the SEC’s website at http://www.sec.gov. |
(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) | Represents previously undisclosed, unrestricted securities which the Fund has held for less than one year. |
† | Non-income producing security. |
REIT Real Estate Investment Trust
See accompanying notes to financial statements.
8
The Gabelli Small Cap Growth Fund
Statement of Assets and Liabilities
September 30, 2019
Assets: | ||||
Investments, at value (cost $969,129,126) | $2,467,722,106 | |||
Investments in affiliates, at value | 19,136,644 | |||
Foreign currency, at value (cost $129,516) | 129,486 | |||
Receivable for Fund shares sold | 606,898 | |||
Receivable for investments sold | 447,225 | |||
Dividends and interest receivable | 2,709,731 | |||
Prepaid expenses | 45,952 | |||
Total Assets | 2,490,798,042 | |||
Liabilities: | ||||
Line of credit payable | 35,740,000 | |||
Payable to custodian | 3,664,768 | |||
Payable for Fund shares redeemed | 2,056,788 | |||
Payable for investment advisory fees | 2,009,103 | |||
Payable for distribution fees | 409,094 | |||
Payable for accounting fees | 7,500 | |||
Other accrued expenses | 702,687 | |||
Total Liabilities | 44,589,940 | |||
Net Assets | $2,446,208,102 | |||
Net Assets Consist of: | ||||
Paid-in capital | $ 562,976,026 | |||
Total distributable earnings | 1,883,232,076 | |||
Net Assets | $2,446,208,102 | |||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($1,243,607,771 ÷ 23,064,412 shares outstanding; 150,000,000 shares authorized) | $53.92 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($170,189,463 ÷ 3,157,831 shares outstanding; 50,000,000 shares authorized) | $53.89 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $57.18 | |||
Class C: | ||||
Net Asset Value and offering price per share ($141,521,881 ÷ 3,034,844 shares outstanding; 50,000,000 shares authorized) | $46.63 | (a) | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($890,888,987 ÷ 16,112,683 shares outstanding; 50,000,000 shares authorized) | $55.29 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2019
Investment Income: | ||||
Dividends - unaffiliated (net of foreign withholding taxes of $654,797) | $ 42,847,995 | |||
Dividends - affiliated | 304,506 | |||
Interest | 74,632 | |||
|
| |||
Total Investment Income | 43,227,133 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 29,727,429 | |||
Distribution fees - Class AAA | 3,451,568 | |||
Distribution fees - Class A | 443,343 | |||
Distribution fees - Class C | 1,678,214 | |||
Shareholder services fees | 2,622,514 | |||
Shareholder communication expenses | 476,619 | |||
Interest expense | 380,097 | |||
Custodian fees | 345,766 | |||
Directors’ fees | 140,618 | |||
Registration expenses | 110,662 | |||
Legal and audit fees | 61,686 | |||
Accounting fees | 45,000 | |||
Miscellaneous expenses | 142,155 | |||
|
| |||
Total Expenses | 39,625,671 | |||
|
| |||
Less: | ||||
Advisory fee reduction on unsupervised assets (See Note 3) | (134,603 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (24,729 | ) | ||
|
| |||
Total Reductions | (159,332 | ) | ||
|
| |||
Net Expenses | 39,466,339 | |||
|
| |||
Net Investment Income | 3,760,794 | |||
|
| |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments - unaffiliated | 502,525,565 | |||
Net realized loss on investments - affiliated | (751,271 | ) | ||
Net realized loss on foreign currency transactions | (27,598 | ) | ||
|
| |||
Net realized gain on investments and foreign currency transactions | 501,746,696 | |||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (750,416,360 | ) | ||
on foreign currency translations | (11,527 | ) | ||
|
| |||
Net change in unrealized appreciation/ depreciation on investments and foreign currency translations | (750,427,887 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (248,681,191 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $(244,920,397 | ) | ||
|
|
See accompanying notes to financial statements.
9
The Gabelli Small Cap Growth Fund
Statement of Changes in Net Assets
Year Ended September 30, 2019 | Year Ended September 30, 2018 | ||||||||||||||
Operations: | |||||||||||||||
Net investment income | $ 3,760,794 | $ 8,421,373 | |||||||||||||
Net realized gain on investments and foreign currency transactions | 501,746,696 | 118,161,846 | |||||||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (750,427,887 | ) | 138,475,243 | ||||||||||||
|
|
|
| ||||||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (244,920,397 | ) | 265,058,462 | ||||||||||||
|
|
|
| ||||||||||||
Distributions to Shareholders: | |||||||||||||||
Class AAA | (62,112,538 | ) | (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 | ) | ||||||||||||
|
|
|
| ||||||||||||
Total Distributions to Shareholders | (140,146,169 | ) | (198,598,479 | ) | |||||||||||
|
|
|
| ||||||||||||
Capital Share Transactions: | |||||||||||||||
Class AAA | (296,298,972 | ) | (201,418,340 | ) | |||||||||||
Class A | (18,442,606 | ) | (24,283,403 | ) | |||||||||||
Class C | (50,785,008 | ) | (18,302,979 | ) | |||||||||||
Class I | (564,742,691 | ) | 188,547,456 | ||||||||||||
Class T* | — | (1,104 | ) | ||||||||||||
|
|
|
| ||||||||||||
Net Decrease in Net Assets from Capital Share Transactions | (930,269,277 | ) | (55,458,370 | ) | |||||||||||
|
|
|
| ||||||||||||
Redemption Fees | 1,663 | 9,649 | |||||||||||||
|
|
|
| ||||||||||||
Net Increase/(Decrease) in Net Assets | (1,315,334,180 | ) | 11,011,262 | ||||||||||||
Net Assets: | |||||||||||||||
Beginning of year | 3,761,542,282 | 3,750,531,020 | |||||||||||||
|
|
|
| ||||||||||||
End of year | $ | 2,446,208,102 | $ | 3,761,542,282 | |||||||||||
|
|
|
|
* | Class T Shares were liquidated on September 21, 2018. |
See accompanying notes to financial statements.
10
The Gabelli Small Cap Growth Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratio to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended | Net Asset | Net | Net | Total from | Net | Net | Total | Redemption | Net Asset | Total | Net Assets | Net | Operating | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $59.61 | $ 0.03 | $(3.50) | $(3.47) | $(0.09) | $(2.13) | $(2.22) | $0.00 | $53.92 | (5.72)% | $1,243,608 | 0.06% | 1.39%(e) | 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 | 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 | 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(f) | 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 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $59.58 | $ 0.03 | $(3.50) | $(3.47) | $(0.09) | $(2.13) | $(2.22) | $0.00 | $53.89 | (5.73)% | $ 170,189 | 0.06% | 1.39%(e) | 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 | 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 | 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(f) | 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 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $52.16 | $(0.32) | $(3.08) | $(3.40) | — | $(2.13) | $(2.13) | $0.00 | $46.63 | (6.44)% | $ 141,522 | (0.69)% | 2.14%(e) | 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 | 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 | 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(f) | 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 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $61.09 | $0.17 | $(3.59) | $(3.42) | $(0.25) | $(2.13) | $(2.38) | $0.00 | $55.29 | (5.50)% | $ 890,889 | 0.32% | 1.14%(e) | 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 | 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 | 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(f) | 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 | 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 year including reinvestment of distributions and does not reflect the applicable sales charges. |
(a) | Due to capital share activity throughout the period, net investment income/(loss) per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. |
(b) | Per share amounts have been calculated using the average shares outstanding method. |
(c) | Amount represents less than $0.005 per share. |
(d) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the years ended September 30, 2019, 2018, 2017, 2016, and 2015, there was no impact on the expense ratios. |
(e) | The Fund incurred interest expense during the year ended September 30, 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, and 2015, the effect of interest expense was minimal. |
(f) | 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.
11
The Gabelli Small Cap Growth Fund
Notes to Financial Statements
1. Organization.The Gabelli Small Cap Growth Fund is a series of the Gabelli Equity Series Funds, Inc. (the Corporation), 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 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 and modifications under ASU2018-13. Management has early adopted the removals and modifications 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 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 Small Cap Growth Fund
Notes to Financial Statements (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 by inputs used to value the Fund’s investments as of September 30, 2019 is as follows:
Valuation Inputs | ||||||||||||||
Level 1 | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 9/30/19 | |||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||
ASSETS (Market Value): | ||||||||||||||
Common Stocks: | ||||||||||||||
Automotive: Parts and Accessories | $ 76,680,838 | $ 1,339 | — | $ 76,682,177 | ||||||||||
Aviation: Parts and Services | 111,681,976 | 1,421,723 | — | 113,103,699 | ||||||||||
Business Services | 113,443,846 | 1,660,756 | — | 115,104,602 | ||||||||||
Consumer Services | 40,035,970 | 150,785 | — | 40,186,755 | ||||||||||
Diversified Industrial | 209,643,342 | 1,026,000 | $ 7,560 | 210,676,902 | ||||||||||
Equipment and Supplies | 296,676,803 | 1,342,176 | — | 298,018,979 | ||||||||||
Financial Services | 96,827,197 | 837,342 | 2,500 | 97,667,039 | ||||||||||
Publishing | 19,329,230 | 456,500 | — | 19,785,730 | ||||||||||
Real Estate | 48,628,945 | 139,863 | — | 48,768,808 | ||||||||||
Specialty Chemicals | 73,238,071 | 730 | — | 73,238,801 | ||||||||||
Other Industries (a) | 1,386,065,695 | — | — | 1,386,065,695 | ||||||||||
Total Common Stocks | 2,472,251,913 | 7,037,214 | 10,060 | 2,479,299,187 | ||||||||||
Closed-End Funds | 4,654,575 | — | — | 4,654,575 | ||||||||||
Preferred Stocks (a) | 2,705,691 | — | — | 2,705,691 | ||||||||||
Rights (a) | 165,300 | — | 33,997 | 199,297 | ||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $2,479,777,479 | $7,037,214 | $44,057 | $2,486,858,750 |
(a) | Please refer to the Summary Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have material transfers into or out of Level 3 during the fiscal year ended September 30, 2019.
13
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
Additional Information to Evaluate Qualitative Information.
General.The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds 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. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These 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.
14
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
Foreign Taxes.The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities.The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than 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 September 30, 2019, the Fund held no restricted securities.
Investments in other Investment Companies.The Fund may invest, from time to time, in shares of other investment 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 fiscal year ended September 30, 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 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 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. Distributions from net investment income for federal income tax purposes include net realized
15
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to tax treatment of currency gains and losses, reclassification of REIT distributions, and equalization utilized. These reclassifications have no impact on the NAV of the Fund. For the fiscal year ended September 30, 2019, reclassifications were made to increasepaid-in capital by $81,682,456 with an offsetting adjustment to total distributable earnings
The tax character of distributions paid during the fiscal years ended September 30, 2019 and 2018 was as follows:
Year Ended September 30, 2019* | Year Ended September 30, 2018 | |||||||||
Distributions paid from: | ||||||||||
Ordinary income (inclusive of short term capital gains) | $ | 10,698,763 | $ | 4,525,464 | ||||||
Net long term capital gains | 211,098,097 | 194,073,015 | ||||||||
|
|
|
| |||||||
Total distributions paid | $ | 221,796,860 | $ | 198,598,479 | ||||||
|
|
|
|
* | Total distributions paid differs from the Statement of Changes in Net Assets due to the utilization of equalization. |
Provision for Income Taxes.The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
At September 30, 2019, the components of accumulated earnings/losses on a tax basis were as follows:
Undistributed ordinary income | $ | 1,859,764 | ||
Undistributed long term capital gains | 407,456,770 | |||
Net unrealized appreciation on investments | 1,473,915,542 | |||
|
| |||
Total | $ | 1,883,232,076 | ||
|
|
At September 30, 2019, the temporary differences between book basis and tax basis unrealized appreciation on investments were primarily due to deferral of losses from wash sales for tax purposes,mark-to-market adjustments on investments no longer considered passive foreign investment companies, and basis adjustments in partnerships.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||||||||||||||
Investments | $ | 1,012,932,882 | $ | 1,532,341,038 | $ | (58,415,170 | ) | $ | 1,473,925,868 |
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 fiscal year ended September 30, 2019, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2019, the Adviser has reviewed all open tax years and concluded that there
16
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions.The Fund has entered into an investment advisory agreement (the Advisory Agreement) with the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, at the annual rate of 1.00% of the value of its average daily net assets. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Directors of the Fund who are affiliated persons of the Adviser.
There was a reduction in the advisory fee paid to the Adviser relating to certain portfolio holdings, i.e., unsupervised assets of the Fund with respect to which the Adviser transferred dispositive and voting control to the Fund’s Proxy Voting Committee. During the fiscal year ended September 30, 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 $134,603.
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 (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 fiscal year ended September 30, 2019, other than short term securities and U.S. Government obligations, aggregated to $36,272,207 and $1,034,239,958, respectively.
6. Transactions with Affiliates and Other Arrangements.During the fiscal year ended September 30, 2019, the Fund paid $608,725 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $37,912 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the fiscal year ended September 30, 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 $24,729.
17
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the fiscal year ended September 30, 2019, the Fund accrued $45,000 in connection with the cost of computing the Fund’s NAV.
During the fiscal year ended September 30, 2019, the Fund engaged in sale transactions with funds that have a common investment adviser. These transactions complied with Rule17a-7 under the Act and amounted to $856,900 in sales transactions.
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. At September 30, 2019, there was $35,740,000 outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the fiscal year ended September 30, 2019 was $12,674,518 with a weighted average interest rate of 3.64%. The maximum amount borrowed at any time during the fiscal year ended September 30, 2019 was $58,157,000.
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 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 fiscal years ended September 30, 2019 and 2018, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
18
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 884,200 | $ | 46,559,000 | 1,530,595 | $ | 89,175,188 | ||||||||||
Shares issued upon reinvestment of distributions | 1,153,577 | 60,515,890 | 1,662,328 | 95,267,987 | ||||||||||||
Shares redeemed | (7,690,327 | ) | (403,373,862 | ) | (6,589,735 | ) | (385,861,515 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (5,652,550 | ) | $ | (296,298,972 | ) | (3,396,812 | ) | $ | (201,418,340 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class A | ||||||||||||||||
Shares sold | 574,000 | $ | 30,547,164 | 495,292 | $ | 28,763,236 | ||||||||||
Shares issued upon reinvestment of distributions | 134,468 | 7,051,472 | 194,678 | 11,151,169 | ||||||||||||
Shares redeemed | (1,057,440 | ) | (56,041,242 | ) | (1,095,555 | ) | (64,197,808 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (348,972 | ) | $ | (18,442,606 | ) | (405,585 | ) | $ | (24,283,403 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 178,656 | $ | 8,073,960 | 456,064 | $ | 23,361,343 | ||||||||||
Shares issued upon reinvestment of distributions | 176,834 | 8,074,235 | 258,736 | 13,055,827 | ||||||||||||
Shares redeemed | (1,460,736 | ) | (66,933,203 | ) | (1,066,442 | ) | (54,720,149 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (1,105,246 | ) | $ | (50,785,008 | ) | (351,642 | ) | $ | (18,302,979 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class I | ||||||||||||||||
Shares sold | 4,152,983 | $ | 223,183,312 | 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 | (15,710,533 | ) | (845,490,897 | ) | (5,806,937 | ) | (345,506,356 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase/(decrease) | (10,485,179 | ) | $ | (564,742,691 | ) | 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. |
19
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
9. Transactions in Securities of Affiliated Issuers.The 1940 Act defines affiliated issuers as those in which a Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the Fund’s transactions in the securities of these issuers during the fiscal year ended September 30, 2019 is set forth below:
Beginning Shares | Shares Purchased/ Acquired | Shares Reduced | Ending Shares | Dividends | Realized Loss | Value at September 30, 2019 | Change in Appreciation/ | Percent Outstanding | |||||||||||||||||||||||||||||||||||||
Bel Fuse Inc., | 281,652 | — | (24,652 | ) | 257,000 | $ | 67,596 | $ | (526,853 | ) | $ | 3,523,470 | $ | (1,535,954 | ) | 11.82 | % | ||||||||||||||||||||||||||||
Griffin Industrial Realty Inc. | 272,600 | — | (10,443 | ) | 262,157 | 122,670 | 14,775 | 9,948,858 | (310,194 | ) | 5.17 | % | |||||||||||||||||||||||||||||||||
Internap Corp.* | 1,494,237 | — | (384,237 | ) | 1,110,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Katy Industries Inc. | 840,000 | — | — | 840,000 | — | — | 7,560 | 4,914 | 10.56 | % | |||||||||||||||||||||||||||||||||||
Strattec Security Corp. | 208,000 | — | (8,000 | ) | 200,000 | 114,240 | (222,222 | ) | 3,996,000 | (2,980,691 | ) | 5.26 | % | ||||||||||||||||||||||||||||||||
Trans-Lux Corp. | 113,500 | 3,137,341 | ** | (10,341 | ) | 3,240,500 | — | (16,971 | ) | 1,660,756 | (2,972,492 | ) | 24.10 | % | |||||||||||||||||||||||||||||||
Trans-Lux Cv. Pfd., Ser. B*** | 14,747 | — | (14,747 | )** | — | — | — | — | 2,845,729 | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total | $ | 304,506 | $ | (751,271 | ) | $ | 19,136,644 | $ | (4,948,688 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
* | Security is no longer considered affiliated at September 30, 2019. |
** | Trans-Lux Convertible Preferred shares were converted intoTrans-Lux Common shares during the period. |
*** | Security was not held as of September 30, 2019. |
10. Indemnifications.The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Subsequent Events.Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
20
The Gabelli Small Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Small Cap Growth Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Small Cap Growth Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the summary schedule of investments, as of September 30, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2019, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli/GAMCO Funds investment companies since 1992.
Philadelphia, Pennsylvania
November 25, 2019
21
The Gabelli Small Cap Growth Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling800-GABELLI(800-422-3554) or by writing to The Gabelli Small Cap Growth Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||||
INTERESTED DIRECTORS4: | ||||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer Age: 77 | Since 1991 | 33 | Chairman, Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer– Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/ GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chairman of Associated Capital Group, Inc. | Director of Morgan Group Holdings, Inc. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013- 2018) | ||||||
John D. Gabelli Director Age: 75 | Since 1991 | 12 | Senior Vice President of G.research, LLC | — | ||||||
INDEPENDENT DIRECTORS5: | ||||||||||
Elizabeth C. Bogan Director Age: 75 | Since 2019 | 8 | Senior Lecturer in Economics at Princeton University | — | ||||||
Anthony J. Colavita6 Director Age: 83 | Since 1991 | 20 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||||
Vincent D. Enright Director Age: 75 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008- 2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||||
Robert J. Morrissey Director Age: 80 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||||
Kuni Nakamura Director Age: 51 | Since 2009 | 33 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||||
Anthonie C. van Ekris6 Director Age: 85 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/ export company) | — | ||||||
Salvatore J. Zizza7 Director Age: 73 | Since 2001 | 31 | President of Zizza & Associates Corp. (private holding company); President of Bergen Cove Realty Inc. (2000-2018); Chairman of Harbor Diversified, Inc. (pharmaceuticals) (2009-2018); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005- 2014) | Director and Chairman ofTrans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018) |
22
The Gabelli Small Cap Growth Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) and Age | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
Bruce N. Alpert President Age: 67 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008 | ||
John C. Ball Treasurer Age: 43 | Since 2017 | Treasurer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017; Vice President of State Street Corporation, 2007-2014 | ||
Agnes Mullady Vice President Age: 61 | Since 2006 | Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2006; President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2015; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Executive Vice President of Associated Capital Group, Inc. since 2016 | ||
Andrea R. Mango Secretary Age: 47 | Since 2013 | Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President ofclosed-end funds within the Gabelli/GAMCO Fund Complex since 2014 | ||
Richard J. Walz Chief Compliance Officer Age: 60 | Since 2013 | Chief Compliance Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election orre-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’sBy-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of several funds which are part of the Gabelli/GAMCO Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Manager. |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
23
THE GABELLI SMALL CAP GROWTH FUND
2019 TAX NOTICE TO SHAREHOLDERS(Unaudited)
For the fiscal year ended September 30, 2019, the Fund paid to shareholders ordinary income distributions (inclusive of short term capital gains) totaling $0.1083, $0.1067, $0.0175, and $0.2628 per share for each of Class AAA, Class A, Class C, and Class I, respectively, and long term capital gains totaling $211,098,097 or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors. For the fiscal year ended September 30, 2019, 100% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 1.14% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 and 100% of the ordinary income dividend qualified for short term capital gain.
U.S. Government Income:
The percentage of the ordinary income distribution paid by the Fund during the fiscal year ended September 30, 2019 which was derived from U.S. Treasury securities was 1.00%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Gabelli Small Cap Growth Fund did not meet this strict requirement in 2019. There were no U.S. Government securities held as of September 30, 2019. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser as to the applicability of the information provided to your specific situation. _
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
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Portfolio Manager Biography
Mario J. Gabelli, CFA,is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO 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/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, telephone number, social security number, bank account number, and other information.
● Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you.This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them.
What information do we disclose and to whom do we disclose it?
We do not disclose 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.
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Gabelli Equity Series Funds, Inc.
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THE GABELLI SMALL CAP GROWTH FUND |
One Corporate Center |
Rye, New York 10580-1422 |
t 800-GABELLI (800-422-3554) |
f 914-921-5118 |
e info@gabelli.com |
GABELLI.COM |
Net Asset Value per share available daily by calling 800-GABELLI after 7:00 P.M.
|
BOARD OF DIRECTORS Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc. Executive Chairman, Associated Capital Group, Inc.
Elizabeth C. Bogan Senior Lecturer, Princeton University
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.
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 Small Cap Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
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GAB443Q319AR |
The Gabelli Focus Five Fund Annual Report — September 30, 2019 |
Daniel M. Miller Portfolio Manager |
To Our Shareholders,
For the fiscal year ended September 30, 2019, the net asset value (NAV) per Class I Share of The Gabelli Focus Five Fund decreased 6.3%, rebounding in 2019 after a 21.4% decline in the fourth calendar quarter of 2018. Other classes of shares are available. See page 2 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2019.
Performance Discussion (Unaudited)
The Focus Five Fund seeks to provide a high level of capital appreciation. Under normal circumstances, the Fund will invest in a concentrated portfolio of twenty-five to thirty-five equity securities. The Fund could potentially invest up to 50% of its net assets in five securities that represent the largest, and thus the highest conviction, positions.
As a Fund with a concentrated portfolio of holdings, stock selection is an important element of performance as the Fund is driven more by the results of the companies selected rather than the movement of the overall market.
The Fund employs an investment strategy that seeks to identify businesses trading at material discounts to estimated Private Market Value, with the potential of near-term catalysts.
Since inception, the Fund has invested about half of its assets under management in “small cap” equities. This segment of the market has underperformed the broader S&P 500 Index in recent years, attributable primarily to a shift in preferences for passive versus active management.
In late 2018, small cap stocks sold off dramatically, further exacerbating a challenging year. Dozens of value-oriented active managers shuttered their funds, and in many cases, liquidated positions.
For example, Herc Holdings’ (6.0% of net assets as of September 30, 2019) share price declined from $51 to $26 between October 1 and December 31, despite reporting a strong third quarter in November. Several hedge funds were forced sellers of the stock, compounding the negative pressure of being held in certain small cap index funds. Herc’s fundamentals remained strong, and the share price rebounded almost 100% in calendar 2019. The Fund added to its position in late 2018.
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.
Additional investments that have performed well during the fiscal year are Option Care Health Inc. (7.0%) and Aptiv Plc (5.1%).
Option Care Health Inc., a provider of a range of infusion therapies to patients with acute and chronic conditions at home and alternate sites in the U.S., saw positive effects from its merger with Bioscrip infusion services, as the two companies have strong histories in the infusion care industry.
Investments that detracted from performance during the fiscal year included Hain Celestial Group Inc. (no longer held), Covetrus Inc. (3.1%), and Internap (2.9%).
We appreciate your confidence and trust.
Comparative Results
Average Annual Returns through September 30, 2019 (a)(b) (Unaudited) | ||||||||||||||||||||||||
1 Year | 3 Year | 5 Year | Since January 1, 2012(c) | 10 Year | Since Inception (12/31/02) | |||||||||||||||||||
Class I (GWSIX) | (6.30 | )% | (1.10 | )% | (0.94 | )% | 6.28 | % | 6.98 | % | 6.56 | % | ||||||||||||
Class AAA (GWSVX) | (6.50 | ) | (1.33 | ) | (1.19 | ) | 6.01 | 6.70 | 6.37 | |||||||||||||||
S&P MidCap 400 Index | (2.49 | ) | 9.38 | 8.88 | 12.47 | (d) | 12.56 | 11.00 | ||||||||||||||||
Russell 2500 Index | (4.04 | ) | 9.51 | 8.57 | 12.20 | (d) | 12.22 | 10.84 | ||||||||||||||||
Russell 1000 Index | 3.87 | 13.19 | 10.62 | 14.06 | 13.23 | 9.97 | ||||||||||||||||||
MSCI AC WorldEx-U.S. Index | (0.72 | ) | 6.85 | 3.39 | 6.36 | 4.93 | 8.01 | |||||||||||||||||
Blended Index | (1.32 | ) | 9.74 | 7.74 | 11.14 | 10.59 | 9.91 | |||||||||||||||||
Class A (GWSAX) | (6.51 | ) | (1.34 | ) | (1.19 | ) | 6.01 | 6.71 | 6.39 | |||||||||||||||
With sales charge (e) | (11.88 | ) | (3.27 | ) | (2.36 | ) | 5.20 | 6.08 | 6.00 | |||||||||||||||
Class C (GWSCX) | (7.18 | ) | (2.07 | ) | (1.92 | ) | 5.22 | 5.91 | 5.61 | |||||||||||||||
With contingent deferred sales charge (f) | (8.11 | ) | (2.07 | ) | (1.92 | ) | 5.22 | 5.91 | 5.61 | |||||||||||||||
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 9 for the expense ratios for the fiscal year ended September 30, 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, 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. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. Investors should carefully consider the investment objectives,risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefullybefore 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.
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2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI FOCUS FIVE FUND (CLASS AAA SHARES), THE BLENDED INDEX, AND THE RUSSELL 2500 INDEX (Unaudited)
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
3
The Gabelli Focus Five Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from April 1, 2019 through September 30, 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. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2019.
Beginning Account Value 04/01/19 | Ending Account Value 09/30/19 | Annualized Expense Ratio | Expenses Paid During Period* | |||||
The Gabelli Focus Five Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $1,059.80 | 1.57% | $ 8.11 | ||||
Class A | $1,000.00 | $1,059.20 | 1.56% | $ 8.05 | ||||
Class C | $1,000.00 | $1,056.10 | 2.31% | $11.91 | ||||
Class I | $1,000.00 | $1,061.20 | 1.30% | $ 6.72 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,017.20 | 1.57% | $ 7.94 | ||||
Class A | $1,000.00 | $1,017.25 | 1.56% | $ 7.89 | ||||
Class C | $1,000.00 | $1,013.49 | 2.31% | $11.66 | ||||
Class I | $1,000.00 | $1,018.55 | 1.30% | $ 6.58 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2019:
The Gabelli Focus Five Fund
U.S. Government Obligations | 14.3% | |||
Health Care | 10.1% | |||
Food and Beverage | 8.5% | |||
Building and Construction | 8.1% | |||
Cable and Satellite | 7.0% | |||
Computer Software and Services | 6.9% | |||
Financial Services | 6.5% | |||
Diversified Industrial | 5.5% | |||
Hotels and Gaming | 5.5% | |||
Automotive: Parts and Accessories | 5.1% | |||
Retail | 4.2% |
Business Services | 3.9 | % | ||
Equipment and Supplies | 3.8 | % | ||
Entertainment | 3.3 | % | ||
Consumer Services | 2.8 | % | ||
Electronics | 2.4 | % | ||
Telecommunications | 1.5 | % | ||
Energy and Utilities | 0.8 | % | ||
Other Assets and Liabilities (Net) | (0.2) | % | ||
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100.0 | % | |||
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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.
5
The Gabelli Focus Five Fund
Schedule of Investments — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS — 85.9% |
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Automotive: Parts and Accessories — 5.1% |
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29,500 | Aptiv plc | $ | 1,817,786 | $ | 2,578,890 | |||||||
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Building and Construction — 8.1% |
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65,000 | Herc Holdings Inc.† | 2,116,838 | 3,023,150 | |||||||||
61,418 | PGT Innovations Inc.† | 913,026 | 1,060,689 | |||||||||
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3,029,864 | 4,083,839 | |||||||||||
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Business Services — 3.9% |
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50,000 | Macquarie Infrastructure Corp. | 1,965,162 | 1,973,500 | |||||||||
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Cable and Satellite — 7.0% |
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20,000 | EchoStar Corp., Cl. A† | 597,886 | 792,400 | |||||||||
69,005 | Liberty Media Corp.- Liberty Formula One, Cl. A† | 2,028,841 | 2,731,908 | |||||||||
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2,626,727 | 3,524,308 | |||||||||||
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Computer Software and Services — 6.9% |
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1,675 | Alphabet Inc., Cl. C† | 993,604 | 2,041,825 | |||||||||
570,000 | Internap Corp.† | 3,057,203 | 1,470,600 | |||||||||
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4,050,807 | 3,512,425 | |||||||||||
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Consumer Services — 2.8% |
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15,000 | GCI Liberty Inc., Cl. A† | 641,986 | 931,050 | |||||||||
175,000 | Groupon Inc.† | 504,880 | 465,500 | |||||||||
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|
|
| |||||||||
1,146,866 | 1,396,550 | |||||||||||
|
|
|
| |||||||||
Diversified Industrial — 5.5% |
| |||||||||||
30,000 | Colfax Corp.† | 744,978 | 871,800 | |||||||||
12,400 | EnPro Industries Inc. | 745,843 | 851,260 | |||||||||
55,000 | GCP Applied Technologies Inc.† | 1,139,955 | 1,058,750 | |||||||||
|
|
|
| |||||||||
2,630,776 | 2,781,810 | |||||||||||
|
|
|
| |||||||||
Electronics — 2.4% |
| |||||||||||
85,000 | Resideo Technologies Inc.† | 1,396,015 | 1,219,750 | |||||||||
|
|
|
| |||||||||
Energy and Utilities — 0.8% |
| |||||||||||
40,000 | California Resources Corp.† | 396,559 | 408,000 | |||||||||
|
|
|
| |||||||||
Entertainment — 3.3% |
| |||||||||||
265,300 | Sirius XM Holdings Inc. | 819,816 | 1,659,451 | |||||||||
|
|
|
| |||||||||
Equipment and Supplies — 3.8% |
| |||||||||||
25,500 | CIRCOR International Inc.† | 549,084 | 957,525 | |||||||||
87,500 | Mueller Water Products Inc., Cl. A | 916,562 | 983,500 | |||||||||
|
|
|
| |||||||||
1,465,646 | 1,941,025 | |||||||||||
|
|
|
| |||||||||
Financial Services — 6.5% |
| |||||||||||
25,000 | Apollo Global Management Inc. | 780,048 | 945,500 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
50,000 | New York Community Bancorp Inc. | $ | 519,054 | $ | 627,500 | |||||||
6,500 | PayPal Holdings Inc.† | 673,618 | 673,335 | |||||||||
30,000 | Synchrony Financial | 801,837 | 1,022,700 | |||||||||
|
|
|
| |||||||||
2,774,557 | 3,269,035 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 8.5% |
| |||||||||||
50,000 | Maple Leaf Foods Inc. | 785,921 | 1,121,636 | |||||||||
20,000 | Mondelēz International Inc., Cl. A | 819,250 | 1,106,400 | |||||||||
19,500 | Post Holdings Inc.† | 649,223 | 2,063,880 | |||||||||
|
|
|
| |||||||||
2,254,394 | 4,291,916 | |||||||||||
|
|
|
| |||||||||
Health Care — 10.1% |
| |||||||||||
130,000 | Covetrus Inc.† | 3,289,969 | 1,545,700 | |||||||||
1,111,353 | Option Care Health Inc.† | 1,614,315 | 3,556,330 | |||||||||
|
|
|
| |||||||||
4,904,284 | 5,102,030 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 5.5% |
| |||||||||||
100,000 | MGM Resorts International | 1,821,967 | 2,772,000 | |||||||||
|
|
|
| |||||||||
Retail — 4.2% |
| |||||||||||
52,600 | Newell Brands Inc. | 777,497 | 984,672 | |||||||||
42,500 | PetIQ Inc.† | 1,102,593 | 1,158,550 | |||||||||
|
|
|
| |||||||||
1,880,090 | 2,143,222 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 1.5% |
| |||||||||||
129,700 | Gogo Inc.† | 431,134 | 782,091 | |||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 35,412,450 | 43,439,842 | ||||||||||
|
|
|
| |||||||||
Principal | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 14.3% |
| |||||||||||
$7,246,000 | U.S. Treasury Bills, | 7,223,880 | 7,225,419 | |||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 100.2% | $ | 42,636,330 | 50,665,261 | |||||||||
|
| |||||||||||
Other Assets and |
| (101,258 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 50,564,003 | |||||||||
|
|
† | Non-income producing security. |
†† | Represents annualized yields at dates of purchase. |
See accompanying notes to financial statements.
6
The Gabelli Focus Five Fund
Statement of Assets and Liabilities
September 30, 2019
Assets: | ||||
Investments, at value (cost $42,636,330) | $ | 50,665,261 | ||
Foreign currency, at value (cost $4,653) | 4,651 | |||
Cash | 2,240 | |||
Receivable for investments sold | 59,367 | |||
Receivable for Fund shares sold | 211 | |||
Dividends receivable | 5,690 | |||
Prepaid expenses | 22,468 | |||
|
| |||
Total Assets | 50,759,888 | |||
|
| |||
Liabilities: | ||||
Payable for investments purchased | 59,464 | |||
Payable for Fund shares redeemed | 21,388 | |||
Payable for investment advisory fees | 42,026 | |||
Payable for distribution fees | 15,811 | |||
Payable for accounting fees | 7,500 | |||
Payable for legal and audit fees | 22,800 | |||
Payable for shareholder communications expenses | 13,777 | |||
Other accrued expenses | 13,119 | |||
|
| |||
Total Liabilities | 195,885 | |||
|
| |||
Net Assets | ||||
(applicable to 4,040,973 shares outstanding) | $ | 50,564,003 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 48,623,721 | ||
Total distributable earnings | 1,940,282 | |||
|
| |||
Net Assets | $ | 50,564,003 | ||
|
| |||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($12,189,208 ÷ 942,872 shares outstanding; 100,000,000 shares authorized) | $12.93 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($9,013,248 ÷ 690,058 shares outstanding; 50,000,000 shares authorized) | $13.06 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $13.86 | |||
Class C: | ||||
Net Asset Value and offering price per share ($13,807,021 ÷ 1,243,968 shares outstanding; 50,000,000 shares authorized) | $11.10 | (a) | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($15,554,526 ÷ 1,164,075 shares outstanding; 50,000,000 shares authorized) | $13.36 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2019
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $4,513) | $ | 571,655 | ||
Interest | 86,569 | |||
|
| |||
Total Investment Income | 658,224 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 622,487 | |||
Distribution fees - Class AAA | 33,010 | |||
Distribution fees - Class A | 27,568 | |||
Distribution fees - Class C | 166,848 | |||
Registration expenses | 64,544 | |||
Accounting fees | 45,000 | |||
Shareholder services fees | 43,478 | |||
Legal and audit fees | 34,382 | |||
Shareholder communications expenses | 28,552 | |||
Custodian fees | 11,404 | |||
Directors’ fees | 2,969 | |||
Interest expense | 281 | |||
Miscellaneous expenses | 15,050 | |||
|
| |||
Total Expenses | 1,095,573 | |||
|
| |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (1,303 | ) | ||
|
| |||
Net Expenses | 1,094,270 | |||
|
| |||
Net Investment Loss | (436,046 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized loss on investments | (3,628,663 | ) | ||
Net realized loss on foreign currency transactions | (235 | ) | ||
|
| |||
Net realized loss on investments and foreign currency transactions | (3,628,898 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (4,210,584 | ) | ||
on foreign currency translations | 14 | |||
|
| |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (4,210,570 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (7,839,468 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (8,275,514 | ) | |
|
|
See accompanying notes to financial statements.
7
The Gabelli Focus Five Fund
Statement of Changes in Net Assets
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||
Operations: | ||||||||||
Net investment loss | $ | (436,046 | ) | $ | (912,721 | ) | ||||
Net realized gain/(loss) on investments, redemptionin-kind, and foreign currency transactions | (3,628,898 | ) | 7,190,442 | |||||||
Net change in unrealized appreciation/depreciation on investments, written options, and foreign currency translations | (4,210,570 | ) | (13,632,137 | ) | ||||||
|
|
|
| |||||||
Net Decrease in Net Assets Resulting from Operations | (8,275,514 | ) | (7,354,416 | ) | ||||||
|
|
|
| |||||||
Distributions to Shareholders: | ||||||||||
Class AAA | (11,940 | ) | (108,381 | ) | ||||||
Class A | (10,608 | ) | (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 | (3,143,551 | ) | (4,746,985 | ) | ||||||
Class A | (4,783,404 | ) | (12,711,472 | ) | ||||||
Class C | (8,686,557 | ) | (9,997,783 | ) | ||||||
Class I | (16,188,041 | ) | (32,916,453 | ) | ||||||
Class T* | — | (1,005 | ) | |||||||
|
|
|
| |||||||
Net Decrease in Net Assets from Capital Share Transactions | (32,801,553 | ) | (60,373,698 | ) | ||||||
|
|
|
| |||||||
Redemption Fees | — | 343 | ||||||||
|
|
|
| |||||||
Net Decrease in Net Assets | (41,142,220 | ) | (68,512,446 | ) | ||||||
Net Assets: | ||||||||||
Beginning of year | 91,706,223 | 160,218,669 | ||||||||
|
|
|
| |||||||
End of year | $ | 50,564,003 | $ | 91,706,223 | ||||||
|
|
|
|
* | Class T Shares were liquidated on September 21, 2018. |
See accompanying notes to financial statements.
8
The Gabelli Focus Five Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Loss (a)(b) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Realized Gain on Investments | Total Distributions | Redemption Fees (b)(c) | Net Asset Value, End of Year | Total Return † | Net Assets End of Year (in 000’s) | Net Investment Loss (a) | Operating Expenses(d) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $13.84 | $(0.07) | $(0.83) | $(0.90) | $(0.01) | $(0.01) | — | $12.93 | (6.50)% | $12,189 | (0.56)% | 1.64%(e) | 67% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 14.61 | (0.09) | (0.61) | (0.70) | (0.07) | (0.07) | $0.00 | 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 | 14.61 | 7.88 | 22,542 | (1.08) | 1.43(e) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 12.00 | (0.14) | 1.84 | 1.70 | — | — | 0.00 | 13.70 | 14.17 | 33,695 | (1.11) | 1.42(e) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 15.22 | (0.12) | (1.81) | (1.93) | (1.29) | (1.29) | 0.00 | 12.00 | (14.11) | 38,960 | (0.83) | 1.37(e) | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $13.98 | $(0.07) | $(0.84) | $(0.91) | $(0.01) | $(0.01) | — | $13.06 | (6.51)% | $9,013 | (0.57)% | 1.64%(e) | 67% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 14.76 | (0.09) | (0.62) | (0.71) | (0.07) | (0.07) | $0.00 | 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 | 14.76 | 7.87 | 29,391 | (1.08) | 1.43(e) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 12.12 | (0.14) | 1.86 | 1.72 | — | — | 0.00 | 13.84 | 14.19 | 43,775 | (1.10) | 1.42(e) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 15.36 | (0.12) | (1.83) | (1.95) | (1.29) | (1.29) | 0.00 | 12.12 | (14.11) | 57,987 | (0.83) | 1.37(e) | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $11.97 | $(0.14) | $(0.72) | $(0.86) | $(0.01) | $(0.01) | — | $11.10 | (7.18)% | $13,807 | (1.33)% | 2.39%(e) | 67% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 12.74 | (0.17) | (0.53) | (0.70) | (0.07) | (0.07) | $0.00 | 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 | 12.74 | 7.04 | 37,147 | (1.83) | 2.18(e) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 10.64 | (0.21) | 1.63 | 1.42 | — | — | 0.00 | 12.06 | 13.35 | 57,796 | (1.85) | 2.17(e) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 13.73 | (0.20) | (1.60) | (1.80) | (1.29) | (1.29) | 0.00 | 10.64 | (14.74) | 70,274 | (1.58) | 2.12(e) | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $14.27 | $(0.05) | $(0.85) | $(0.90) | $(0.01) | $(0.01) | — | $13.36 | (6.30)% | $15,555 | (0.36)% | 1.39%(e) | 67% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.02 | (0.06) | (0.62) | (0.68) | (0.07) | (0.07) | $0.00 | 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 | 15.02 | 8.11 | 71,138 | (0.83) | 1.18(e) | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 12.27 | (0.11) | 1.89 | 1.78 | — | — | 0.00 | 14.05 | 14.51 | 103,490 | (0.85) | 1.17(e) | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 15.50 | (0.09) | (1.85) | (1.94) | (1.29) | (1.29) | 0.00 | 12.27 | (13.90) | 174,754 | (0.58) | 1.12(e) | 73 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect the applicable sales charges. |
(a) | Due to capital share activity, net investment loss per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. |
(b) | Per share amounts have been calculated using the average shares outstanding method. |
(c) | Amount represents less than $0.005 per share. |
(d) | The Fund incurred interest expense during the fiscal years ended September 30, 2019, 2018, 2017, 2016, and 2015, and the effect of interest expense was minimal. |
(e) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. If such credits had not been incurred, the ratio of operating expenses to average net assets would have been 1.64% (Class AAA and Class A), 2.39% (Class C), and 1.40% (Class I) for the fiscal year ended September 30, 2019. 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.
9
The Gabelli Focus Five Fund
Notes to Financial Statements
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 and modifications under ASU2018-13. Management has early adopted the removals and modifications 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.
10
The Gabelli Focus Five Fund
Notes to Financial Statements (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 September 30, 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 September 30, 2019 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 9/30/19 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $43,439,842 | — | $43,439,842 | |||||||||
U.S. Government Obligations | — | $7,225,419 | 7,225,419 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $43,439,842 | $7,225,419 | $50,665,261 |
(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,
11
The Gabelli Focus Five Fund
Notes to Financial Statements (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 September 30, 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
12
The Gabelli Focus Five Fund
Notes to Financial Statements (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 September 30, 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
13
The Gabelli Focus Five Fund
Notes to Financial Statements (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. For the fiscal year ended September 30, 2019, reclassifications were made to decreasepaid-in capital by $904,355 with an offsetting adjustment to total distributable earnings.
The tax character of distributions paid during the fiscal years ended September 30, 2019 and 2018 was as follows:
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||
Distributions paid from: | ||||||||
Net long term capital gains | $65,153 | $784,675 | ||||||
Total distributions paid | $65,153 | $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.
At September 30, 2019, the components of accumulated earnings/losses on a tax basis were as follows:
Accumulated capital loss carryforwards | $ | (4,530,202 | ) | |
Net unrealized appreciation on investments | 7,847,871 | |||
Qualified late year loss deferral* | (1,377,387 | ) | ||
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| |||
Total | $ | 1,940,282 | ||
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|
* | Under the current law, qualified late year ordinary losses realized after December 31 or post October capital losses realized after October 31 and prior to the Fund’s year end may be elected as occurring on the first day of the following year. For the fiscal year ended September 30, 2019, the Fund elected to defer $256,454 of late year ordinary losses and $1,120,933 of post October capital losses. |
14
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
The Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses. The Fund has a short term capital loss carryforward with no expiration of $4,530,202.
At September 30, 2019, the temporary differences between book basis and tax basis unrealized appreciation on investments were primarily due to deferral of losses from wash sales for tax purposes.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||||||||
Investments | $ | 42,817,380 | $11,760,115 | $(3,912,234) | $7,847,881 |
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 fiscal year ended September 30, 2019, the Fund did not incur excise tax. As of September 30, 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 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 fiscal year ended September 30, 2019, other than short term securities and U.S. Government obligations, aggregated to $39,515,781 and $78,044,198, respectively.
15
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
6. Transactions with Affiliates and Other Arrangements.During the fiscal year ended September 30, 2019, the Fund paid $1,219 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $3,776 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the fiscal year ended September 30, 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 $1,303.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the fiscal year ended September 30, 2019, the Fund accrued $45,000 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 fiscal year ended September 30, 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%, 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 fiscal years ended September 30, 2019 and 2018, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
16
The Gabelli Focus Five Fund
Notes to Financial Statements (Continued)
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 36,551 | $ | 450,109 | 33,479 | $ | 471,631 | ||||||||||
Shares issued upon reinvestment of distributions | 1,846 | 22,967 | 7,545 | 104,193 | ||||||||||||
Shares redeemed | (297,070) | (3,616,627) | (382,512 | ) | (5,322,809 | ) | ||||||||||
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| |||||||||
Net decrease | (258,673) | $ | (3,143,551 | ) | (341,488 | ) | $ | (4,746,985 | ) | |||||||
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| |||||||||
Class A | ||||||||||||||||
Shares sold | 75,374 | $ | 959,065 | 177,619 | $ | 2,527,290 | ||||||||||
Shares issued upon reinvestment of distributions | 789 | 10,014 | 9,556 | 133,310 | ||||||||||||
Shares redeemed | (468,679) | (5,752,483) | (1,096,053 | ) | (15,372,072 | ) | ||||||||||
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| |||||||||
Net decrease | (392,516) | $ | (4,783,404 | ) | (908,878 | ) | $ | (12,711,472 | ) | |||||||
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| |||||||||
Class C | ||||||||||||||||
Shares sold | 45,255 | $ | 476,557 | 137,743 | $ | 1,693,578 | ||||||||||
Shares issued upon reinvestment of distributions | 1,718 | 18,647 | 15,559 | 187,019 | ||||||||||||
Shares redeemed | (890,312) | (9,181,761) | (980,921 | ) | (11,878,380 | ) | ||||||||||
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|
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| |||||||||
Net decrease | (843,339) | $ | (8,686,557 | ) | (827,619 | ) | $ | (9,997,783 | ) | |||||||
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| |||||||||
Class I | ||||||||||||||||
Shares sold | 222,615 | $ | 2,821,913 | 418,637 | $ | 6,054,038 | ||||||||||
Shares issued upon reinvestment of distributions | 1,617 | 20,936 | 21,972 | 312,000 | ||||||||||||
Shares redeemed | (1,509,657) | (19,030,890) | (1,608,707 | ) | (23,099,547 | ) | ||||||||||
Shares redeemedin-kind | — | — | (1,118,379 | ) | (16,182,944 | ) | ||||||||||
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|
|
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| |||||||||
Net decrease | (1,285,425) | $ | (16,188,041 | ) | (2,286,477 | ) | $ | (32,916,453 | ) | |||||||
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| |||||||||
Class T * | ||||||||||||||||
Shares issued upon reinvestment of distributions | — | — | — | $ | 5 | |||||||||||
Shares redeemed | — | — | (71 | ) | (1,010 | ) | ||||||||||
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| |||||||||
Net decrease | — | — | (71 | ) | $ | (1,005 | ) | |||||||||
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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’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.
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.
17
The Gabelli Focus Five Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Focus Five Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Focus Five Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the schedule of investments, as of September 30, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2019, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli/GAMCO Funds investment companies since 1992.
Philadelphia, Pennsylvania
November 25, 2019
18
The Gabelli Focus Five Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling800-GABELLI(800-422-3554) or by writing to The Gabelli Focus Five Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) | Other Directorships Held by Director3 | ||||||
INTERESTED DIRECTORS4: | ||||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer Age: 77 | Since 1991 | 33 | Chairman, Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer– Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/ GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chairman of Associated Capital Group, Inc. | Director of Morgan Group Holdings, Inc. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013-2018) | ||||||
John Gabelli Director Age: 75 | Since 1991 | 12 | Senior Vice President of G.research, LLC | — | ||||||
INDEPENDENT DIRECTORS5: | ||||||||||
Elizabeth C. Bogan Director Age: 75 | Since 2019 | 8 | Senior Lecturer in Economics at Princeton University | — | ||||||
Anthony J. Colavita6 Director Age: 83 | Since 1991 | 20 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||||
Vincent D. Enright Director Age: 75 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||||
Robert J. Morrissey Director Age: 80 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||||
Kuni Nakamura Director Age: 51 | Since 2009 | 33 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||||
Anthonie C. van Ekris6 Director Age: 85 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/export company) | — | ||||||
Salvatore J. Zizza7 Director Age: 73 | Since 2001 | 31 | President of Zizza & Associates Corp. (private holding company); President of Bergen Cove Realty Inc. (2000-2018); Chairman of Harbor Diversified, Inc. (pharmaceuticals) (2009-2018); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014) | Director and Chairman ofTrans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018) |
19
The Gabelli Focus Five Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) and Age | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
Bruce N. Alpert President Age: 67 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008 | ||
John C. Ball Treasurer Age: 43 | Since 2017 | Treasurer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017; Vice President of State Street Corporation, 2007-2014 | ||
Agnes Mullady Vice President Age: 61 | Since 2006 | Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2006; President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2015; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Executive Vice President of Associated Capital Group, Inc. since 2016 | ||
Andrea R. Mango Secretary Age: 47 | Since 2013 | Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President ofclosed-end funds within the Gabelli/GAMCO Fund Complex since 2014 | ||
Richard J. Walz Chief Compliance Officer Age: 60 | Since 2013 | Chief Compliance Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election orre-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’sBy-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli/GAMCO Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
20
THE GABELLI FOCUS FIVE FUND
2019 TAX NOTICE TO SHAREHOLDERS (Unaudited)
During the fiscal year ended September 30, 2019, the Fund paid to shareholders long term capital gains totaling $65,153, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
Portfolio Manager Biography
Daniel M. Millerhas been the portfolio manager of the Gabelli Focus Five Fund since inception of the Fund. He currently serves as a portfolio manager of Gabelli Funds, LLC and 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/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, telephone number, social security number, bank account number, and other information.
● Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you.This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them.
What information do we disclose and to whom do we disclose it?
We do not disclose 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.
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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.
Elizabeth C. Bogan Senior Lecturer, Princeton University
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.
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.
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GAB840Q319AR
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The Gabelli Global Financial Services Fund
Annual Report — September 30, 2019 | ||
Ian Lapey Portfolio Manager |
To Our Shareholders,
For the fiscal year ended September 30, 2019, the since inception performance for the net asset value (NAV) per Class AAA Share of The Gabelli Global Financial Services Fund decreased 8.8% compared with a decrease of 0.2% for the Morgan Stanley Capital International (MSCI) World Financials Index and an increase of 4.3% for the Standard & Poor’s (S&P) 500 Index. Other classes of shares are available. See page 2 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2019.
Performance Discussion (Unaudited)
The Fund launched on October 1, 2018. The goal of the Fund is to generate long term capital appreciation, and under normal market conditions, the Fund will invest at least 80% of the value of its net assets in the securities of companies principally engaged in the financial services sector. The Fund considers a company to be engaged in financial services if it devotes a significant portion of its assets to, or derives a significant portion of its revenues from, providing financial services.
The start of the fiscal year saw widening valuations with the vast majority of the companies in the Fund experiencing a growing discount between their public market prices and their private market values. European banks saw weakness driven by macro concerns about Italian government bond spreads, Brexit, and an overall economic slowdown in the region despite healthy bank fundamentals.
While the overall stock market rebounded in the first calendar quarter, the common stocks of most companies engaged in financial services generally continued to underperform and remain extremely attractively priced. Slowing global economic growth led to declining government bond yields and flattening yield curves. Concerns about a potential recession in the U.S. and parts of Europe contributed to the weak stock performance of bank stocks.
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 second and third calendar quarters saw continued underperformance relative to the overall stock market. The primary driver of the negative performance has been the decline in interest rates. The 10 year U.S. Treasury yield has declined from 3.1% to 1.7%. While lower interest rates usually do result in lower net interest margins and earnings, there are several positive attributes including: lower funding costs, improved economic activity in interest rate sensitive industries, and an increase in company stock buybacks.
Among the better performing stocks was Daimler AG (2.6% of net assets as of September 30, 2019), a company engaged in the development, production, and distribution of vehicles in Germany, which improved operating performance and cash flow generation; Jefferies Financial Group (4.3%), a diversified holding company focused on return on investment and long term value, performed well following a successful spin off of Spectrum Brands (0.3%); and Ally Financial Inc. (6.1%), a digital financial services company that benefited from the consumer trend towards low fee investment products.
Our weaker performing stocks during the year included Commerzbank (3.7%), a bank for private and corporate customers, which suffered from lower interest rates and fierce competition; Bank of New York Mellon (4.2%), a global investments company which cited declining interest rates and lower than expected growth in dividends as major headwinds; and Societe Generale (2.9%), a French financial services company, which struggled to remain profitable as it implemented a major restructuring plan on the back of poor performance in its trading units.
We appreciate your confidence and trust.
Comparative Results
Total Returns through September 30, 2019 (a)(b) (Unaudited) | ||||||
| Since Inception (10/1/18) | |||||
Class AAA (GAFSX) | (8.76)% | |||||
MSCI World Financials Index | (0.24) | |||||
S&P 500 Index | 4.25 | |||||
Class A (GGFSX) | (8.71) | |||||
With sales charge (c) | (13.96) | |||||
Class C (GCFSX) | (9.39) | |||||
With contingent deferred sales charge (d) | (10.29) | |||||
Class I (GFSIX) | (8.51) | |||||
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 9 for the expense ratios for the fiscal year ended September 30, 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 inshare 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 orhigher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Returnswould have been lower had the Adviser not reimbursed certain expenses of the Fund. The Fund imposes a 2% redemption fee on sharessold or exchanged within seven days of purchase. Investors should carefully consider the investment objectives, risks, charges, andexpenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefullybefore 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. 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.
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2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI GLOBAL FINANCIAL SERVICES FUND (CLASS AAA SHARES),
S&P 500 INDEX, AND MSCI WORLD FINANCIALS INDEX (Unaudited)
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
3
The Gabelli Global Financial Services Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from April 1, 2019 through September 30, 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. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2019.
Beginning Account Value 04/01/19 | Ending Account Value 09/30/19 | Annualized Expense Ratio | Expenses Paid During Period* | |||||
The Gabelli Global Financial Services Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $1,003.30 | 1.25% | $ 6.28 | ||||
Class A | $1,000.00 | $1,003.30 | 1.25% | $ 6.28 | ||||
Class C | $1,000.00 | $1,000.00 | 2.00% | $10.03 | ||||
Class I | $1,000.00 | $1,004.40 | 1.00% | $ 5.02 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,018.80 | 1.25% | $ 6.33 | ||||
Class A | $1,000.00 | $1,018.80 | 1.25% | $ 6.33 | ||||
Class C | $1,000.00 | $1,015.04 | 2.00% | $10.10 | ||||
Class I | $1,000.00 | $1,020.05 | 1.00% | $ 5.06 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2019:
The Gabelli Global Financial Services Fund
Banks | 22.0% | |||
Diversified Banks | 19.1% | |||
Investment Management | 12.4% | |||
Consumer Finance | 9.2% | |||
Homebuilders | 6.9% | |||
Life Insurance | 6.6% | |||
Institutional Brokerage | 6.6% | |||
Automobiles | 6.3% | |||
Institutional Trust, Fiduciary, and Custody | 4.2% |
Real Estate Owners and Developers | 3.3 | % | ||
Investment Companies | 1.5 | % | ||
U.S. Government Obligations | 1.3 | % | ||
Consumer Products | 0.3 | % | ||
Other Assets and Liabilities (Net) | 0.3 | % | ||
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100.0 | % | |||
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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.
5
The Gabelli Global Financial Services Fund
Schedule of Investments — September 30, 2019
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS — 98.4% |
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Automobiles — 6.3% |
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6,800 | Daimler AG | $ | 402,112 | $ | 338,121 | |||||||
3,700 | Toyota Motor Corp., ADR | 444,133 | 497,613 | |||||||||
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846,245 | 835,734 | |||||||||||
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Banks — 22.0% |
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84,000 | Commerzbank AG | 739,317 | 487,262 | |||||||||
11,000 | Credit Suisse Group AG, ADR | 127,910 | 134,310 | |||||||||
86,300 | Dah Sing Financial Holdings Ltd. | 500,317 | 319,316 | |||||||||
21,000 | Japan Post Bank Co. Ltd. | 244,399 | 203,349 | |||||||||
28,700 | Mediobanca Banca di Credito Finanziario SpA | 262,846 | 313,442 | |||||||||
1,570 | Shinhan Financial Group Co. Ltd. | 58,501 | 54,864 | |||||||||
8,300 | Shinhan Financial Group Co. Ltd., ADR | 320,067 | 290,417 | |||||||||
26,000 | Shinsei Bank Ltd. | 383,846 | 378,488 | |||||||||
7,300 | State Street Corp. | 385,497 | 432,087 | |||||||||
24,700 | UniCredit SpA | 325,688 | 291,295 | |||||||||
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3,348,388 | 2,904,830 | |||||||||||
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Consumer Finance — 9.2% |
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24,400 | Ally Financial Inc. | 621,977 | 809,104 | |||||||||
4,500 | Capital One Financial Corp. | 373,611 | 409,410 | |||||||||
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995,588 | 1,218,514 | |||||||||||
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Consumer Products — 0.3% |
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760 | Spectrum Brands Holdings Inc. | 37,977 | 40,043 | |||||||||
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Diversified Banks — 19.1% |
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195,000 | Barclays plc | 422,544 | 360,600 | |||||||||
8,700 | Citigroup Inc. | 542,849 | 600,996 | |||||||||
31,000 | Credit Agricole SA | 407,497 | 376,405 | |||||||||
123,000 | Royal Bank of Scotland Group plc | 379,566 | 313,961 | |||||||||
14,010 | Societe Generale SA | 514,646 | 383,894 | |||||||||
58,000 | Standard Chartered plc | 446,964 | 487,927 | |||||||||
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2,714,066 | 2,523,783 | |||||||||||
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Homebuilders — 6.9% |
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3,100 | Cavco Industries Inc.† | 447,625 | 595,479 | |||||||||
19,400 | Legacy Housing Corp.† | 224,389 | 314,280 | |||||||||
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672,014 | 909,759 | |||||||||||
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Institutional Brokerage — 6.6% |
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69,600 | Daiwa Securities Group Inc. | 395,040 | 309,877 | |||||||||
30,810 | Jefferies Financial Group Inc. | 636,564 | 566,904 | |||||||||
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1,031,604 | 876,781 | |||||||||||
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Market | ||||||||||||
Shares | Cost | Value | ||||||||||
Institutional Trust, Fiduciary, and Custody — 4.2% |
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12,400 | The Bank of New York Mellon Corp. | $ | 616,815 | $ | 560,604 | |||||||
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Investment Companies — 1.5% |
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174,881 | Atlas Mara Ltd.† | 350,651 | 199,364 | |||||||||
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Investment Management — 12.4% |
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4,500 | Diamond Hill Investment Group Inc. | 708,341 | 621,585 | |||||||||
17,200 | Franklin Resources Inc. | 516,931 | 496,392 | |||||||||
16,900 | Janus Henderson Group plc | 348,253 | 379,574 | |||||||||
5,000 | Westwood Holdings Group Inc. | 227,447 | 138,350 | |||||||||
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1,800,972 | 1,635,901 | |||||||||||
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Life Insurance — 6.6% |
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106,040 | Aegon NV | 581,372 | 441,164 | |||||||||
12,302 | NN Group NV | 526,080 | 436,316 | |||||||||
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1,107,452 | 877,480 | |||||||||||
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Real Estate Owners and Developers — 3.3% |
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90,000 | Hang Lung Group Ltd. | 232,917 | 224,147 | |||||||||
46,200 | Henderson Land Development Co. Ltd. | 206,680 | 215,152 | |||||||||
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439,597 | 439,299 | |||||||||||
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TOTAL COMMON STOCKS | 13,961,369 | 13,022,092 | ||||||||||
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Principal | ||||||||||||
Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 1.3% |
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$ 170,000 | U.S. Treasury Bill, 2.056%††, 10/24/19 | 169,778 | 169,806 | |||||||||
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TOTAL | $ | 14,131,147 | 13,191,898 | |||||||||
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Other Assets and Liabilities (Net) — 0.3% |
| 45,912 | ||||||||||
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NET ASSETS — 100.0% |
| $ | 13,237,810 | |||||||||
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† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
6
The Gabelli Global Financial Services Fund
Statement of Assets and Liabilities
September 30, 2019
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Assets: | ||||
Investments, at value (cost $14,131,147) | $ | 13,191,898 | ||
Receivable for investments sold | 38,012 | |||
Receivable from Adviser | 24,376 | |||
Dividends receivable | 37,735 | |||
Prepaid expenses | 36,728 | |||
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Total Assets | 13,328,749 | |||
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Liabilities: | ||||
Foreign currency, at value (cost $13) | 13 | |||
Payable to custodian | 7,055 | |||
Payable for investments purchased | 22,284 | |||
Payable for investment advisory fees | 21,301 | |||
Payable for distribution fees | 30 | |||
Payable for legal and audit fees | 22,800 | |||
Payable for shareholder communications expenses | 10,792 | |||
Other accrued expenses | 6,664 | |||
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Total Liabilities | 90,939 | |||
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Net Assets | ||||
(applicable to 1,452,810 shares outstanding) | $ | 13,237,810 | ||
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Net Assets Consist of: | ||||
Paid-in capital | $ | 14,026,704 | ||
Total accumulated loss | (788,894 | ) | ||
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Net Assets | $ | 13,237,810 | ||
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Shares of Capital Stock, each at $0.001 par value: |
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Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($134,332 ÷ 14,772 shares outstanding; 120,000,000 shares authorized) | $9.09 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($9,966 ÷ 1,095 shares outstanding; 60,000,000 shares authorized) | $9.10 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $9.66 | |||
Class C: | ||||
Net Asset Value and offering price per share ($906 ÷ 100.13 shares outstanding; 20,000,000 shares authorized) | $9.05 | (a) | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($13,092,606 ÷ 1,436,843 shares outstanding; 150,000,000 shares authorized) | $9.11 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2019
| ||||
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $35,080) | $ | 423,790 | ||
Non-cash dividends | 37,888 | |||
Interest | 11,465 | |||
|
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Total Investment Income | 473,143 | |||
|
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Expenses: | ||||
Investment advisory fees | 116,822 | |||
Distribution fees - Class AAA | 278 | |||
Distribution fees - Class A | 16 | |||
Distribution fees - Class C | 9 | |||
Legal and audit fees | 34,002 | |||
Shareholder communication expenses | 32,378 | |||
Shareholder services fees | 17,745 | |||
Custodian fees | 16,627 | |||
Registration expenses | 14,919 | |||
Directors’ fees | 527 | |||
Miscellaneous expenses | 8,954 | |||
|
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Total Expenses | 242,277 | |||
|
| |||
Less: | ||||
Expense reimbursements (See Note 3) | (124,154 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (998 | ) | ||
|
| |||
Total Reductions | (125,152 | ) | ||
|
| |||
Net Expenses | 117,125 | |||
|
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Net Investment Income | 356,018 | |||
|
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Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized loss on investments | (161,201 | ) | ||
Net realized gain on foreign currency transactions | 645 | |||
|
| |||
Net realized loss on investments and foreign currency transactions | (160,556 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (939,249 | ) | ||
on foreign currency translations | (228 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation on investments and foreign currency transactions | (939,477 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (1,100,033 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (744,015 | ) | |
|
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See accompanying notes to financial statements.
7
The Gabelli Global Financial Services Fund
Statement of Changes in Net Assets
Year Ended | |||||
September 30, 2019(a) | |||||
Operations: | |||||
Net investment income | $ | 356,018 | |||
Net realized loss on investments and foreign currency transactions | (160,556 | ) | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (939,477 | ) | |||
|
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Net Decrease in Net Assets Resulting from Operations | (744,015 | ) | |||
|
| ||||
Distributions to Shareholders: | |||||
Class AAA | (310 | ) | |||
Class A | (3 | ) | |||
Class C | (1 | ) | |||
Class I | (44,565 | ) | |||
|
| ||||
Total Distributions to Shareholders | (44,879 | ) | |||
|
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Capital Share Transactions: | |||||
Class AAA | 139,202 | ||||
Class A | 10,263 | ||||
Class C | 1,001 | ||||
Class I | 13,876,238 | ||||
|
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Net Increase in Net Assets from Capital Share Transactions | 14,026,704 | ||||
|
| ||||
Net Increase in Net Assets | 13,237,810 | ||||
Net Assets: | |||||
Beginning of period | — | ||||
|
| ||||
End of year | $13,237,810 | ||||
|
|
(a) | The Fund commenced investment operations on October 1, 2018. |
See accompanying notes to financial statements.
8
The Gabelli Global Financial Services Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout the year:
Income from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||
Year Ended | Net Asset Value, Beginning of Year(a) | Net Investment Income(b) | Net Realized and Unrealized Gain/(Loss) on Investments | Total from Investment Operations | Net Income | Total Distributions | Net Year | Total Return † | Net (in 000’s) | Net Income | Operating Expenses Before Reimbursement | Operating Expenses Net of Reimbursement(c) | Portfolio Turnover Rate | |||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.00 | $0.27 | $(1.15) | $(0.88) | $(0.03) | $(0.03) | $ | 9.09 | (8.76 | )% | $ | 134 | 3.01% | 2.32% | 1.25% | 14% | ||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.00 | $0.35 | $(1.22) | $(0.87) | $(0.03) | $(0.03) | $ | 9.10 | (8.71 | )% | $ | 10 | 3.77% | 2.32% | 1.25% | 14% | ||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.00 | $0.17 | $(1.11) | $(0.94) | $(0.01) | $(0.01) | $ | 9.05 | (9.39 | )% | $ | 1 | 1.85% | 3.08% | 2.00% | 14% | ||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.00 | $0.28 | $(1.13) | $(0.85) | $(0.04) | $(0.04) | $ | 9.11 | (8.51 | )% | $ | 13,093 | 3.05% | 2.07% | 1.00% | 14% |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect the applicable sales charges. |
(a) | The Fund commenced investment operations on October 1, 2018. |
(b) | Per share amounts have been calculated using the average shares outstanding method. |
(c) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed expenses of $124,154 during the fiscal year ended September 30, 2019. |
See accompanying notes to financial statements.
9
The Gabelli Global Financial Services Fund
Notes to Financial Statements
1. Organization.The Gabelli Global Financial Services Fund is a series of the Gabelli Equity Series Funds, Inc. (the Corporation). The Corporation was incorporated on July 25, 1991 in Maryland. The Fund is 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 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 and modifications under ASU2018-13. Management has early adopted the removals and modifications 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 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.
10
The Gabelli Global Financial Services Fund
Notes to Financial Statements (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 September 30, 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 September 30, 2019 is as follows:
Valuation Inputs | |||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 9/30/19 | |||||||||||||
INVESTMENTS IN SECURITIES: | |||||||||||||||
ASSETS (Market Value): | |||||||||||||||
Common Stocks (a) | $13,022,092 | — | $13,022,092 | ||||||||||||
U.S. Government Obligations | — | $169,806 | 169,806 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $13,022,092 | $169,806 | $13,191,898 |
(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,
11
The Gabelli Global Financial Services Fund
Notes to Financial Statements (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 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.
Foreign Taxes.The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities.The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than 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 September 30, 2019, the Fund held no restricted securities.
12
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
Investments in other Investment Companies.The Fund may invest, from time to time, in shares of other investment 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 fiscal year ended September 30, 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 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 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. The characterization of 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 extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to the tax treatment of currency gains and losses. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2019 was as follows:
Year Ended September 30, 2019 | |||||
Distributions paid from: | |||||
Ordinary income | $44,879 | ||||
Total distributions paid | $44,879 |
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
13
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
At September 30, 2019, the components of accumulated earnings/losses on a tax basis were as follows:
Net unrealized depreciation on investments | $ | (941,090 | ) | |
Undistributed ordinary income | 311,784 | |||
Accumulated capital loss carryforwards | (159,588 | ) | ||
|
| |||
Total | $ | (788,894 | ) | |
|
|
The Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses. The Fund has a short term capital loss carryforward with no expiration of $159,588.
At September 30, 2019, the temporary difference between book basis and tax basis net unrealized depreciation on investments was due to deferral of losses from wash sales for tax purposes.
The following summarizes the tax cost of investments and the related net unrealized depreciation at September 30, 2019:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation | |||||
Investments | $14,132,760 | $796,989 | $(1,737,851) | $(940,862) |
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 fiscal year ended September 30, 2019, the Fund did not incur any income tax, interest, or penalties. As of September 30, 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. The Fund’s federal and state returns for the current fiscal year 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 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 fiscal year ended September 30, 2019, the Adviser reimbursed the Fund in the amount of $124,154. In addition, the Fund has also agreed, during the
14
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
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 September 30, 2019, the cumulative amount which the Fund may repay the Adviser with an expiration date of September 30, 2021, subject to the terms above, is $124,154.
The Corporation pays each Director who is not considered an affiliated person an annual retainer of $18,000 plus $2,000 for each Board meeting attended, and they are reimbursed for any out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000 per meeting attended. The Chairman of the Audit Committee receives a $3,000 annual fee, and the Lead Director receives an annual fee of $2,000. A Director may receive a single meeting fee, allocated among the participating funds, for attending certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
4. Distribution Plan.The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to 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 fiscal year ended September 30, 2019, other than short term securities and U.S. Government obligations, aggregated $15,606,472 and $1,484,274, respectively.
6. Transactions with Affiliates and Other Arrangements.During the fiscal year ended September 30, 2019, the Fund paid $4,683 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.
During the fiscal year ended September 30, 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 $998.
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 fiscal year ended September 30, 2019.
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 fiscal year ended September 30, 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
15
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
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 fiscal year ended September 30, 2019, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2019(a) | ||||||||
Shares | Amount | |||||||
Class AAA | ||||||||
Shares sold | 19,438 | $ | 181,324 | |||||
Shares issued upon reinvestment of distributions | 37 | 310 | ||||||
Shares redeemed | (4,703 | ) | (42,432 | ) | ||||
|
|
|
| |||||
Net increase | 14,772 | $ | 139,202 | |||||
|
|
|
| |||||
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 | 1,431,995 | $ | 13,836,051 | |||||
Shares issued upon reinvestment of distributions | 5,363 | 44,565 | ||||||
Shares redeemed | (515 | ) | (4,378 | ) | ||||
|
|
|
| |||||
Net increase | 1,436,843 | $ | 13,876,238 | |||||
|
|
|
|
(a) | The Fund commenced investment operations on October 1, 2018. |
* | Represents fewer than 0.50 shares. |
9. Significant Shareholder.As of September 30, 2019, approximately 94.8% of the Fund was beneficially owned by the Adviser and its affiliates.
10. Indemnifications.The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Subsequent Events.Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
16
The Gabelli Global Financial Services Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Global Financial Services Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Global Financial Services Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the schedule of investments, as of September 30, 2019, and the related statement of operations, statement of changes in net assets, and the financial highlights for the year then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2019, the results of its operations, the changes in its net assets and its financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2019, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli/GAMCO Funds investment companies since 1992.
Philadelphia, Pennsylvania
November 25, 2019
17
The Gabelli Global Financial Services Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling800-GABELLI(800-422-3554) or by writing to The Gabelli Global Financial Services Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office | Number of Funds in Fund Complex | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director4 | ||||||
INTERESTED DIRECTORS3: | ||||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer Age: 77 | Since 1991 | 33 | Chairman, Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer– Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chairman of Associated Capital Group, Inc. | Director of Morgan Group Holdings, Inc. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications)(2013-2018) | ||||||
John D. Gabelli Director Age: 75 | Since 1991 | 12 | Senior Vice President of G.research, LLC | — | ||||||
INDEPENDENT DIRECTORS5: | ||||||||||
Elizabeth C. Bogan Director Age: 75 | Since 2019 | 8 | Senior Lecturer in Economics at Princeton University | — | ||||||
Anthony J. Colavita6 Director Age: 83 | Since 1991 | 20 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||||
Vincent D. Enright Director Age: 75 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics)(2008-2014); Director of The LGL Group, Inc. (diversified manufacturing)(2011-2014) | ||||||
Robert J. Morrissey Director Age: 80 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||||
Kuni Nakamura Director Age: 51 | Since 2009 | 33 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||||
Anthonie C. van Ekris6 Director Age: 85 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/export company) | — | ||||||
Salvatore J. Zizza7 Director Age: 73 | Since 2001 | 31 | President of Zizza & Associates Corp. (private holding company); President of Bergen Cove Realty Inc. (2000-2018); Chairman of Harbor Diversified, Inc. (pharmaceuticals) (2009-2018); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Metropolitan Paper Recycling Inc. (recycling)(2005-2014) | Director and Chairman ofTrans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018) |
18
The Gabelli Global Financial Services Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) and Age | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
Bruce N. Alpert President Age: 67 | Since 1991 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008 | ||
John C. Ball Treasurer Age: 43 | Since 2017 | Treasurer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017; Vice President of State Street Corporation, 2007-2014 | ||
Agnes Mullady Vice President Age: 61 | Since 2006 | Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2006; President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2015; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Executive Vice President of Associated Capital Group, Inc. since 2016 | ||
Andrea R. Mango Secretary Age: 47 | Since 2013 | Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President ofclosed-end funds within the Gabelli/GAMCO Fund Complex since 2014 | ||
Richard J. Walz Chief Compliance Officer Age: 60 | Since 2013 | Chief Compliance Officer of registered investment companies within the Gabelli/GAMCO Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election orre-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’sBy-Laws and Articles of Incorporation. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. |
3 | “Interested person” of the Fund as defined in the 1940 Act. Messers. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. |
4 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli/GAMCO Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
19
THE GABELLI GLOBAL FINANCIAL SERVICES FUND
2019 TAX NOTICE TO SHAREHOLDERS(Unaudited)
During the fiscal year ended September 30, 2019, the Fund paid to shareholders, ordinary income distributions totaling $0.0311, $0.0263, $0.0104, and $0.0355 per share for Class AAA, Class A, Class C, and Class I Shares, respectively. For the fiscal year ended September 30, 2019, 31.39% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 2.17% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010.
U.S. Government Income:
The percentage of the ordinary income distribution paid by the Fund during the fiscal year ended September 30, 2019 which was derived from U.S. Treasury securities was 2.13%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Global Financial Services Fund did not meet this strict requirement in 2019. The percentage of U.S. Government securities held as of September 30, 2019 was 1.28%. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser as to the applicability of the information provided to your specific situation.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
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, telephone number, social security number, bank account number, and other information. |
● | Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you.This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them. |
What information do we disclose and to whom do we disclose it?
We do not disclose 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.
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THE GABELLI GLOBAL FINANCIAL SERVICES FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager Biography
Ian Lapeyjoined Gabelli in October 2018, as a portfolio manager. 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.
Elizabeth C. Bogan Senior Lecturer, Princeton University
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.
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.
GAB3630Q319AR
Item 2. Code of Ethics.
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the registrant’s board of directors has determined that Vincent D. Enright is qualified to serve as an audit committee financial expert serving on its audit committee and that he is “independent.”
Item 4. Principal Accountant Fees and Services.
Audit Fees
(a) | The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $93,500 in 2018 and $109,000 in 2019. |
Audit-Related Fees
(b) | The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $0 in 2018 and $0 in 2019. |
Tax Fees
(c) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $11,400 in 2018 |
and $15,200 in 2019. Tax fees represent tax compliance services provided in connection with the review of the Registrant’s tax returns. |
All Other Fees
(d) | The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $2,859 in 2018 and $4,615 in 2019. The fees relate to Passive Foreign Investment Company identification database subscription fees billed on an annual basis. |
(e)(1) | Disclose the audit committee’spre-approval policies and procedures described in paragraph (c)(7) of Rule2-01 of RegulationS-X. |
Pre-Approval Policies and Procedures. The Audit Committee (“Committee”) of the registrant is responsible forpre-approving (i) all audit and permissiblenon-audit services to be provided by the independent registered public accounting firm to the registrant and (ii) all permissiblenon-audit services to be provided by the independent registered public accounting firm to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC (“Gabelli”) that provides services to the registrant (a “Covered Services Provider”) if the independent registered public accounting firm’s engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility topre-approve any such audit and permissiblenon-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson’spre-approval of such services, his or her decision(s). The Committee may also establish detailedpre-approval policies and procedures forpre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee’spre-approval responsibilities to the other persons (other than Gabelli or the registrant’s officers).Pre-approval by the Committee of any permissiblenon-audit services is not required so long as: (i) the permissiblenon-audit services were not recognized by the registrant at the time of the engagement to benon-audit services; and (ii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit.
(e)(2) | The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule2-01 of RegulationS-X are as follows: |
(b) N/A
(c) 0%
(d) 0%
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
(g) | The aggregatenon-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including anysub-adviser |
whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $14,259 in 2018 and $19,815 in 2019. |
(h) | The registrant’s audit committee of the board of directorshas considered whether the provision ofnon-audit services that were rendered to the registrant’s investment adviser (not including anysub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were notpre-approved pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-X is compatible with maintaining the principal accountant’s independence. |
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
The Gabelli Small Cap Growth Fund
Schedule of Investments — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 101.4% |
| |||||||||||
Aerospace — 2.2% |
| |||||||||||
1,028,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 5,467,203 | $ | 51,924,280 | |||||||
17,000 | Allied Motion Technologies Inc. | 602,528 | 600,270 | |||||||||
40,000 | Innovative Solutions & Support Inc.† | 130,088 | 188,000 | |||||||||
10,000 | Park Aerospace Corp. | 79,205 | 175,600 | |||||||||
|
|
|
| |||||||||
6,279,024 | 52,888,150 | |||||||||||
|
|
|
| |||||||||
Agriculture — 0.0% | ||||||||||||
12,000 | Cadiz Inc.† | 93,950 | 149,880 | |||||||||
4,000 | Limoneira Co. | 93,848 | 73,440 | |||||||||
|
|
|
| |||||||||
187,798 | 223,320 | |||||||||||
|
|
|
| |||||||||
Automotive — 1.4% | ||||||||||||
1,210,000 | Navistar International Corp.† | 32,003,282 | 34,013,100 | |||||||||
13,000 | PACCAR Inc. | 521,581 | 910,130 | |||||||||
|
|
|
| |||||||||
32,524,863 | 34,923,230 | |||||||||||
|
|
|
| |||||||||
Automotive: Parts and Accessories — 3.1% |
| |||||||||||
190,000 | BorgWarner Inc. | 940,966 | 6,969,200 | |||||||||
88,022 | China Automotive Systems Inc.† | 420,368 | 176,044 | |||||||||
1,180,000 | Dana Inc. | 10,511,396 | 17,039,200 | |||||||||
1,120,000 | Freni Brembo SpA | 2,126,449 | 10,913,490 | |||||||||
20,000 | Garrett Motion Inc.† | 197,554 | 199,200 | |||||||||
1,600 | Lear Corp. | 218,349 | 188,640 | |||||||||
658,000 | Modine Manufacturing Co.† | 7,731,539 | 7,481,460 | |||||||||
18,000 | Monro Inc. | 80,738 | 1,422,180 | |||||||||
19,000 | O’Reilly Automotive Inc.† | 408,863 | 7,571,690 | |||||||||
45,000 | Puradyn Filter Technologies Inc.† | 11,732 | 1,339 | |||||||||
148,000 | SORL Auto Parts Inc.† | 685,466 | 467,680 | |||||||||
85,000 | Spartan Motors Inc. | 462,294 | 1,166,200 | |||||||||
200,000 | Standard Motor Products Inc. | 1,551,316 | 9,710,000 | |||||||||
200,000 | Strattec Security Corp.(a) | 4,016,784 | 3,996,000 | |||||||||
228,000 | Superior Industries International Inc. | 3,347,697 | 658,920 | |||||||||
455,000 | Tenneco Inc., Cl. A | 3,570,884 | 5,696,600 | |||||||||
22,500 | Thor Industries Inc. | 208,449 | 1,274,400 | |||||||||
210,000 | Uni-Select Inc. | 3,018,325 | 1,749,934 | |||||||||
|
|
|
| |||||||||
39,509,169 | 76,682,177 | |||||||||||
|
|
|
| |||||||||
Aviation: Parts and Services — 4.6% |
| |||||||||||
26,000 | AAR Corp. | 336,784 | 1,071,460 | |||||||||
9,500 | Astronics Corp.† | 13,628 | 279,110 | |||||||||
22,700 | Astronics Corp., Cl. B† | 31,898 | 665,337 | |||||||||
7,075,000 | BBA Aviation plc | 15,217,291 | 27,158,341 | |||||||||
132,400 | Curtiss-Wright Corp. | 2,178,812 | 17,128,588 | |||||||||
45,000 | Ducommun Inc.† | 912,593 | 1,908,000 | |||||||||
854,000 | Kaman Corp. | 15,871,571 | 50,778,840 | |||||||||
90,000 | Moog Inc., Cl. A | 1,139,951 | 7,300,800 |
Shares | Cost | Market Value | ||||||||||
16,500 | Moog Inc., Cl. B | $ | 496,050 | $ | 1,421,723 | |||||||
50,000 | Woodward Inc. | 551,303 | 5,391,500 | |||||||||
|
|
|
| |||||||||
36,749,881 | 113,103,699 | |||||||||||
|
|
|
| |||||||||
Broadcasting — 1.8% |
| |||||||||||
355,000 | Beasley Broadcast Group Inc., Cl. A | 2,041,704 | 1,100,500 | |||||||||
10,000 | Cogeco Communications Inc. | 340,851 | 805,903 | |||||||||
23,300 | Cogeco Inc. | 592,837 | 1,678,493 | |||||||||
200,000 | Corus Entertainment Inc., Cl. B | 737,530 | 798,581 | |||||||||
40,000 | Fox Corp., Cl. A | 1,662,000 | 1,261,400 | |||||||||
25,000 | Gray Television Inc.† | 73,674 | 408,000 | |||||||||
72,350 | Gray Television Inc., Cl. A† | 386,480 | 1,205,626 | |||||||||
450,000 | ITV plc | 982,182 | 696,598 | |||||||||
17,500 | Liberty Broadband Corp., Cl. A† | 107,647 | 1,829,100 | |||||||||
21,000 | Liberty Broadband Corp., Cl. C† | 115,874 | 2,198,070 | |||||||||
20,000 | Liberty Media Corp.-Liberty Formula One, Cl. A† | 66,962 | 791,800 | |||||||||
32,000 | Liberty Media Corp.-Liberty Formula One, Cl. C† | 109,693 | 1,330,880 | |||||||||
72,000 | Liberty Media Corp.-Liberty SiriusXM, Cl. A† | 242,910 | 2,993,040 | |||||||||
34,000 | Liberty Media Corp.-Liberty SiriusXM, Cl. C† | 104,056 | 1,426,640 | |||||||||
352,000 | MSG Networks Inc., Cl. A† | 2,255,094 | 5,709,440 | |||||||||
79,000 | Nexstar Media Group Inc., Cl. A | 4,846,650 | 8,082,490 | |||||||||
364,000 | Salem Media Group Inc. | 149,746 | 556,920 | |||||||||
160,000 | Sinclair Broadcast Group Inc., Cl. A | 1,221,814 | 6,838,400 | |||||||||
600,000 | Sirius XM Holdings Inc. | 757,079 | 3,753,000 | |||||||||
|
|
|
| |||||||||
16,794,783 | 43,464,881 | |||||||||||
|
|
|
| |||||||||
Building and Construction — 4.6% |
| |||||||||||
86,000 | Arcosa Inc. | 1,072,689 | 2,942,060 | |||||||||
96,000 | Armstrong Flooring Inc.† | 1,594,821 | 613,440 | |||||||||
17,000 | Beazer Homes USA Inc.† | 216,264 | 253,300 | |||||||||
182,000 | D.R. Horton Inc. | 2,065,603 | 9,593,220 | |||||||||
30,000 | Gibraltar Industries Inc.† | 569,070 | 1,378,200 | |||||||||
468,000 | Herc Holdings Inc.† | 15,841,745 | 21,766,680 | |||||||||
158,000 | KB Home | 1,621,709 | 5,372,000 | |||||||||
410,000 | Lennar Corp., Cl. B | 10,106,006 | 18,191,700 | |||||||||
465,000 | Louisiana-Pacific Corp. | 3,858,558 | 11,429,700 | |||||||||
130,000 | MDC Holdings Inc. | 2,629,155 | 5,603,000 | |||||||||
70,000 | Meritage Homes Corp.† | 1,456,142 | 4,924,500 | |||||||||
2,700 | NVR Inc.† | 1,908,453 | 10,036,845 | |||||||||
252,000 | PulteGroup Inc. | 1,698,776 | 9,210,600 | |||||||||
65,000 | Titan Machinery Inc.† | 1,078,654 | 932,100 |
See accompanying notes to financial statements.
1
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Building and Construction (Continued) |
| |||||||||||
250,000 | Toll Brothers Inc. | $ | 4,708,173 | $ | 10,262,500 | |||||||
|
|
|
| |||||||||
50,425,818 | 112,509,845 | |||||||||||
|
|
|
| |||||||||
Business Services — 4.7% |
| |||||||||||
15,000 | ACCO Brands Corp. | 75,774 | 148,050 | |||||||||
700,012 | Clear Channel Outdoor Holdings Inc.† | 2,200,774 | 1,764,030 | |||||||||
547,000 | Diebold Nixdorf Inc.† | 5,886,737 | 6,126,400 | |||||||||
110,000 | Element Solutions Inc.† | 1,069,636 | 1,119,800 | |||||||||
72,000 | GP Strategies Corp.† | 595,984 | 924,480 | |||||||||
13,000 | GSE Systems Inc.† | 18,200 | 21,580 | |||||||||
254,000 | IAA Inc.† | 2,108,165 | 10,599,420 | |||||||||
1,110,000 | Internap Corp.† | 7,803,863 | 2,863,800 | |||||||||
500,000 | Live Nation Entertainment Inc.† | 4,454,869 | 33,170,000 | |||||||||
145,000 | Loomis AB, Cl. B | 1,487,770 | 5,096,480 | |||||||||
175,000 | Macquarie Infrastructure Corp. | 34,359 | 6,907,250 | |||||||||
71,000 | McGrath RentCorp. | 1,887,236 | 4,940,890 | |||||||||
20,000 | Sealed Air Corp. | 587,044 | 830,200 | |||||||||
105,000 | Sohgo Security Services Co. Ltd. | 1,255,920 | 5,496,416 | |||||||||
17,000 | Stamps.com Inc.† | 147,469 | 1,265,650 | |||||||||
340,000 | Team Inc.† | 5,235,883 | 6,137,000 | |||||||||
6,000 | The Brink’s Co. | 104,503 | 497,700 | |||||||||
895,000 | The Interpublic Group of Companies Inc. | 4,715,390 | 19,296,200 | |||||||||
25,000 | TransAct Technologies Inc. | 115,198 | 304,500 | |||||||||
3,240,500 | Trans-Lux Corp.†(a) | 4,679,964 | 1,660,756 | |||||||||
45,000 | United Rentals Inc.† | 492,790 | 5,608,800 | |||||||||
8,000 | Vectrus Inc.† | 163,504 | 325,200 | |||||||||
|
|
|
| |||||||||
45,121,032 | 115,104,602 | |||||||||||
|
|
|
| |||||||||
Cable — 1.0% | ||||||||||||
160,000 | AMC Networks Inc., Cl. A† | 1,836,742 | 7,865,600 | |||||||||
40,057 | DISH Network Corp., Cl. A† | 747,585 | 1,364,742 | |||||||||
30,000 | EchoStar Corp., Cl. A† | 479,334 | 1,188,600 | |||||||||
179,000 | Liberty Global plc, Cl. A† | 4,237,660 | 4,430,250 | |||||||||
400,000 | Liberty Global plc, Cl. C† | 9,273,668 | 9,516,000 | |||||||||
132,000 | WideOpenWest Inc.† | 1,276,827 | 813,120 | |||||||||
|
|
|
| |||||||||
17,851,816 | 25,178,312 | |||||||||||
|
|
|
| |||||||||
Communications Equipment — 0.1% |
| |||||||||||
256,300 | Communications Systems Inc. | 1,771,773 | 1,171,291 | |||||||||
8,000 | Fortinet Inc.† | 137,060 | 614,080 | |||||||||
|
|
|
| |||||||||
1,908,833 | 1,785,371 | |||||||||||
|
|
|
| |||||||||
Computer Software and Services — 2.7% |
| |||||||||||
35,000 | 3D Systems Corp.† | 432,970 | 285,250 | |||||||||
120,000 | Activision Blizzard Inc. | 1,762,962 | 6,350,400 | |||||||||
669,000 | Alithya Group Inc., Cl. A† | 2,545,024 | 2,007,000 |
Shares | Cost | Market Value | ||||||||||
190,000 | Avid Technology Inc.† | $ | 1,146,316 | $ | 1,176,100 | |||||||
358,900 | GTY Technology Holdings Inc.† | 3,523,296 | 2,250,303 | |||||||||
35,500 | InterXion Holding NV† | 511,237 | 2,891,830 | |||||||||
18,000 | MKS Instruments Inc. | 324,981 | 1,661,040 | |||||||||
91,000 | NCR Corp.† | 771,884 | 2,871,960 | |||||||||
74,000 | Rockwell Automation Inc. | 1,803,807 | 12,195,200 | |||||||||
114,000 | Stratasys Ltd.† | 2,652,442 | 2,428,770 | |||||||||
117,900 | Tyler Technologies Inc.† | 316,120 | 30,948,750 | |||||||||
|
|
|
| |||||||||
15,791,039 | 65,066,603 | |||||||||||
|
|
|
| |||||||||
Consumer Products — 2.1% |
| |||||||||||
165,000 | 1-800-Flowers.com Inc., Cl. A† | 425,510 | 2,441,175 | |||||||||
78,000 | Brunswick Corp. | 2,094,741 | 4,065,360 | |||||||||
32,000 | Chofu Seisakusho Co. Ltd. | 461,495 | 707,625 | |||||||||
65,000 | Church & Dwight Co. Inc. | 110,635 | 4,890,600 | |||||||||
17,000 | Energizer Holdings Inc. | 709,960 | 740,860 | |||||||||
36,000 | Ginko International Co. Ltd. | 347,472 | 204,226 | |||||||||
2,000 | Harley-Davidson Inc. | 4,713 | 71,940 | |||||||||
146,500 | Hunter Douglas NV | 6,359,948 | 9,516,823 | |||||||||
2,800 | Kobayashi Pharmaceutical Co. Ltd. | 115,862 | 212,865 | |||||||||
11,000 | LCI Industries | 182,781 | 1,010,350 | |||||||||
265,000 | Marine Products Corp. | 166,856 | 3,752,400 | |||||||||
9,000 | National Presto Industries Inc. | 266,852 | 801,810 | |||||||||
31,000 | Newell Brands Inc. | 402,815 | 580,320 | |||||||||
410,000 | Sally Beauty Holdings Inc.† | 2,673,499 | 6,104,900 | |||||||||
220,000 | Samick Musical Instruments Co. Ltd. | 299,584 | 336,580 | |||||||||
11,000 | Shimano Inc. | 1,261,312 | 1,656,231 | |||||||||
14,000 | Steven Madden Ltd. | 34,457 | 501,060 | |||||||||
139,500 | Swedish Match AB | 2,763,697 | 5,769,013 | |||||||||
25,000 | The ScottsMiracle-Gro Co. | 771,996 | 2,545,500 | |||||||||
19,500 | WD-40 Co. | 533,167 | 3,579,030 | |||||||||
85,000 | Wolverine World Wide Inc. | 413,704 | 2,402,100 | |||||||||
|
|
|
| |||||||||
20,401,056 | 51,890,768 | |||||||||||
|
|
|
| |||||||||
Consumer Services — 1.6% |
| |||||||||||
53,000 | Bowlin Travel Centers Inc.† | 53,947 | 150,785 | |||||||||
2,750 | Collectors Universe Inc. | 0 | 78,320 | |||||||||
20,000 | GCI Liberty Inc., Cl. A† | 180,509 | 1,241,400 | |||||||||
2,000 | H&E Equipment Services Inc. | 55,903 | 57,720 | |||||||||
14,000 | IAC/InterActiveCorp.† | 154,429 | 3,051,580 | |||||||||
260,000 | KAR Auction Services Inc. | 1,330,391 | 6,383,000 | |||||||||
10,000 | Liberty TripAdvisor Holdings Inc., Cl. A† | 94,715 | 94,100 | |||||||||
855,000 | Rollins Inc. | 1,380,863 | 29,129,850 | |||||||||
|
|
|
| |||||||||
3,250,757 | 40,186,755 | |||||||||||
|
|
|
| |||||||||
Diversified Industrial — 8.6% |
| |||||||||||
15,300 | Acuity Brands Inc. | 149,041 | 2,062,287 |
See accompanying notes to financial statements.
2
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Diversified Industrial (Continued) |
| |||||||||||
80,000 | Albany International Corp., Cl. A | $ | 1,682,061 | $ | 7,212,800 | |||||||
146,000 | Ampco-Pittsburgh Corp.† | 1,245,372 | 537,280 | |||||||||
6,000 | Anixter International Inc.† | 57,120 | 414,720 | |||||||||
72,000 | Burnham Holdings Inc., Cl. A | 1,299,193 | 1,026,000 | |||||||||
398,000 | Crane Co. | 9,369,728 | 32,090,740 | |||||||||
126,900 | EnPro Industries Inc. | 7,055,682 | 8,711,685 | |||||||||
115,000 | Greif Inc., Cl. A | 2,267,516 | 4,357,350 | |||||||||
98,200 | Greif Inc., Cl. B | 4,497,967 | 4,473,992 | |||||||||
1,516,400 | Griffon Corp. | 18,226,171 | 31,798,908 | |||||||||
5,500 | Haynes International Inc. | 181,995 | 197,120 | |||||||||
190,000 | Jardine Strategic Holdings Ltd. | 3,487,637 | 5,677,200 | |||||||||
8,000 | JSP Corp. | 178,997 | 131,625 | |||||||||
840,000 | Katy Industries Inc.†(a)(b) | 2,604 | 7,560 | |||||||||
149,000 | Kimball International Inc., Cl. B | 1,476,744 | 2,875,700 | |||||||||
50,000 | L.B. Foster Co., Cl. A† | 642,804 | 1,083,500 | |||||||||
67,000 | Lawson Products Inc.† | 921,325 | 2,594,910 | |||||||||
80,000 | Lincoln Electric Holdings Inc. | 2,119,375 | 6,940,800 | |||||||||
56,000 | Lindsay Corp. | 1,292,962 | 5,199,600 | |||||||||
27,000 | Lydall Inc.† | 286,221 | 672,570 | |||||||||
39,500 | Matthews International Corp., Cl. A | 1,176,085 | 1,397,905 | |||||||||
975,000 | Myers Industries Inc. | 13,675,708 | 17,208,750 | |||||||||
19,000 | nVent Electric plc | 231,864 | 418,760 | |||||||||
114,000 | Oil-Dri Corp. of America | 1,139,505 | 3,882,840 | |||||||||
90,000 | Olin Corp. | 1,693,357 | 1,684,800 | |||||||||
300,000 | Park-Ohio Holdings Corp. | 2,639,467 | 8,958,000 | |||||||||
19,000 | Pentair plc | 495,270 | 718,200 | |||||||||
94,000 | Raven Industries Inc. | 2,319,682 | 3,145,240 | |||||||||
21,500 | Roper Technologies Inc. | 405,805 | 7,666,900 | |||||||||
78,000 | Sonoco Products Co. | 2,325,445 | 4,540,380 | |||||||||
57,000 | Standex International Corp. | 1,528,709 | 4,157,580 | |||||||||
470,000 | Steel Connect Inc.† | 1,612,151 | 813,100 | |||||||||
283,046 | Steel Partners Holdings LP† | 4,778,889 | 3,622,989 | |||||||||
15,000 | T Hasegawa Co. Ltd. | 280,594 | 276,763 | |||||||||
8,000 | Terex Corp. | 190,480 | 207,760 | |||||||||
375,000 | Textron Inc. | 2,313,053 | 18,360,000 | |||||||||
491,000 | Tredegar Corp. | 8,063,497 | 9,584,320 | |||||||||
240,000 | Trinity Industries Inc. | 2,754,686 | 4,723,200 | |||||||||
50,000 | Ultra Electronics Holdings plc | 1,005,460 | 1,243,068 | |||||||||
|
|
|
| |||||||||
105,070,222 | 210,676,902 | |||||||||||
|
|
|
| |||||||||
Educational Services — 0.0% |
| |||||||||||
48,000 | Career Education Corp.† | 274,324 | 762,720 | |||||||||
18,000 | Universal Technical Institute Inc.† | 64,727 | 97,920 | |||||||||
|
|
|
| |||||||||
339,051 | 860,640 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Electronics — 1.7% |
| |||||||||||
174,000 | Badger Meter Inc. | $ | 2,381,257 | $ | 9,343,800 | |||||||
257,000 | Bel Fuse Inc., Cl. A(a) | 5,467,652 | 3,523,470 | |||||||||
545,000 | CTS Corp. | 5,245,019 | 17,636,200 | |||||||||
40,000 | Daktronics Inc. | 362,126 | 295,400 | |||||||||
140,000 | Gentex Corp. | 1,469,860 | 3,854,900 | |||||||||
40,000 | IMAX Corp.† | 583,383 | 878,000 | |||||||||
70,000 | KEMET Corp. | 270,334 | 1,272,600 | |||||||||
50,000 | Renesas Electronics Corp.† | 324,593 | 324,624 | |||||||||
100,000 | Stoneridge Inc.† | 633,084 | 3,097,000 | |||||||||
|
|
|
| |||||||||
16,737,308 | 40,225,994 | |||||||||||
|
|
|
| |||||||||
Energy and Utilities — 5.2% |
| |||||||||||
50,000 | Avangrid Inc. | 1,960,738 | 2,612,500 | |||||||||
17,600 | Black Hills Corp. | 413,795 | 1,350,448 | |||||||||
700,000 | Black Ridge Oil and Gas Inc.† | 7,560 | 12,600 | |||||||||
125,000 | Callon Petroleum Co.† | 789,109 | 542,500 | |||||||||
36,000 | Chesapeake Utilities Corp. | 605,059 | 3,431,520 | |||||||||
37,200 | CMS Energy Corp. | 192,709 | 2,378,940 | |||||||||
21,000 | Connecticut Water Service Inc. | 421,740 | 1,471,260 | |||||||||
11,000 | Consolidated Water Co. Ltd. | 141,093 | 181,390 | |||||||||
145,000 | Covanta Holding Corp. | 139,031 | 2,507,050 | |||||||||
58,000 | Diamondback Energy Inc. | 2,939,384 | 5,214,780 | |||||||||
46,000 | Dril-Quip Inc.† | 1,860,887 | 2,308,280 | |||||||||
200,000 | El Paso Electric Co. | 2,654,561 | 13,416,000 | |||||||||
76,000 | Energy Recovery Inc.† | 328,088 | 704,140 | |||||||||
91,000 | Hawaiian Electric Industries Inc. | 2,298,309 | 4,150,510 | |||||||||
56,111 | KLX Energy Services Holdings Inc.† | 1,395,317 | 485,080 | |||||||||
28,000 | Landis+Gyr Group AG | 1,738,770 | 2,509,494 | |||||||||
25,000 | Marathon Petroleum Corp. | 123,445 | 1,518,750 | |||||||||
37,000 | Middlesex Water Co. | 629,141 | 2,403,520 | |||||||||
60,000 | National Fuel Gas Co. | 3,162,013 | 2,815,200 | |||||||||
15,000 | Northwest Natural Holding Co. | 715,241 | 1,070,100 | |||||||||
39,000 | NorthWestern Corp. | 1,094,371 | 2,926,950 | |||||||||
60,000 | Oceaneering International Inc.† | 930,224 | 813,000 | |||||||||
134,000 | Otter Tail Corp. | 2,854,459 | 7,202,500 | |||||||||
740,000 | PNM Resources Inc. | 7,108,826 | 38,539,200 | |||||||||
1,870,000 | RPC Inc. | 897,227 | 10,490,700 | |||||||||
20,000 | Siemens Gamesa Renewable Energy SA | 117,491 | 271,398 | |||||||||
94,000 | SJW Group | 1,740,116 | 6,419,260 | |||||||||
52,000 | Southwest Gas Holdings Inc. | 879,424 | 4,734,080 | |||||||||
9,500 | Spire Inc. | 374,435 | 828,780 | |||||||||
39,000 | The York Water Co. | 545,703 | 1,702,740 | |||||||||
12,000 | Vestas Wind Systems A/S | 105,150 | 931,627 | |||||||||
|
|
|
| |||||||||
39,163,416 | 125,944,297 | |||||||||||
|
|
|
|
See accompanying notes to financial statements.
3
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Entertainment — 2.5% |
| |||||||||||
4,000 | AMC Entertainment Holdings Inc., Cl. A | $ | 56,832 | $ | 42,800 | |||||||
50,000 | Discovery Inc., Cl. A† | 863,334 | 1,331,500 | |||||||||
79,000 | Discovery Inc., Cl. C† | 524,418 | 1,944,980 | |||||||||
120,000 | Entertainment One Ltd. | 559,951 | 835,106 | |||||||||
4,000 | Eros International plc† | 40,142 | 7,640 | |||||||||
100,010 | Inspired Entertainment Inc.† | 651,343 | 719,072 | |||||||||
6,814 | International Speedway Corp., Cl. B | 167,786 | 303,904 | |||||||||
78,334 | Liberty Media Corp.- Liberty Braves, Cl. A† | 1,724,567 | 2,180,035 | |||||||||
240,000 | Liberty Media Corp.- Liberty Braves, Cl. C† | 3,636,880 | 6,660,000 | |||||||||
13,000 | Lions Gate Entertainment Corp., Cl. A | 265,677 | 120,250 | |||||||||
30,000 | Manchester United plc, Cl. A | 481,746 | 492,900 | |||||||||
42,000 | Take-Two Interactive Software Inc.† | 317,728 | 5,264,280 | |||||||||
101,472 | The Madison Square Garden Co., Cl. A† | 3,913,524 | 26,739,901 | |||||||||
37,500 | The Walt Disney Co. | 215,044 | 4,887,000 | |||||||||
100,000 | Universal Entertainment Corp. | 785,769 | 3,227,746 | |||||||||
76,000 | World Wrestling Entertainment Inc., Cl. A | 801,620 | 5,407,400 | |||||||||
|
|
|
| |||||||||
15,006,361 | 60,164,514 | |||||||||||
|
|
|
| |||||||||
Environmental Services — 0.9% |
| |||||||||||
16,000 | Evoqua Water Technologies Corp.† | 142,093 | 272,320 | |||||||||
260,000 | Republic Services Inc. | 2,460,898 | 22,503,000 | |||||||||
|
|
|
| |||||||||
2,602,991 | 22,775,320 | |||||||||||
|
|
|
| |||||||||
Equipment and Supplies — 12.2% |
| |||||||||||
75,000 | A.O. Smith Corp. | 266,267 | 3,578,250 | |||||||||
469,000 | AMETEK Inc. | 798,046 | 43,063,580 | |||||||||
50,000 | AZZ Inc. | 1,714,863 | 2,178,000 | |||||||||
33,000 | Chart Industries Inc.† | 1,087,096 | 2,057,880 | |||||||||
195,000 | CIRCOR International Inc.† | 3,413,580 | 7,322,250 | |||||||||
390,062 | Core Molding Technologies Inc.† | 1,259,494 | 2,500,297 | |||||||||
153,000 | Crown Holdings Inc.† | 618,169 | 10,107,180 | |||||||||
2,335 | Danaher Corp. | 15,131 | 337,244 | |||||||||
146,000 | Donaldson Co. Inc. | 1,020,482 | 7,603,680 | |||||||||
95,000 | Entegris Inc. | 407,362 | 4,470,700 | |||||||||
620,000 | Federal Signal Corp. | 3,671,528 | 20,298,800 | |||||||||
260,000 | Flowserve Corp. | 1,838,240 | 12,144,600 | |||||||||
285,000 | Franklin Electric Co. Inc. | 1,124,451 | 13,625,850 | |||||||||
654,000 | Graco Inc. | 6,724,688 | 30,110,160 | |||||||||
75,000 | IDEX Corp. | 391,583 | 12,291,000 | |||||||||
336,000 | Interpump Group SpA | 1,852,073 | 10,620,511 | |||||||||
25,000 | Littelfuse Inc. | 406,570 | 4,432,750 |
Shares | Cost | Market Value | ||||||||||
55,000 | Maezawa Kyuso Industries Co. Ltd. | $ | 359,609 | $ | 1,015,815 | |||||||
78,000 | Minerals Technologies Inc. | 3,816,294 | 4,141,020 | |||||||||
6,000 | MSA Safety Inc. | 179,592 | 654,660 | |||||||||
731,000 | Mueller Industries Inc. | 19,524,027 | 20,965,080 | |||||||||
640,000 | Mueller Water Products Inc., Cl. A | 5,217,952 | 7,193,600 | |||||||||
4,000 | Teleflex Inc. | 60,933 | 1,359,000 | |||||||||
247,000 | Tennant Co. | 4,823,743 | 17,462,900 | |||||||||
850,000 | The Gorman-Rupp Co. | 14,113,525 | 29,571,500 | |||||||||
110,000 | The Greenbrier Companies Inc. | 1,383,138 | 3,313,200 | |||||||||
245,308 | The L.S. Starrett Co., Cl. A† | 2,691,675 | 1,422,786 | |||||||||
35,000 | The Manitowoc Co. Inc.† | 419,374 | 437,500 | |||||||||
65,000 | The Middleby Corp.† | 762,356 | 7,598,500 | |||||||||
40,000 | The Timken Co. | 1,374,376 | 1,740,400 | |||||||||
42,000 | The Toro Co. | 737,387 | 3,078,600 | |||||||||
7,500 | Valmont Industries Inc. | 172,236 | 1,038,300 | |||||||||
33,000 | Vicor Corp.† | 165,582 | 974,160 | |||||||||
7,875 | Watsco Inc., Cl. B | 23,627 | 1,342,176 | |||||||||
85,000 | Watts Water Technologies Inc., Cl. A | 1,614,108 | 7,967,050 | |||||||||
|
|
|
| |||||||||
84,049,157 | 298,018,979 | |||||||||||
|
|
|
| |||||||||
Financial Services — 4.0% |
| |||||||||||
9,500 | Alleghany Corp.† | 1,509,327 | 7,578,720 | |||||||||
8,240 | Ameris Bancorp | 71,898 | 331,578 | |||||||||
30,000 | Argo Group International Holdings Ltd. | 626,030 | 2,107,200 | |||||||||
9,400 | BKF Capital Group Inc.† | 148,653 | 115,197 | |||||||||
20,000 | Cadence BanCorp. | 452,411 | 350,800 | |||||||||
12,000 | Capitol Federal Financial Inc. | 120,000 | 165,360 | |||||||||
22,000 | Crazy Woman Creek Bancorp Inc. | 343,564 | 388,080 | |||||||||
6,000 | Eagle Bancorp Inc. | 303,254 | 267,720 | |||||||||
380,000 | Energy Transfer LP | 0 | 4,970,400 | |||||||||
124 | Farmers & Merchants Bank of Long Beach | 810,024 | 985,800 | |||||||||
473,000 | Flushing Financial Corp. | 8,270,280 | 9,556,965 | |||||||||
66,000 | FNB Corp. | 659,922 | 760,980 | |||||||||
330,000 | GAM Holding AG† | 2,416,491 | 1,322,579 | |||||||||
290,000 | Hope Bancorp Inc. | 3,236,117 | 4,158,600 | |||||||||
450,000 | Huntington Bancshares Inc. | 4,307,429 | 6,421,500 | |||||||||
135,000 | Janus Henderson Group plc | 1,831,965 | 3,032,100 | |||||||||
740,000 | �� | KKR & Co. Inc., Cl. A | 3,198,906 | 19,869,000 | ||||||||
2,500 | Manning & Napier Inc. | 10,096 | 4,700 | |||||||||
100,000 | Medallion Financial Corp.† | 521,993 | 640,000 | |||||||||
150,000 | Oritani Financial Corp. | 1,500,000 | 2,654,250 | |||||||||
76,000 | PJT Partners Inc., Cl. A | 2,345,655 | 3,093,200 | |||||||||
56,000 | Pzena Investment Management Inc., Cl. A | 498,969 | 499,520 | |||||||||
3,000 | Rafael Holdings Inc., Cl. B† | 9,542 | 62,880 |
See accompanying notes to financial statements.
4
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Financial Services (Continued) |
| |||||||||||
43,072 | Sandy Spring Bancorp Inc. | $ | 1,493,212 | $ | 1,451,957 | |||||||
20,000 | Sculptor Capital Management Inc. | 539,537 | 389,600 | |||||||||
843 | South State Corp. | 62,077 | 63,478 | |||||||||
20,000 | State Auto Financial Corp. | 523,760 | 647,800 | |||||||||
420,000 | Sterling Bancorp | 4,594,375 | 8,425,200 | |||||||||
93,000 | Synovus Financial Corp. | 2,736,108 | 3,325,680 | |||||||||
4,000 | T. Rowe Price Group Inc. | 108,314 | 457,000 | |||||||||
20,000 | TFS Financial Corp. | 294,262 | 360,400 | |||||||||
135,000 | The Charles Schwab Corp. | 2,136,268 | 5,647,050 | |||||||||
15,000 | Thomasville Bancshares Inc. | 570,703 | 660,300 | |||||||||
40,000 | Value Line Inc. | 539,679 | 910,000 | |||||||||
345,000 | Waddell & Reed Financial Inc., Cl. A | 5,330,303 | 5,927,100 | |||||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 2,500 | |||||||||
133,000 | Wright Investors’ Service Holdings Inc.† | 90,952 | 61,845 | |||||||||
|
|
|
| |||||||||
52,213,449 | 97,667,039 | |||||||||||
|
|
|
| |||||||||
Food and Beverage — 9.1% |
| |||||||||||
435,000 | Arca Continental SAB de CV | 781,512 | 2,358,399 | |||||||||
112,500 | Brown-Forman Corp., Cl. A | 867,033 | 6,721,875 | |||||||||
42,000 | Bull-Dog Sauce Co. Ltd. | 120,234 | 432,721 | |||||||||
2,100,000 | China Tontine Wines Group Ltd.† | 259,341 | 38,583 | |||||||||
212,000 | Chr. Hansen Holding A/S | 8,849,385 | 17,993,825 | |||||||||
350,000 | Cott Corp. | 2,480,553 | 4,364,500 | |||||||||
350,000 | Crimson Wine Group Ltd.† | 3,112,381 | 2,642,500 | |||||||||
2,140,000 | Davide Campari-Milano SpA | 5,743,398 | 19,336,436 | |||||||||
220,000 | Denny’s Corp.† | 699,281 | 5,008,300 | |||||||||
1,500,000 | Dynasty Fine Wines Group Ltd.† | 324,747 | 80,381 | |||||||||
103,440 | Farmer Brothers Co.† | 1,812,771 | 1,339,548 | |||||||||
435,000 | Flowers Foods Inc. | 1,033,955 | 10,061,550 | |||||||||
35,000 | Ingredion Inc. | 666,520 | 2,860,900 | |||||||||
151,000 | ITO EN Ltd. | 3,015,354 | 7,108,347 | |||||||||
92,000 | Iwatsuka Confectionery Co. Ltd. | 3,920,656 | 3,326,890 | |||||||||
23,000 | J & J Snack Foods Corp. | 509,737 | 4,416,000 | |||||||||
146,000 | Kameda Seika Co. Ltd. | 5,952,869 | 6,420,624 | |||||||||
968,000 | Kikkoman Corp. | 9,527,667 | 46,195,422 | |||||||||
8,000 | Lifeway Foods Inc.† | 48,459 | 17,520 | |||||||||
764,000 | Maple Leaf Foods Inc. | 13,395,888 | 17,138,604 | |||||||||
6,000 | MEIJI Holdings Co. Ltd. | 117,526 | 437,272 | |||||||||
35,900 | MGP Ingredients Inc. | 77,267 | 1,783,512 | |||||||||
84,000 | Morinaga Milk Industry Co. Ltd. | 1,670,479 | 3,200,740 | |||||||||
27,000 | National Beverage Corp. | 1,162,091 | 1,197,720 | |||||||||
79,000 | Nissin Foods Holdings Co. Ltd. | 2,696,412 | 5,698,960 |
Shares | Cost | Market Value | ||||||||||
30,000 | Post Holdings Inc.† | $ | 398,255 | $ | 3,175,200 | |||||||
295,000 | Rock Field Co. Ltd. | 2,292,028 | 3,939,699 | |||||||||
13,800 | The Boston Beer Co. Inc., Cl. A† | 278,682 | 5,024,304 | |||||||||
300,000 | The Hain Celestial Group Inc.† | 2,583,475 | 6,442,500 | |||||||||
67,000 | The J.M. Smucker Co. | 1,696,653 | 7,371,340 | |||||||||
700,000 | Tingyi (Cayman Islands) Holding Corp. | 1,518,266 | 986,004 | |||||||||
300,000 | Tootsie Roll Industries Inc. | 5,077,878 | 11,142,000 | |||||||||
25,000 | United Natural Foods Inc.† | 377,460 | 288,000 | |||||||||
420,000 | Vina Concha y Toro SA | 776,193 | 834,643 | |||||||||
1,250,000 | Vitasoy International Holdings Ltd. | 811,574 | 5,063,667 | |||||||||
20,000 | Willamette Valley Vineyards Inc.† | 73,225 | 138,400 | |||||||||
130,000 | Yakult Honsha Co. Ltd. | 3,191,539 | 7,261,965 | |||||||||
|
|
|
| |||||||||
87,920,744 | 221,848,851 | |||||||||||
|
|
|
| |||||||||
Health Care — 5.9% |
| |||||||||||
4,000 | Align Technology Inc.† | 27,902 | 723,680 | |||||||||
8,700 | Bio-Rad Laboratories Inc., Cl. A† | 482,596 | 2,894,838 | |||||||||
17,000 | Bruker Corp. | 152,308 | 746,810 | |||||||||
97,000 | Cantel Medical Corp. | 1,054,471 | 7,255,600 | |||||||||
28,000 | Cardiovascular Systems Inc.† | 778,430 | 1,330,560 | |||||||||
13,200 | Chemed Corp. | 193,044 | 5,511,924 | |||||||||
36,000 | CONMED Corp. | 822,713 | 3,461,400 | |||||||||
34,400 | Covetrus Inc.† | 183,588 | 409,016 | |||||||||
456,000 | Cutera Inc.† | 6,991,983 | 13,328,880 | |||||||||
45,000 | DexCom Inc.† | 310,994 | 6,715,800 | |||||||||
67,000 | Evolent Health Inc., Cl. A† | 968,813 | 481,730 | |||||||||
12,000 | Global Blood Therapeutics Inc.† | 601,602 | 582,240 | |||||||||
192,000 | Globus Medical Inc., Cl. A† | 4,431,625 | 9,815,040 | |||||||||
79,000 | Henry Schein Inc.† | 543,788 | 5,016,500 | |||||||||
3,200 | Heska Corp.† | 21,621 | 226,784 | |||||||||
33,800 | ICU Medical Inc.† | 1,288,061 | 5,394,480 | |||||||||
25,000 | LivaNova plc† | 1,289,648 | 1,844,750 | |||||||||
78,000 | Masimo Corp.† | 1,970,248 | 11,605,620 | |||||||||
1,000 | Melinta Therapeutics Inc.† | 4,359 | 3,810 | |||||||||
91,000 | Meridian Bioscience Inc. | 1,649,558 | 863,590 | |||||||||
25,733 | Neogen Corp.† | 549,687 | 1,752,675 | |||||||||
138,000 | NuVasive Inc.† | 3,956,845 | 8,746,440 | |||||||||
18,000 | Nuvectra Corp.† | 121,490 | 24,480 | |||||||||
176,000 | OPKO Health Inc.† | 485,692 | 367,840 | |||||||||
143,000 | Orthofix Medical Inc.† | 3,331,445 | 7,581,860 | |||||||||
44,000 | Owens & Minor Inc. | 150,471 | 255,640 | |||||||||
46,000 | Patterson Cos. Inc. | 1,026,819 | 819,720 | |||||||||
432,000 | Quidel Corp.† | 4,226,525 | 26,503,200 | |||||||||
165,000 | RTI Surgical Holdings Inc.† | 730,518 | 470,250 | |||||||||
25,000 | Seikagaku Corp. | 292,810 | 261,503 |
See accompanying notes to financial statements.
5
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Health Care (Continued) |
| |||||||||||
35,000 | STERIS plc | $ | 2,608,900 | $ | 5,057,150 | |||||||
1,900 | Straumann Holding AG | 170,618 | 1,553,048 | |||||||||
3,000 | Stryker Corp. | 142,188 | 648,900 | |||||||||
34,000 | SurModics Inc.† | 694,449 | 1,555,160 | |||||||||
32,000 | Teladoc Health Inc.† | 1,074,935 | 2,167,040 | |||||||||
4,000 | The Cooper Companies Inc. | 145,088 | 1,188,000 | |||||||||
40,000 | United-Guardian Inc. | 352,460 | 750,000 | |||||||||
346,000 | Wright Medical Group NV† | 7,116,083 | 7,137,980 | |||||||||
|
|
|
| |||||||||
50,944,375 | 145,053,938 | |||||||||||
|
|
|
| |||||||||
Home Furnishings — 0.3% |
| |||||||||||
208,000 | Bassett Furniture Industries Inc. | 2,261,682 | 3,182,400 | |||||||||
17,000 | Ethan Allen Interiors Inc. | 401,956 | 324,700 | |||||||||
100,000 | La-Z-Boy Inc. | 1,722,802 | 3,359,000 | |||||||||
|
|
|
| |||||||||
4,386,440 | 6,866,100 | |||||||||||
|
|
|
| |||||||||
Hotels and Gaming — 4.3% |
| |||||||||||
475,000 | Boyd Gaming Corp. | 3,848,514 | 11,376,250 | |||||||||
190,000 | Canterbury Park Holding Corp. | 1,954,658 | 2,319,900 | |||||||||
185,000 | Churchill Downs Inc. | 1,906,491 | 22,839,175 | |||||||||
140,000 | Formosa International Hotels Corp. | 969,425 | 712,985 | |||||||||
558,000 | Full House Resorts Inc.† | 1,637,267 | 1,205,280 | |||||||||
64,000 | Gaming and Leisure Properties Inc., REIT | 548,799 | 2,447,360 | |||||||||
1,000,000 | Genting Singapore Ltd. | 969,758 | 636,689 | |||||||||
171,000 | Golden Entertainment Inc.† | 1,549,180 | 2,272,590 | |||||||||
35,000 | Las Vegas Sands Corp. | 124,579 | 2,021,600 | |||||||||
3,000,000 | Mandarin Oriental International Ltd. | 4,216,476 | 4,680,000 | |||||||||
62,000 | Penn National Gaming Inc.† | 1,047,465 | 1,154,750 | |||||||||
452,000 | Ryman Hospitality Properties Inc., REIT | 11,256,699 | 36,978,120 | |||||||||
2,950,000 | The Hongkong & Shanghai Hotels Ltd. | 3,184,911 | 2,871,825 | |||||||||
327,000 | The Marcus Corp. | 3,954,076 | 12,102,270 | |||||||||
22,000 | Wynn Resorts Ltd. | 153,485 | 2,391,840 | |||||||||
|
|
|
| |||||||||
37,321,783 | 106,010,634 | |||||||||||
|
|
|
| |||||||||
Machinery — 1.7% |
| |||||||||||
378,559 | Astec Industries Inc. | 13,369,213 | 11,773,185 | |||||||||
1,630,000 | CNH Industrial NV | 5,353,904 | 16,544,500 | |||||||||
180,000 | Kennametal Inc. | 3,358,415 | 5,533,200 | |||||||||
6,000 | Nordson Corp. | 107,171 | 877,560 | |||||||||
173,000 | The Eastern Co. | 3,390,979 | 4,293,860 | |||||||||
157,100 | Twin Disc Inc.† | 2,261,984 | 1,663,689 | |||||||||
100,000 | Welbilt Inc.† | 513,586 | 1,686,000 | |||||||||
|
|
|
| |||||||||
28,355,252 | 42,371,994 | |||||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Manufactured Housing and Recreational Vehicles — 1.0% |
| |||||||||||
89,800 | Cavco Industries Inc.† | $ | 2,470,478 | $ | 17,249,682 | |||||||
80,000 | Nobility Homes Inc. | 971,207 | 1,884,800 | |||||||||
85,000 | Skyline Champion Corp.† | 500,100 | 2,557,650 | |||||||||
55,000 | Winnebago Industries Inc. | 637,722 | 2,109,250 | |||||||||
|
|
|
| |||||||||
4,579,507 | 23,801,382 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 0.2% |
| |||||||||||
110,000 | Allegheny Technologies Inc.† | 1,793,628 | 2,227,500 | |||||||||
15,000 | Century Aluminum Co.† | 105,873 | 99,525 | |||||||||
45,000 | Ivanhoe Mines Ltd., Cl. A† | 117,783 | 116,843 | |||||||||
100,000 | Kinross Gold Corp.† | 453,144 | 460,000 | |||||||||
7,500 | Materion Corp. | 99,935 | 460,200 | |||||||||
191,000 | TimkenSteel Corp.† | 2,360,333 | 1,201,390 | |||||||||
95,000 | Turquoise Hill Resources Ltd.† | 221,995 | 45,144 | |||||||||
|
|
|
| |||||||||
5,152,691 | 4,610,602 | |||||||||||
|
|
|
| |||||||||
Publishing — 0.8% |
| |||||||||||
3,000 | Graham Holdings Co., Cl. B | 1,379,851 | 1,990,350 | |||||||||
10,000 | John Wiley & Sons Inc., Cl. B | 38,750 | 456,500 | |||||||||
48,000 | Meredith Corp. | 1,348,986 | 1,759,680 | |||||||||
65,000 | News Corp., Cl. A | 91,837 | 904,800 | |||||||||
1,105,000 | The E.W. Scripps Co., Cl. A | 8,535,622 | 14,674,400 | |||||||||
|
|
|
| |||||||||
11,395,046 | 19,785,730 | |||||||||||
|
|
|
| |||||||||
Real Estate — 2.0% |
| |||||||||||
79,000 | Capital Properties Inc., Cl. A | 948,311 | 1,271,900 | |||||||||
90,000 | Cohen & Steers Inc. | 1,606,678 | 4,943,700 | |||||||||
262,157 | Griffin Industrial Realty Inc.(a) | 4,872,521 | 9,948,858 | |||||||||
6,967 | Gyrodyne LLC† | 201,352 | 139,863 | |||||||||
19,500 | Lamar Advertising Co., Cl. A, REIT | 131,608 | 1,597,635 | |||||||||
94,500 | Morguard Corp. | 1,199,459 | 14,729,403 | |||||||||
99,995 | Reading International Inc., Cl. A† | 1,588,434 | 1,195,940 | |||||||||
2,637 | Reading International Inc., Cl. B† | 53,953 | 65,925 | |||||||||
28,000 | Seritage Growth Properties, Cl. A, REIT | 1,174,579 | 1,189,720 | |||||||||
178,000 | Tejon Ranch Co.† | 4,391,647 | 3,020,660 | |||||||||
587,000 | The St. Joe Co.† | 9,647,203 | 10,055,310 | |||||||||
99,000 | Trinity Place Holdings Inc.† | 356,400 | 396,000 | |||||||||
9,369 | Twin River Worldwide Holdings Inc. | 227,634 | 213,894 | |||||||||
|
|
|
| |||||||||
26,399,779 | 48,768,808 | |||||||||||
|
|
|
| |||||||||
Retail — 5.1% | ||||||||||||
36,000 | Aaron’s Inc. | 28,432 | 2,313,360 | |||||||||
186,000 | AutoNation Inc.† | 3,141,842 | 9,430,200 | |||||||||
21,024 | Barnes & Noble Education Inc.† | 156,313 | 65,595 | |||||||||
39,000 | Big 5 Sporting Goods Corp. | 269,314 | 81,120 |
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
Retail (Continued) |
| |||||||||||
3,000 | Biglari Holdings Inc., Cl. A† | $ | 2,572,848 | $ | 1,683,540 | |||||||
3,000 | Casey’s General Stores Inc. | 106,932 | 483,480 | |||||||||
133,000 | Copart Inc.† | 1,136,258 | 10,683,890 | |||||||||
2,500 | Dunkin’ Brands Group Inc. | 47,500 | 198,400 | |||||||||
150,000 | GNC Holdings Inc., Cl. A† | 452,593 | 321,000 | |||||||||
891,223 | Hertz Global Holdings Inc.† | 14,022,881 | 12,334,526 | |||||||||
631,400 | Ingles Markets Inc., Cl. A | 10,214,164 | 24,536,204 | |||||||||
79,100 | Lands’ End Inc.† | 1,320,205 | 897,389 | |||||||||
110,000 | Macy’s Inc. | 1,380,196 | 1,709,400 | |||||||||
85,000 | Movado Group Inc. | 1,429,062 | 2,113,100 | |||||||||
157,000 | Nathan’s Famous Inc. | 241,163 | 11,280,450 | |||||||||
84,000 | Penske Automotive Group Inc. | 1,233,802 | 3,971,520 | |||||||||
93,000 | Pets at Home Group plc | 159,631 | 238,072 | |||||||||
290,000 | Rush Enterprises Inc., Cl. B | 3,282,048 | 11,579,700 | |||||||||
8,500 | Salvatore Ferragamo SpA | 173,169 | 157,081 | |||||||||
379,000 | The Cheesecake Factory Inc. | 10,539,726 | 15,796,720 | |||||||||
133,000 | Tractor Supply Co. | 1,183,505 | 12,028,520 | |||||||||
44,500 | Village Super Market Inc., Cl. A | 1,129,564 | 1,177,025 | |||||||||
70,000 | Vitamin Shoppe Inc.† | 285,151 | 456,400 | |||||||||
57,000 | Weis Markets Inc. | 1,831,840 | 2,173,980 | |||||||||
600 | Winmark Corp. | 41,191 | 105,834 | |||||||||
|
|
|
| |||||||||
56,379,330 | 125,816,506 | |||||||||||
|
|
|
| |||||||||
Specialty Chemicals — 3.0% |
| |||||||||||
88,000 | Albemarle Corp. | 2,765,963 | 6,117,760 | |||||||||
31,000 | Ashland Global Holdings Inc. | 234,735 | 2,388,550 | |||||||||
1,870,000 | Ferro Corp.† | 9,443,558 | 22,178,200 | |||||||||
207,000 | GCP Applied Technologies Inc.† | 5,954,183 | 3,984,750 | |||||||||
91,200 | General Chemical Group Inc.† | 1,186 | 730 | |||||||||
300,000 | H.B. Fuller Co. | 3,956,963 | 13,968,000 | |||||||||
24,000 | Hawkins Inc. | 777,976 | 1,020,000 | |||||||||
84,000 | Huntsman Corp. | 278,555 | 1,953,840 | |||||||||
14,300 | NewMarket Corp. | 1,471,783 | 6,750,887 | |||||||||
11,500 | Quaker Chemical Corp. | 186,963 | 1,818,610 | |||||||||
123,000 | Sensient Technologies Corp. | 2,428,841 | 8,443,950 | |||||||||
24,302 | SGL Carbon SE† | 233,129 | 115,382 | |||||||||
8,000 | Takasago International Corp. | 215,759 | 193,480 | |||||||||
195,400 | Valvoline Inc. | 1,127,348 | 4,304,662 | |||||||||
|
|
|
| |||||||||
29,076,942 | 73,238,801 | |||||||||||
|
|
|
| |||||||||
Telecommunications — 1.2% |
| |||||||||||
35,000 | ATN International Inc. | 1,066,440 | 2,042,950 | |||||||||
230,000 | Cincinnati Bell Inc.† | 2,842,209 | 1,166,100 | |||||||||
80,000 | Consolidated Communications Holdings Inc. | 527,811 | 380,800 | |||||||||
146,000 | Gogo Inc.† | 1,032,449 | 880,380 | |||||||||
220,000 | HC2 Holdings Inc.† | 843,600 | 517,000 | |||||||||
6,000 | IDT Corp., Cl. B† | 25,437 | 63,180 |
Shares | Cost | Market Value | ||||||||||
112,000 | Iridium Communications Inc.† | $ | 1,092,455 | $ | 2,383,360 | |||||||
20,000 | Liberty Latin America Ltd., Cl. A† | 427,136 | 341,400 | |||||||||
65,000 | Liberty Latin America Ltd., Cl. C† | 1,473,711 | 1,111,175 | |||||||||
55,000 | Loral Space & Communications Inc.† | 2,193,920 | 2,277,000 | |||||||||
300,000 | NII Holdings Inc.† | 549,579 | 588,000 | |||||||||
130,000 | Nuvera Communications Inc. | 1,161,754 | 2,684,500 | |||||||||
102,000 | Rogers Communications Inc., Cl. B | 383,758 | 4,970,460 | |||||||||
176,000 | Shenandoah Telecommunications Co. | 626,164 | 5,591,520 | |||||||||
750,000 | VEON Ltd., ADR | 1,669,945 | 1,800,000 | |||||||||
22,000 | Verizon Communications Inc. | 107,086 | 1,327,920 | |||||||||
|
|
|
| |||||||||
16,023,454 | 28,125,745 | |||||||||||
|
|
|
| |||||||||
Transportation — 1.5% |
| |||||||||||
460,000 | GATX Corp. | 13,731,576 | 35,663,800 | |||||||||
18,600 | Irish Continental Group plc | 13,660 | 84,742 | |||||||||
134,000 | Navigator Holdings Ltd.† | 1,602,641 | 1,431,120 | |||||||||
|
|
|
| |||||||||
15,347,877 | 37,179,662 | |||||||||||
|
|
|
| |||||||||
Wireless Communications — 0.3% |
| |||||||||||
78,000 | Millicom International Cellular SA, SDR | 4,193,787 | 3,784,296 | |||||||||
58,000 | United States Cellular Corp.† | 2,250,369 | 2,179,640 | |||||||||
|
|
|
| |||||||||
6,444,156 | 5,963,936 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 981,705,200 | 2,478,784,087 | ||||||||||
|
|
|
| |||||||||
CLOSED-END FUNDS — 0.2% |
| |||||||||||
75,000 | MVC Capital Inc. | 653,952 | 667,500 | |||||||||
79,500 | The Central Europe, Russia, and Turkey Fund Inc. | 2,201,431 | 2,067,000 | |||||||||
31,977 | The European Equity Fund Inc. | 318,173 | 284,595 | |||||||||
118,000 | The New Germany Fund Inc. | 1,635,088 | 1,635,480 | |||||||||
|
|
|
| |||||||||
TOTALCLOSED-END FUNDS | 4,808,644 | 4,654,575 | ||||||||||
|
|
|
| |||||||||
PREFERRED STOCKS — 0.1% |
| |||||||||||
Automotive: Parts and Accessories — 0.1% |
| |||||||||||
125,500 | Jungheinrich AG | 861,591 | 2,705,691 | |||||||||
|
|
|
| |||||||||
RIGHTS — 0.0% |
| |||||||||||
Entertainment — 0.0% |
| |||||||||||
1,680,000 | Media General Inc., | 2 | 2 | |||||||||
|
|
|
| |||||||||
Health Care — 0.0% |
| |||||||||||
290,000 | Sanofi, CVR† | 256,986 | 165,300 | |||||||||
|
|
|
|
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2019
Shares | Cost | Market Value | ||||||||||
RIGHTS (Continued) | ||||||||||||
Specialty Chemicals — 0.0% |
| |||||||||||
65,000 | A. Schulman Inc., CVR†(b) | $ | 33,995 | $ | 33,995 | |||||||
|
|
|
| |||||||||
TOTAL RIGHTS | 290,983 | 199,297 | ||||||||||
|
|
|
| |||||||||
TOTAL MISCELLANEOUS INVESTMENTS — 0.0%(c) | 502,233 | 515,100 | ||||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 101.7% | $ | 988,168,651 | 2,486,858,750 | |||||||||
|
| |||||||||||
Other Assets and Liabilities (Net) — (1.7)% |
| (40,650,648 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0% | $ | 2,446,208,102 | ||||||||||
|
|
(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) | Represents previously undisclosed, unrestricted securities which the Fund has held for less than one year. |
† | 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.
8
The Gabelli Small Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Small Cap Growth Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements and Schedule of Investments in Securities
We have audited the accompanying statement of assets and liabilities of The Gabelli Small Cap Growth Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the summary schedule of investments, as of September 30, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”) (the financial statements are included in Item 1 of this FormN-CSR), and the schedule of investments in securities as of September 30, 2019 (included in Item 6 of this FormN-CSR). In our opinion, the financial statements and schedule of investments in securities present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and schedule of investments in securities are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements and schedule of investments in securities based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule of investments in securities are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and schedule of investments in securities, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and schedule of investments in securities. Our procedures included confirmation of securities owned as of September 30, 2019, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule of investments in securities. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli/GAMCO Funds investment companies since 1992.
Philadelphia, Pennsylvania
November 25, 2019
9
(b) | Not applicable due to no such divestments during the semi-annual period covered since the previous FormN-CSR filing. |
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 inRule 30a-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 byRule 30a-3(b) under the 1940 Act (17 CFR270.30a-3(b)) andRules 13a-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 inRule 30a-3(d) under the 1940 Act (17 CFR270.30a-3(d))) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | Disclosure of Securities Lending Activities forClosed-End Management Investment Companies. |
Not applicable.
Item 13. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to 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 12/04/2019 |
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 12/04/2019 | ||||
By (Signature and Title)* /s/ John C. Ball | ||||
John C. Ball, Principal Financial Officer and Treasurer | ||||
Date 12/04/2019 |
* Print the name and title of each signing officer under his or her signature.