UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06367
Gabelli Equity Series Funds, Inc.
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: September 30
Date of reporting period: March 31, 2022
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 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.
(a) | The Report to Shareholders is attached herewith. |
The Gabelli Equity Income Fund
Semiannual Report — March 31, 2022
To Our Shareholders,
For the six months ended March 31, 2022, the net asset value (NAV) total return per Class AAA Share of The Gabelli Equity Income Fund was 4.8% compared with a total return of 5.9% 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 March 31, 2022.
Investment Objective and Strategy (Unaudited)
The Fund seeks to provide a high level of total return on its assets with an emphasis on income. 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. In making stock selections, Gabelli Funds, LLC, the Adviser, looks for securities that have a better yield than the average of the S&P 500 Index, as well as capital gains potential.
Performance Discussion (Unaudited)
In mid 2021, the Federal Reserve was saying that inflation was “transitory”. However, by the end of the first quarter of 2022 with inflation numbers hitting 40 year highs, almost nobody believes that inflation is “transitory,” including the Federal Reserve. In fact, the Fed is now starting to take aggressive steps both to raise short term interest rates, and to reduce the size of the Federal Reserve’s balance sheet, in efforts to fight inflation. Energy costs have risen dramatically as a result of the ongoing war in Ukraine, and now food prices are starting to move up also, along with most other prices.
For the last six months, the two best performing sectors in the S&P 500 were the Energy sector, which was up over 40%, and the Utility sector which was a more modest amount. Rising energy costs for both oil and natural gas drove strong performance in the energy sector. During the last six months, the 2 year Treasury note yield moved up from 0.28% at the end of September to 2.82% at the end of March. We continue to focus on companies that we believe will be able to raise prices and adjust to an inflationary environment.
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 call 800-422-3554 or send an email request to info@gabelli.com. |
While the Fund overall advanced during the last six months, there were a number of stocks that performed very well in (y)our portfolio. One of them was GATX (2.1% of net assets at March 31, 2022), the global railcar lessor company, which owns fleets in North America and around the globe. With supply chain strains across the world, demand for rail services to move goods is in high demand right now. Another top performer over the last six months was Chevron (1.2%), the second largest integrated energy company in the United States. Rising energy prices were a major catalyst for all energy companies, including Chevron. Another top performer was Newmont (1.9%), the gold mining company. With inflation now at 40 year highs, investors have renewed interest in gold stocks as a hedge against inflation.
On the laggard side of performance during the last six months, there was Dish Networks (0.7%), the satellite company with significant wireless licenses. They plan to build out a 5G network and the cost of that build out is putting short term pressure on the stock. We think the wireless licenses that Dish owns are significantly undervalued at the current stock price. Another stock that struggled over the last six months was Fortune Brands Home and Security (0.5%). With interest rates starting to rise, mortgage rates for new homes are starting to move up also and investors are concerned home improvement projects might slow down with higher rates. Finally, ITO EN (1.1%), a large Japanese beverage company was also a laggard during the last six months.
We appreciate your confidence and trust.
The views expressed reflect the opinions of the Fund’s portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
2
Comparative Results
Average Annual Returns through March 31, 2022 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Since Inception | ||||||||||||||||||
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | (1/2/92) | |||||||||||||
Class AAA (GABEX) | 4.84 | % | 10.39 | % | 9.23 | % | 9.44 | % | 7.28 | % | 9.83 | % | ||||||
S&P 500 Index (c) | 5.92 | 15.65 | 15.99 | 14.64 | 10.26 | 10.39 | ||||||||||||
Lipper Equity Income Fund Average (c) | 8.35 | 13.77 | 11.30 | 11.32 | 7.70 | 8.92 | ||||||||||||
Class A (GCAEX) (d) | 4.81 | 10.36 | 9.23 | 9.44 | 7.28 | 9.83 | ||||||||||||
With sales charge (e) | (1.21 | ) | 4.01 | 7.94 | 8.79 | 6.86 | 9.61 | |||||||||||
Class C (GCCEX) (d) | 4.47 | 9.69 | 8.43 | 8.63 | 6.49 | 9.34 | ||||||||||||
With contingent deferred sales charge (f) | 3.47 | 8.69 | 8.43 | 8.63 | 6.49 | 9.34 | ||||||||||||
Class I (GCIEX) (d) | 4.98 | 10.66 | 9.51 | 9.71 | 7.54 | 9.96 |
(a) | The Fund’s fiscal year ends September 30. |
(b) | The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. |
(c) | 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. Inception performance is as of December 31, 1991. The Lipper Equity Income Fund Average includes the 30 largest equity funds in this category tracked by Lipper, Inc. Dividends are considered reinvested. You cannot invest directly in an index. |
(d) | 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. |
(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. |
In the current prospectuses dated January 28, 2022, the expense ratios for Class AAA, A, and I Shares are 1.42%, 1.42%, and 1.17%, respectively. See page 12 for the expense ratios for the six months ended March 31, 2022. Class AAA and Class I Shares do not have a sales charge. The maximum sales charge for Class A Shares is 5.75%.
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.
Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. 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.
3
The Gabelli Equity Income Fund For the Six Month Period from October 1, 2021 through March 31, 2022 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Beginning Account Value 10/01/21 | Ending Account Value 03/31/22 | Annualized Expense Ratio | Expenses Paid During Period * | ||||
The Gabelli Equity Income Fund | |||||||
Actual Fund Return | |||||||
Class AAA | $1,000.00 | $1,048.40 | 1.42% | $ | 7.25 | ||
Class A | $1,000.00 | $1,048.10 | 1.42% | $ | 7.25 | ||
Class C | $1,000.00 | $1,044.70 | 2.17% | $ | 11.06 | ||
Class I | $1,000.00 | $1,049.80 | 1.17% | $ | 5.98 | ||
Hypothetical 5% Return | |||||||
Class AAA | $1,000.00 | $1,017.85 | 1.42% | $ | 7.14 | ||
Class A | $1,000.00 | $1,017.85 | 1.42% | $ | 7.14 | ||
Class C | $1,000.00 | $1,014.11 | 2.17% | $ | 10.90 | ||
Class I | $1,000.00 | $1,019.10 | 1.17% | $ | 5.89 |
*
| Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2022:
The Gabelli Equity Income Fund
Food and Beverage | 16.3 | % | ||
Financial Services | 14.0 | % | ||
Consumer Products | 6.2 | % | ||
Diversified Industrial | 5.5 | % | ||
Retail | 5.2 | % | ||
Health Care | 4.8 | % | ||
Equipment and Supplies | 4.7 | % | ||
Automotive: Parts and Accessories | 4.3 | % | ||
Telecommunications | 4.0 | % | ||
Machinery | 4.0 | % | ||
Business Services | 3.7 | % | ||
Energy and Utilities: Oil | 3.0 | % | ||
Metals and Mining | 2.5 | % | ||
Computer Software and Services | 2.3 | % | ||
Energy and Utilities: Natural Gas | 2.3 | % | ||
Entertainment | 2.3 | % | ||
Transportation | 2.1 | % | ||
Electronics | 2.1 | % | ||
Building and Construction | 1.9 | % | ||
Computer Hardware | 1.8 | % | ||
Specialty Chemicals | 0.9 | % |
Agriculture | 0.9 | % | ||
Cable and Satellite | 0.8 | % | ||
Energy and Utilities: Services | 0.6 | % | ||
Energy and Utilities: Integrated | 0.6 | % | ||
Aerospace | 0.6 | % | ||
Real Estate Investment Trusts | 0.5 | % | ||
Energy and Utilities: Electric | 0.5 | % | ||
Communications Equipment | 0.3 | % | ||
Broadcasting | 0.2 | % | ||
Energy and Utilities: Water | 0.2 | % | ||
Environmental Services | 0.2 | % | ||
Automotive | 0.2 | % | ||
Consumer Services | 0.1 | % | ||
Hotels and Gaming | 0.1 | % | ||
Wireless Communications | 0.1 | % | ||
Paper and Forest Products | 0.1 | % | ||
Publishing | 0.0 | %* | ||
Other Assets and Liabilities (Net) | 0.1 | % | ||
100.0 | % |
* Amount represents less than 0.05%. |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-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 calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Equity Income Fund
Schedule of Investments — March 31, 2022 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS — 99.9% | ||||||||||||
Aerospace — 0.6% | ||||||||||||
2,000 | Lockheed Martin Corp. | $ | 47,350 | $ | 882,800 | |||||||
8,200 | Rockwell Automation Inc. | 246,347 | 2,296,246 | |||||||||
293,697 | 3,179,046 | |||||||||||
Agriculture — 0.9% | ||||||||||||
50,000 | Archer-Daniels-Midland Co. | 1,281,567 | 4,513,000 | |||||||||
11,200 | The Mosaic Co. | 173,883 | 744,800 | |||||||||
1,455,450 | 5,257,800 | |||||||||||
Automotive — 0.2% | ||||||||||||
10,000 | PACCAR Inc. | 386,268 | 880,700 | |||||||||
Automotive: Parts and Accessories — 4.3% | ||||||||||||
76,000 | Dana Inc. | 1,193,901 | 1,335,320 | |||||||||
185,000 | Genuine Parts Co.(a) | 8,275,339 | 23,313,700 | |||||||||
9,469,240 | 24,649,020 | |||||||||||
Broadcasting — 0.2% | ||||||||||||
45,000 | Liberty Global plc, Cl. A† | 1,033,770 | 1,147,950 | |||||||||
9,000 | Liberty Global plc, Cl. C† | 195,254 | 233,190 | |||||||||
1,229,024 | 1,381,140 | |||||||||||
Building and Construction — 1.9% | ||||||||||||
30,000 | Carrier Global Corp. | 254,819 | 1,376,100 | |||||||||
40,500 | Fortune Brands Home & Security Inc. | 400,623 | 3,008,340 | |||||||||
22,700 | Herc Holdings Inc. | 691,235 | 3,792,943 | |||||||||
47,000 | Johnson Controls International plc | 844,848 | 3,081,790 | |||||||||
2,191,525 | 11,259,173 | |||||||||||
Business Services — 3.7% | ||||||||||||
11,000 | Automatic Data Processing Inc. | 525,972 | 2,502,940 | |||||||||
26,500 | Mastercard Inc., Cl. A | 530,111 | 9,470,570 | |||||||||
2,400 | MSC Industrial Direct Co. Inc., Cl. A | 165,490 | 204,504 | |||||||||
32,000 | Pentair plc | 622,795 | 1,734,720 | |||||||||
18,800 | S&P Global Inc. | 821,917 | 7,711,384 | |||||||||
2,666,285 | 21,624,118 | |||||||||||
Cable and Satellite — 0.8% | ||||||||||||
129,000 | DISH Network Corp., Cl. A† | 2,343,605 | 4,082,850 | |||||||||
16,000 | EchoStar Corp., Cl. A† | 389,202 | 389,440 | |||||||||
10,000 | Liberty Media Corp. - Liberty Braves, Cl. A† | 286,769 | 287,800 | |||||||||
3,019,576 | 4,760,090 | |||||||||||
Communications Equipment — 0.3% | ||||||||||||
42,000 | Corning Inc. | 481,575 | 1,550,220 | |||||||||
Computer Hardware — 1.8% | ||||||||||||
40,000 | Apple Inc. | 732,404 | 6,984,400 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
26,000 | International Business Machines Corp. | $ | 2,071,253 | $ | 3,380,520 | |||||||
2,803,657 | 10,364,920 | |||||||||||
Computer Software and Services — 2.3% | ||||||||||||
90,000 | Hewlett Packard Enterprise Co. | 509,279 | 1,503,900 | |||||||||
37,500 | Microsoft Corp. | 1,047,750 | 11,561,625 | |||||||||
1,557,029 | 13,065,525 | |||||||||||
Consumer Products — 6.2% | ||||||||||||
6,000 | Edgewell Personal Care Co. | 182,805 | 220,020 | |||||||||
48,000 | Energizer Holdings Inc. | 1,205,437 | 1,476,480 | |||||||||
30,000 | Essity AB, Cl. A | 529,907 | 711,521 | |||||||||
1,000 | National Presto Industries Inc. | 30,628 | 76,950 | |||||||||
34,000 | Reckitt Benckiser Group plc | 1,008,398 | 2,604,810 | |||||||||
3,860,000 | Swedish Match AB | 4,858,861 | 29,098,613 | |||||||||
41,000 | Unilever plc, ADR | 818,025 | 1,868,370 | |||||||||
8,634,061 | 36,056,764 | |||||||||||
Consumer Services — 0.1% | ||||||||||||
1,600 | Allegion plc | 19,252 | 175,648 | |||||||||
15,000 | Rollins Inc. | 14,913 | 525,750 | |||||||||
34,165 | 701,398 | |||||||||||
Diversified Industrial — 5.5% | ||||||||||||
78,000 | Crane Co. | 2,384,873 | 8,445,840 | |||||||||
34,000 | Eaton Corp. plc | 1,256,618 | 5,159,840 | |||||||||
1,500 | Honeywell International Inc. | 32,160 | 291,870 | |||||||||
8,824 | Ingersoll Rand Inc. | 46,675 | 444,289 | |||||||||
48,000 | ITT Inc. | 961,318 | 3,610,080 | |||||||||
36,000 | Jardine Matheson Holdings Ltd. | 1,819,621 | 1,980,000 | |||||||||
22,000 | nVent Electric plc | 230,823 | 765,160 | |||||||||
108,000 | Textron Inc. | 841,688 | 8,033,040 | |||||||||
154,000 | Toray Industries Inc. | 1,030,504 | 808,076 | |||||||||
8,000 | Trane Technologies plc | 137,872 | 1,221,600 | |||||||||
22,000 | Trinity Industries Inc. | 290,669 | 755,920 | |||||||||
9,032,821 | 31,515,715 | |||||||||||
Electronics — 2.1% | ||||||||||||
6,500 | Sony Group Corp. | 138,865 | 679,686 | |||||||||
30,000 | Sony Group Corp., ADR | 682,008 | 3,081,300 | |||||||||
48,500 | TE Connectivity Ltd. | 1,600,853 | 6,352,530 | |||||||||
10,000 | Texas Instruments Inc. | 147,000 | 1,834,800 | |||||||||
2,568,726 | 11,948,316 | |||||||||||
Energy and Utilities: Electric — 0.5% | ||||||||||||
7,500 | Avangrid Inc. | 210,171 | 350,550 | |||||||||
20,000 | Korea Electric Power Corp., ADR† | 236,921 | 186,200 | |||||||||
8,000 | Portland General Electric Co. | 334,816 | 441,200 |
See accompanying notes to financial statements.
6
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2022 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Energy and Utilities: Electric (Continued) | ||||||||||||
63,000 | The AES Corp. | $ | 291,918 | $ | 1,620,990 | |||||||
1,073,826 | 2,598,940 | |||||||||||
Energy and Utilities: Integrated — 0.6% | ||||||||||||
50,000 | Energy Transfer LP | 35,299 | 559,500 | |||||||||
21,000 | Eni SpA | 220,487 | 308,836 | |||||||||
6,500 | Iberdrola SA, ADR | 98,020 | 283,790 | |||||||||
57,000 | OGE Energy Corp. | 760,843 | 2,324,460 | |||||||||
1,114,649 | 3,476,586 | |||||||||||
Energy and Utilities: Natural Gas — 2.3% | ||||||||||||
106,000 | National Fuel Gas Co. | 4,708,628 | 7,282,200 | |||||||||
11,500 | ONE Gas Inc. | 48,202 | 1,014,760 | |||||||||
59,000 | ONEOK Inc. | 30,168 | 4,167,170 | |||||||||
7,500 | Southwest Gas Holdings Inc. | 153,948 | 587,175 | |||||||||
4,940,946 | 13,051,305 | |||||||||||
Energy and Utilities: Oil — 3.0% | ||||||||||||
44,000 | Chevron Corp. | 1,742,912 | 7,164,520 | |||||||||
4,500 | ConocoPhillips | 82,502 | 450,000 | |||||||||
7,200 | Devon Energy Corp. | 73,144 | 425,736 | |||||||||
12,000 | Exxon Mobil Corp. | 312,521 | 991,080 | |||||||||
58,200 | Hess Corp. | 2,786,612 | 6,229,728 | |||||||||
18,000 | Marathon Petroleum Corp. | 234,717 | 1,539,000 | |||||||||
13,500 | TotalEnergies SE, ADR | 230,259 | 682,290 | |||||||||
5,462,667 | 17,482,354 | |||||||||||
Energy and Utilities: Services — 0.6% | ||||||||||||
84,000 | Halliburton Co. | 1,527,900 | 3,181,080 | |||||||||
10,000 | Schlumberger NV | 240,037 | 413,100 | |||||||||
1,767,937 | 3,594,180 | |||||||||||
Energy and Utilities: Water — 0.2% | ||||||||||||
4,200 | Essential Utilities Inc. | 30,961 | 214,746 | |||||||||
20,000 | Severn Trent plc | 504,722 | 808,683 | |||||||||
535,683 | 1,023,429 | |||||||||||
Entertainment — 2.3% | ||||||||||||
40,000 | Grupo Televisa SAB, ADR | 381,710 | 468,000 | |||||||||
6,000 | Madison Square Garden Entertainment Corp.† | 128,559 | 499,860 | |||||||||
2,500 | Madison Square Garden Sports Corp.† | 301,304 | 448,400 | |||||||||
286,500 | Paramount Global, Cl. A | 6,852,305 | 11,577,465 | |||||||||
7,663,878 | 12,993,725 | |||||||||||
Environmental Services — 0.2% | ||||||||||||
7,500 | Republic Services Inc. | 284,610 | 993,750 | |||||||||
Equipment and Supplies — 4.7% | ||||||||||||
7,000 | A.O. Smith Corp. | 18,652 | 447,230 | |||||||||
14,000 | Danaher Corp. | 406,841 | 4,106,620 | |||||||||
158,000 | Flowserve Corp. | 1,981,245 | 5,672,200 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
50,000 | Graco Inc. | $ | 853,683 | $ | 3,486,000 | |||||||
18,500 | Minerals Technologies Inc. | 703,572 | 1,223,775 | |||||||||
146,400 | Mueller Industries Inc. | 2,739,855 | 7,930,488 | |||||||||
15,000 | Parker-Hannifin Corp. | 809,385 | 4,256,400 | |||||||||
7,513,233 | 27,122,713 | |||||||||||
Financial Services — 14.0% | ||||||||||||
2,200 | Alleghany Corp.† | 325,436 | 1,863,400 | |||||||||
19,000 | AllianceBernstein Holding LP | 19,393 | 893,380 | |||||||||
19,000 | American Express Co. | 459,057 | 3,553,000 | |||||||||
20,000 | Ameris Bancorp | 211,974 | 877,600 | |||||||||
4,500 | Argo Group International Holdings Ltd. | 82,366 | 185,760 | |||||||||
5,195 | Banco Santander Chile, ADR | 29,250 | 117,355 | |||||||||
125,000 | Bank of America Corp. | 823,246 | 5,152,500 | |||||||||
12,000 | BNP Paribas SA | 513,665 | 689,371 | |||||||||
40,500 | Interactive Brokers Group Inc., Cl. A | 604,122 | 2,669,355 | |||||||||
15,000 | Jefferies Financial Group Inc. | 263,160 | 492,750 | |||||||||
8,500 | JPMorgan Chase & Co. | 164,948 | 1,158,720 | |||||||||
51,000 | Julius Baer Group Ltd. | 1,644,750 | 2,973,735 | |||||||||
21,000 | Kinnevik AB, Cl. A† | 509,320 | 567,302 | |||||||||
63,500 | Loews Corp. | 2,344,007 | 4,116,070 | |||||||||
11,200 | M&T Bank Corp. | 956,465 | 1,898,400 | |||||||||
16,200 | Marsh & McLennan Companies Inc. | 445,081 | 2,760,804 | |||||||||
10,000 | Morgan Stanley | 497,929 | 874,000 | |||||||||
5,800 | Popular Inc. | 93,651 | 474,092 | |||||||||
64,000 | SLM Corp. | 311,552 | 1,175,040 | |||||||||
122,000 | State Street Corp. | 5,565,671 | 10,628,640 | |||||||||
6,000 | T. Rowe Price Group Inc. | 122,374 | 907,140 | |||||||||
297,000 | The Bank of New York Mellon Corp.(a) | 7,458,271 | 14,740,110 | |||||||||
15,000 | The Goldman Sachs Group Inc. | 1,887,537 | 4,951,500 | |||||||||
24,300 | The PNC Financial Services Group Inc. | 1,914,956 | 4,482,135 | |||||||||
53,000 | Valley National Bancorp | 331,250 | 690,060 | |||||||||
118,000 | Webster Financial Corp. | 2,730,948 | 6,622,160 | |||||||||
113,000 | Wells Fargo & Co. | 3,182,298 | 5,475,980 | |||||||||
33,492,677 | 80,990,359 | |||||||||||
Food and Beverage — 16.3% | ||||||||||||
1,000 | Anheuser-Busch InBev SA/ NV | 15,876 | 60,025 | |||||||||
206,000 | Brown-Forman Corp., Cl. A | 3,510,324 | 12,924,440 | |||||||||
34,000 | Campbell Soup Co. | 1,061,533 | 1,515,380 | |||||||||
19,000 | Coca-Cola Europacific Partners plc | 427,500 | 923,590 | |||||||||
10,000 | Coca-Cola Femsa SAB de CV, ADR | 340,562 | 549,500 |
See accompanying notes to financial statements.
7
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2022 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Food and Beverage (Continued) | ||||||||||||
6,000 | Constellation Brands Inc., Cl. A | $ | 74,420 | $ | 1,381,920 | |||||||
35,000 | Danone SA | 1,347,433 | 1,937,099 | |||||||||
35,000 | Davide Campari-Milano NV | 117,659 | 408,676 | |||||||||
49,500 | Diageo plc, ADR | 3,063,927 | 10,055,430 | |||||||||
81,500 | Fomento Economico Mexicano SAB de CV, ADR | 1,986,761 | 6,752,275 | |||||||||
1,000 | General Mills Inc. | 26,640 | 67,720 | |||||||||
1,740,000 | Grupo Bimbo SAB de CV, Cl. A | 1,394,485 | 5,248,869 | |||||||||
93,000 | Heineken NV | 4,417,436 | 8,907,459 | |||||||||
132,000 | ITO EN Ltd. | 2,344,495 | 6,516,511 | |||||||||
17,500 | Kellogg Co. | 910,204 | 1,128,575 | |||||||||
4,000 | McCormick & Co. Inc. | 137,120 | 400,000 | |||||||||
31,500 | McCormick & Co. Inc., Non-Voting | 680,896 | 3,143,700 | |||||||||
34,000 | Mondelēz International Inc., Cl. A | 612,479 | 2,134,520 | |||||||||
32,200 | Nestlé SA | 660,986 | 4,188,561 | |||||||||
54,000 | Nissin Foods Holdings Co. Ltd. | 1,657,298 | 3,801,380 | |||||||||
31,300 | PepsiCo Inc. | 2,107,123 | 5,238,994 | |||||||||
23,800 | Pernod Ricard SA | 2,337,623 | 5,247,320 | |||||||||
31,200 | Remy Cointreau SA | 1,660,939 | 6,454,305 | |||||||||
30,000 | Sapporo Holdings Ltd. | 664,276 | 568,507 | |||||||||
10,000 | The Coca-Cola Co. | 208,400 | 620,000 | |||||||||
1,000 | The Hershey Co. | 36,300 | 216,630 | |||||||||
50,000 | The Kraft Heinz Co. | 1,403,471 | 1,969,500 | |||||||||
32,000 | Yakult Honsha Co. Ltd. | 799,840 | 1,713,816 | |||||||||
34,006,006 | 94,074,702 | |||||||||||
Health Care — 4.8% | ||||||||||||
4,000 | Abbott Laboratories | 91,738 | 473,440 | |||||||||
3,000 | AbbVie Inc. | 74,560 | 486,330 | |||||||||
3,500 | Alcon Inc. | 116,706 | 277,655 | |||||||||
75,000 | Baxter International Inc. | 1,657,103 | 5,815,500 | |||||||||
4,400 | Bio-Rad Laboratories Inc., Cl. A† | 432,651 | 2,478,212 | |||||||||
88,000 | Bristol-Myers Squibb Co. | 2,117,918 | 6,426,640 | |||||||||
69,500 | Demant A/S† | 672,691 | 3,162,802 | |||||||||
8,000 | GlaxoSmithKline plc, ADR | 327,365 | 348,480 | |||||||||
29,700 | Henry Schein Inc.† | 306,559 | 2,589,543 | |||||||||
16,000 | Merck & Co. Inc. | 283,402 | 1,312,800 | |||||||||
12,000 | Novartis AG, ADR | 585,253 | 1,053,000 | |||||||||
1,600 | Organon & Co. | 12,725 | 55,888 | |||||||||
20,000 | Pfizer Inc. | 320,152 | 1,035,400 | |||||||||
42,500 | Roche Holding AG, ADR | 781,653 | 2,099,925 | |||||||||
1,700 | Zimmer Biomet Holdings Inc. | 122,484 | 217,430 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
170 | Zimvie Inc.† | $ | 3,097 | $ | 3,883 | |||||||
7,906,057 | 27,836,928 | |||||||||||
Hotels and Gaming — 0.1% | ||||||||||||
12,000 | MGM Resorts International | 144,776 | 503,280 | |||||||||
1,500 | Wynn Resorts Ltd.† | 71,983 | 119,610 | |||||||||
216,759 | 622,890 | |||||||||||
Machinery — 4.0% | ||||||||||||
6,000 | Caterpillar Inc. | 35,181 | 1,336,920 | |||||||||
48,500 | Deere & Co. | 1,583,529 | 20,149,810 | |||||||||
9,500 | Otis Worldwide Corp. | 365,921 | 731,025 | |||||||||
8,700 | Xylem Inc. | 278,890 | 741,762 | |||||||||
2,263,521 | 22,959,517 | |||||||||||
Metals and Mining — 2.5% | ||||||||||||
78,000 | Freeport-McMoRan Inc. | 881,709 | 3,879,720 | |||||||||
136,500 | Newmont Corp. | 3,244,212 | 10,844,925 | |||||||||
4,125,921 | 14,724,645 | |||||||||||
Paper and Forest Products — 0.1% | ||||||||||||
21,500 | Svenska Cellulosa AB SCA, Cl. A | 89,315 | 417,085 | |||||||||
Publishing — 0.0% | ||||||||||||
3,000 | Value Line Inc. | 41,976 | 201,000 | |||||||||
Real Estate Investment Trusts — 0.5% | ||||||||||||
8,300 | Indus Realty Trust Inc. | 233,069 | 606,647 | |||||||||
66,000 | Weyerhaeuser Co. | 1,038,594 | 2,501,400 | |||||||||
1,271,663 | 3,108,047 | |||||||||||
Retail — 5.2% | ||||||||||||
14,000 | Cie Financiere Richemont SA, Cl. A | 470,500 | 1,787,782 | |||||||||
23,500 | Copart Inc.† | 207,477 | 2,948,545 | |||||||||
7,200 | Costco Wholesale Corp. | 331,059 | 4,146,120 | |||||||||
89,000 | CVS Health Corp. | 2,975,871 | 9,007,690 | |||||||||
55,000 | Ingles Markets Inc., Cl. A | 860,778 | 4,897,750 | |||||||||
70,000 | Seven & i Holdings Co. Ltd. | 2,096,532 | 3,342,451 | |||||||||
4,000 | The Home Depot Inc. | 111,052 | 1,197,320 | |||||||||
59,000 | Walgreens Boots Alliance Inc. | 1,805,941 | 2,641,430 | |||||||||
1,000 | Walmart Inc. | 43,340 | 148,920 | |||||||||
8,902,550 | 30,118,008 | |||||||||||
Specialty Chemicals — 0.9% | ||||||||||||
2,700 | Albemarle Corp. | 27,305 | 597,105 | |||||||||
2,500 | Ashland Global Holdings Inc. | 58,813 | 246,025 | |||||||||
7,200 | FMC Corp. | 149,971 | 947,304 | |||||||||
44,000 | H.B. Fuller Co. | 908,899 | 2,907,080 | |||||||||
2,000 | NewMarket Corp. | 7,719 | 648,760 | |||||||||
600 | Quaker Chemical Corp. | 6,478 | 103,686 | |||||||||
1,159,185 | 5,449,960 |
See accompanying notes to financial statements.
8
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2022 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Telecommunications — 4.0% | ||||||||||||
105,000 | BCE Inc. | $ | 2,004,577 | $ | 5,823,300 | |||||||
190,000 | Deutsche Telekom AG, ADR | 2,540,249 | 3,537,800 | |||||||||
12,000 | Orange SA, ADR | 138,547 | 141,840 | |||||||||
2,500 | Proximus SA | 46,757 | 46,601 | |||||||||
65,000 | Telefonica SA, ADR | 274,093 | 312,000 | |||||||||
122,000 | Telephone and Data Systems Inc. | 3,241,741 | 2,303,360 | |||||||||
94,000 | TELUS Corp. | 713,431 | 2,457,160 | |||||||||
170,000 | Verizon Communications Inc.(a) | 5,905,545 | 8,659,800 | |||||||||
14,864,940 | 23,281,861 | |||||||||||
Transportation — 2.1% | ||||||||||||
100,000 | GATX Corp. | 3,162,200 | 12,333,000 | |||||||||
Wireless Communications — 0.1% | ||||||||||||
76,000 | BT Group plc, Cl. A | 211,724 | 181,904 | |||||||||
17,000 | Telesat Corp.† | 812,770 | 280,500 | |||||||||
205 | Telesat Corp., New York† | 3,342 | 3,382 |
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
20,000 | Turkcell Iletisim Hizmetleri A/S, ADR | $ | 91,562 | $ | 77,800 | |||||||
1,119,398 | 543,586 | |||||||||||
TOTAL COMMON STOCKS | 188,802,696 | 577,192,515 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Retail — 0.0% | ||||||||||||
28,000 | Cie Financiere Richemont SA, expire 11/22/23† | 0 | 22,120 | |||||||||
TOTAL INVESTMENTS — 99.9% | $ | 188,802,696 | 577,214,635 | |||||||||
Other Assets and Liabilities (Net) — 0.1% | 818,892 | |||||||||||
NET ASSETS — 100.0% | $ | 578,033,527 |
(a) | Securities, or a portion thereof, with a value of $22,691,750 were deposited with Pershing LLC. |
† | Non-income producing security. |
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
9
The Gabelli Equity Income Fund
Statement of Assets and Liabilities
March 31, 2022 (Unaudited)
Assets: | ||||
Investments, at value (cost $188,802,696) | $ | 577,214,635 | ||
Cash | 3,247 | |||
Foreign currency, at value (cost $58,847) | 58,538 | |||
Receivable for investments sold | 543,854 | |||
Receivable for Fund shares sold | 397,802 | |||
Dividends and interest receivable | 1,352,569 | |||
Prepaid expenses | 43,496 | |||
Total Assets | 579,614,141 | |||
Liabilities: | ||||
Line of credit payable | 443,000 | |||
Payable for investments purchased | 3,342 | |||
Payable for Fund shares redeemed | 271,314 | |||
Payable for investment advisory fees | 484,607 | |||
Payable for distribution fees | 122,584 | |||
Payable for accounting fees | 3,750 | |||
Payable for shareholder communications | 115,111 | |||
Payable for shareholder services fees | 79,919 | |||
Other accrued expenses | 56,987 | |||
Total Liabilities | 1,580,614 | |||
Net Assets | ||||
(applicable to 57,383,536 shares outstanding) | $ | 578,033,527 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 193,084,286 | ||
Total distributable earnings | 384,949,241 | |||
Net Assets | $ | 578,033,527 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($289,862,252 ÷ 26,908,389 shares outstanding; 150,000,000 shares authorized) | $ | 10.77 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($111,780,887 ÷ 10,542,558 shares outstanding; 50,000,000 shares authorized) | $ | 10.60 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 11.25 | ||
Class C: | ||||
Net Asset Value and redemption price per share ($45,448,149 ÷ 9,336,156 shares outstanding; 50,000,000 shares authorized) | $ | 4.87 | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($130,942,239 ÷ 10,596,433 shares outstanding; 50,000,000 shares authorized) | $ | 12.36 |
Statement of Operations
For the Six Months Ended March 31, 2022 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $100,988) | $ | 5,295,607 | ||
Interest | 202 | |||
Total Investment Income | 5,295,809 | |||
Expenses: | ||||
Investment advisory fees | 2,946,387 | |||
Distribution fees - Class AAA | 373,402 | |||
Distribution fees - Class A | 136,811 | |||
Distribution fees - Class C | 244,412 | |||
Shareholder services fees | 221,418 | |||
Shareholder communications expenses | 70,389 | |||
Custodian fees | 51,332 | |||
Legal and audit fees | 33,297 | |||
Registration expenses | 32,185 | |||
Accounting fees | 22,500 | |||
Directors’ fees | 22,077 | |||
Interest expense | 11,612 | |||
Miscellaneous expenses | 24,604 | |||
Total Expenses | 4,190,426 | |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (2,845 | ) | ||
Net Expenses | 4,187,581 | |||
Net Investment Income | 1,108,228 | |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments | 33,288,710 | |||
Net realized gain on foreign currency transactions | 6,695 | |||
Net realized gain on investments and foreign currency transactions | 33,295,405 | |||
Net change in unrealized appreciation/depreciation: on investments | (6,555,673 | ) | ||
on foreign currency translations | (3,513 | ) | ||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (6,559,186 | ) | ||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 26,736,219 | |||
Net Increase in Net Assets Resulting from Operations | $ | 27,844,447 |
See accompanying notes to financial statements.
10
The Gabelli Equity Income Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2022 (Unaudited) | Year Ended September 30, 2021 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,108,228 | $ | 3,696,072 | ||||
Net realized gain on investments and foreign currency transactions | 33,295,405 | 68,927,126 | ||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (6,559,186 | ) | 82,921,021 | |||||
Net Increase in Net Assets Resulting from Operations | 27,844,447 | 155,544,219 | ||||||
Distributions to Shareholders: | ||||||||
Accumulated earnings | ||||||||
Class AAA | (16,131,061 | )* | (33,908,511 | ) | ||||
Class A | (6,039,992 | )* | (10,265,934 | ) | ||||
Class C | (5,616,333 | )* | (11,014,210 | ) | ||||
Class I | (6,267,704 | )* | (14,518,170 | ) | ||||
(34,055,090 | ) | (69,706,825 | ) | |||||
Return of capital | ||||||||
Class AAA | — | (23,401,915 | ) | |||||
Class A | — | (8,046,305 | ) | |||||
Class C | — | (7,915,693 | ) | |||||
Class I | — | (8,957,061 | ) | |||||
— | (48,320,974 | ) | ||||||
Total Distributions to Shareholders | (34,055,090 | ) | (118,027,799 | ) | ||||
Capital Share Transactions: | ||||||||
Class AAA | (5,698,385 | ) | 1,047,718 | |||||
Class A | 14,090,402 | 25,393,934 | ||||||
Class C | (2,155,685 | ) | 1,702,442 | |||||
Class I | (3,205,753 | ) | (11,136,577 | ) | ||||
Net Increase in Net Assets from Capital Share Transactions | 3,030,579 | 17,007,517 | ||||||
Redemption Fees | 175 | 215 | ||||||
Net Increase/(Decrease) in Net Assets | (3,179,889 | ) | 54,524,152 | |||||
Net Assets: | ||||||||
Beginning of year | 581,213,416 | 526,689,264 | ||||||
End of period | $ | 578,033,527 | $ | 581,213,416 |
* Based on year to date book income. Amounts are subject to change and recharacterization at year end.
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 period:
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 and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Return of Capital | Total Distributions | Redemption Fees(a)(b) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income (Loss) | Operating Expenses(c)(d) | Portfolio Turnover Rate | |||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||
2022(e) | $ | 10.85 | $ | 0.02 | $ | 0.50 | $ | 0.52 | $ | (0.60 | )* | $ | — | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 10.77 | 4.84 | % | $ | 289,863 | 0.38 | %(f) | 1.42 | %(f) | 0 | %(g) | ||||||||||||
2021 | 10.04 | 0.07 | 3.00 | 3.07 | (0.08 | ) | (1.24 | ) | (0.94 | ) | (2.26 | ) | 0.00 | 10.85 | 31.32 | 297,369 | 0.64 | 1.42 | 1 | |||||||||||||||||||||||||
2020 | 13.61 | 0.10 | (h) | (0.02 | ) | 0.08 | (0.11 | ) | (2.39 | ) | (1.15 | ) | (3.65 | ) | 0.00 | 10.04 | 0.93 | 272,980 | 0.75 | (h) | 1.45 | 0 | (g) | |||||||||||||||||||||
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 | (g) | ||||||||||||||||||||||||
2017 | 24.06 | 0.24 | 2.97 | 3.21 | (0.25 | ) | (3.33 | ) | (0.85 | ) | (4.43 | ) | 0.00 | 22.84 | 13.91 | 662,696 | 0.97 | 1.39 | 1 | |||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||
2022(e) | $ | 10.69 | $ | 0.02 | $ | 0.49 | $ | 0.51 | $ | (0.60 | )* | $ | — | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 10.60 | 4.81 | % | $ | 111,781 | 0.39 | %(f) | 1.42 | %(f) | 0 | %(g) | ||||||||||||
2021 | 9.92 | 0.08 | 2.95 | 3.03 | (0.08 | ) | (1.24 | ) | (0.94 | ) | (2.26 | ) | 0.00 | 10.69 | 31.31 | 98,631 | 0.65 | 1.42 | 1 | |||||||||||||||||||||||||
2020 | 13.49 | 0.10 | (h) | (0.02 | ) | 0.08 | (0.11 | ) | (2.39 | ) | (1.15 | ) | (3.65 | ) | 0.00 | 9.92 | 0.95 | 69,201 | 0.75 | (h) | 1.45 | 0 | (g) | |||||||||||||||||||||
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 | (g) | ||||||||||||||||||||||||
2017 | 23.96 | 0.24 | 2.96 | 3.20 | (0.25 | ) | (3.33 | ) | (0.85 | ) | (4.43 | ) | 0.00 | 22.73 | 13.92 | 115,702 | 0.96 | 1.39 | 1 | |||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||
2022(e) | $ | 5.24 | $ | (0.01 | ) | $ | 0.24 | $ | 0.23 | $ | (0.60 | )* | $ | — | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 4.87 | 4.47 | % | $ | 45,448 | (0.38 | )%(f) | 2.17 | %(f) | 0 | %(g) | |||||||||||
2021 | 5.81 | (0.01 | ) | 1.70 | 1.69 | (0.05 | ) | (1.24 | ) | (0.97 | ) | (2.26 | ) | 0.00 | 5.24 | 30.29 | 51,140 | (0.12 | ) | 2.17 | 1 | |||||||||||||||||||||||
2020 | 9.48 | 0.00 | (b)(h) | (0.02 | ) | (0.02 | ) | (0.06 | ) | (2.39 | ) | (1.20 | ) | (3.65 | ) | 0.00 | 5.81 | 0.27 | 53,605 | 0.00 | (h)(i) | 2.20 | 0 | (g) | ||||||||||||||||||||
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 | )(i) | 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 | (g) | ||||||||||||||||||||||||
2017 | 20.99 | 0.05 | 2.56 | 2.61 | (0.10 | ) | (3.33 | ) | (1.00 | ) | (4.43 | ) | 0.00 | 19.17 | 13.04 | 246,690 | 0.22 | 2.14 | 1 | |||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||
2022(e) | $ | 12.35 | $ | 0.04 | $ | 0.57 | $ | 0.61 | $ | (0.60 | )* | $ | — | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 12.36 | 4.98 | % | $ | 130,942 | 0.63 | %(f) | 1.17 | %(f) | 0 | %(g) | ||||||||||||
2021 | 11.15 | 0.12 | 3.34 | 3.46 | (0.11 | ) | (1.24 | ) | (0.91 | ) | (2.26 | ) | 0.00 | 12.35 | 31.71 | 134,073 | 0.89 | 1.17 | 1 | |||||||||||||||||||||||||
2020 | 14.68 | 0.14 | (h) | (0.02 | ) | 0.12 | (0.14 | ) | (2.39 | ) | (1.12 | ) | (3.65 | ) | 0.00 | 11.15 | 1.14 | 130,903 | 1.00 | (h) | 1.20 | 0 | (g) | |||||||||||||||||||||
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 | (g) | ||||||||||||||||||||||||
2017 | 24.80 | 0.31 | 3.07 | 3.38 | (0.31 | ) | (3.33 | ) | (0.79 | ) | (4.43 | ) | 0.00 | 23.75 | 14.19 | 443,912 | 1.21 | 1.14 | 1 |
* | Based on year to date book income. Amounts are subject to change and recharacterization at year end. |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | 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 all periods presented. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.41%, 1.41%, 1.42%, 1.40%, 1.39%, and 1.38% (Class AAA and Class A), 2.16%, 2.16%, 2.17%, 2.15%, 2.14%, and 2.13% (Class C), and 1.16%, 1.16%, 1.17%, 1.15%, 1.14%, and 1.13% (Class I), respectively. |
(d) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For all periods, there was no impact on the expense ratios. |
(e) | For the six months ended March 31, 2022, unaudited. |
(f) | Annualized. |
(g) | Amount represents less than 0.5%. |
(h) | Includes income resulting from special dividends. Without these dividends, the per share income (loss) amounts would have been $0.09 (Class AAA and Class A), $(0.01) (Class C), and $0.13 (Class I), respectively, and the net investment income (loss) ratio would have been 0.68% (Class AAA and Class A), (0.07)% (Class C), and 0.93% (Class I), respectively. |
(i) | Amount represents less than 0.005%. |
See accompanying notes to financial statements.
12
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Equity Income Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the 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.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
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 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 of 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 and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S.
13
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of March 31, 2022 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 03/31/22 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks | ||||||||||||
Wireless Communications | $ | 263,086 | $ | 280,500 | $ | 543,586 | ||||||
Other Industries (a) | 576,648,929 | — | 576,648,929 | |||||||||
Total Common Stocks | 576,912,015 | 280,500 | 577,192,515 | |||||||||
Warrants (a) | 22,120 | — | 22,120 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 576,934,135 | $ | 280,500 | $ | 577,214,635 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at March 31, 2022 or September 30, 2021.
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
14
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
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.
Securities Sold Short. The Fund enters into short sale transactions. Short selling involves selling securities that may or may not be owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of an open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The broker retains collateral for the value of the open positions, which is adjusted periodically as the value of the position fluctuates. At March 31, 2022, there were no short sales outstanding.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
15
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
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 the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2022, the Fund did not hold any 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 an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. 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. These reclassifications have no impact on the NAV of the Fund.
16
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
The tax character of distributions paid during the fiscal year ended September 30, 2021 was as follows:
Distributions paid from: | ||||
Ordinary income | $ | 4,817,998 | ||
Net long term capital gains | 67,752,576 | |||
Return of capital | 48,320,974 | |||
Total distributions paid* | $ | 120,891,548 |
* | Total distributions paid differs from the Statement of Changes in Net Assets due to the utilization of equalization. |
The Fund has a fixed distribution policy. Under the policy, the Fund declares and pays monthly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the calendar year. Pursuant to this policy, distributions during the calendar year are made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board continues to evaluate its distribution policy in light of ongoing economic and market conditions and may change the amount of the monthly distributions in the future.
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2022:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $190,567,639 | $390,295,249 | $(3,648,253) | $386,646,996 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2022, the Fund did not incur any income tax, interest, or penalties. As of March 31, 2022, 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
17
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Directors of the Fund who are affiliated persons of the Adviser.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2022, other than short term securities and U.S. Government obligations, aggregated $2,733,538 and $43,886,508, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2022, the Fund paid $3,102 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $45,894 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of fund shares.
During the six months ended March 31, 2022, 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 $2,845.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2022, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on March 1, 2023 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 bank 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 135 basis points or the Overnight Bank Funding Rate plus 135 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At March 31, 2022, there was $443,000 outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the six months ended March 31, 2022 was $2,176,732 with a weighted average interest rate of 1.36%. The maximum amount borrowed at any time during the six months ended March 31, 2022 was $12,402,000.
8. Capital Stock. The Fund offers three classes of shares – Class AAA Shares, Class A Shares, and Class I Shares. Effective January 3, 2022, (the Effective Date) the Fund’s Class C shares were “closed to purchases from new investors.” “Closed to purchases from new investors” means neither new investors nor existing shareholders may purchase any additional Class C shares after the Effective Date. These changes will have no effect on existing shareholders’ ability to redeem shares of the Fund as described in the Fund’s Prospectus. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum
18
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
front-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 in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2022 and the fiscal year ended September 30, 2021, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Six Months Ended March 31, 2022 (Unaudited) | Year Ended September 30, 2021 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 339,414 | $ | 3,752,360 | 719,191 | $ | 8,391,443 | ||||||||||
Shares issued upon reinvestment of distributions | 1,425,576 | 15,590,245 | 4,944,370 | 55,696,708 | ||||||||||||
Shares redeemed | (2,255,015 | ) | (25,040,990 | ) | (5,455,710 | ) | (63,040,433 | ) | ||||||||
Net increase/(decrease) | (490,025 | ) | $ | (5,698,385 | ) | 207,851 | $ | 1,047,718 | ||||||||
Class A | ||||||||||||||||
Shares sold | 1,826,109 | $ | 19,724,024 | 3,025,728 | $ | 34,701,143 | ||||||||||
Shares issued upon reinvestment of distributions | 531,196 | 5,717,016 | 1,538,993 | 17,114,296 | ||||||||||||
Shares redeemed | (1,039,497 | ) | (11,350,638 | ) | (2,318,146 | ) | (26,421,505 | ) | ||||||||
Net increase | 1,317,808 | $ | 14,090,402 | 2,246,575 | $ | 25,393,934 | ||||||||||
Class C | ||||||||||||||||
Shares sold | 1,024,796 | $ | 5,423,547 | 1,812,023 | $ | 11,756,248 | ||||||||||
Shares issued upon reinvestment of distributions | 1,079,488 | 5,486,358 | 3,201,433 | 18,582,717 | ||||||||||||
Shares redeemed | (2,527,894 | ) | (13,065,590 | ) | (4,487,597 | ) | (28,636,523 | ) | ||||||||
Net increase/(decrease) | (423,610 | ) | $ | (2,155,685 | ) | 525,859 | $ | 1,702,442 | ||||||||
Class I | ||||||||||||||||
Shares sold | 821,730 | $ | 10,462,757 | 1,707,653 | $ | 22,716,891 | ||||||||||
Shares issued upon reinvestment of distributions | 495,802 | 6,197,367 | 1,824,386 | 23,208,214 | ||||||||||||
Shares redeemed | (1,576,868 | ) | (19,865,877 | ) | (4,414,403 | ) | (57,061,682 | ) | ||||||||
Net decrease | (259,336 | ) | $ | (3,205,753 | ) | (882,364 | ) | $ | (11,136,577 | ) |
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.
19
The Gabelli Equity Income Fund
Liquidity Risk Management Program (Unaudited)
In accordance with Rule 22e-4 under the 1940 Act, the Fund has established a liquidity risk management program (the LRM Program) to govern its approach to managing liquidity risk. The LRM Program is administered by the Liquidity Committee (the Committee), which is comprised of members of Gabelli Funds, LLC management. The Board has designated the Committee to administer the LRM Program.
The LRM Program’s principal objectives include supporting the Fund’s compliance with limits on investments in illiquid assets and mitigating the risk that the Fund will be unable to meet its redemption obligations in a timely manner. The LRM Program also includes elements that support the management and assessment of liquidity risk, including an annual assessment of factors that influence the Fund’s liquidity and the monthly classification and re-classification of certain investments that reflect the Committee’s assessment of their relative liquidity under current market conditions.
At a meeting of the Board held on May 12, 2021, the Board received a written report from the Committee regarding the design and operational effectiveness of the LRM Program. The Committee determined, and reported to the Board, that the LRM Program is reasonably designed to assess and manage the Fund’s liquidity risk and has operated adequately and effectively since its implementation. The Committee reported that there were no liquidity events that impacted the Fund or its ability to timely meet redemptions without dilution to existing shareholders. The Committee noted that the Fund is primarily invested in highly liquid securities and, accordingly, continues to be exempt from the requirement to determine a “highly liquid investment minimum” as defined in the Rule 22e-4. Because of that continued qualification for the exemption, the Fund has not adopted a “highly liquid investment minimum” amount. The Committee further noted that while changes to the LRM Program were made during the Review Period and reported to the Board, no material changes were made to the LRM Program as a result of the Committee’s annual review.
There can be no assurance that the LRM Program will achieve its objectives in the future. Please refer to the Fund’s Prospectus for more information regarding its exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
20
The Gabelli Equity Income Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)
During the six months ended March 31, 2022, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser, and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2021) of the Fund against a peer group of seven other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional equity income funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Equity Income Index. The Independent Board Members noted that the Fund’s performance was in the fourth quartile for the one year period, the second quartile for the three year period, and the third quartile for the five year period, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the fourth quintile for the one year and five year periods and the third quintile for the three year period. The Independent Board Members discussed the recent improvements in the Fund’s performance and the steps the Adviser was taking to continue to improve the Fund’s performance.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a peer group of eighteen other equity income funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratio was above average within both groups. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
21
The Gabelli Equity Income Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services and good ancillary services. The Independent Board Members noted the reasons for the Fund’s underperformance and the steps the Adviser was taking to improve performance and indicated that they would continue to evaluate the Fund. The Independent Board Members also concluded that the Fund’s expense ratios and the profitability to the Adviser of managing the Fund were acceptable and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend the continuation of the investment management agreements to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
22
THE GABELLI EQUITY INCOME FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager’s 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.
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 Values 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 Former 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
Peter Goldstein Secretary and Vice President
Richard J. Walz Chief Compliance Officer
Daniel Plourde Vice President
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.
GAB444Q122SR
The Gabelli Small Cap Growth Fund
Semiannual Report — March 31, 2022
Mario J. Gabelli, CFA, | Gordon Grender |
To Our Shareholders,
For the six months ended March 31, 2022, the net asset value (NAV) total return per Class AAA Share of The Gabelli Small Cap Growth Fund was 1.7% compared with a total return of (0.3)% for the Standard & Poor’s (S&P) SmallCap 600 Index. Other classes of shares are available. See page 3 for performance information for all classes.
Enclosed are the financial statements, including the summary schedule of investments, as of March 31, 2022.
Investment Objective and Strategy
The Fund invests primarily in small cap companies, that through bottom-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.
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 call 800-422-3554 or send an email request to info@gabelli.com. |
Performance Discussion (Unaudited)
The winter surge in COVID cases to end 2021 had us feeling that we have passed this way before. Volatility also returned, due in part to the emergence of the Omicron variant, exacerbated by the anticipated removal of fiscal and monetary support for the economy. Workers benefited from a tight labor market but suffered through a jump in the cost of just about everything. In-person gatherings, work, commerce, and sporting events resumed, and medical innovation laid the groundwork for society to live alongside COVID rather than in fear of it.
Markets declined in the first quarter of 2022 with the S&P SmallCap 600 Index falling 5.6%, the first quarterly drop since the severe market downturn in Q1 2020 when COVID-19 was first detected in the U.S. Two years of a macro environment underpinned by economic reopening and expansion was finally replaced by one with significantly elevated inflation, rising interest rates, and the first major war in Europe in over 70 years. The human toll of these events is horrific and tragic, and the economic costs are also significant and borne unequally by companies.
The combination of inflation, lapsing fiscal stimulus, and tighter monetary conditions would argue for both lower earnings growth and lower multiples. Earnings have so far remained resilient, as consumer and corporate demand is strong and price increases are generally going through, but the cure for higher prices may ultimately be higher prices, i.e., demand destruction and a possible recession.
We continue to use bottom-up research to seek excellent businesses that are trading below Private Market Value with one or more catalysts in place to surface value. M&A and financial engineering activity continue to be robust. We hold a diversified portfolio of quality companies that share many attributes: revenue growth prospects, high and growing margins, strong free cash flow generation, and pricing power. While the outlook for the market is uncertain, we don’t buy the market – we are bottom-up investors and buy individual stocks, and we are bullish on the prospects for our holdings.
GATX Corp (2.46% of net assets as of March 31, 2022), a global railcar lessor, outperformed expectations and was the lead performer in the Fund for the six months ended March 31, 2022. Cutera, Inc. (1.49%), the provider of face and body laser, light, and other energy based aesthetic systems, also performed well. Cutera’s stock price benefitted from the FDA’s clearance in the first quarter of AviClear, laser treatment for cases of mild, moderate, and severe acne. Also performing well in the period was RPC, Inc. (1.04%), an oil and gas service company that provides a broad range of oilfield services and equipment for the exploration, production, and development of oil and gas properties throughout the United States.
Of the laggards in the Fund, the worst performing was Griffon Corporation (1.42%), a provider of consumer and professional, home and building products through its subsidiaries. Griffon has been struggling to overcome labor, transportation, and supply chain challenges brought on by the pandemic. Dana Inc. (1.06%), a supplier of axles, drivelines, and thermal products for the automotive and trucking industries, also underperformed over the last six months. Finally, Astec Industries (0.79%), a manufacturer of asphalt and paving materials and equipment, struggled with the same supply chain issues that have plagued Griffon and other companies.
The views expressed reflect the opinions of the Fund’s portfolio managers and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
2
Comparative Results
Average Annual Returns through March 31, 2022 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | Since Inception (10/22/91) | |||||||||||||
Class AAA (GABSX) | 1.65 | % | 4.93 | % | 9.29 | % | 10.77 | % | 8.65 | % | 12.10 | % | ||||||
S&P SmallCap 600 Index (c) | (0.30 | ) | 1.23 | 10.89 | 12.56 | 9.50 | N/A | |||||||||||
Lipper Small-Cap Core Funds Average (c) | 0.01 | 1.90 | 10.17 | 11.06 | 8.30 | N/A | ||||||||||||
Class A (GCASX) (d) | 1.66 | 4.94 | 9.29 | 10.77 | 8.65 | 12.10 | ||||||||||||
With sales charge (e) | (4.19 | ) | (1.10 | ) | 8.01 | 10.12 | 8.22 | 11.89 | ||||||||||
Class C (GCCSX) (d) | 1.28 | 4.15 | 8.48 | 9.95 | 7.84 | 11.61 | ||||||||||||
With contingent deferred sales charge (f) | 0.28 | 3.15 | 8.48 | 9.95 | 7.84 | 11.61 | ||||||||||||
Class I (GACIX) (d) | 1.78 | 5.18 | 9.57 | 11.05 | 8.91 | 12.24 |
(a) | The Fund’s fiscal year ends September 30. |
(b) | The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. |
(c) | The S&P SmallCap 600 Index is an unmanaged indicator which measures the performance of the small-cap segment of the U.S. equity market. The inception date of the index is December 31, 1994. The Lipper Small-Cap Core Funds Average reflects the average performance of mutual funds classified in this particular category. The inception date of the index is December 31, 1991. Dividends are considered reinvested. You cannot invest directly in an index. |
(d) | 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. |
(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. |
In the current prospectuses dated January 28, 2022, the expense ratios for Class AAA, A, C, and I Shares are 1.38%, 1.38%, 2.13%, and 1.13%, respectively. See page 11 for the expense ratios for the six months ended March 31, 2022. Class AAA and Class I Shares have no sales charge. The maximum sales charge for Class A Shares, and Class C Shares is 5.75% and 1.00%, respectively.
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. 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.
Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. 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.
3
The Gabelli Small Cap Growth Fund Disclosure of Fund Expenses (Unaudited) For the Six Month Period from October 1, 2021 through March 31, 2022 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Beginning Account Value 10/01/21 | Ending Account Value 03/31/22 | Annualized Expense Ratio | Expenses Paid During Period * | ||||
The Gabelli Small Cap Growth Fund | |||||||
Actual Fund Return | |||||||
Class AAA | $1,000.00 | $1,016.50 | 1.38% | $ | 6.94 | ||
Class A | $1,000.00 | $1,016.60 | 1.38% | $ | 6.94 | ||
Class C | $1,000.00 | $1,012.80 | 2.13% | $ | 10.69 | ||
Class I | $1,000.00 | $1,017.80 | 1.13% | $ | 5.68 | ||
Hypothetical 5% Return | |||||||
Class AAA | $1,000.00 | $1,018.05 | 1.38% | $ | 6.94 | ||
Class A | $1,000.00 | $1,018.05 | 1.38% | $ | 6.94 | ||
Class C | $1,000.00 | $1,014.31 | 2.13% | $ | 10.70 | ||
Class I | $1,000.00 | $1,019.30 | 1.13% | $ | 5.69 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2022:
The Gabelli Small Cap Growth Fund
Equipment and Supplies | 15.6 | % | ||
Diversified Industrial | 11.0 | % | ||
Food and Beverage | 6.2 | % | ||
Building and Construction | 6.0 | % | ||
Health Care | 5.9 | % | ||
Retail | 5.4 | % | ||
Financial Services | 4.5 | % | ||
Hotels and Gaming | 4.3 | % | ||
Automotive: Parts and Accessories | 3.9 | % | ||
Real Estate | 3.1 | % | ||
Energy and Utilities | 2.9 | % | ||
Business Services | 2.7 | % | ||
Transportation | 2.5 | % | ||
Machinery | 2.5 | % | ||
Specialty Chemicals | 2.5 | % | ||
Aviation: Parts and Services | 2.5 | % | ||
Consumer Products | 2.2 | % | ||
Broadcasting | 2.2 | % | ||
Electronics | 2.2 | % | ||
Computer Software and Services | 1.8 | % | ||
Manufactured Housing and Recreational Vehicles | 1.5 | % |
Entertainment | 1.4 | % | ||
U.S. Government Obligations | 1.2 | % | ||
Publishing | 1.0 | % | ||
Consumer Services | 0.9 | % | ||
Miscellaneous Investments | 0.8 | % | ||
Telecommunications | 0.8 | % | ||
Cable | 0.7 | % | ||
Aerospace | 0.6 | % | ||
Environmental Services | 0.5 | % | ||
Home Furnishings | 0.3 | % | ||
Automotive | 0.1 | % | ||
Closed-End Funds | 0.1 | % | ||
Metals and Mining | 0.1 | % | ||
Wireless Communications | 0.0 | %* | ||
Agriculture | 0.0 | %* | ||
Communications Equipment | 0.0 | %* | ||
Other Assets and Liabilities (Net) | 0.1 | % | ||
100.0 | % |
* | Amount represents less than 0.05%. |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-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 calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments — March 31, 2022 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS* — 97.6% | ||||||||||||
Aerospace — 0.6% | ||||||||||||
250,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 1,025,125 | $ | 9,837,500 | |||||||
77,000 | Various Securities | 924,729 | 1,360,960 | |||||||||
1,949,854 | 11,198,460 | |||||||||||
Agriculture — 0.0% | ||||||||||||
57,282 | Various Securities | 891,925 | 714,800 | |||||||||
Automotive — 0.1% | ||||||||||||
70,200 | Various Securities | 375,411 | 2,597,274 | |||||||||
Automotive: Parts and Accessories — 3.7% | ||||||||||||
846,000 | Brembo SpA | 1,564,227 | 9,471,182 | |||||||||
1,110,000 | Dana Inc. | 9,031,849 | 19,502,700 | |||||||||
245,458 | Strattec Security Corp.†(a) | 4,733,287 | 9,148,220 | |||||||||
1,304,022 | Various Securities | 8,938,369 | 29,477,383 | |||||||||
24,267,732 | 67,599,485 | |||||||||||
Aviation: Parts and Services — 2.5% | ||||||||||||
670,000 | Kaman Corp. | 9,964,092 | 29,131,600 | |||||||||
228,700 | Various Securities | 3,047,429 | 15,916,297 | |||||||||
13,011,521 | 45,047,897 | |||||||||||
Broadcasting — 2.2% | ||||||||||||
1,849,342 | Various Securities | 13,570,054 | 40,591,485 | |||||||||
Building and Construction — 6.0% | ||||||||||||
238,400 | Herc Holdings Inc. | 7,804,861 | 39,834,256 | |||||||||
377,000 | Lennar Corp., Cl. B | 9,087,354 | 25,767,950 | |||||||||
2,100 | NVR Inc.† | 1,460,433 | 9,381,267 | |||||||||
794,000 | Various Securities | 10,047,007 | 34,357,730 | |||||||||
28,399,655 | 109,341,203 | |||||||||||
Business Services — 2.7% | ||||||||||||
338,000 | The Interpublic Group of Companies Inc. | 1,425,712 | 11,982,100 | |||||||||
1,612,400 | Trans-Lux Corp.†(a) | 1,587,444 | 1,148,916 | |||||||||
34,000 | United Rentals Inc.† | 209,146 | 12,077,140 | |||||||||
1,670,500 | Various Securities | 10,058,359 | 24,855,384 | |||||||||
13,280,661 | 50,063,540 | |||||||||||
Cable — 0.7% | ||||||||||||
470,500 | Various Securities | 7,268,835 | 12,329,515 | |||||||||
Communications Equipment — 0.0% | ||||||||||||
20,000 | Various Securities | 465,367 | 330,000 | |||||||||
Computer Software and Services — 1.8% | ||||||||||||
33,000 | Tyler Technologies Inc.† | 65,775 | 14,681,370 | |||||||||
669,117 | Various Securities | 5,250,195 | 18,346,080 | |||||||||
5,315,970 | 33,027,450 | |||||||||||
Consumer Products — 2.2% | ||||||||||||
2,057,500 | Various Securities | 10,697,831 | 41,142,937 | |||||||||
Consumer Services — 0.9% | ||||||||||||
354,000 | Rollins Inc. | 336,751 | 12,407,700 |
Shares | Cost | Market Value | ||||||||||
241,000 | Various Securities | $ | 1,026,684 | $ | 4,153,910 | |||||||
1,363,435 | 16,561,610 | |||||||||||
Diversified Industrial — 11.0% | ||||||||||||
357,500 | Crane Co. | 7,663,159 | 38,710,100 | |||||||||
100,000 | EnPro Industries Inc. | 5,227,056 | 9,773,000 | |||||||||
1,300,000 | Griffon Corp. | 14,096,530 | 26,039,000 | |||||||||
920,000 | Myers Industries Inc. | 12,634,530 | 19,872,000 | |||||||||
339,000 | Textron Inc. | 2,053,938 | 25,214,820 | |||||||||
2,305,040 | Various Securities | 34,071,925 | 81,513,743 | |||||||||
75,747,138 | 201,122,663 | |||||||||||
Electronics — 2.2% | ||||||||||||
135,500 | Badger Meter Inc. | 1,720,972 | 13,510,705 | |||||||||
213,500 | Bel Fuse Inc., Cl. A(a) | 4,038,795 | 4,483,500 | |||||||||
460,000 | CTS Corp. | 3,922,113 | 16,256,400 | |||||||||
267,000 | Various Securities | 2,239,794 | 5,670,323 | |||||||||
11,921,674 | 39,920,928 | |||||||||||
Energy and Utilities — 2.9% | ||||||||||||
1,795,000 | RPC Inc.† | 777,550 | 19,152,650 | |||||||||
602,400 | Various Securities | 11,354,215 | 33,989,395 | |||||||||
12,131,765 | 53,142,045 | |||||||||||
Entertainment — 1.4% | ||||||||||||
702,000 | Various Securities | 9,249,099 | 25,693,829 | |||||||||
Environmental Services — 0.5% | ||||||||||||
66,000 | Various Securities | 596,200 | 8,745,000 | |||||||||
Equipment and Supplies — 15.6% | ||||||||||||
399,500 | AMETEK Inc. | 679,786 | 53,205,410 | |||||||||
109,000 | Crown Holdings Inc. | 439,573 | 13,634,810 | |||||||||
158,000 | Franklin Electric Co. Inc. | 616,384 | 13,120,320 | |||||||||
440,000 | Graco Inc. | 2,456,347 | 30,676,800 | |||||||||
677,000 | Mueller Industries Inc. | 17,784,706 | 36,673,090 | |||||||||
169,500 | Tennant Co. | 2,846,579 | 13,356,600 | |||||||||
744,000 | The Gorman-Rupp Co. | 11,389,014 | 26,694,720 | |||||||||
2,272,203 | Various Securities | 20,376,029 | 98,105,265 | |||||||||
56,588,418 | 285,467,015 | |||||||||||
Financial Services — 4.5% | ||||||||||||
678,000 | KKR & Co. Inc. | 2,749,449 | 39,642,660 | |||||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 5,000 | |||||||||
2,381,630 | Various Securities | 23,188,735 | 42,451,805 | |||||||||
25,939,557 | 82,099,465 | |||||||||||
Food and Beverage — 6.2% | ||||||||||||
195,000 | Chr. Hansen Holding A/S | 8,106,517 | 14,404,381 | |||||||||
412,000 | Flowers Foods Inc. | 979,233 | 10,592,520 | |||||||||
240,000 | Kikkoman Corp. | 1,630,295 | 16,027,600 | |||||||||
675,000 | Maple Leaf Foods Inc. | 11,752,263 | 16,198,056 | |||||||||
5,221,250 | Various Securities | 24,574,026 | 57,225,283 | |||||||||
47,042,334 | 114,447,840 |
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — March 31, 2022 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS* (Continued) | ||||||||||||
Health Care — 5.9% | ||||||||||||
397,000 | Cutera Inc.† | $ | 4,708,074 | $ | 27,393,000 | |||||||
151,500 | Globus Medical Inc., Cl. A† | 3,394,653 | 11,177,670 | |||||||||
1,101,800 | Various Securities | 15,701,143 | 69,772,005 | |||||||||
23,803,870 | 108,342,675 | |||||||||||
Home Furnishings — 0.3% | ||||||||||||
246,500 | Various Securities | 2,939,320 | 4,816,290 | |||||||||
Hotels and Gaming — 4.3% | ||||||||||||
105,000 | Churchill Downs Inc. | 942,777 | 23,286,900 | |||||||||
253,000 | Ryman Hospitality Properties Inc., REIT† | 4,091,634 | 23,470,810 | |||||||||
6,937,548 | Various Securities | 13,589,704 | 32,868,167 | |||||||||
18,624,115 | 79,625,877 | |||||||||||
Machinery — 2.5% | ||||||||||||
336,000 | Astec Industries Inc. | 11,735,785 | 14,448,000 | |||||||||
1,420,000 | CNH Industrial NV | 3,654,806 | 22,521,200 | |||||||||
356,657 | Various Securities | 5,948,727 | 9,128,272 | |||||||||
21,339,318 | 46,097,472 | |||||||||||
Manufactured Housing and Recreational Vehicles — 1.5% | ||||||||||||
70,500 | Cavco Industries Inc.† | 1,401,644 | 16,979,925 | |||||||||
203,800 | Various Securities | 1,844,622 | 9,672,480 | |||||||||
3,246,266 | 26,652,405 | |||||||||||
Metals and Mining — 0.1% | ||||||||||||
140,000 | Various Securities | 529,906 | 978,310 | |||||||||
Publishing — 1.0% | ||||||||||||
775,000 | The E.W. Scripps Co., Cl. A† | 4,022,887 | 16,112,250 | |||||||||
41,500 | Various Securities | 1,231,080 | 2,547,675 | |||||||||
5,253,967 | 18,659,925 | |||||||||||
Real Estate — 3.1% | ||||||||||||
255,000 | Indus Realty Trust Inc., REIT | 4,641,656 | 18,637,950 | |||||||||
89,800 | Morguard Corp. | 1,138,278 | 9,901,238 | |||||||||
390,000 | The St. Joe Co. | 5,995,272 | 23,103,600 | |||||||||
382,567 | Various Securities | 5,083,177 | 6,196,534 | |||||||||
16,858,383 | 57,839,322 | |||||||||||
Retail — 5.4% | ||||||||||||
128,500 | AutoNation Inc.† | 2,084,848 | 12,796,030 | |||||||||
85,000 | Copart Inc.† | 715,897 | 10,664,950 | |||||||||
340,700 | Ingles Markets Inc., Cl. A | 4,719,643 | 30,339,335 | |||||||||
336,500 | Rush Enterprises Inc., Cl. B | 2,398,027 | 16,269,775 | |||||||||
552,568 | Various Securities | 5,724,679 | 29,718,775 | |||||||||
15,643,094 | 99,788,865 | |||||||||||
Specialty Chemicals — 2.5% | ||||||||||||
485,000 | Ferro Corp.† | 1,473,123 | 10,543,900 | |||||||||
248,000 | H.B. Fuller Co. | 2,785,028 | 16,385,360 | |||||||||
441,700 | Various Securities | 4,995,818 | 18,956,678 | |||||||||
9,253,969 | 45,885,938 |
Shares | Cost | Market Value | ||||||||||
Telecommunications — 0.8% | ||||||||||||
1,321,000 | Various Securities | $ | 4,700,214 | $ | 13,932,325 | |||||||
Transportation — 2.5% | ||||||||||||
366,000 | GATX Corp. | 10,403,367 | 45,138,780 | |||||||||
143,653 | Various Securities | 1,214,387 | 1,606,630 | |||||||||
11,617,754 | 46,745,410 | |||||||||||
Wireless Communications — 0.0% | ||||||||||||
25,000 | Various Securities | 876,740 | 755,750 | |||||||||
TOTAL COMMON STOCKS | 494,761,352 | 1,791,305,005 | ||||||||||
CLOSED-END FUNDS* — 0.1% | ||||||||||||
209,266 | Various Securities | 3,219,321 | 2,429,663 | |||||||||
PREFERRED STOCKS* — 0.2% | ||||||||||||
Automotive: Parts and Accessories 0.2% | ||||||||||||
92,000 | Various Securities | 628,894 | 2,680,753 | |||||||||
RIGHTS* — 0.0% | ||||||||||||
Communications Equipment — 0.0% | ||||||||||||
60,500 | Various Securities | 0 | 0 | |||||||||
Entertainment — 0.0% | ||||||||||||
1,680,000 | Media General Inc., CVR†(b) | 2 | 2 | |||||||||
TOTAL RIGHTS | 2 | 2 | ||||||||||
WARRANTS* — 0.0% | ||||||||||||
Business Services — 0.0% | ||||||||||||
1 | Various Securities | 0 | 652 | |||||||||
Diversified Industrial — 0.0% | ||||||||||||
140,000 | Various Securities | 95,648 | 114,114 | |||||||||
TOTAL WARRANTS | 95,648 | 114,766 |
Principal | ||||||||||||
Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS* — 1.2% | ||||||||||||
$ | 22,595,000 | U.S. Treasury Bills, 0.315% to 0.395%††, 06/02/22 to 06/09/22 | 22,582,433 | 22,582,134 | ||||||||
TOTAL U.S. GOVERNMENT OBLIGATIONS | 22,582,433 | 22,582,134 | ||||||||||
TOTAL MISCELLANEOUS INVESTMENTS — 0.8%(c) | 9,972,851 | 14,428,714 | ||||||||||
TOTAL INVESTMENTS — 99.9% | $ | 531,260,501 | 1,833,541,037 | |||||||||
Other Assets and Liabilities (Net) — 0.1% | 1,480,031 | |||||||||||
NET ASSETS — 100.0% | $ | 1,835,021,068 |
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — March 31, 2022 (Unaudited)
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 March 31, 2022. The complete Schedule of Investments is available (i) without charge, upon request, by calling 800-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. |
†† | Represents annualized yields at dates of purchase. |
CVR | Contingent Value Right |
REIT | Real Estate Investment Trust |
See accompanying notes to financial statements.
8
The Gabelli Small Cap Growth Fund
Statement of Assets and Liabilities
March 31, 2022 (Unaudited)
Assets: | ||||
Investments, at value (cost $520,900,975) | $ | 1,818,760,401 | ||
Investments in affiliates, at value (cost $10,359,526) | 14,780,636 | |||
Foreign currency, at value (cost $103,861) | 103,437 | |||
Receivable for investments sold | 2,259,610 | |||
Receivable for Fund shares sold | 381,116 | |||
Dividends and interest receivable | 1,939,870 | |||
Prepaid expenses | 75,102 | |||
Total Assets | 1,838,300,172 | |||
Liabilities: | ||||
Payable to bank | 55,102 | |||
Payable for investments purchased | 129,640 | |||
Payable for Fund shares redeemed | 716,590 | |||
Payable for investment advisory fees | 1,543,885 | |||
Payable for distribution fees | 292,398 | |||
Payable for accounting fees | 3,750 | |||
Payable for shareholder communications | 249,548 | |||
Payable for shareholder services fees | 204,379 | |||
Other accrued expenses | 83,812 | |||
Total Liabilities | 3,279,104 | |||
Net Assets | ||||
(applicable to 41,261,365 shares outstanding) | $ | 1,835,021,068 | ||
Net Assets Consist of: | ||||
Paid-in capital. | 471,808,629 | |||
Total distributable earnings | 1,363,212,439 | |||
Net Assets | $ | 1,835,021,068 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($1,035,528,865 ÷ 23,395,805 shares outstanding; 150,000,000 shares authorized) | $ | 44.26 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($137,342,757 ÷ 3,106,749 shares outstanding; 50,000,000 shares authorized) | $ | 44.21 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 46.91 | ||
Class C: | ||||
Net Asset Value and offering price per share ($51,838,919 ÷ 1,559,184 shares outstanding; 50,000,000 shares authorized) | $ | 33.25 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($610,310,527 ÷ 13,199,627 shares outstanding; 50,000,000 shares authorized) | $ | 46.24 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Six Months Ended March 31, 2022 (Unaudited)
Investment Income: | ||||
Dividends - unaffiliated (net of foreign withholding taxes of $113,657) | $ | 12,347,951 | ||
Dividends - affiliated | 25,656 | |||
Interest | 7,742 | |||
Total Investment Income | 12,381,349 | |||
Expenses: | ||||
Investment advisory fees | 9,517,934 | |||
Distribution fees - Class AAA | 1,325,876 | |||
Distribution fees - Class A | 175,861 | |||
Distribution fees - Class C | 299,997 | |||
Shareholder services fees | 746,088 | |||
Shareholder communications expenses | 169,773 | |||
Custodian fees | 101,921 | |||
Directors’ fees | 70,839 | |||
Registration expenses | 44,892 | |||
Legal and audit fees | 33,277 | |||
Accounting fees | 22,500 | |||
Interest expense | 14,621 | |||
Miscellaneous expenses | 63,035 | |||
Total Expenses | 12,586,614 | |||
Less: | ||||
Advisory fee reduction on unsupervised assets (See Note 3) | (52,553 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (7,816 | ) | ||
Total Reductions | (60,369 | ) | ||
Net Expenses | 12,526,245 | |||
Net Investment Loss | (144,896 | ) | ||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized gain on investments - unaffiliated | 109,023,186 | |||
Net realized loss on investments - affiliated | (3,547 | ) | ||
Net realized gain on foreign currency transactions | 153 | |||
Net realized gain on investments and foreign currency transactions | 109,019,792 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments - unaffiliated | (75,113,125 | ) | ||
on investments - affiliated | 1,493,342 | |||
on foreign currency translations | (13,864 | ) | ||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (73,633,647 | ) | ||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 35,386,145 | |||
Net Increase in Net Assets Resulting from Operations | $ | 35,241,249 |
See accompanying notes to financial statements.
9
The Gabelli Small Cap Growth Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2022 (Unaudited) | Year Ended September 30, 2021 | |||||||
Operations: | ||||||||
Net investment income/(loss) | $ | (144,896 | ) | $ | 2,755,107 | |||
Net realized gain on investments and foreign currency transactions | 109,019,792 | 259,697,102 | ||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (73,633,647 | ) | 378,606,406 | |||||
Net Increase in Net Assets Resulting from Operations | 35,241,249 | 641,058,615 | ||||||
Distributions to Shareholders: | ||||||||
Accumulated earnings | ||||||||
Class AAA | (133,745,401 | ) | (191,595,179 | ) | ||||
Class A | (17,235,275 | ) | (22,004,092 | ) | ||||
Class C | (10,378,509 | ) | (18,595,632 | ) | ||||
Class I | (79,708,013 | ) | (114,398,478 | ) | ||||
Total Distributions to Shareholders | (241,067,198 | ) | (346,593,381 | ) | ||||
Capital Share Transactions: | ||||||||
Class AAA | 95,253,926 | 9,809,347 | ||||||
Class A | 18,287,867 | 2,604,293 | ||||||
Class C | (5,347,770 | ) | (17,810,664 | ) | ||||
Class I | 33,221,145 | (28,524,077 | ) | |||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | 141,415,168 | (33,921,101 | ) | |||||
Redemption Fees | 336 | 1,871 | ||||||
Net Increase/(Decrease) in Net Assets | (64,410,445 | ) | 260,546,004 | |||||
Net Assets: | ||||||||
Beginning of year | 1,899,431,513 | 1,638,885,509 | ||||||
End of period | $ | 1,835,021,068 | $ | 1,899,431,513 |
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 period:
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)(b) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Total Distributions | Redemption Fees(a)(c) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income (Loss)(b) | Operating Expenses(d)(e) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||
2022(f) | $ | 49.61 | $ | (0.02 | ) | $ | 1.06 | $ | 1.04 | $ | (0.05 | ) | $ | (6.34 | ) | $ | (6.39 | ) | $ | 0.00 | $ | 44.26 | 1.65 | % | $ | 1,035,529 | (0.07 | )%(g) | 1.38 | %(g) | 1 | % | ||||||||||
2021 | 43.30 | 0.04 | 15.83 | 15.87 | — | (9.56 | ) | (9.56 | ) | 0.00 | 49.61 | 42.16 | 1,054,894 | 0.09 | 1.38 | (h) | 1 | |||||||||||||||||||||||||
2020 | 53.92 | 0.04 | (0.63 | ) | (0.59 | ) | (0.07 | ) | (9.96 | ) | (10.03 | ) | 0.00 | 43.30 | (2.08 | ) | 884,341 | 0.08 | 1.41 | (h) | 0 | (i) | ||||||||||||||||||||
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 | (h) | 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 | ||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||
2022(f) | $ | 49.56 | $ | (0.02 | ) | $ | 1.06 | $ | 1.04 | $ | (0.05 | ) | $ | (6.34 | ) | $ | (6.39 | ) | $ | 0.00 | $ | 44.21 | 1.66 | % | $ | 137,343 | (0.08 | )%(g) | 1.38 | %(g) | 1 | % | ||||||||||
2021 | 43.26 | 0.04 | 15.82 | 15.86 | — | (9.56 | ) | (9.56 | ) | 0.00 | 49.56 | 42.17 | 134,005 | 0.08 | 1.38 | (h) | 1 | |||||||||||||||||||||||||
2020 | 53.89 | 0.05 | (0.64 | ) | (0.59 | ) | (0.08 | ) | (9.96 | ) | (10.04 | ) | 0.00 | 43.26 | (2.08 | ) | 110,975 | 0.11 | 1.41 | (h) | 0 | (i) | ||||||||||||||||||||
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 | (h) | 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 | ||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||
2022(f) | $ | 38.86 | $ | (0.15 | ) | $ | 0.88 | $ | 0.73 | $ | — | $ | (6.34 | ) | $ | (6.34 | ) | $ | 0.00 | $ | 33.25 | 1.28 | % | $ | 51,839 | (0.82 | )%(g) | 2.13 | %(g) | 1 | % | |||||||||||
2021 | 35.95 | (0.24 | ) | 12.71 | 12.47 | — | (9.56 | ) | (9.56 | ) | 0.00 | 38.86 | 41.10 | 66,467 | (0.64 | ) | 2.13 | (h) | 1 | |||||||||||||||||||||||
2020 | 46.63 | (0.24 | ) | (0.48 | ) | (0.72 | ) | — | (9.96 | ) | (9.96 | ) | 0.00 | 35.95 | (2.80 | ) | 75,505 | (0.65 | ) | 2.16 | (h) | 0 | (i) | |||||||||||||||||||
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 | (h) | 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 | ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||
2022(f) | $ | 51.62 | $ | 0.04 | $ | 1.10 | $ | 1.14 | $ | (0.18 | ) | $ | (6.34 | ) | $ | (6.52 | ) | $ | 0.00 | $ | 46.24 | 1.78 | % | $ | 610,311 | 0.17 | %(g) | 1.13 | %(g) | 1 | % | |||||||||||
2021 | 44.62 | 0.17 | 16.39 | 16.56 | — | (9.56 | ) | (9.56 | ) | 0.00 | 51.62 | 42.51 | 644,066 | 0.34 | 1.13 | (h) | 1 | |||||||||||||||||||||||||
2020 | 55.29 | 0.15 | (0.64 | ) | (0.49 | ) | (0.22 | ) | (9.96 | ) | (10.18 | ) | 0.00 | 44.62 | (1.83 | ) | 568,065 | 0.34 | 1.16 | (h) | 0 | (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 | (h) | 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 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | 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. |
(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 all periods presented, there was no impact on the expense ratios. |
(e) | Ratio of operating expenses includes advisory fee reduction on unsupervised assets totaling 0.01% of net assets for the six months ended March 31, 2022 and year ended September 30, 2020. For the years ended September 30, 2021, 2019, 2018, and 2017, there was no impact on the expense ratios. |
(f) | For the six months ended March 31, 2022, unaudited. |
(g) | Annualized. |
(h) | The Fund incurred interest expense during the fiscal years ended September 30, 2021, 2020, and 2019. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.37%, 1.39%, and 1.38% (Class AAA and Class A), 2.12%, 2.14%, and 2.13% (Class C), and 1.12%, 1.14%, and 1.13% (Class I). For the six months ended March 31, 2022 and the years ended September 30, 2018 and 2017, the effect of interest expense was minimal. |
(i) | Amount represents less than 0.5%. |
See accompanying notes to financial statements.
11
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) |
1. Organization. The Gabelli Small Cap Growth Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the Portfolios) of the Corporation. The Fund seeks to provide a high level of capital appreciation. The Fund commenced investment operations on October 22, 1991. 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.
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.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
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 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 of 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 and non-financial information about the company; comparisons with the valuation and
12
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
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 March 31, 2022 is as follows:
Valuation Inputs | |||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs (a) | Total Market Value | ||||||||||
INVESTMENTS IN SECURITIES: | |||||||||||||
ASSETS (Market Value): | |||||||||||||
Common Stocks: | |||||||||||||
Automotive: Parts and Accessories | $ | 67,599,481 | $ | 4 | — | $ | 67,599,485 | ||||||
Aviation: Parts and Services | 43,310,040 | 1,737,857 | — | 45,047,897 | |||||||||
Communications Equipment | 330,000 | 825,000 | — | 1,155,000 | |||||||||
Consumer Services | 16,288,660 | 272,950 | — | 16,561,610 | |||||||||
Equipment and Supplies | 283,385,454 | 2,429,201 | — | 285,814,655 | |||||||||
Financial Services | 89,724,025 | 1,574,120 | $ | 5,000 | 91,303,145 | ||||||||
Real Estate | 56,867,492 | 971,830 | — | 57,839,322 | |||||||||
Retail | 99,130,698 | 658,167 | — | 99,788,865 | |||||||||
Specialty Chemicals | 45,885,938 | 0 | — | 45,885,938 | |||||||||
Other Industries (b) | 1,094,737,802 | — | — | 1,094,737,802 | |||||||||
Total Common Stocks | 1,797,259,590 | 8,469,129 | 5,000 | 1,805,733,719 | |||||||||
Closed-End Funds | 2,429,663 | — | — | 2,429,663 | |||||||||
Preferred Stocks (b) | 2,680,753 | — | — | 2,680,753 | |||||||||
Rights (b) | — | 0 | 2 | 2 | |||||||||
Warrants (b) | 114,114 | 652 | — | 114,766 | |||||||||
U.S. Government Obligations | — | 22,582,134 | — | 22,582,134 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 1,802,484,120 | $ | 31,051,915 | $ | 5,002 | $ | 1,833,541,037 |
(a) | The inputs for these securities are not readily available and are derived based on the judgment of the Adviser according to procedures approved by the Board of Directors. |
(b) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
During the six months ended March 31, 2022, the Fund did not have material transfers into or out of Level 3.
13
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
14
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the 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 the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2022, the Fund did not hold any 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 portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the six months ended March 31, 2022, 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 an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains as determined under the GAAP. 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
15
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2021 was as follows:
Distributions paid from: | ||||
Ordinary income | $ | 373,251 | ||
Net long term capital gains | 368,128,057 | |||
Total distributions paid* | $ | 368,501,308 |
* 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.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2022:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $536,915,491 | $1,317,234,286 | $(20,608,740) | $1,296,625,546 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2022, the Fund did not incur any income tax, interest, or penalties. As of March 31, 2022, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions. The Fund has entered into an investment advisory agreement (the Advisory Agreement) with the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, at the annual rate of 1.00% of the value of its average daily net assets. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Directors of the Fund who are affiliated persons of the Adviser.
There was a reduction in the advisory fee paid to the Adviser relating to certain portfolio holdings, i.e., unsupervised assets, of the Fund with respect to which the Adviser transferred dispositive and voting control to the Fund’s Proxy Voting Committee. During the six months ended March 31, 2022, 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 $52,553.
16
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2022, other than short term securities and U.S. Government obligations, aggregated $14,379,628 and $137,428,974, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2022, the Fund paid $10,012 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $6,442 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the six months ended March 31, 2022, 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 $7,816.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2022, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on March 1, 2023 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 bank 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 135 basis points or the Overnight Bank Funding Rate plus 135 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At March 31, 2022, there were no borrowings under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the six months ended March 31, 2022 was $3,377,467 with a weighted average interest rate of 1.36%. The maximum amount borrowed at any time during the six months ended March 31, 2022 was $14,505,000.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2022 and the fiscal year
17
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
ended September 30, 2021, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Six Months Ended | Year Ended | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Class AAA | ||||||||||||||
Shares sold | 992,628 | $ | 44,354,948 | 580,407 | $ | 27,170,660 | ||||||||
Shares issued upon reinvestment of distributions | 2,817,801 | 129,196,157 | 4,663,083 | 185,171,154 | ||||||||||
Shares redeemed | (1,678,528 | ) | (78,297,179 | ) | (4,404,600 | ) | (202,532,467 | ) | ||||||
Net increase | 2,131,901 | $ | 95,253,926 | 838,890 | $ | 9,809,347 | ||||||||
Class A | ||||||||||||||
Shares sold | 292,400 | $ | 13,347,139 | 596,881 | $ | 27,627,213 | ||||||||
Shares issued upon reinvestment of distributions | 353,484 | 16,189,558 | 509,988 | 20,231,248 | ||||||||||
Shares redeemed | (243,074 | ) | (11,248,830 | ) | (968,174 | ) | (45,254,168 | ) | ||||||
Net increase | 402,810 | $ | 18,287,867 | 138,695 | $ | 2,604,293 | ||||||||
Class C | ||||||||||||||
Shares sold | 48,733 | $ | 1,689,190 | 113,421 | $ | 4,140,636 | ||||||||
Shares issued upon reinvestment of distributions | 298,257 | 10,298,825 | 588,946 | 18,439,890 | ||||||||||
Shares redeemed | (498,188 | ) | (17,335,785 | ) | (1,092,311 | ) | (40,391,190 | ) | ||||||
Net decrease | (151,198 | ) | $ | (5,347,770 | ) | (389,944 | ) | $ | (17,810,664 | ) | ||||
Class I | ||||||||||||||
Shares sold | 696,385 | $ | 33,538,394 | 1,947,762 | $ | 95,525,742 | ||||||||
Shares issued upon reinvestment of distributions | 1,620,291 | 77,547,117 | 2,640,278 | 108,858,645 | ||||||||||
Shares redeemed | (1,594,695 | ) | (77,864,366 | ) | (4,842,756 | ) | (232,908,464 | ) | ||||||
Net increase/(decrease) | 721,981 | $ | 33,221,145 | (254,716 | ) | $ | (28,524,077 | ) |
18
The Gabelli Small Cap Growth Fund Notes to Financial Statements (Unaudited) (Continued) |
9. Transactions in Securities of Affiliated Issuers. The 1940 Act defines affiliated issuers as those in 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 six months ended March 31, 2022 is set forth below:
Market Value at 2021 | Purchases | Sales | Realized | Change In | Market March 31, 2022 | Dividend Income | Percent | |||||||||||||||||||||||||
Bel Fuse Inc., Cl. A | $ | 3,072,306 | — | $ | 5,694 | $ | (3,498 | ) | $ | 1,420,386 | $ | 4,483,500 | $ | 25,656 | 9.95 | % | ||||||||||||||||
Strattec Security Corp.† | 9,491,600 | $ | 55,349 | — | — | (398,729 | ) | 9,148,220 | — | 6.21 | % | |||||||||||||||||||||
Trans-Lux Corp.† | 677,331 | — | 51 | (49 | ) | 471,685 | 1,148,916 | — | 11.99 | % | ||||||||||||||||||||||
Total | $ | (3,547 | ) | $ | 1,493,342 | $ | 14,780,636 | $ | 25,656 |
† Non-income producing security.
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.
19
The Gabelli Small Cap Growth Fund Liquidity Risk Management Program (Unaudited) |
In accordance with Rule 22e-4 under the 1940 Act, the Fund has established a liquidity risk management program (the LRM Program) to govern its approach to managing liquidity risk. The LRM Program is administered by the Liquidity Committee (the Committee), which is comprised of members of Gabelli Funds, LLC management. The Board has designated the Committee to administer the LRM Program.
The LRM Program’s principal objectives include supporting the Fund’s compliance with limits on investments in illiquid assets and mitigating the risk that the Fund will be unable to meet its redemption obligations in a timely manner. The LRM Program also includes elements that support the management and assessment of liquidity risk, including an annual assessment of factors that influence the Fund’s liquidity and the monthly classification and re-classification of certain investments that reflect the Committee’s assessment of their relative liquidity under current market conditions.
At a meeting of the Board held on May 12, 2021, the Board received a written report from the Committee regarding the design and operational effectiveness of the LRM Program. The Committee determined, and reported to the Board, that the LRM Program is reasonably designed to assess and manage the Fund’s liquidity risk and has operated adequately and effectively since its implementation. The Committee reported that there were no liquidity events that impacted the Fund or its ability to timely meet redemptions without dilution to existing shareholders. The Committee noted that the Fund is primarily invested in highly liquid securities and, accordingly, continues to be exempt from the requirement to determine a “highly liquid investment minimum” as defined in the Rule 22e-4. Because of that continued qualification for the exemption, the Fund has not adopted a “highly liquid investment minimum” amount. The Committee further noted that while changes to the LRM Program were made during the Review Period and reported to the Board, no material changes were made to the LRM Program as a result of the Committee’s annual review.
There can be no assurance that the LRM Program will achieve its objectives in the future. Please refer to the Fund’s Prospectus for more information regarding its exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
20
The Gabelli Small Cap Growth Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)
During the six months ended March 31, 2022, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2021) of the Fund against a peer group of ten other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional small-cap core funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Small-Cap Core Index. The Independent Board Members noted that the Fund’s performance was in the fourth quartile for the one year period and the second quartile for the three year and five year periods, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the third quintile for the one year period, the second quintile for the three year, five year, and ten year periods. The Independent Board Members noted the Fund’s total return was below the median total return for the one year period and above the median total return for the three year and five year periods within the Adviser Peer Group.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund compared with similar expense ratios of the Adviser Peer Group and a peer group of sixteen other small cap core funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratio was above average within both groups, and the Fund’s size was also above average within the groups. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with but did not consider to be
21
The Gabelli Small Cap Growth Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)
material to their decision, various information comparing the advisory fees, good ancillary services, and the fees for other types of accounts managed by affiliates of the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services and an acceptable performance record. The Independent Board Members also concluded that the Fund’s expense ratios and the profitability to the Adviser of managing the Fund were reasonable in light of the Fund’s performance and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend the continuation of the investment management agreements to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
22
THE GABELLI SMALL CAP GROWTH FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Management Team
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.
Gordon Grender joined GAMCO UK in 2020 as a portfolio manager. Prior to joining the Firm, Mr. Grender served as the portfolio manager for a U.S. equity fund at GAM International Ltd.
Gabelli Equity Series Funds, Inc.
THE GABELLI SMALL CAP GROWTH FUND
One Corporate Center
Rye, New York 10580-1422
t | 800-GABELLI (800-422-3554) |
f | 914-921-5118 |
e | info@gabelli.com |
GABELLI.COM
Net Asset Values 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 Former 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
Peter Goldstein Secretary and Vice President
Richard J. Walz Chief Compliance Officer
Daniel Plourde Vice President
DISTRIBUTOR G.distributors, LLC
CUSTODIAN State Street Bank and Trust Company
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT DST Asset Manager Solutions, Inc.
LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP |
This report is submitted for the general information of the shareholders of The Gabelli Small Cap Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
GAB443Q122SR
The Gabelli Focused Growth and Income Fund
Semiannual Report — March 31, 2022 | ![]() |
Daniel M. Miller Portfolio Manager GAMCO Investors BS, University of Miami |
To Our Shareholders,
For the six months ended March 31, 2022, the net asset value (NAV) total return per Class I Share of The Gabelli Focused Growth and Income Fund was 5.9% compared with a total return of 8.4% for the Lipper Equity Income Fund Average. 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 March 31, 2022.
Investment Objective and Strategy (Unaudited)
The Gabelli Focused Growth and Income Fund seeks to provide a high level of capital appreciation. The Fund invests in a global portfolio of common and preferred equities, REITs, bonds, and other securities that have the potential for capital appreciation while emphasizing a high level of current net investment income. The Fund currently distributes its net investment income on a monthly basis.
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 call 800-422-3554 or send an email request to info@gabelli.com. |
Performance Discussion (Unaudited)
As investors digest an increasingly complex outlook (geopolitical, interest rates, inflation, etc.), we continue to believe that high quality dividend paying securities should provide attractive returns. Since 1940, real equity returns have turned negative when CPI inflation exceeded 5%, according to Goldman Sachs research. Goldman also notes that high dividend yield / dividend growth stocks typically outperform during periods of high inflation, and currently this group currently trades at an attractive valuation relative to the S&P 500.
We believe current dynamics bode particularly well for portfolios with above benchmark allocations to dividend paying companies in the energy sector. As of March 31, approximately 26% of the Fund’s portfolio was allocated to common and preferred shares of renewable and midstream energy businesses. The second and third largest contributors to performance in the prior six months were Enterprise Products Partners LP (+24%, 5.7% of net assets as of March 31, 2022) and NextEra Energy Partners LP (+13%, 6.7%), respectively. EPD and NEP offer current returns of 7% and 4%, respectively, while still trading at discounts to our estimate of intrinsic value of approximately 20%.
The Fund’s single biggest contributor to performance in the prior six months was Abbvie Inc. (+54%, 3.8%), the proprietary pharmaceuticals business that generates approximately 60% of revenues from Humira, followed by a variety of products in oncology, virology, and women’s health. Shares of AbbVie increased almost 50% in the period on appreciation for the company’s development pipeline. While the dividend yield remains close to 4%, we believe shares are now fairly valued, trading around 11x next year’s earnings.
Our biggest detractor in the period was our exposure to securities more sensitive to a change in interest rates, including preferred and fixed income issues, financial services firms and banks. Our largest allocation in this group is the 8% cumulative preferred issued by Qurate Retail, Inc. (-17%, 4.9%). The common shares of Qurate declined sharply in the last several months from disruptions to inventory and other short term dynamics. Given the leverage that control-investors John Malone and Greg Maffei have brought to the business, we can appreciate why the preferred shares have declined more than 20% in recent weeks. Nevertheless, we have a high level of conviction that holders of the preferred will continue to receive $8 per share in annual dividend payments until at least December 2025 when the company can call the issue at a 4% premium to par ($104), and believe the current discount will narrow in the coming months.
We continue to position the portfolio toward high income producing securities. We appreciate your continued confidence and trust.
The views expressed reflect the opinions of the Fund’s portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
2
Comparative Results
Average Annual Returns through March 31, 2022 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | Since Inception (12/31/02) | |||||||||||||
Class I (GWSIX) (c) | 5.87 | % | 16.96 | % | 7.82 | % | 8.12 | % | 6.26 | % | 7.93 | % | ||||||
Class AAA (GWSVX) | 5.35 | 15.52 | 7.30 | 7.72 | 5.92 | 7.66 | ||||||||||||
S&P MidCap 400 Index (d) | 2.73 | 4.59 | 11.10 | 12.20 | 9.67 | 11.61 | ||||||||||||
Lipper Equity Income Fund Average (d) | 8.35 | 13.77 | 11.30 | 11.32 | 7.70 | 9.25 | ||||||||||||
Class A (GWSAX) | 5.35 | 15.60 | 7.33 | 7.74 | 5.93 | 7.68 | ||||||||||||
With sales charge (e) | (0.71 | ) | 8.95 | 6.06 | 7.10 | 5.50 | 7.35 | |||||||||||
Class C (GWSCX) | 5.00 | 14.74 | 6.52 | 6.94 | 5.15 | 6.89 | ||||||||||||
With contingent deferred sales charge (f) | 4.00 | 13.74 | 6.52 | 6.94 | 5.15 | 6.89 |
(a) | The Fund’s fiscal year ends September 30. |
(b) | 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. |
(c) | 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. |
(d) | 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 Lipper Equity Income Fund Average includes the 30 largest equity funds in this category tracked by Lipper, Inc. Dividends are considered reinvested. You cannot invest directly in an index. |
(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. |
In the current prospectuses dated January 28, 2022, the expense ratios for Class AAA, A, and I Shares are 1.96%, 1.96%, and 1.71%, respectively, and the net expense ratios for these share classes after contractual reimbursements by the Adviser are 1.96%, 1.96%, and 0.80%, respectively. See page 10 for the expense ratios for the six months ended March 31, 2022. Class AAA and Class I Shares have no sales charge. The maximum sales charge for Class A Shares is 5.75%.
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.
Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. 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.
3
The Gabelli Focused Growth and Income Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2021 through March 31, 2022 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Beginning Account Value 10/01/21 | Ending Account Value 03/31/22 | Annualized Expense Ratio | Expenses Paid During Period * | |||
The Gabelli Focused Growth and Income Fund | ||||||
Actual Fund Return | ||||||
Class AAA | $1,000.00 | $1,053.50 | 1.81% | $ | 9.27 | |
Class A | $1,000.00 | $1,053.50 | 1.81% | $ | 9.27 | |
Class C | $1,000.00 | $1,050.00 | 2.56% | $ | 13.08 | |
Class I | $1,000.00 | $1,058.70 | 0.80% | $ | 4.11 | |
Hypothetical 5% Return | ||||||
Class AAA | $1,000.00 | $1,015.91 | 1.81% | $ | 9.10 | |
Class A | $1,000.00 | $1,015.91 | 1.81% | $ | 9.10 | |
Class C | $1,000.00 | $1,012.17 | 2.56% | $ | 12.84 | |
Class I | $1,000.00 | $1,020.94 | 0.80% | $ | 4.03 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2022:
The Gabelli Focused Growth and Income Fund
Energy and Utilities | 27.3% | Telecommunications | 3.4 | % | |
Real Estate Investment Trusts | 15.7% | Building and Construction | 3.1 | % | |
Financial Services | 14.8% | Computer Software and Services | 2.7 | % | |
Retail | 7.7% | Automotive: Parts and Accessories | 1.9 | % | |
Food and Beverage | 7.5% | Cable and Satellite | 1.0 | % | |
Health Care | 5.6% | U.S. Government Obligations | 0.3 | % | |
Diversified Industrial | 4.4% | Other Assets and Liabilities (Net) | 0.4 | % | |
Entertainment | 4.2% | 100.0 | % |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-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 calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Focused Growth and Income Fund
Schedule of Investments — March 31, 2022 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 77.7% | ||||||||||||
Automotive: Parts and Accessories — 1.9% | ||||||||||||
7,000 | Aptiv plc† | $ | 365,597 | $ | 837,970 | |||||||
Building and Construction — 3.1% | ||||||||||||
8,000 | Herc Holdings Inc. | 153,970 | 1,336,720 | |||||||||
Cable and Satellite — 1.0% | ||||||||||||
7,000 | Liberty Media Corp. - Liberty Formula One, Cl. A† | 197,542 | 441,910 | |||||||||
Computer Software and Services — 2.7% | ||||||||||||
415 | Alphabet Inc., Cl. C† | 246,177 | 1,159,091 | |||||||||
Diversified Industrial — 0.9% | ||||||||||||
775 | Roper Technologies Inc. | 222,013 | 365,978 | |||||||||
Energy and Utilities — 23.0% | ||||||||||||
22,500 | Atlantica Sustainable Infrastructure plc | 774,333 | 789,075 | |||||||||
135,000 | Energy Transfer LP | 959,441 | 1,510,650 | |||||||||
106,208 | Enterprise Products Partners LP | 2,003,017 | 2,741,229 | |||||||||
105,000 | Kinder Morgan Inc. | 1,304,953 | 1,985,550 | |||||||||
35,000 | NextEra Energy Partners LP | 1,597,111 | 2,917,600 | |||||||||
6,638,855 | 9,944,104 | |||||||||||
Entertainment — 2.1% | ||||||||||||
140,000 | Sirius XM Holdings Inc. | 409,894 | 926,800 | |||||||||
Financial Services — 10.8% | ||||||||||||
39,000 | Apollo Global Management Inc. | 1,357,641 | 2,417,610 | |||||||||
12,500 | Morgan Stanley | 525,580 | 1,092,500 | |||||||||
107,500 | New York Community Bancorp Inc. | 965,360 | 1,152,400 | |||||||||
2,848,581 | 4,662,510 | |||||||||||
Food and Beverage — 7.5% | ||||||||||||
6,959 | BellRing Brands Inc.† | 59,457 | 160,614 | |||||||||
67,500 | Maple Leaf Foods Inc. | 1,086,138 | 1,619,805 | |||||||||
15,000 | Mondelēz International Inc., Cl. A | 613,773 | 941,700 | |||||||||
7,750 | Post Holdings Inc.† | 174,078 | 536,765 | |||||||||
1,933,446 | 3,258,884 | |||||||||||
Health Care — 5.6% | ||||||||||||
8,000 | AbbVie Inc. | 835,556 | 1,296,880 | |||||||||
40,000 | Option Care Health Inc.† | 218,656 | 1,142,400 | |||||||||
1,054,212 | 2,439,280 | |||||||||||
Real Estate Investment Trusts — 15.7% | ||||||||||||
57,500 | Blackstone Mortgage Trust Inc., Cl. A | 1,525,853 | 1,827,925 |
Shares | Cost | Market Value | ||||||||||
8,000 | Hannon Armstrong Sustainable Infrastructure Capital Inc. | $ | 249,961 | $ | 379,440 | |||||||
32,500 | Healthpeak Properties Inc. | 964,455 | 1,115,725 | |||||||||
90,000 | MGM Growth Properties LLC, Cl. A | 2,044,090 | 3,483,000 | |||||||||
4,784,359 | 6,806,090 | |||||||||||
Telecommunications — 3.4% | ||||||||||||
80,000 | Lumen Technologies Inc. | 773,629 | 901,600 | |||||||||
4,500 | T-Mobile US Inc.† | 328,888 | 577,575 | |||||||||
1,102,517 | 1,479,175 | |||||||||||
TOTAL COMMON STOCKS | 19,957,163 | 33,658,512 | ||||||||||
PREFERRED STOCKS — 19.5% | ||||||||||||
Diversified Industrial — 3.5% | ||||||||||||
17,704 | Babcock & Wilcox Enterprises Inc., 8.125%, 02/28/26 | 445,279 | 465,084 | |||||||||
45,000 | Steel Partners Holdings LP, Ser. A, 6.000%, 02/07/26 | 929,339 | 1,049,400 | |||||||||
1,374,618 | 1,514,484 | |||||||||||
Energy and Utilities — 4.3% | ||||||||||||
75,000 | Energy Transfer LP, Ser. D, 7.625% | 1,450,875 | 1,851,000 | |||||||||
Financial Services — 4.0% | ||||||||||||
39,812 | Argo Blockchain plc, Ser. A, 8.750%, 11/30/26 | 962,149 | 919,657 | |||||||||
37,500 | Greenidge Generation Holdings Inc., 8.500%, 10/31/26 | 858,633 | 826,875 | |||||||||
1,820,782 | 1,746,532 | |||||||||||
Retail — 7.7% | ||||||||||||
39,000 | Qurate Retail Inc., 8.000%, 03/15/31 | 3,653,021 | 3,354,390 | |||||||||
TOTAL PREFERRED STOCKS | 8,299,296 | 8,466,406 | ||||||||||
MANDATORY CONVERTIBLE SECURITIES(a) — 2.1% | ||||||||||||
Entertainment — 2.1% | ||||||||||||
16,500 | Paramount Global, Ser. A, 5.750%, 04/01/24 | 858,881 | 916,575 |
See accompanying notes to financial statements.
6
The Gabelli Focused Growth and Income Fund
Schedule of Investments (Continued) — March 31, 2022 (Unaudited)
Principal Amount | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 0.3% | ||||||||||||
$ | 150,000 | U.S. Treasury Bill, 0.412%††, 06/16/22 | $ | 149,870 | $ | 149,871 | ||||||
TOTAL INVESTMENTS — 99.6% | $ | 29,265,210 | 43,191,364 | |||||||||
Other Assets and Liabilities (Net) — 0.4% | 155,501 | |||||||||||
NET ASSETS — 100.0% | $ | 43,346,865 |
(a) | Mandatory convertible securities are required to be converted on the dates listed; they generally may be converted prior to these dates at the option of the holder. |
† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
See accompanying notes to financial statements.
7
The Gabelli Focused Growth and Income Fund
Statement of Assets and Liabilities
March 31, 2022 (Unaudited)
Assets: | ||||
Investments, at value (cost $29,265,210) | $ | 43,191,364 | ||
Cash | 73,702 | |||
Foreign currency, at value (cost $9,217) | 9,179 | |||
Receivable for investments sold | 349,791 | |||
Receivable for Fund shares sold | 1,707 | |||
Receivable from Adviser | 9,220 | |||
Dividends receivable | 112,319 | |||
Prepaid expenses | 27,907 | |||
Total Assets | 43,775,189 | |||
Liabilities: | ||||
Payable for investments purchased | 295,905 | |||
Payable for investment advisory fees | 35,759 | |||
Payable for distribution fees | 9,210 | |||
Payable for legal and audit fees | 49,851 | |||
Payable for shareholder communications | 26,602 | |||
Other accrued expenses | 10,997 | |||
Total Liabilities | 428,324 | |||
Net Assets | ||||
(applicable to 2,408,660 shares outstanding) | $ | 43,346,865 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 29,416,920 | ||
Total distributable earnings | 13,929,945 | |||
Net Assets | $ | 43,346,865 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($6,713,169 ÷ 371,526 shares outstanding; 100,000,000 shares authorized) | $ | 18.07 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($12,283,949 ÷ 671,704 shares outstanding; 50,000,000 shares authorized) | $ | 18.29 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 19.41 | ||
Class C: | ||||
Net Asset Value and redemption price per share ($6,387,253 ÷ 423,069 shares outstanding; 50,000,000 shares authorized) | $ | 15.10 | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($17,962,494 ÷ 942,361 shares outstanding; 50,000,000 shares authorized) | $ | 19.06 |
Statement of Operations
For the Six Months Ended March 31, 2022 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $3,011) | $ | 789,486 | ||
Interest | 265 | |||
Total Investment Income | 789,751 | |||
Expenses: | ||||
Investment advisory fees | 210,171 | |||
Distribution fees - Class AAA | 8,646 | |||
Distribution fees - Class A | 13,377 | |||
Distribution fees - Class C | 35,920 | |||
Legal and audit fees | 47,838 | |||
Registration expenses | 30,958 | |||
Shareholder communications expenses | 15,575 | |||
Shareholder services fees | 12,626 | |||
Custodian fees | 3,573 | |||
Directors’ fees | 1,460 | |||
Interest expense | 243 | |||
Miscellaneous expenses | 6,099 | |||
Total Expenses | 386,486 | |||
Less: | ||||
Expense reimbursements (See Note 3) | (65,655 | ) | ||
Net Expenses | 320,831 | |||
Net Investment Income | 468,920 | |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments | 1,895,308 | |||
Net realized gain on foreign currency transactions | 316 | |||
Net realized gain on investments and foreign currency transactions | 1,895,624 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (152,151 | ) | ||
on foreign currency translations | (63 | ) | ||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (152,214 | ) | ||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 1,743,410 | |||
Net Increase in Net Assets Resulting from Operations | $ | 2,212,330 |
See accompanying notes to financial statements.
8
The Gabelli Focused Growth and Income Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2022 (Unaudited) | Year Ended September 30, 2021 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 468,920 | $ | 763,540 | ||||||
Net realized gain on investments and foreign currency transactions | 1,895,624 | 6,177,026 | ||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (152,214 | ) | 6,127,552 | |||||||
Net Increase in Net Assets Resulting from Operations | 2,212,330 | 13,068,118 | ||||||||
Distributions to Shareholders: | ||||||||||
Accumulated earnings | ||||||||||
Class AAA | (138,361 | ) | (246,442 | ) | ||||||
Class A | (213,843 | ) | (274,575 | ) | ||||||
Class C | (170,209 | ) | (301,224 | ) | ||||||
Class I | (329,036 | ) | (435,658 | ) | ||||||
Total Distributions to Shareholders | (851,449 | ) | (1,257,899 | ) | ||||||
Capital Share Transactions: | ||||||||||
Class AAA | (432,204 | ) | (4,833,791 | ) | ||||||
Class A | 2,961,191 | (298,998 | ) | |||||||
Class C | (1,901,266 | ) | (1,224,967 | ) | ||||||
Class I | 1,114,892 | 4,175,125 | ||||||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | 1,742,613 | (2,182,631 | ) | |||||||
Net Increase in Net Assets | 3,103,494 | 9,627,588 | ||||||||
Net Assets: | ||||||||||
Beginning of year | 40,243,371 | 30,615,783 | ||||||||
End of period | $ | 43,346,865 | $ | 40,243,371 |
See accompanying notes to financial statements.
9
The Gabelli Focused Growth and Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | |||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a)(b) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Total Distributions | Redemption Fees(a) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income (Loss)(b) | Operating Expenses(c) | Portfolio Turnover Rate | |||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||
2022(d) | $ | 17.50 | $ | 0.17 | $ | 0.76 | $ | 0.93 | $ | (0.36 | ) | $ | — | $ | (0.36 | ) | $ | — | $ | 18.07 | 5.35 | % | $ | 6,713 | 1.90 | %(e) | 1.81 | %(e) | 16 | % | |||||||||||
2021 | 12.48 | 0.34 | 5.22 | 5.56 | (0.54 | ) | — | (0.54 | ) | — | 17.50 | 44.76 | 6,927 | 2.15 | 1.96 | 54 | |||||||||||||||||||||||||
2020 | 12.93 | (0.03 | ) | (0.42 | ) | (0.45 | ) | — | — | — | 0.00 | (f) | 12.48 | (3.48 | ) | 8,713 | (0.24 | ) | 1.71 | 59 | |||||||||||||||||||||
2019 | 13.84 | (0.07 | ) | (0.83 | ) | (0.90 | ) | — | (0.01 | ) | (0.01 | ) | — | 12.93 | (6.50 | ) | 12,189 | (0.56 | ) | 1.64 | (g) | 67 | |||||||||||||||||||
2018 | 14.61 | (0.09 | ) | (0.61 | ) | (0.70 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 13.84 | (4.78 | ) | 16,630 | (0.63 | ) | 1.53 | 105 | |||||||||||||||||||
2017 | 13.70 | (0.15 | ) | 1.21 | 1.06 | — | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 14.61 | 7.88 | 22,542 | (1.08 | ) | 1.43 | (g) | 77 | |||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||
2022(d) | $ | 17.71 | $ | 0.18 | $ | 0.76 | $ | 0.94 | $ | (0.36 | ) | $ | — | $ | (0.36 | ) | $ | — | $ | 18.29 | 5.35 | % | $ | 12,284 | 2.01 | %(e) | 1.81 | %(e) | 16 | % | |||||||||||
2021 | 12.62 | 0.30 | 5.33 | 5.63 | (0.54 | ) | — | (0.54 | ) | — | 17.71 | 44.82 | 8,958 | 1.83 | 1.96 | 54 | |||||||||||||||||||||||||
2020 | 13.06 | (0.03 | ) | (0.41 | ) | (0.44 | ) | — | — | — | 0.00 | (f) | 12.62 | (3.37 | ) | 6,644 | (0.24 | ) | 1.71 | 59 | |||||||||||||||||||||
2019 | 13.98 | (0.07 | ) | (0.84 | ) | (0.91 | ) | — | (0.01 | ) | (0.01 | ) | — | 13.06 | (6.51 | ) | 9,013 | (0.57 | ) | 1.64 | (g) | 67 | |||||||||||||||||||
2018 | 14.76 | (0.09 | ) | (0.62 | ) | (0.71 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 13.98 | (4.80 | ) | 15,137 | (0.65 | ) | 1.53 | 105 | |||||||||||||||||||
2017 | 13.84 | (0.15 | ) | 1.22 | 1.07 | — | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 14.76 | 7.87 | 29,391 | (1.08 | ) | 1.43 | (g) | 77 | |||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||
2022(d) | $ | 14.73 | $ | 0.08 | $ | 0.65 | $ | 0.73 | $ | (0.36 | ) | $ | — | $ | (0.36 | ) | $ | — | $ | 15.10 | 5.00 | % | $ | 6,387 | 1.12 | %(e) | 2.56 | %(e) | 16 | % | |||||||||||
2021 | 10.64 | 0.15 | 4.48 | 4.63 | (0.54 | ) | — | (0.54 | ) | — | 14.73 | 43.75 | 8,143 | 1.13 | 2.71 | 54 | |||||||||||||||||||||||||
2020 | 11.10 | (0.11 | ) | (0.35 | ) | (0.46 | ) | — | — | — | 0.00 | (f) | 10.64 | (4.14 | ) | 6,926 | (1.00 | ) | 2.46 | 59 | |||||||||||||||||||||
2019 | 11.97 | (0.14 | ) | (0.72 | ) | (0.86 | ) | — | (0.01 | ) | (0.01 | ) | — | 11.10 | (7.18 | ) | 13,807 | (1.33 | ) | 2.39 | (g) | 67 | |||||||||||||||||||
2018 | 12.74 | (0.17 | ) | (0.53 | ) | (0.70 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 11.97 | (5.48 | ) | 24,992 | (1.38 | ) | 2.28 | 105 | |||||||||||||||||||
2017 | 12.06 | (0.22 | ) | 1.05 | 0.83 | — | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 12.74 | 7.04 | 37,147 | (1.83 | ) | 2.18 | (g) | 77 | |||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||
2022(d) | $ | 18.35 | $ | 0.28 | $ | 0.79 | $ | 1.07 | $ | (0.36 | ) | $ | — | $ | (0.36 | ) | $ | — | $ | 19.06 | 5.87 | % | $ | 17,963 | 2.97 | %(e) | 1.56 | %(e)(h) | 16 | % | |||||||||||
2021 | 12.94 | 0.46 | 5.49 | 5.95 | (0.54 | ) | — | (0.54 | ) | — | 18.35 | 46.21 | 16,215 | 2.70 | 1.71 | (h) | 54 | ||||||||||||||||||||||||
2020 | 13.36 | 0.00 | (f) | (0.42 | ) | (0.42 | ) | — | — | — | 0.00 | (f) | 12.94 | (3.14 | ) | 8,333 | 0.01 | 1.46 | 59 | ||||||||||||||||||||||
2019 | 14.27 | (0.05 | ) | (0.85 | ) | (0.90 | ) | — | (0.01 | ) | (0.01 | ) | — | 13.36 | (6.30 | ) | 15,555 | (0.36 | ) | 1.39 | (g) | 67 | |||||||||||||||||||
2018 | 15.02 | (0.06 | ) | (0.62 | ) | (0.68 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 14.27 | (4.50 | ) | 34,947 | (0.39 | ) | 1.28 | 105 | |||||||||||||||||||
2017 | 14.05 | (0.11 | ) | 1.23 | 1.12 | — | (0.15 | ) | (0.15 | ) | 0.00 | (f) | 15.02 | 8.11 | 71,138 | (0.83 | ) | 1.18 | (g) | 77 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Due to capital share activity, net investment income/(loss) per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. |
(c) | The Fund incurred interest expense. For the fiscal year ended September 30, 2020, if interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.70% (Class AAA and Class A), 2.45% (Class C), and 1.45% (Class I). For the six months ended March 31, 2022 and the fiscal years ended September 30, 2021, 2019, 2018, and 2017, the effect of interest expense was minimal. |
(d) | For the six months ended March 31, 2022, unaudited. |
(e) | Annualized. |
(f) | Amount represents less than $0.005 per share. |
(g) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the fiscal year ended September 30, 2019, if such credits had not been received the ratios 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, 2017, there was no impact to the expense ratios. |
(h) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed Class I expenses of $65,655 and $97,862 with the operating expenses net of reimbursement ratio of 0.80% and 0.95% for the six months ended March 31, 2022 and the fiscal year ended September 30, 2021. |
See accompanying notes to financial statements.
10
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Focused Growth and Income Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the Portfolios) of the Corporation. The Fund seeks to provide a high level of capital appreciation. The Fund commenced investment operations on December 31, 2002. Effective January 14, 2021, The Gabelli Focus Five Fund changed its name to Gabelli Focused Growth and Income Fund with a corresponding change in the name of each of its Classes of Shares.
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.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
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 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 of 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 and non-financial information about the company; comparisons with the valuation and
11
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
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 March 31, 2022 is as follows:
Valuation Inputs | |||||||||||||||
Level 1 Quoted Prices | Level 2 Other Observable Inputs | Total Market Value at 03/31/22 | |||||||||||||
INVESTMENTS IN SECURITIES: | |||||||||||||||
ASSETS (Market Value): | |||||||||||||||
Common Stocks (a) | $ | 33,658,512 | — | $ | 33,658,512 | ||||||||||
Preferred Stocks (a) | 8,466,406 | — | 8,466,406 | ||||||||||||
Mandatory Convertible Securities (a) | 916,575 | — | 916,575 | ||||||||||||
U.S. Government Obligations | — | $ | 149,871 | 149,871 | |||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 43,041,493 | $ | 149,871 | $ | 43,191,364 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at March 31, 2022 or September 30, 2021.
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
12
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
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 an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each
13
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. These book/tax differences are either temporary or permanent in nature. These reclassifications have no impact on the NAV of the Fund.
The Fund has a fixed distribution policy. Under the policy, the Fund declares and pays monthly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the calendar year. Pursuant to this policy, distributions during the calendar year are made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board continues to evaluate its distribution policy in light of ongoing economic and market conditions and may change the amount of the monthly distributions in the future.
The tax character of distributions paid during the fiscal year ended September 20, 2021 was ordinary income.
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2022:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $29,285,716 | $14,299,035 | $(393,387) | $13,905,648 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2022, the Fund did not incur any income tax, interest, or penalties. As of March 31, 2022, the Adviser has reviewed all open tax years and concluded that there was no
14
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
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 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 Class I (excluding brokerage costs, acquired fund fees and expenses, interest, taxes, and extraordinary expenses) at no more than an annual rate of 0.80% of the value of that class’s average daily net assets. This agreement is in effect through January 31, 2023 and may be terminated only by the Board before such time. In addition, the Fund has agreed, during the two year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent, that after giving effect to the repayment, such adjusted annualized total operating expenses of the Class I Shares would not exceed 0.80% of the value of the Class I average daily net assets. At March 31, 2022, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $163,517.
For the fiscal year ended September 30, 2021, expiring September 30, 2023 | $ | 97,862 | |||
For the six months ended March 31, 2022, expiring September 30, 2024 | 65,655 | ||||
$ | 163,517 |
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2022, other than short term securities and U.S. Government obligations, aggregated $8,723,740 and $6,671,818, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2022, the Fund paid $225 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $7,550 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
15
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on March 1, 2023 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 bank 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 135 basis points or the Overnight Bank Funding Rate plus 135 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. During the six months ended March 31, 2022, there were no borrowings under the line of credit.
8. Capital Stock. The Fund offers three classes of shares – Class AAA Shares, Class A Shares, and Class I Shares. Effective January 3, 2022, (the Effective Date) the Fund’s Class C shares were “closed to purchases from new investors.” “Closed to purchases from new investors” means neither new investors nor existing shareholders may purchase any additional Class C shares after the Effective Date. These changes will have no effect on existing shareholders’ ability to redeem shares of the Fund as described in the Fund’s Prospectus. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2022 and the fiscal year ended September 30, 2021, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
16
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
Transactions in shares of capital stock were as follows:
Six Months Ended March 31, 2022 (Unaudited) | Year Ended September 30, 2021 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 8,681 | $ | 155,324 | 12,780 | $ | 207,769 | ||||||||||
Shares issued upon reinvestment of distributions | 7,676 | 137,341 | 14,570 | 244,259 | ||||||||||||
Shares redeemed | (40,706 | ) | (724,869 | ) | (329,648 | ) | (5,285,819 | ) | ||||||||
Net decrease | (24,349 | ) | $ | (432,204 | ) | (302,298 | ) | $ | (4,833,791 | ) | ||||||
Class A | ||||||||||||||||
Shares sold | 192,526 | $ | 3,448,728 | 97,320 | $ | 1,561,225 | ||||||||||
Shares issued upon reinvestment of distributions | 10,735 | 194,177 | 14,276 | 244,498 | ||||||||||||
Shares redeemed | (37,422 | ) | (681,714 | ) | (132,380 | ) | (2,104,721 | ) | ||||||||
Net increase/(decrease) | 165,839 | $ | 2,961,191 | (20,784 | ) | $ | (298,998 | ) | ||||||||
Class C | ||||||||||||||||
Shares sold | 18,686 | $ | 284,199 | 63,456 | $ | 902,093 | ||||||||||
Shares issued upon reinvestment of distributions | 11,291 | 169,578 | 20,969 | 300,090 | ||||||||||||
Shares redeemed | (159,545 | ) | (2,355,043 | ) | (182,584 | ) | (2,427,150 | ) | ||||||||
Net decrease | (129,568 | ) | $ | (1,901,266 | ) | (98,159 | ) | $ | (1,224,967 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 78,533 | $ | 1,491,885 | 345,547 | $ | 5,842,285 | ||||||||||
Shares issued upon reinvestment of distributions | 16,549 | 311,502 | 23,078 | 409,395 | ||||||||||||
Shares redeemed | (36,344 | ) | (688,495 | ) | (129,025 | ) | (2,076,555 | ) | ||||||||
Net increase | 58,738 | $ | 1,114,892 | 239,600 | $ | 4,175,125 |
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 Focused Growth and Income Fund
Liquidity Risk Management Program (Unaudited)
In accordance with Rule 22e-4 under the 1940 Act, the Fund has established a liquidity risk management program (the LRM Program) to govern its approach to managing liquidity risk. The LRM Program is administered by the Liquidity Committee (the Committee), which is comprised of members of Gabelli Funds, LLC management. The Board has designated the Committee to administer the LRM Program.
The LRM Program’s principal objectives include supporting the Fund’s compliance with limits on investments in illiquid assets and mitigating the risk that the Fund will be unable to meet its redemption obligations in a timely manner. The LRM Program also includes elements that support the management and assessment of liquidity risk, including an annual assessment of factors that influence the Fund’s liquidity and the monthly classification and re-classification of certain investments that reflect the Committee’s assessment of their relative liquidity under current market conditions.
At a meeting of the Board held on May 12, 2021, the Board received a written report from the Committee regarding the design and operational effectiveness of the LRM Program. The Committee determined, and reported to the Board, that the LRM Program is reasonably designed to assess and manage the Fund’s liquidity risk and has operated adequately and effectively since its implementation. The Committee reported that there were no liquidity events that impacted the Fund or its ability to timely meet redemptions without dilution to existing shareholders. The Committee noted that the Fund is primarily invested in highly liquid securities and, accordingly, continues to be exempt from the requirement to determine a “highly liquid investment minimum” as defined in the Rule 22e-4. Because of that continued qualification for the exemption, the Fund has not adopted a “highly liquid investment minimum” amount. The Committee further noted that while changes to the LRM Program were made during the Review Period and reported to the Board, no material changes were made to the LRM Program as a result of the Committee’s annual review.
There can be no assurance that the LRM Program will achieve its objectives in the future. Please refer to the Fund’s Prospectus for more information regarding its exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
18
The Gabelli Focused Growth and Income Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)
During the six months ended March 31, 2022, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2021) of the Fund against eleven other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional mid-cap value funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Mid- Cap Value Index. The Independent Board Members noted that the Fund’s performance was in the second quartile for the one year period, the third quartile for three year, and the five year periods, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the third quintile for the one year period, in the first quintile for the three year period, and in the fourth quintile for the five year period. The Independent Board Members discussed the recent changes to the Fund’s non-fundamental investment policies.
Profitability. The Independent Board Members reviewed summary data regarding the historical lack of profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that an affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop or any losses or diminished profitability to the Adviser in prior years.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with expense ratios of the Adviser Peer Group and a peer group of fifteen other midcap value funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratios were above average, and the size of the fund was below average within each peer group. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members noted the recent amendments to the contractual Expense Deferral Agreement
19
The Gabelli Focused Growth and Income Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)
between the Adviser and the Company, on behalf of the Fund, pursuant to which the net expense ratio was be reduced to 0.80% for Class I Shares, effective January 21, 2021. The Independent Board Members were presented with but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable performance record that had begun to improve over the past year. The Independent Board Members also concluded that the Fund’s expense ratios were reasonable given the size of the Fund relative to its peers and the unique nature of the Fund’s “best ideas” investment strategy and that economies of scale were not a factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend the continuation of the Advisory Agreements to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
20
Gabelli Funds and Your Personal Privacy
Who are we?
The Gabelli Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, 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 of non-public information do we collect about you if you become a fund shareholder?
If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is:
● | Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information. |
● | Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you. This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them. |
What information do we disclose and to whom do we disclose it?
We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www. sec.gov.
What do we do to protect your personal information?
We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential.
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THE GABELLI FOCUSED GROWTH AND INCOME FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager’s Biography
Daniel M. Miller 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.
Gabelli Equity Series Funds, Inc.
THE GABELLI FOCUSED GROWTH AND 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 Values per share available daily
by calling 800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS
Elizabeth C. Bogan
Anthony J. Colavita Anthony J. Colavita, P.C. Vincent D. Enright Former Senior Vice President and Chief Financial Officer, KeySpan Corp.
John D. Gabelli Former 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
Peter Goldstein Secretary and Vice President
Daniel Plourde Vice President
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR G.distributors, LLC
CUSTODIAN State Street Bank and Trust Company
TRANSFER AGENT AND 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 Focused Growth and Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
GAB840Q122SR
The Gabelli Global Financial Services Fund
Semiannual Report — March 31, 2022 | ![]() |
Ian Lapey Portfolio Manager BA, Williams College MS, Northeastern University MBA, New York University |
To Our Shareholders,
For the six months ended March 31, 2022, the net asset value (NAV) total return per Class AAA Share of The Gabelli Global Financial Services Fund was (4.2)% compared with a total return of 2.5% for the Morgan Stanley Capital International (MSCI) World Financials Index. Other classes of shares are available. See page 4 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 2022.
Investment Objective and Strategy (Unaudited)
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 assets in the securities of companies principally engaged in the group of industries comprising 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 Adviser’s investment philosophy with respect to buying and selling equity securities is to identify assets that are selling in the public market at a discount to their private market value (PMV). The Adviser defines PMV as the value informed purchasers are willing to pay to acquire assets with similar characteristics.
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 call 800-422-3554 or send an email request to info@gabelli.com. |
Performance Discussion (Unaudited)
After mostly healthy performance during the fourth quarter of 2021 and beginning of 2022, the common stocks of many global financial services companies fell sharply in February and March owing primarily to Russia’s invasion of Ukraine, the flattening US Treasury yield curve, and a slowdown in global investment banking activity. The Fund is invested in the common stocks of several global banks that have small exposure to Russia. This is resulting in charges to earnings in the first quarter but should not result in meaningfully negative impacts to their strong capital positions unless the war expands to other countries. During periods of global economic uncertainty like this one, it is especially important that the Fund is focused on common stocks of companies with strong balance sheets and capable management teams.
The largest negative contributor to the Fund’s performance during the six months was the common stock of First Citizens BancShares Inc., (3.7%), which the Fund received after the completion of its merger with former holding CIT Group on January 3, 2022. This transformative transaction nearly doubled First Citizens’ assets, significantly expanded its commercial lending franchise, and added a leading rail leasing business. In a recent presentation to investors, the company projected that the transaction would be 38% accretive to tangible book value, up from its initial estimate of 30% when the transaction was announced. Nevertheless, investors appeared to be disappointed with the company’s earnings guidance even though management projected that the transaction would be 39-46% accretive to 2023 earnings. The company has an impressive long term track record having generated growth in Earnings per Share (EPS) and Tangible Book Value per share (TBV) of 12.6% and 9.5%, respectively, over the last 17 years.
The next largest detractor was the common stock of Citigroup Inc. (3.1%). During the company’s investor day in March, it projected that it could incur losses of up to half of its $9.8 billion gross exposure to Russia in a severe stress scenario. Subsequently, in the company’s first quarter earnings release in April, it noted that it had reduced its gross exposure to Russia by $2 billion as of March 31 and that its projected losses in a severe stress scenario were reduced to $2.5-3.0 billion. The company reported a solid 10.5% Return on Tangible Common Equity in the first quarter, despite $1.9 billion of charges related to Russia, and repurchased 2.1% of its outstanding shares at a significant discount to tangible book value.
2
The largest positive contributor was the common stock of property and casualty insurer Axis Capital Holdings Ltd. (3.9%). The company reported strong financial results in the second half of 2021, despite losses from Hurricane Ida, as it is benefitting from a shift to lower risk specialty insurance and a robust pricing environment. Additionally, the company increased its dividend for the 18th consecutive year and announced a $100 million share repurchase. Another significant positive contributor was the common stock of Standard Chartered (2.3%), a UK based bank focused on growing markets in Asia, Africa and the Middle East. Despite lingering effects from the pandemic, the company reported resilient financial results in 2021, repurchased 3% of its shares at a significant discount to tangible book value, and announced further share repurchases for 2022.
Fund management initiated a significant new position in the common stock of Pzena Investment Management Inc. (3.2%), a value oriented investment manager. Despite a very challenging environment for active value oriented investors, the company has generated positive net flows in each of the last five years and had $52.8 billion in Assets Under Management as of March 31, 2022. The business is extremely profitable, with an average operating margin of 45% over the last five years and 53% in 2021, and cash generative. The common stock trades at only 8 times 2021 earnings and has a dividend yield of nearly 7.7% based on dividends paid over the last year.
The Fund’s aggregate valuation metrics are very attractive at about 1.0 times book value, 1.3 times tangible book value and 9.3 and 10.1 times 2021 and 2022 earnings, respectively. I continue to be pleased with the underlying business performance of the Fund’s holdings and increased my personal investment in the Fund. While the near term earnings outlooks for many of the Fund’s holdings have deteriorated, primarily because of Russia’s invasion of Ukraine, I believe that their long term intrinsic values continue to grow and that their recent stock price declines represent attractive buying opportunities.
We appreciate your continued confidence and trust.
The views expressed reflect the opinions of the Fund’s portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
3
Comparative Results
Average Annual Returns through March 31, 2022 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses. Performance returns for periods of less than one year are not annualized.
Six Months | 1 Year | 3 Year | Since Inception (10/1/18) | |||||||||
Class AAA (GAFSX) | (4.23 | )% | 4.25 | % | 8.97 | % | 4.77 | % | ||||
MSCI World Financials Index (c) | 2.47 | 11.91 | 13.05 | 9.03 | ||||||||
Class A (GGFSX) | (4.20 | ) | 4.24 | 9.03 | 4.83 | |||||||
With sales charge (d) | (9.71 | ) | (1.75 | ) | 6.90 | 3.07 | ||||||
Class C (GCFSX) | (4.49 | ) | 3.48 | 8.15 | 3.98 | |||||||
With contingent deferred sales charge (e) | (5.45 | ) | 2.48 | 8.15 | 3.98 | |||||||
Class I (GFSIX) | (4.07 | ) | 4.52 | 9.23 | 5.03 |
(a) | The Fund’s fiscal year ends September 30. |
(b) | 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. |
(c) | The MSCI World Financials Index captures large and mid cap securities in the Financials sector across Developed Markets countries. Dividends are considered reinvested. You cannot invest directly in an index. |
(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. |
In the current prospectuses dated January 28, 2022, the gross expense ratios for Class AAA, A, C, and I Shares are 2.04%, 2.04%, 2.79%, and 1.79%, respectively, and the net expense ratios for these share classes after contractual reimbursements by the Adviser are 1.25%, 1.25%, 2.00%, and 1.00%, respectively. See page 10 for the expense ratios for the six months ended March 31, 2022. The contractual reimbursements are in effect through January 31, 2023. 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.
Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic, and political risks. 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.
Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. 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.
4
The Gabelli Global Financial Services Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2021 through March 31, 2022 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Beginning Account Value 10/01/21 | Ending Account Value 03/31/22 | Annualized Expense Ratio | Expenses Paid During Period * | |||||||||
The Gabelli Global Financial Services Fund | ||||||||||||
Actual Fund Return | ||||||||||||
Class AAA | $1,000.00 | $957.70 | 1.28 | % | $ | 6.25 | ||||||
Class A | $1,000.00 | $958.00 | 1.28 | % | $ | 6.25 | ||||||
Class C | $1,000.00 | $955.10 | 2.03 | % | $ | 9.89 | ||||||
Class I | $1,000.00 | $959.30 | 1.03 | % | $ | 5.03 | ||||||
Hypothetical 5% Return | ||||||||||||
Class AAA | $1,000.00 | $1,018.55 | 1.28 | % | $ | 6.44 | ||||||
Class A | $1,000.00 | $1,018.55 | 1.28 | % | $ | 6.44 | ||||||
Class C | $1,000.00 | $1,014.81 | 2.03 | % | $ | 10.20 | ||||||
Class I | $1,000.00 | $1,019.80 | 1.03 | % | $ | 5.19 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
5
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2022:
The Gabelli Global Financial Services Fund
Banks | 25.6 | % | |
Diversified Banks | 13.1 | % | |
Investment Management | 12.1 | % | |
Insurance | 9.9 | % | |
Automobiles | 7.7 | % | |
Institutional Brokerage | 6.9 | % | |
Consumer Finance | 6.0 | % | |
Institutional Trust, Fiduciary, and Custody | 5.9 | % |
Homebuilders | 5.1 | % | |
Reinsurance | 3.9 | % | |
U.S. Government Obligations | 3.8 | % | |
Other Assets and Liabilities (Net) | (0.0 | )%* | |
100.0 | % |
* | Amount represents greater than (0.05)%. |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-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 calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
6
The Gabelli Global Financial Services Fund
Schedule of Investments — March 31, 2022 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 96.2% | ||||||||||||
Automobiles — 7.7% | ||||||||||||
20,750 | Daimler Truck Holding AG† | $ | 653,776 | $ | 579,147 | |||||||
8,500 | Mercedes-Benz Group AG | 495,469 | 600,013 | |||||||||
4,140 | Toyota Motor Corp., ADR | 539,394 | 746,235 | |||||||||
1,688,639 | 1,925,395 | |||||||||||
Banks — 25.6% | ||||||||||||
74,000 | Banco Bilbao Vizcaya Argentaria SA | 399,347 | 426,504 | |||||||||
90,000 | Commerzbank AG† | 538,934 | 689,669 | |||||||||
379,400 | Dah Sing Banking Group Ltd. | 387,728 | 337,102 | |||||||||
198,500 | Dah Sing Financial Holdings Ltd. | 803,317 | 646,184 | |||||||||
1,386 | First Citizens BancShares Inc., Cl. A | 486,655 | 922,522 | |||||||||
32,000 | ING Groep NV | 275,954 | 336,689 | |||||||||
49,100 | Japan Post Bank Co. Ltd. | 484,848 | 397,269 | |||||||||
25,950 | Shinhan Financial Group Co. Ltd., ADR† | 874,004 | 867,508 | |||||||||
28,000 | Shinsei Bank Ltd.† | 381,477 | 514,506 | |||||||||
26,147 | TrustCo Bank Corp. NY | 863,745 | 834,874 | |||||||||
7,700 | Webster Financial Corp. | 235,623 | 432,124 | |||||||||
5,731,632 | 6,404,951 | |||||||||||
Consumer Finance — 6.0% | ||||||||||||
17,900 | Ally Financial Inc. | 436,426 | 778,292 | |||||||||
5,450 | Capital One Financial Corp. | 484,507 | 715,531 | |||||||||
920,933 | 1,493,823 | |||||||||||
Diversified Banks — 13.1% | ||||||||||||
256,000 | Barclays plc | 531,384 | 498,725 | |||||||||
14,750 | Citigroup Inc. | 877,536 | 787,650 | |||||||||
46,820 | Credit Agricole SA | 552,024 | 563,836 | |||||||||
218,000 | NatWest Group plc | 543,319 | 618,285 | |||||||||
8,610 | Societe Generale SA | 185,478 | 232,977 | |||||||||
86,100 | Standard Chartered plc | 539,500 | 577,063 | |||||||||
3,229,241 | 3,278,536 | |||||||||||
Homebuilders — 5.1% | ||||||||||||
2,970 | Cavco Industries Inc.† | 428,164 | 715,325 | |||||||||
26,409 | Legacy Housing Corp.† | 331,589 | 566,737 | |||||||||
759,753 | 1,282,062 | |||||||||||
Institutional Brokerage — 6.9% | ||||||||||||
18,100 | Credit Suisse Group AG, ADR | 153,936 | 142,085 | |||||||||
110,000 | Daiwa Securities Group Inc. | 588,859 | 625,899 | |||||||||
29,310 | Jefferies Financial Group Inc. | 577,108 | 962,834 | |||||||||
1,319,903 | 1,730,818 |
Shares | Cost | Market Value | ||||||||||
Institutional Trust, Fiduciary, and Custody — 5.9% | ||||||||||||
8,450 | State Street Corp. | $ | 444,650 | $ | 736,164 | |||||||
15,050 | The Bank of New York Mellon Corp. | 663,828 | 746,931 | |||||||||
1,108,478 | 1,483,095 | |||||||||||
Insurance — 9.9% | ||||||||||||
144,118 | Aegon NV | 561,082 | 765,586 | |||||||||
100 | Alleghany Corp.† | 84,241 | 84,700 | |||||||||
937 | E-L Financial Corp. Ltd. | 698,062 | 661,817 | |||||||||
21,552 | HG Holdings Inc.† | 199,012 | 174,571 | |||||||||
15,829 | NN Group NV | 628,327 | 803,047 | |||||||||
2,170,724 | 2,489,721 | |||||||||||
Investment Management — 12.1% | ||||||||||||
1,100 | Diamond Hill Investment Group Inc. | 193,508 | 206,030 | |||||||||
13,150 | Franklin Resources Inc. | 303,830 | 367,148 | |||||||||
22,400 | Janus Henderson Group plc | 456,743 | 784,448 | |||||||||
101,137 | Pzena Investment Management Inc., Cl. A | 954,910 | 811,119 | |||||||||
56,263 | Westwood Holdings Group Inc. | 803,739 | 861,949 | |||||||||
2,712,730 | 3,030,694 | |||||||||||
Reinsurance — 3.9% | ||||||||||||
16,300 | Axis Capital Holdings Ltd. | 819,975 | 985,661 | |||||||||
TOTAL COMMON STOCKS | 20,462,008 | 24,104,756 |
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 3.8% | ||||||||||||
$ | 955,000 | U.S. Treasury Bills, 0.060% to 0.380%††, 04/21/22 to 06/09/22 | 954,788 | 954,805 | ||||||||
TOTAL INVESTMENTS — 100.0% | $ | 21,416,796 | 25,059,561 | |||||||||
Other Assets and Liabilities (Net) — (0.0)% | (1,571 | ) | ||||||||||
NET ASSETS — 100.0% | $ | 25,057,990 |
† | Non-income producing security. |
†† | Represents annualized yields at dates of purchase.
|
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
7
The Gabelli Global Financial Services Fund
Statement of Assets and Liabilities
March 31, 2022 (Unaudited)
Assets: | ||||
Investments, at value (cost $21,416,796) | $ | 25,059,561 | ||
Cash | 26,943 | |||
Foreign currency, at value (cost $27) | 27 | |||
Receivable for Fund shares sold | 4,064 | |||
Receivable from Adviser | 11,925 | |||
Dividends receivable | 121,908 | |||
Prepaid expenses | 23,417 | |||
Total Assets | 25,247,845 | |||
Liabilities: | ||||
Payable for investments purchased | 73,787 | |||
Payable for Fund shares redeemed | 40,897 | |||
Payable for investment advisory fees | 21,253 | |||
Payable for distribution fees | 128 | |||
Payable for shareholder communications | 25,150 | |||
Payable for legal and audit fees | 22,249 | |||
Other accrued expenses | 6,391 | |||
Total Liabilities | 189,855 | |||
Net Assets | ||||
(applicable to 2,261,375 shares outstanding) | $ | 25,057,990 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 21,932,981 | ||
Total distributable earnings | 3,125,009 | |||
Net Assets | $ | 25,057,990 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($517,991 ÷ 46,735 shares outstanding; 120,000,000 shares authorized) | $ | 11.08 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($17,042 ÷ 1,528 shares outstanding; 60,000,000 shares authorized) | $ | 11.15 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 11.83 | ||
Class C: | ||||
Net Asset Value and offering price per share ($1,146 ÷ 104 shares outstanding; 20,000,000 shares authorized) | $ | 11.02 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($24,521,811 ÷ 2,213,008 shares outstanding; 150,000,000 shares authorized) | $ | 11.08 |
Statement of Operations
For the Six Months Ended March 31, 2022 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $10,690) | $ | 298,594 | ||
Non-cash dividends | 125,028 | |||
Interest | 1,769 | |||
Total Investment Income | 425,391 | |||
Expenses: | ||||
Investment advisory fees | 130,862 | |||
Distribution fees - Class AAA | 834 | |||
Distribution fees - Class A | 35 | |||
Distribution fees - Class C | 6 | |||
Registration expenses | 28,783 | |||
Legal and audit fees | 20,236 | |||
Shareholder communications expenses | 10,101 | |||
Shareholder services fees | 6,214 | |||
Custodian fees | 5,919 | |||
Tax expense | 4,565 | |||
Directors’ fees | 863 | |||
Miscellaneous expenses | 5,846 | |||
Total Expenses | 214,264 | |||
Less: | ||||
Expense reimbursements (See Note 3) | (77,565 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (396 | ) | ||
Total Credits and Reimbursements | (77,961 | ) | ||
Net Expenses | 136,303 | |||
Net Investment Income | 289,088 | |||
Net Realized and Unrealized Gain/(Loss) on Investments, Forward Foreign Exchange Contracts, and Foreign Currency: | ||||
Net realized gain on investments | 275,129 | |||
Net realized gain on forward foreign exchange contracts | 206 | |||
Net realized gain on foreign currency transactions | 7 | |||
Net realized gain on investments, forward foreign exchange contracts, and foreign currency transactions | 275,342 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (1,670,993 | ) | ||
on foreign currency translations | (611 | ) | ||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | (1,671,604 | ) | ||
Net Realized and Unrealized Gain/(Loss) on Investments, Forward Foreign Exchange Contracts, and Foreign Currency | (1,396,262 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (1,107,174 | ) |
(a) | Redemption price varies based on the length of time held. |
See accompanying notes to financial statements.
8
The Gabelli Global Financial Services Fund
Statement of Changes in Net Assets
Six Months Ended | |||||||||||
March 31, 2022 | Year Ended | ||||||||||
(Unaudited) | September 30, 2021 | ||||||||||
Operations: | |||||||||||
Net investment income | $ | 289,088 | $ | 588,897 | |||||||
Net realized gain on investments, forward foreign exchange contracts, and foreign | |||||||||||
currency transactions | 275,342 | 141,531 | |||||||||
Net change in unrealized appreciation/depreciation on investments and foreign | |||||||||||
currency translations | (1,671,604 | ) | 8,856,888 | ||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (1,107,174 | ) | 9,587,316 | ||||||||
Distributions to Shareholders: | |||||||||||
Accumulated earnings | |||||||||||
Class AAA | (11,914 | ) | (858 | ) | |||||||
Class A | (541 | ) | (92 | ) | |||||||
Class C | (15 | ) | (8 | ) | |||||||
Class I | (520,749 | ) | (285,578 | ) | |||||||
Total Distributions to Shareholders | (533,219 | ) | (286,536 | ) | |||||||
Capital Share Transactions: | |||||||||||
Class AAA | (3,140 | ) | 453,786 | ||||||||
Class A | (16,201 | ) | 18,752 | ||||||||
Class C | 14 | 8 | |||||||||
Class I | 1,898,359 | 1,544,852 | |||||||||
Net Increase in Net Assets from Capital Share Transactions | 1,879,032 | 2,017,398 | |||||||||
Net Increase in Net Assets | 238,639 | 11,318,178 | |||||||||
Net Assets: | |||||||||||
Beginning of year | 24,819,351 | 13,501,173 | |||||||||
End of period | $ | 25,057,990 | $ | 24,819,351 |
See accompanying notes to financial statements.
9
The Gabelli Global Financial Services Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Period | Net Investment Income(a) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Total Distributions | Redemption Fees(a) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income | Operating Expenses Before Reimbursement | Operating Expenses Net of Reimbursement(b) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022(c) | $ | 11.80 | $ | 0.12 | (d) | $ | (0.61 | ) | $ | (0.49 | ) | $ | (0.23 | ) | $ | (0.23 | ) | $ | — | $ | 11.08 | (4.23 | )% | $ | 518 | 1.96 | %(d)(e) | 1.88 | %(e) | 1.28 | %(e)(f)(g) | 12 | % | |||||||||||||||||||||||||
2021 | 7.08 | 0.33 | 4.52 | 4.85 | (0.13 | ) | (0.13 | ) | — | 11.80 | 69.04 | 564 | 2.99 | 2.04 | 1.25 | (f) | 19 | |||||||||||||||||||||||||||||||||||||||||
2020 | 9.09 | 0.11 | (1.90 | ) | (1.79 | ) | (0.22 | ) | (0.22 | ) | 0.00 | (h) | 7.08 | (20.33 | ) | 47 | 1.34 | 2.51 | 1.25 | (f) | 18 | |||||||||||||||||||||||||||||||||||||
2019(i) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022(c) | $ | 11.86 | $ | 0.12 | (d) | $ | (0.61 | ) | $ | (0.49 | ) | $ | (0.22 | ) | $ | (0.22 | ) | $ | — | $ | 11.15 | (4.20 | )% | $ | 17 | 1.90 | %(d)(e) | 1.88 | %(e) | 1.28 | %(e)(f)(g) | 12 | % | |||||||||||||||||||||||||
2021 | 7.08 | 0.32 | 4.54 | 4.86 | (0.08 | ) | (0.08 | ) | — | 11.86 | 69.07 | 33 | 2.94 | 2.04 | 1.25 | (f) | 19 | |||||||||||||||||||||||||||||||||||||||||
2020 | 9.10 | 0.16 | (1.94 | ) | (1.78 | ) | (0.24 | ) | (0.24 | ) | 0.00 | (h) | 7.08 | (20.24 | ) | 8 | 2.12 | 2.51 | 1.25 | (f) | 18 | |||||||||||||||||||||||||||||||||||||
2019(i) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022(c) | $ | 11.68 | $ | 0.07 | (d) | $ | (0.59 | ) | $ | (0.52 | ) | $ | (0.14 | ) | $ | (0.14 | ) | $ | — | $ | 11.02 | (4.49 | )% | $ | 1 | 1.21 | %(d)(e) | 2.63 | %(e) | 2.03 | %(e)(f)(g) | 12 | % | |||||||||||||||||||||||||
2021 | 7.03 | 0.18 | 4.55 | 4.73 | (0.08 | ) | (0.08 | ) | — | 11.68 | 67.59 | 1 | 1.77 | 2.79 | 2.00 | (f) | 19 | |||||||||||||||||||||||||||||||||||||||||
2020 | 9.05 | 0.06 | (1.91 | ) | (1.85 | ) | (0.17 | ) | (0.17 | ) | 0.00 | (h) | 7.03 | (20.97 | ) | 1 | 0.76 | 3.26 | 2.00 | (f) | 18 | |||||||||||||||||||||||||||||||||||||
2019(i) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022(c) | $ | 11.80 | $ | 0.13 | (d) | $ | (0.60 | ) | $ | (0.47 | ) | $ | (0.25 | ) | $ | (0.25 | ) | $ | — | $ | 11.08 | (4.07 | )% | $ | 24,522 | 2.22 | %(d)(e) | 1.63 | %(e) | 1.03 | %(e)(f)(g) | 12 | % | |||||||||||||||||||||||||
2021 | 7.08 | 0.29 | 4.58 | 4.87 | (0.15 | ) | (0.15 | ) | — | 11.80 | 69.45 | 24,221 | 2.79 | 1.79 | 1.00 | (f) | 19 | |||||||||||||||||||||||||||||||||||||||||
2020 | 9.11 | 0.14 | (1.91 | ) | (1.77 | ) | (0.26 | ) | (0.26 | ) | 0.00 | (h) | 7.08 | (20.17 | ) | 13,445 | 1.84 | 2.26 | 1.00 | (f) | 18 | |||||||||||||||||||||||||||||||||||||
2019(i) | 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 investment at the beginning of the period and sold at the end of the period. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed expenses of $77,565, $165,217, $174,126, and $124,154 for the six months ended March 31, 2022 and the fiscal years ended September 30, 2021, 2020, and 2019, respectively. |
(c) | For the six months ended March 31, 2022, unaudited. |
(d) | Includes income resulting from special dividends. Without these dividends, the per share income amounts would have been $0.06 (Class AAA and Class A), $0.02 (Class C), and $0.08 (Class I), and the net investment income ratios would have been 1.00% (Class AAA), 0.95% (Class A), 0.25% (Class C), and 1.26% (Class I) for the six months ended March 31, 2022. |
(e) | Annualized. |
(f) | The Fund received credits from a designated broker who agreed to pay certain Fund expenses. For the six months ended March 31, 2022 and the fiscal years ended September 30, 2021 and 2020, if credits had not been received, the expense ratios would have been 1.29%, 1.26%, and 1.26% (Class AAA and Class A), 2.04%, 2.01%, and 2.01% (Class C), and 1.04%, 1.01%, and 1.01% (Class I), respectively. |
(g) | The Fund incurred tax expense for the six months ended March 31, 2022. If tax expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.25% (Class AAA and Class A), 2.00% (Class C), and 1.00% (Class I). |
(h) | Amount represents less than $0.005 per share. |
(i) | The Fund commenced investment operations on October 1, 2018. |
See accompanying notes to financial statements.
10
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Global Financial Services Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the 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.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
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 of 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 and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S.
11
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of March 31, 2022 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 03/31/22 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $ | 24,104,756 | — | $ | 24,104,756 | |||||||
U.S. Government Obligations | — | $ | 954,805 | 954,805 | ||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 24,104,756 | $ | 954,805 | $ | 25,059,561 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at March 31, 2022 or September 30, 2021.
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
12
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
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 the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2022, the Fund did not hold any restricted securities.
13
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
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 an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. 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. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2021 was ordinary income.
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2022:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $21,440,898 | $4,386,984 | $(768,321) | $3,618,663 |
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
14
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2022, the Fund incurred an excise tax expense of $4,565. As of March 31, 2022, 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 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, 2023. For the six months ended March 31, 2022, the Adviser reimbursed the Fund in the amount of $77,565. In addition, the Fund has also agreed, during the two year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent, that after giving effect to the repayments, such adjusted annualized total operating expenses of the Fund would not exceed the foregoing expense limitations of the value of the Fund’s average daily net assets for Class AAA, Class A, Class C, and Class I Shares. At March 31, 2022, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $416,907:
For the fiscal year ended September 30, 2020, expiring September 30, 2022 | $ | 174,126 | |||
For the fiscal year ended September 30, 2021, expiring September 30, 2023 | 165,216 | ||||
For the six months ended March 31, 2022, expiring September 30, 2024 | 77,565 | ||||
$ | 416,907 |
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2022, other than short term securities and U.S. Government obligations, aggregated $4,779,530 and $2,825,485, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2022, the Fund paid $1,751 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.
15
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
During the six months ended March 31, 2022, 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 $396.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. The Adviser did not seek a reimbursement during the six months ended March 31, 2022.
The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on March 1, 2023 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 135 basis points or the Overnight Bank Funding Rate plus 135 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. During the six months ended March 31, 2022, there were no borrowings under the line of credit.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2022 and the fiscal year ended September 30, 2021, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
16
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
Transactions in shares of capital stock were as follows:
Six Months Ended March 31, 2022 (Unaudited) | Year Ended September 30, 2021 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 60,367 | $ | 742,124 | 43,802 | $ | 484,049 | ||||||||||
Shares issued upon reinvestment of distributions | 992 | 11,563 | 96 | 858 | ||||||||||||
Shares redeemed | (62,431 | ) | (756,827 | ) | (2,821 | ) | (31,121 | ) | ||||||||
Net increase/(decrease) | (1,072 | ) | $ | (3,140 | ) | 41,077 | $ | 453,786 | ||||||||
Class A | ||||||||||||||||
Shares sold | 115 | $ | 1,375 | 1,707 | $ | 18,743 | ||||||||||
Shares issued upon reinvestment of distributions | 46 | 541 | 10 | 92 | ||||||||||||
Shares redeemed | (1,438 | ) | (18,117 | ) | (10 | ) | (83 | ) | ||||||||
Net increase/(decrease) | (1,277 | ) | $ | (16,201 | ) | 1,707 | $ | 18,752 | ||||||||
Class C | ||||||||||||||||
Shares issued upon reinvestment of distributions | 1 | $ | 14 | 1 | $ | 8 | ||||||||||
Net increase | 1 | $ | 14 | 1 | $ | 8 | ||||||||||
Class I | ||||||||||||||||
Shares sold | 122,688 | $ | 1,457,765 | 130,600 | $ | 1,318,396 | ||||||||||
Shares issued upon reinvestment of distributions | 44,460 | 517,966 | 31,795 | 305,172 | ||||||||||||
Shares redeemed | (7,082 | ) | (77,372 | ) | (7,406 | ) | (78,716 | ) | ||||||||
Net increase | 160,066 | $ | 1,898,359 | 154,989 | $ | 1,544,852 |
9. Significant Shareholder. As of March 31, 2022, approximately 71.91% of the Fund was beneficially owned by the Adviser and its affiliates, including managed accounts for which the Adviser and affiliates have voting control but disclaim pecuniary interest.
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.
17
The Gabelli Global Financial Services Fund
Liquidity Risk Managment Program (Unaudited)
In accordance with Rule 22e-4 under the 1940 Act, the Fund has established a liquidity risk management program (the LRM Program) to govern its approach to managing liquidity risk. The LRM Program is administered by the Liquidity Committee (the Committee), which is comprised of members of Gabelli Funds, LLC management. The Board has designated the Committee to administer the LRM Program.
The LRM Program’s principal objectives include supporting the Fund’s compliance with limits on investments in illiquid assets and mitigating the risk that the Fund will be unable to meet its redemption obligations in a timely manner. The LRM Program also includes elements that support the management and assessment of liquidity risk, including an annual assessment of factors that influence the Fund’s liquidity and the monthly classification and re-classification of certain investments that reflect the Committee’s assessment of their relative liquidity under current market conditions.
At a meeting of the Board held on May 12, 2021, the Board received a written report from the Committee regarding the design and operational effectiveness of the LRM Program. The Committee determined, and reported to the Board, that the LRM Program is reasonably designed to assess and manage the Fund’s liquidity risk and has operated adequately and effectively since its implementation. The Committee reported that there were no liquidity events that impacted the Fund or its ability to timely meet redemptions without dilution to existing shareholders. The Committee noted that the Fund is primarily invested in highly liquid securities and, accordingly, continues to be exempt from the requirement to determine a “highly liquid investment minimum” as defined in the Rule 22e-4. Because of that continued qualification for the exemption, the Fund has not adopted a “highly liquid investment minimum” amount. The Committee further noted that while changes to the LRM Program were made during the Review Period and reported to the Board, no material changes were made to the LRM Program as a result of the Committee’s annual review.
There can be no assurance that the LRM Program will achieve its objectives in the future. Please refer to the Fund’s Prospectus for more information regarding its exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
18
The Gabelli Global Financial Services Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)
During the six months ended March 31, 2022, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short term performance of the Fund (as of December 31, 2021) against a peer group of eight other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of the Fund and all retail and institutional global financial services funds, regardless of asset size or primary channel of distribution. The Independent Board Members noted that the Fund’s performance was in the third quartile for the one year period, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the first quintile for the one year period and third quintile for the two year and three year periods. The Independent Board Members noted that at its current size, the Fund was not competitive among its peer groups and encouraged the Adviser to explore ways to increase the size of the Fund.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with a pro rata administrative overhead charge and with a standalone administrative charge and noted the effect of the Deferral Agreement. The Independent Board Members also noted that a portion of the Fund’s portfolio transactions were executed by an affiliated broker of the Adviser and that another affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale and reviewed data provided by the Adviser.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a Broadridge selected peer group of eleven financial services funds, two of which were global, and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted the effect of the Deferral Agreement in place for the Fund. The Independent Board Members noted that the Fund’s expense ratios were below average within each peer group and that the Fund’s size was below average within the Adviser Peer Group and below average within the peer group of comparable funds selected by Broadridge. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the
19
The Gabelli Global Financial Services Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)
Gabelli funds. The Independent Board Members were presented with but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services and good ancillary services. The Independent Board Members noted the reasons for the Fund’s underperformance and the steps the Adviser was taking to improve performance and indicated that they would continue to evaluate the Fund. The Independent Board Members also concluded that the Fund’s expense ratios and profitability to the Adviser were acceptable and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend the continuation of the investment management agreement to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
20
Gabelli Funds and Your Personal Privacy
Who are we?
The Gabelli Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, 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 of non-public information do we collect about you if you become a fund shareholder?
If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is:
● | Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information. |
● | Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you. This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them. |
What information do we disclose and to whom do we disclose it?
We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www. sec.gov.
What do we do to protect your personal information?
We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information.
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THE GABELLI GLOBAL FINANCIAL SERVICES FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager’s Biography
Ian Lapey joined 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 degree 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.
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 Values 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 Former 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
Peter Goldstein Secretary and Vice President
Daniel Plourde Vice President
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.
GAB3630Q122SR
(b) | Not applicable. |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
The Gabelli Small Cap Growth Fund |
Schedule of Investments — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | ||||||
COMMON STOCKS — 97.6% | ||||||||
Aerospace — 0.6% | ||||||||
250,000 | Aerojet Rocketdyne Holdings Inc.† | $ | 1,025,125 | $ | 9,837,500 | |||
30,000 | Allied Motion Technologies Inc. | 664,462 | 895,200 | |||||
40,000 | Innovative Solutions and Support Inc.† | 130,088 | 322,400 | |||||
7,000 | Kratos Defense & Security Solutions Inc.† | 130,179 | 143,360 | |||||
1,949,854 | 11,198,460 | |||||||
Agriculture — 0.0% | ||||||||
10,000 | Cadiz Inc.† | 67,959 | 20,700 | |||||
47,282 | Limoneira Co. | 823,966 | 694,100 | |||||
891,925 | 714,800 | |||||||
Automotive — 0.1% | ||||||||
1,200 | PACCAR Inc. | 44,521 | 105,684 | |||||
69,000 | The Shyft Group Inc. | 330,890 | 2,491,590 | |||||
375,411 | 2,597,274 | |||||||
Automotive: Parts and Accessories — 3.7% | ||||||||
148,000 | BorgWarner Inc. | 693,961 | 5,757,200 | |||||
846,000 | Brembo SpA | 1,564,227 | 9,471,182 | |||||
94,022 | China Automotive Systems Inc.† | 443,798 | 286,767 | |||||
75,000 | Commercial Vehicle Group Inc.† | 665,983 | 633,750 | |||||
1,110,000 | Dana Inc. | 9,031,849 | 19,502,700 | |||||
410,000 | Modine Manufacturing Co.† | 3,741,867 | 3,694,100 | |||||
30,000 | Monro Inc. | 604,484 | 1,330,200 | |||||
4,300 | O’Reilly Automotive Inc.† | 92,532 | 2,945,328 | |||||
45,000 | Puradyn Filter Technologies Inc.† | 11,732 | 4 | |||||
180,000 | Standard Motor Products Inc. | 1,353,308 | 7,765,200 | |||||
245,458 | Strattec Security Corp.†(a) | 4,733,287 | 9,148,220 | |||||
280,000 | Tenneco Inc., Cl. A† | 1,006,626 | 5,129,600 | |||||
18,700 | Thor Industries Inc. | 173,180 | 1,471,690 | |||||
19,000 | Uni-Select Inc.† | 150,898 | 463,544 | |||||
24,267,732 | 67,599,485 | |||||||
Aviation: Parts and Services — 2.5% | ||||||||
20,000 | AAR Corp.† | 230,415 | 968,600 | |||||
9,500 | Astronics Corp.† | 13,628 | 122,835 | |||||
23,200 | Astronics Corp., Cl. B† | 38,562 | 301,020 | |||||
47,000 | Ducommun Inc.† | 968,850 | 2,462,330 | |||||
670,000 | Kaman Corp. | 9,964,092 | 29,131,600 | |||||
89,000 | Moog Inc., Cl. A | 1,052,574 | 7,814,200 | |||||
17,500 | Moog Inc., Cl. B | 581,070 | 1,436,837 | |||||
22,500 | Woodward Inc. | 162,330 | 2,810,475 | |||||
13,011,521 | 45,047,897 |
Shares | Cost | Market Value | |||||||
Broadcasting — 2.2% | |||||||||
119,000 | Beasley Broadcast Group Inc., Cl. A† | $ | 449,276 | $ | 209,440 | ||||
10,000 | Cogeco Communications Inc. | 340,851 | 827,741 | ||||||
23,300 | Cogeco Inc. | 592,837 | 1,436,599 | ||||||
180,000 | Corus Entertainment Inc., Cl. B | 660,010 | 708,395 | ||||||
40,000 | Fox Corp., Cl. A | 1,662,000 | 1,578,000 | ||||||
25,000 | Gray Television Inc. | 73,674 | 551,750 | ||||||
72,350 | Gray Television Inc., Cl. A | 386,480 | 1,487,516 | ||||||
260,000 | ITV plc† | 529,070 | 279,797 | ||||||
13,000 | Liberty Broadband Corp., Cl. A† | 78,211 | 1,703,780 | ||||||
11,000 | Liberty Broadband Corp., Cl. C† | 57,595 | 1,488,520 | ||||||
20,000 | Liberty Media Corp.- Liberty Formula One, Cl. A† | 66,962 | 1,262,600 | ||||||
27,000 | Liberty Media Corp.- Liberty Formula One, Cl. C† | 91,359 | 1,885,680 | ||||||
64,000 | Liberty Media Corp.- Liberty SiriusXM, Cl. A† | 214,254 | 2,925,440 | ||||||
34,452 | Liberty Media Corp.- Liberty SiriusXM, Cl. C† | 294,602 | 1,575,490 | ||||||
92,340 | Madison Square Garden Entertainment Corp.† | 2,147,239 | 7,692,845 | ||||||
22,900 | Nexstar Media Group Inc., Cl. A | 1,439,565 | 4,316,192 | ||||||
100,000 | Salem Media Group Inc.† | 0 | 339,000 | ||||||
255,000 | Sinclair Broadcast Group Inc., Cl. A | 4,169,298 | 7,145,100 | ||||||
480,000 | Sirius XM Holdings Inc. | 316,771 | 3,177,600 | ||||||
13,570,054 | 40,591,485 | ||||||||
Building and Construction — 6.0% | |||||||||
79,000 | Arcosa Inc. | 942,643 | 4,522,750 | ||||||
42,000 | Armstrong Flooring Inc.† | 226,629 | 60,060 | ||||||
84,000 | D.R. Horton Inc. | 911,911 | 6,258,840 | ||||||
28,000 | Gibraltar Industries Inc.† | 524,580 | 1,202,600 | ||||||
238,400 | Herc Holdings Inc. | 7,804,861 | 39,834,256 | ||||||
120,500 | KB Home | 1,184,837 | 3,901,790 | ||||||
3,000 | Legacy Housing Corp.† | 38,431 | 64,380 | ||||||
377,000 | Lennar Corp., Cl. B | 9,087,354 | 25,767,950 | ||||||
95,500 | MDC Holdings Inc. | 1,748,559 | 3,613,720 | ||||||
15,000 | Meritage Homes Corp.† | 240,072 | 1,188,450 | ||||||
2,100 | NVR Inc.† | 1,460,433 | 9,381,267 | ||||||
123,000 | PulteGroup Inc. | 710,669 | 5,153,700 | ||||||
64,000 | Titan Machinery Inc.† | 1,057,708 | 1,808,640 | ||||||
140,000 | Toll Brothers Inc. | 2,460,968 | 6,582,800 | ||||||
28,399,655 | 109,341,203 | ||||||||
Business Services — 2.7% | |||||||||
13,000 | ACCO Brands Corp. | 60,332 | 104,000 |
See accompanying notes to financial statements.
1 |
The Gabelli Small Cap Growth Fund |
Schedule of Investments (Continued) — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | |||||||
COMMON STOCKS (Continued) | |||||||||
Business Services (Continued) | |||||||||
570,000 | Clear Channel Outdoor Holdings Inc.† | $ | 1,214,257 | $ | 1,972,200 | ||||
400,000 | Diebold Nixdorf Inc.† | 3,940,682 | 2,692,000 | ||||||
60,000 | Element Solutions Inc. | 537,606 | 1,314,000 | ||||||
13,000 | GSE Systems Inc.† | 18,200 | 27,040 | ||||||
196,000 | IAA Inc.† | 1,593,186 | 7,497,000 | ||||||
36,500 | Live Nation Entertainment Inc.† | 307,269 | 4,293,860 | ||||||
40,000 | Loomis AB | 402,123 | 1,098,017 | ||||||
162,000 | Macquarie Infrastructure Holdings LLC | 7,832 | 604,260 | ||||||
16,000 | McGrath RentCorp | 411,253 | 1,359,680 | ||||||
20,000 | Sealed Air Corp. | 587,044 | 1,339,200 | ||||||
69,000 | Sohgo Security Services Co. Ltd. | 799,632 | 2,267,127 | ||||||
50,000 | Team Inc.† | 63,745 | 110,500 | ||||||
338,000 | The Interpublic Group of Companies Inc. | 1,425,712 | 11,982,100 | ||||||
25,000 | TransAct Technologies Inc.† | 115,198 | 176,500 | ||||||
1,612,400 | Trans-Lux Corp.†(a) | 1,587,444 | 1,148,916 | ||||||
34,000 | United Rentals Inc.† | 209,146 | 12,077,140 | ||||||
13,280,661 | 50,063,540 | ||||||||
Cable — 0.7% | |||||||||
52,500 | AMC Networks Inc., Cl. A† | 0 | 2,133,075 | ||||||
39,000 | DISH Network Corp., Cl. A† | 726,991 | 1,234,350 | ||||||
30,000 | EchoStar Corp., Cl. A† | 479,334 | 730,200 | ||||||
121,000 | Liberty Global plc, Cl. A† | 2,700,564 | 3,086,710 | ||||||
138,000 | Liberty Global plc, Cl. C† | 2,601,190 | 3,575,580 | ||||||
90,000 | WideOpenWest Inc.† | 760,756 | 1,569,600 | ||||||
7,268,835 | 12,329,515 | ||||||||
Communications Equipment — 0.0% | |||||||||
20,000 | Telesat Corp.† | 465,367 | 330,000 | ||||||
Computer Software and Services — 1.8% | |||||||||
86,000 | Activision Blizzard Inc. | 1,697,089 | 6,889,460 | ||||||
375,000 | Alithya Group Inc., Cl. A† | 1,134,058 | 956,250 | ||||||
150,000 | GTY Technology Holdings Inc.† | 1,319,372 | 484,500 | ||||||
10,000 | I3 Verticals Inc., Cl. A† | 243,267 | 278,600 | ||||||
12,000 | MKS Instruments Inc | 208,375 | 1,800,000 | ||||||
28,000 | Rockwell Automation Inc. | 642,872 | 7,840,840 | ||||||
33,000 | Tyler Technologies Inc.† | 65,775 | 14,681,370 | ||||||
8,117 | Vimeo Inc.† | 5,162 | 96,430 | ||||||
5,315,970 | 33,027,450 | ||||||||
Consumer Products — 2.2% | |||||||||
85,000 | 1-800-Flowers.com Inc., | ||||||||
Cl. A† | 1,026,008 | 1,084,600 | |||||||
68,000 | Brunswick Corp. | 1,372,115 | 5,500,520 | ||||||
32,000 | Chofu Seisakusho Co. Ltd. | 461,495 | 522,293 |
Shares | Cost | Market Value | |||||||
40,500 | Church & Dwight Co. Inc. | $ | 68,934 | $ | 4,024,890 | ||||
22,500 | Energizer Holdings Inc. | 888,924 | 692,100 | ||||||
2,000 | Harley-Davidson Inc. | 4,713 | 78,800 | ||||||
46,000 | Hunter Douglas NV† | 1,853,684 | 8,783,183 | ||||||
2,500 | Kobayashi Pharmaceutical Co. Ltd. | 103,323 | 201,659 | ||||||
3,800 | LCI Industries | 62,898 | 394,478 | ||||||
220,000 | Marine Products Corp. | 136,308 | 2,541,000 | ||||||
3,000 | National Presto Industries Inc. | 83,060 | 230,850 | ||||||
200,000 | Sally Beauty Holdings Inc.† | 1,174,250 | 3,126,000 | ||||||
215,000 | Samick Musical Instruments Co. Ltd. | 289,566 | 316,633 | ||||||
3,700 | Shimano Inc. | 414,540 | 855,705 | ||||||
10,000 | Steven Madden Ltd. | 21,602 | 386,400 | ||||||
1,000,000 | Swedish Match AB | 1,904,234 | 7,538,501 | ||||||
10,000 | The Scotts Miracle-Gro Co. | 174,942 | 1,229,600 | ||||||
9,500 | WD-40 Co. | 248,399 | 1,740,685 | ||||||
84,000 | Wolverine World Wide Inc. | 408,836 | 1,895,040 | ||||||
10,697,831 | 41,142,937 | ||||||||
Consumer Services — 0.9% | |||||||||
53,000 | Bowlin Travel Centers Inc.† | 53,948 | 272,950 | ||||||
3,000 | H&E Equipment Services Inc. | 67,163 | 130,560 | ||||||
5,000 | IAC/InterActiveCorp.† | 11,719 | 501,400 | ||||||
180,000 | KAR Auction Services Inc.† | 893,854 | 3,249,000 | ||||||
354,000 | Rollins Inc. | 336,751 | 12,407,700 | ||||||
1,363,435 | 16,561,610 | ||||||||
Diversified Industrial — 11.0% | |||||||||
10,000 | Acuity Brands Inc. | 94,378 | 1,893,000 | ||||||
53,500 | Albany International Corp., Cl. A | 1,044,848 | 4,511,120 | ||||||
192,500 | Ampco-Pittsburgh Corp.† | 955,813 | 1,214,675 | ||||||
64,000 | Burnham Holdings Inc., Cl. A | 1,088,648 | 887,040 | ||||||
357,500 | Crane Co. | 7,663,159 | 38,710,100 | ||||||
100,000 | EnPro Industries Inc. | 5,227,056 | 9,773,000 | ||||||
110,000 | Greif Inc., Cl. A | 2,079,606 | 7,156,600 | ||||||
96,362 | Greif Inc., Cl. B | 4,378,812 | 6,144,041 | ||||||
1,300,000 | Griffon Corp. | 14,096,530 | 26,039,000 | ||||||
16,932 | Hyster-Yale Materials Handling Inc. | 769,656 | 562,312 | ||||||
4,000 | JSP Corp. | 89,499 | 50,501 | ||||||
90,022 | Kimball International Inc., Cl. B | 845,282 | 760,686 | ||||||
87,217 | L.B. Foster Co., Cl. A† | 1,224,317 | 1,340,525 | ||||||
50,000 | Lawson Products Inc.† | 654,828 | 1,927,000 | ||||||
44,000 | Lincoln Electric Holdings Inc. | 1,125,965 | 6,063,640 | ||||||
37,800 | Lindsay Corp. | 792,407 | 5,934,978 |
See accompanying notes to financial statements.
2 |
The Gabelli Small Cap Growth Fund |
Schedule of Investments (Continued) — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | |||||||
COMMON STOCKS (Continued) | |||||||||
Diversified Industrial (Continued) | |||||||||
38,000 | Matthews International Corp., Cl. A | $ | 976,341 | $ | 1,229,680 | ||||
920,000 | Myers Industries Inc. | 12,634,530 | 19,872,000 | ||||||
72,000 | Oil-Dri Corp. of America | 501,026 | 2,062,800 | ||||||
13,000 | Olin Corp. | 203,184 | 679,640 | ||||||
320,000 | Park-Ohio Holdings Corp. | 2,947,314 | 4,502,400 | ||||||
12,500 | Pentair plc | 296,897 | 677,625 | ||||||
14,500 | Roper Technologies Inc. | 272,650 | 6,847,335 | ||||||
55,000 | Sonoco Products Co. | 1,585,365 | 3,440,800 | ||||||
51,000 | Standex International Corp. | 1,322,505 | 5,095,920 | ||||||
110,000 | Steel Connect Inc.† | 124,473 | 141,900 | ||||||
84,029 | Steel Partners Holdings LP† | 1,091,664 | 3,492,245 | ||||||
13,000 | T. Hasegawa Co. Ltd. | 236,725 | 278,389 | ||||||
7,000 | Terex Corp. | 166,670 | 249,620 | ||||||
339,000 | Textron Inc. | 2,053,938 | 25,214,820 | ||||||
387,678 | Tredegar Corp. | 5,743,832 | 4,648,259 | ||||||
227,000 | Trinity Industries Inc. | 2,582,107 | 7,799,720 | ||||||
44,000 | Ultra Electronics Holdings plc | 877,113 | 1,921,292 | ||||||
75,747,138 | 201,122,663 | ||||||||
Electronics — 2.2% | |||||||||
135,500 | Badger Meter Inc. | 1,720,972 | 13,510,705 | ||||||
213,500 | Bel Fuse Inc., Cl. A(a) | 4,038,795 | 4,483,500 | ||||||
460,000 | CTS Corp. | 3,922,113 | 16,256,400 | ||||||
34,000 | Daktronics Inc.† | 269,428 | 130,560 | ||||||
120,000 | Gentex Corp. | 1,305,089 | 3,500,400 | ||||||
20,000 | IMAX Corp.† | 158,565 | 378,600 | ||||||
30,000 | Renesas Electronics Corp.† | 194,117 | 352,883 | ||||||
63,000 | Stoneridge Inc.† | 312,595 | 1,307,880 | ||||||
11,921,674 | 39,920,928 | ||||||||
Energy and Utilities — 2.9% | |||||||||
18,000 | Avangrid Inc. | 697,500 | 841,320 | ||||||
13,000 | Callon Petroleum Co.† | 69,277 | 768,040 | ||||||
10,000 | Chesapeake Utilities Corp. | 130,041 | 1,377,600 | ||||||
35,000 | CMS Energy Corp. | 164,801 | 2,447,900 | ||||||
20,000 | Consolidated Water Co. Ltd. | 233,823 | 221,200 | ||||||
38,000 | Diamondback Energy Inc. | 1,878,453 | 5,209,040 | ||||||
50,000 | Dril-Quip Inc.† | 1,338,899 | 1,867,500 | ||||||
74,000 | Energy Recovery Inc.† | 316,427 | 1,490,360 | ||||||
25,000 | Landis+Gyr Group AG | 1,532,514 | 1,588,117 | ||||||
24,000 | Marathon Petroleum Corp. | 117,934 | 2,052,000 | ||||||
3,500 | Middlesex Water Co. | 54,166 | 368,095 | ||||||
11,000 | Northwest Natural Holding Co. | 518,541 | 568,920 | ||||||
21,500 | NorthWestern Corp. | 582,609 | 1,300,535 | ||||||
9,700 | Otter Tail Corp. | 190,136 | 606,250 | ||||||
1,795,000 | RPC Inc.† | 777,550 | 19,152,650 | ||||||
20,000 | Siemens Gamesa Renewable Energy SA† | 117,491 | 353,447 |
Shares | Cost | Market Value | |||||||
87,000 | SJW Group | $ | 1,570,913 | $ | 6,053,460 | ||||
32,500 | Southwest Gas Holdings Inc. | 533,592 | 2,544,425 | ||||||
9,000 | Spire Inc. | 354,680 | 645,840 | ||||||
33,200 | The York Water Co. | 464,396 | 1,493,004 | ||||||
13,000 | TravelCenters of America Inc.† | 393,311 | 558,480 | ||||||
55,000 | Vestas Wind Systems A/S | 94,711 | 1,633,862 | ||||||
12,131,765 | 53,142,045 | ||||||||
Entertainment — 1.4% | |||||||||
43,000 | Discovery Inc., Cl. A† | 624,892 | 1,071,560 | ||||||
65,000 | Discovery Inc., Cl. C† | 427,851 | 1,623,050 | ||||||
76,500 | Inspired Entertainment Inc.† | 479,260 | 940,950 | ||||||
120,000 | Liberty Media Corp.- Liberty Braves, Cl. A† | 2,805,865 | 3,453,600 | ||||||
200,000 | Liberty Media Corp.- Liberty Braves, Cl. C† | 2,918,192 | 5,582,000 | ||||||
34,000 | Madison Square Garden Sports Corp.† | 186,907 | 6,098,240 | ||||||
60,000 | Manchester United plc, Cl. A | 914,513 | 868,200 | ||||||
8,000 | Take-Two Interactive Software Inc.† | 60,304 | 1,229,920 | ||||||
3,500 | The Walt Disney Co.† | 20,071 | 480,060 | ||||||
35,000 | Universal Entertainment Corp.† | 210,518 | 787,169 | ||||||
57,000 | World Wrestling Entertainment Inc., Cl. A | 600,726 | 3,559,080 | ||||||
9,249,099 | 25,693,829 | ||||||||
Environmental Services — 0.5% | |||||||||
66,000 | Republic Services Inc. | 596,200 | 8,745,000 | ||||||
Equipment and Supplies — 15.6% | |||||||||
17,500 | A.O. Smith Corp. | 35,875 | 1,118,075 | ||||||
399,500 | AMETEK Inc. | 679,786 | 53,205,410 | ||||||
56,000 | AZZ Inc. | 1,967,745 | 2,701,440 | ||||||
13,000 | Chart Industries Inc.† | 427,173 | 2,233,010 | ||||||
149,000 | CIRCOR International Inc.† | 2,312,117 | 3,966,380 | ||||||
317,000 | Core Molding Technologies Inc.† | 637,421 | 3,410,920 | ||||||
109,000 | Crown Holdings Inc. | 439,573 | 13,634,810 | ||||||
2,025 | Danaher Corp. | 13,122 | 593,993 | ||||||
100,000 | Donaldson Co. Inc. | 575,112 | 5,193,000 | ||||||
48,000 | Entegris Inc. | 205,006 | 6,300,480 | ||||||
216,000 | Federal Signal Corp. | 1,144,716 | 7,290,000 | ||||||
241,000 | Flowserve Corp. | 1,445,694 | 8,651,900 | ||||||
158,000 | Franklin Electric Co. Inc. | 616,384 | 13,120,320 | ||||||
440,000 | Graco Inc. | 2,456,347 | 30,676,800 | ||||||
35,000 | IDEX Corp. | 128,247 | 6,710,550 | ||||||
141,500 | Interpump Group SpA | 629,216 | 7,153,621 | ||||||
7,800 | Littelfuse Inc. | 67,160 | 1,945,398 |
See accompanying notes to financial statements.
3 |
The Gabelli Small Cap Growth Fund |
Schedule of Investments (Continued) — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | |||||||
COMMON STOCKS (Continued) | |||||||||
Equipment and Supplies (Continued) | |||||||||
110,000 | Maezawa Kyuso Industries Co. Ltd. | $ | 359,609 | $ | 879,169 | ||||
60,000 | Minerals Technologies Inc. | 2,530,695 | 3,969,000 | ||||||
6,000 | MSA Safety Inc. | 179,592 | 796,200 | ||||||
677,000 | Mueller Industries Inc. | 17,784,706 | 36,673,090 | ||||||
335,000 | Mueller Water Products Inc., Cl. A | 2,243,532 | 4,328,200 | ||||||
3,500 | Teleflex Inc. | 53,317 | 1,241,905 | ||||||
169,500 | Tennant Co. | 2,846,579 | 13,356,600 | ||||||
744,000 | The Gorman-Rupp Co. | 11,389,014 | 26,694,720 | ||||||
92,000 | The Greenbrier Companies Inc. | 1,018,089 | 4,738,920 | ||||||
115,003 | The L.S. Starrett Co., Cl. A† | 840,851 | 884,373 | ||||||
30,000 | The Manitowoc Co. Inc.† | 283,157 | 452,400 | ||||||
50,000 | The Middleby Corp.† | 533,815 | 8,197,000 | ||||||
35,000 | The Timken Co. | 1,159,088 | 2,124,500 | ||||||
30,000 | The Toro Co. | 524,020 | 2,564,700 | ||||||
7,000 | Valmont Industries Inc. | 145,925 | 1,670,200 | ||||||
7,875 | Watsco Inc., Cl. B | 23,627 | 2,429,201 | ||||||
47,000 | Watts Water Technologies Inc., Cl. A | 892,108 | 6,560,730 | ||||||
56,588,418 | 285,467,015 | ||||||||
Financial Services — 4.5% | |||||||||
4,800 | Alleghany Corp.† | 730,311 | 4,065,600 | ||||||
8,240 | Ameris Bancorp | 71,897 | 361,571 | ||||||
25,000 | Argo Group International Holdings Ltd. | 493,734 | 1,032,000 | ||||||
12,000 | Capitol Federal Financial Inc. | 120,000 | 130,560 | ||||||
20,900 | Crazy Woman Creek Bancorp Inc. | 319,740 | 553,955 | ||||||
325,000 | Energy Transfer LP | 0 | 3,636,750 | ||||||
140 | Farmers & Merchants Bank of Long Beach | 927,895 | 1,148,000 | ||||||
335,450 | Flushing Financial Corp. | 5,505,473 | 7,497,308 | ||||||
66,000 | FNB Corp. | 659,922 | 821,700 | ||||||
195,000 | GAM Holding AG† | 601,170 | 241,204 | ||||||
278,000 | Hope Bancorp Inc. | 3,087,049 | 4,470,240 | ||||||
410,000 | Huntington Bancshares Inc. | 3,921,829 | 5,994,200 | ||||||
678,000 | KKR & Co. Inc. | 2,749,449 | 39,642,660 | ||||||
80,000 | Medallion Financial Corp. | 362,763 | 680,000 | ||||||
8,000 | PROG Holdings Inc.† | 5,116 | 230,160 | ||||||
80,000 | Pzena Investment Management Inc., Cl. A | 644,606 | 641,600 | ||||||
44,000 | Sandy Spring Bancorp Inc. | 1,491,612 | 1,976,480 | ||||||
18,000 | Sculptor Capital Management Inc. | 363,274 | 250,740 | ||||||
800 | SouthState Corp. | 58,904 | 65,272 | ||||||
41,000 | Synovus Financial Corp. | 1,049,450 | 2,009,000 | ||||||
16,000 | TFS Financial Corp. | 234,831 | 265,600 |
Shares | Cost | Market Value | |||||||
15,000 | Thomasville Bancshares Inc. | $ | 570,703 | $ | 986,250 | ||||
230,000 | Valley National Bancorp | 1,437,500 | 2,994,600 | ||||||
35,300 | Value Line Inc. | 440,004 | 2,365,100 | ||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 5,000 | ||||||
133,000 | Wright Investors’ Service Holdings Inc.† | 90,952 | 33,915 | ||||||
25,939,557 | 82,099,465 | ||||||||
Food and Beverage — 6.2% | |||||||||
425,000 | Arca Continental SAB de CV | 763,179 | 2,884,402 | ||||||
80,000 | Brown-Forman Corp., Cl. A | 460,939 | 5,019,200 | ||||||
40,000 | Bull-Dog Sauce Co. Ltd. | 95,622 | 701,824 |
900,000 | China Tontine Wines Group Ltd.† | 94,571 | 11,260 | ||||||
195,000 | Chr. Hansen Holding A/S | 8,106,517 | 14,404,381 | ||||||
283,000 | Crimson Wine Group Ltd.† | 2,484,231 | 2,289,470 | ||||||
220,000 | Denny’s Corp.† | 736,620 | 3,148,200 | ||||||
500,000 | Dynasty Fine Wines Group Ltd.† | 74,726 | 23,617 | ||||||
115,000 | Farmer Brothers Co.† | 1,080,788 | 818,800 | ||||||
412,000 | Flowers Foods Inc. | 979,233 | 10,592,520 | ||||||
114,000 | ITO EN Ltd. | 2,136,608 | 5,627,895 | ||||||
46,000 | Iwatsuka Confectionery Co. Ltd. | 1,592,452 | 1,475,522 | ||||||
23,000 | J & J Snack Foods Corp. | 509,737 | 3,567,300 | ||||||
107,000 | Kameda Seika Co. Ltd. | 4,299,932 | 3,493,716 | ||||||
240,000 | Kikkoman Corp. | 1,630,295 | 16,027,600 | ||||||
675,000 | Maple Leaf Foods Inc. | 11,752,263 | 16,198,056 | ||||||
6,000 | MEIJI Holdings Co. Ltd. | 117,526 | 325,776 | ||||||
16,000 | MGP Ingredients Inc. | 21,536 | 1,369,440 | ||||||
62,000 | Morinaga Milk Industry Co. Ltd. | 1,182,249 | 2,663,545 | ||||||
7,000 | National Beverage Corp. | 309,445 | 304,500 | ||||||
43,500 | Nissin Foods Holdings Co. Ltd. | 1,444,598 | 3,062,223 | ||||||
13,500 | Post Holdings Inc.† | 37,686 | 935,010 | ||||||
60,000 | Rock Field Co. Ltd. | 402,002 | 732,380 | ||||||
2,000 | The Boston Beer Co. Inc., Cl. A† | 107,510 | 776,940 | ||||||
57,200 | The J.M. Smucker Co. | 1,323,825 | 7,745,452 | ||||||
625,000 | Tingyi (Cayman Islands) Holding Corp. | 1,326,207 | 1,053,196 | ||||||
36,050 | Tootsie Roll Industries Inc. | 300,545 | 1,260,308 | ||||||
370,000 | Vina Concha y Toro SA | 676,677 | 596,853 | ||||||
950,000 | Vitasoy International Holdings Ltd. | 542,729 | 1,802,178 | ||||||
20,000 | Willamette Valley Vineyards Inc.† | 73,225 | 180,600 | ||||||
100,000 | Yakult Honsha Co. Ltd. | 2,378,861 | 5,355,676 | ||||||
47,042,334 | 114,447,840 |
See accompanying notes to financial statements. |
4 |
The Gabelli Small Cap Growth Fund |
Schedule of Investments (Continued) — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | |||||||
COMMON STOCKS (Continued) | |||||||||
Health Care — 5.9% | |||||||||
1,400 | Align Technology Inc.† | $ | 9,766 | $ | 610,400 | ||||
6,700 | Bio-Rad Laboratories Inc., Cl. A† | 283,604 | 3,773,641 | ||||||
13,500 | Bruker Corp. | 107,977 | 868,050 | ||||||
1,000 | Chemed Corp. | 13,731 | 506,550 | ||||||
21,500 | CONMED Corp. | 441,065 | 3,193,825 | ||||||
32,000 | Covetrus Inc.† | 153,127 | 537,280 | ||||||
397,000 | Cutera Inc.† | 4,708,074 | 27,393,000 | ||||||
12,500 | Dexcom Inc.† | 68,464 | 6,395,000 | ||||||
10,000 | Evolent Health Inc., Cl. A† | 103,500 | 323,000 | ||||||
8,000 | Global Blood Therapeutics Inc.† | 273,937 | 277,120 | ||||||
151,500 | Globus Medical Inc., Cl. A† | 3,394,653 | 11,177,670 | ||||||
70,500 | Henry Schein Inc.† | 483,808 | 6,146,895 | ||||||
28,000 | ICU Medical Inc.† | 892,631 | 6,233,920 | ||||||
33,200 | Masimo Corp.† | 795,375 | 4,831,928 | ||||||
80,000 | Meridian Bioscience Inc.† | 1,243,246 | 2,076,800 | ||||||
45,000 | Neogen Corp.† | 430,861 | 1,387,800 | ||||||
32,500 | Neuronetics Inc.† | 361,570 | 98,475 | ||||||
90,000 | NuVasive Inc.† | 2,261,410 | 5,103,000 | ||||||
216,000 | OPKO Health Inc.† | 569,980 | 743,040 | ||||||
129,000 | Orthofix Medical Inc.† | 2,865,834 | 4,218,300 | ||||||
17,000 | Patterson Cos. Inc. | 369,442 | 550,290 | ||||||
70,500 | Quidel Corp.† | 312,578 | 7,928,430 | ||||||
24,000 | Seikagaku Corp. | 280,995 | 172,499 | ||||||
25,000 | STERIS plc | 1,221,860 | 6,044,250 | ||||||
1,900 | Straumann Holding AG | 170,618 | 3,056,490 | ||||||
3,000 | Stryker Corp. | 142,188 | 802,050 | ||||||
39,000 | Surgalign Holdings Inc.† | 152,638 | 11,868 | ||||||
30,000 | SurModics Inc.† | 608,729 | 1,359,900 | ||||||
22,500 | Teladoc Health Inc.† | 746,163 | 1,622,925 | ||||||
100 | The Cooper Companies Inc. | 3,627 | 41,759 | ||||||
38,000 | United-Guardian Inc. | 332,419 | 856,520 | ||||||
23,803,870 | 108,342,675 | ||||||||
Home Furnishings — 0.3% | |||||||||
171,500 | Bassett Furniture Industries Inc. | 1,682,604 | 2,840,040 | ||||||
5,000 | Ethan Allen Interiors Inc. | 116,387 | 130,350 | ||||||
70,000 | La-Z-Boy Inc. | 1,140,329 | 1,845,900 | ||||||
2,939,320 | 4,816,290 | ||||||||
Hotels and Gaming — 4.3% | |||||||||
54,000 | Boyd Gaming Corp. | 230,415 | 3,552,120 | ||||||
191,040 | Canterbury Park Holding Corp. | 1,967,490 | 4,202,880 | ||||||
105,000 | Churchill Downs Inc. | 942,777 | 23,286,900 | ||||||
120,000 | Formosa International Hotels Corp. | 775,629 | 720,381 | ||||||
530,000 | Full House Resorts Inc.† | 1,541,909 | 5,093,300 |
Shares | Cost | Market Value | |||||||
48,508 | Gaming and Leisure Properties Inc., REIT | $ | 389,693 | $ | 2,276,480 | ||||
7,000 | GAN Ltd.† | 100,809 | 33,740 | ||||||
750,000 | Genting Singapore Ltd. | 688,148 | 450,991 | ||||||
93,000 | Golden Entertainment Inc.† | 722,120 | 5,400,510 | ||||||
2,500,000 | Mandarin Oriental International Ltd.† | 3,339,115 | 5,000,000 | ||||||
3,500 | Penn National Gaming Inc.† | 15,199 | 148,470 | ||||||
253,000 | Ryman Hospitality Properties Inc., REIT† | 4,091,634 | 23,470,810 | ||||||
2,500,000 | The Hongkong & Shanghai Hotels Ltd.† | 2,476,225 | 2,664,905 |
127,000 | The Marcus Corp.† | 1,342,952 | 2,247,900 | ||||||
13,500 | Wynn Resorts Ltd.† | 0 | 1,076,490 | ||||||
18,624,115 | 79,625,877 | ||||||||
Machinery — 2.5% | |||||||||
336,000 | Astec Industries Inc. | 11,735,785 | 14,448,000 | ||||||
1,420,000 | CNH Industrial NV | 3,654,806 | 22,521,200 | ||||||
90,000 | Kennametal Inc. | 1,650,215 | 2,574,900 | ||||||
5,000 | Nordson Corp. | 83,104 | 1,135,400 | ||||||
160,000 | The Eastern Co. | 3,114,959 | 3,726,400 | ||||||
101,657 | Twin Disc Inc.† | 1,100,449 | 1,691,572 | ||||||
21,339,318 | 46,097,472 | ||||||||
Manufactured Housing and Recreational Vehicles — 1.5% | |||||||||
70,500 | Cavco Industries Inc.† | 1,401,644 | 16,979,925 | ||||||
70,300 | Nobility Homes Inc. | 781,024 | 2,390,200 | ||||||
81,500 | Skyline Champion Corp.† | 471,554 | 4,472,720 | ||||||
52,000 | Winnebago Industries Inc. | 592,044 | 2,809,560 | ||||||
3,246,266 | 26,652,405 | ||||||||
Metals and Mining — 0.1% | |||||||||
45,000 | Ivanhoe Mines Ltd., Cl. A† | 117,783 | 419,710 | ||||||
95,000 | Kinross Gold Corp. | 412,123 | 558,600 | ||||||
529,906 | 978,310 | ||||||||
Publishing — 1.0% | |||||||||
2,500 | Graham Holdings Co., Cl. B | 1,163,667 | 1,528,675 | ||||||
5,000 | John Wiley & Sons Inc., Cl. B | 19,375 | 265,900 | ||||||
34,000 | News Corp., Cl. A | 48,038 | 753,100 | ||||||
775,000 | The E.W. Scripps Co., Cl. A† | 4,022,887 | 16,112,250 | ||||||
5,253,967 | 18,659,925 | ||||||||
Real Estate — 3.1% | |||||||||
78,500 | Capital Properties Inc., Cl. A | 935,416 | 971,830 | ||||||
7,567 | Gyrodyne LLC† | 208,654 | 107,754 | ||||||
255,000 | Indus Realty Trust Inc., REIT | 4,641,656 | 18,637,950 | ||||||
17,500 | Lamar Advertising Co., Cl. A, REIT | 91,707 | 2,033,150 | ||||||
89,800 | Morguard Corp. | 1,138,278 | 9,901,238 |
See accompanying notes to financial statements. |
5 |
The Gabelli Small Cap Growth Fund |
Schedule of Investments (Continued) — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | |||||||
COMMON STOCKS (Continued) | |||||||||
Real Estate (Continued) | |||||||||
15,000 | Reading International Inc., Cl. A† | $ | 90,420 | $ | 64,200 | ||||
4,000 | Reading International Inc., Cl. B† | 77,243 | 76,000 | ||||||
30,000 | Seritage Growth Properties, Cl. A, REIT† | 406,254 | 379,800 | ||||||
130,000 | Tejon Ranch Co.† | 2,933,139 | 2,373,800 | ||||||
390,000 | The St. Joe Co. | 5,995,272 | 23,103,600 | ||||||
100,000 | Trinity Place Holdings Inc.† | 340,344 | 190,000 | ||||||
16,858,383 | 57,839,322 | ||||||||
Retail — 5.4% | |||||||||
128,500 | AutoNation Inc.† | 2,084,848 | 12,796,030 | ||||||
9,000 | Big 5 Sporting Goods Corp. | 53,145 | 154,350 | ||||||
900 | Biglari Holdings Inc., Cl. A† | 548,428 | 646,583 | ||||||
85,000 | Copart Inc.† | 715,897 | 10,664,950 | ||||||
523 | Hertz Global Holdings Inc.† | 5,957 | 11,584 | ||||||
45 | Hertz Global Holdings Inc.† | 62 | 997 | ||||||
340,700 | Ingles Markets Inc., Cl. A | 4,719,643 | 30,339,335 | ||||||
30,000 | Lands’ End Inc.† | 395,280 | 507,600 | ||||||
70,000 | Movado Group Inc. | 1,036,083 | 2,733,500 | ||||||
155,500 | Nathan’s Famous Inc. | 187,982 | 8,423,435 | ||||||
71,000 | Penske Automotive Group Inc. | 1,036,332 | 6,654,120 | ||||||
93,000 | Pets at Home Group plc | 159,631 | 441,520 | ||||||
336,500 | Rush Enterprises Inc., Cl. B | 2,398,027 | 16,269,775 | ||||||
10,000 | Salvatore Ferragamo SpA† | 198,277 | 190,054 | ||||||
10,000 | The Cheesecake Factory Inc.† | 93,275 | 397,900 | ||||||
32,000 | Tractor Supply Co. | 274,440 | 7,467,840 | ||||||
60,000 | Village Super Market Inc., Cl. A | 1,471,077 | 1,470,000 | ||||||
3,300 | Vroom Inc.† | 38,438 | 8,778 | ||||||
6,700 | Weis Markets Inc. | 185,081 | 478,514 | ||||||
600 | Winmark Corp. | 41,191 | 132,000 | ||||||
15,643,094 | 99,788,865 | ||||||||
Specialty Chemicals — 2.5% | |||||||||
3,500 | Albemarle Corp. | 52,132 | 774,025 | ||||||
28,000 | Ashland Global Holdings Inc. | 210,127 | 2,755,480 | ||||||
485,000 | Ferro Corp.† | 1,473,123 | 10,543,900 | ||||||
94,000 | GCP Applied Technologies Inc.† | 2,203,756 | 2,953,480 | ||||||
248,000 | H.B. Fuller Co. | 2,785,028 | 16,385,360 | ||||||
37,500 | Hawkins Inc. | 640,205 | 1,721,250 | ||||||
42,000 | Huntsman Corp | 199,389 | 1,575,420 | ||||||
5,600 | NewMarket Corp. | 561,284 | 1,816,528 | ||||||
8,400 | Quaker Chemical Corp. | 128,364 | 1,451,604 | ||||||
34,000 | Sensient Technologies Corp. | 658,217 | 2,854,300 | ||||||
2,500 | Takasago International Corp. | 66,073 | 56,391 |
Shares | Cost | Market Value | |||||||
91,200 | The General Chemical Group Inc.† | $ | 1,185 | $ | 0 | ||||
95,000 | Valvoline Inc. | 275,086 | 2,998,200 | ||||||
9,253,969 | 45,885,938 | ||||||||
Telecommunications — 0.8% | |||||||||
60,000 | Consolidated Communications Holdings Inc.† | 369,591 | 354,000 | ||||||
68,500 | Gogo Inc.† | 356,433 | 1,305,610 | ||||||
3,500 | IDT Corp., Cl. B† | 11,346 | 119,315 | ||||||
61,000 | Iridium Communications Inc.† | 541,699 | 2,459,520 | ||||||
86,000 | Nuvera Communications Inc. | 634,234 | 1,866,200 |
82,000 | Rogers Communications Inc., Cl. B | 293,920 | 4,653,500 | ||||||
110,000 | Shenandoah Telecommunications Co. | 906,413 | 2,593,800 | ||||||
850,000 | VEON Ltd., ADR† | 1,586,578 | 580,380 | ||||||
4,700,214 | 13,932,325 | ||||||||
Transportation — 2.5% | |||||||||
366,000 | GATX Corp. | 10,403,367 | 45,138,780 | ||||||
18,600 | Irish Continental Group plc† | 13,660 | 79,733 | ||||||
125,053 | Navigator Holdings Ltd.† | 1,200,727 | 1,526,897 | ||||||
11,617,754 | 46,745,410 | ||||||||
Wireless Communications — 0.0% | |||||||||
25,000 | United States Cellular Corp.† | 876,740 | 755,750 | ||||||
TOTAL COMMON STOCKS | 494,761,352 | 1,791,305,005 | |||||||
CLOSED-END FUNDS — 0.1% | |||||||||
57,000 | The Central Europe, Russia, and Turkey Fund Inc. | 1,234,853 | 763,230 | ||||||
32,729 | The European Equity Fund Inc. | 325,355 | 300,125 | ||||||
119,537 | The New Germany Fund Inc. | 1,659,113 | 1,366,308 | ||||||
3,219,321 | 2,429,663 | ||||||||
TOTAL CLOSED-END FUNDS | 3,219,321 | 2,429,663 | |||||||
PREFERRED STOCKS — 0.2% | |||||||||
Automotive: Parts and Accessories — 0.2% | |||||||||
92,000 | Jungheinrich AG | 628,894 | 2,680,753 |
See accompanying notes to financial statements. |
6 |
The Gabelli Small Cap Growth Fund |
Schedule of Investments (Continued) — March 31, 2022 (Unaudited) |
Shares | Cost | Market Value | ||||||||
RIGHTS — 0.0% | ||||||||||
Communications Equipment — 0.0% | ||||||||||
60,500 | Pineapple Holdings Inc., CVR† | $ | 0 | $ | 0 | |||||
Entertainment — 0.0% | ||||||||||
1,680,000 | Media General Inc., CVR†(b) | 2 | 2 | |||||||
TOTAL RIGHTS | 2 | 2 | ||||||||
WARRANTS — 0.0% | ||||||||||
Business Services — 0.0% | ||||||||||
1 | Internap Corp., expire 05/08/24† | 0 | 652 | |||||||
Diversified Industrial — 0.0% | ||||||||||
140,000 | Ampco-Pittsburgh Corp., expire 08/01/25† | 95,648 | 114,114 | |||||||
TOTAL WARRANTS | 95,648 | 114,766 | ||||||||
Principal | ||||||||||
Amount | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 1.2% | ||||||||||
$ | 22,595,000 | U.S. Treasury Bills, 0.315% to 0.395%††, 06/02/22 to 06/09/22 | 22,582,433 | 22,582,134 | ||||||
TOTAL MISCELLANEOUS | ||||||||||
INVESTMENTS — 0.8%(c) | 9,972,851 | 14,428,714 | ||||||||
TOTAL INVESTMENTS — 99.9% | $ | 531,260,501 | 1,833,541,037 | |||||||
Other Assets and Liabilities (Net) — 0.1% | 1,480,031 | |||||||||
NET ASSETS — 100.0% | $ | 1,835,021,068 |
(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. |
†† | Represents annualized yields at dates of purchase. |
ADR | American Depositary Receipt |
CVR | Contingent Value Right |
REIT | Real Estate Investment Trust |
See accompanying notes to financial statements. |
7 |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the 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 for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(2)(1) | Not applicable. |
(a)(2)(2) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Gabelli Equity Series Funds, Inc. |
By (Signature and Title)* | /s/ Bruce N. Alpert | |
Bruce N. Alpert, Principal Executive Officer |
Date | June 3, 2022 |
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 | June 3, 2022 |
By (Signature and Title)* | /s/ John C. Ball | |
John C. Ball, Principal Financial Officer and Treasurer |
Date | June 3, 2022 |
* Print the name and title of each signing officer under his or her signature.