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)
John C. Ball
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: September 30
Date of reporting period: September 30, 2023
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.
Gabelli Equity Series, Inc, (the “Company”) is filing this amendment No. 1 to the Form N-CSR for the purposes of including Ernst & Young LLP’s report of Independent Registered Accounting Firm (“Auditor’s Report”). The Auditor’s Report in Form N-CSR filed on December 8, 2023 did not include the reference to the full Schedule of Investments. This amendment includes the correct Audit Report.
Item 1. | Reports to Stockholders. |
(a) | The Report to Shareholders is attached herewith. |
The Gabelli Equity Income Fund
Annual Report — September 30, 2023
To Our Shareholders,
For the fiscal year ended September 30, 2023, the net asset value (NAV) total return per Class AAA Share of The Gabelli Equity Income Fund was 11.9% compared with a total return of 21.6% for the Standard & Poor’s (S&P) 500 Index. Other classes of shares are available. See page 3 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2023.
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)
The Fed has repeatedly stated its goal of trying to bring inflation down to the 2% annual rate, but that clearly will not happen this year and probably not next year either, even though inflation is slowly moving down. The fight against inflation continues to be a major concern for the Federal Reserve, and a major topic on Wall Street. The balance sheet of the Federal Reserve increased dramatically during the financial crisis, and it ballooned even further since the start of the COVID-19 pandemic. The massive infusion of liquidity helped the economy and stock market through the financial crisis and the COVID lockdowns, but it also helped to contribute to the inflation we are seeing now. Thus, it needs to come down in the years ahead. In the spring of 2022, total assets on the Fed’s balance sheet were about $9 trillion, and that number has now come down to about $8 trillion. We still need to move another two trillion off the Fed’s balance sheet. As the process of quantitative tightening occurs, liquidity will be draining from the financial system, and this will be a headwind for future stock returns, especially for companies with poor free cash flow. Luckily, in (y)our portfolio, we focus on stocks that have strong free cash flow and good prospects for growing their dividends.
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 sharehold-er 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. |
The third quarter of 2023 was down for virtually every major equity index, although the first half of 2023 saw healthy gains in the U.S. stock market. Small caps, as measured by the Russell 2000, were down about 5% in the quarter, while the S&P 500 total return was down just over 3%. Growth stocks were down a little bit less than value stocks during the quarter. Although the Fed is probably at the end of its tightening cycle, the Fed did raise rates by 25 basis points in the quarter to 5.5%. The bigger move in interest rates, however, was with the 10 year note, which moved up by 76 basis points in the quarter, to about 4.6%. Since mortgage rates are heavily dependent on the 10 year note, mortgage rates also rose during the year, hitting multi-year highs. The labor market generally remained strong in the quarter, and labor strikes picked up. There were several new labor settlements that increased wages by a meaningful amount, including with the Airline Pilots Association and the Teamsters. The United Auto Workers were on strike demanding even higher wage increases.
Of the eleven sectors that make up the S&P 500 index, most were down in the third quarter, while two sectors were up. The best performing sector was Energy, up over 12%, followed by Communication services, up just over 3%. The two worst performing sectors in the third quarter were Utilities, down about 9%, and Real Estate, also down about 9%. Rising interest rates have been hurting both sectors.
One of the best performing stocks in (y)our portfolio during the fiscal year was FEMSA, Fomento Economico Mexicano SAB de CV (1.8% of net assets as of September 30, 2023), FEMSA is a beverage and retail conglomerate. The holding company enjoys a global presence operating through its subsidiaries, primarily Coca-Cola FEMSA that the Fund also holds. Microsoft Corporation (2.0%) is an American multinational technology corporation best known for the Windows line of operating systems, the Microsoft 365 suite of productivity applications, and the Edge web browser. GATX (2.1%), a major railcar lessor was also a strong contributor during the fiscal year.
There were also a few stock holdings in (y)our portfolio that declined over the fiscal year. One of the leading detractors was CVS Health Corporation (1.2%), which is a healthcare company that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; and Aetna, a health insurance provider. Another leading detractor was Brown-Forman (2.3%), a spirits company based in Kentucky that owns Jack Daniel’s and other premium brands. An additional detractor was Diageo plc (1.5%), a British multinational alcoholic beverage company that is a major distributor of Scotch whisky, Guinness, Captain Morgan and other spirits.
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 September 30, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
1 Year | 5 Year | 10 Year | 15 Year | Since Inception (1/2/92) | ||||||||||||||||
Class AAA (GABEX) | 11.92 | % | 5.70 | % | 6.65 | % | 7.91 | % | 9.20 | % | ||||||||||
S&P 500 Index (c) | 21.62 | 9.92 | 11.91 | 11.28 | 9.77 | |||||||||||||||
Lipper Equity Income Fund Average (c) | 13.10 | 6.92 | 8.59 | 8.78 | 8.33 | |||||||||||||||
Class A (GCAEX) (d) | 11.94 | 5.71 | 6.66 | 7.92 | 9.08 | |||||||||||||||
With sales charge (e) | 5.51 | 4.47 | 6.03 | 7.49 | 9.00 | |||||||||||||||
Class C (GEICX) (d)(f) | 11.23 | 4.92 | 5.86 | 7.11 | 8.70 | |||||||||||||||
With contingent deferred sales charge (g) | 9.71 | 4.82 | 5.81 | 7.08 | 8.69 | |||||||||||||||
Class C1 (GCCEX) (d) | 11.34 | 4.94 | 5.87 | 7.12 | 8.70 | |||||||||||||||
With contingent deferred sales charge (g) | 10.34 | 4.94 | 5.87 | 7.12 | 8.70 | |||||||||||||||
Class I (GCIEX) (d) | 12.19 | 5.97 | 6.92 | 8.19 | 9.34 |
(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 C1 Shares on December 31, 2002, and Class I Shares on January 11, 2008. The actual performance of the Class A Shares and Class C1 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) | The Class C1 Share NAVs are used to calculate the performance for the period prior to the issuance of the Class C Shares on June 1, 2023. | |
(g) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
In the current prospectuses dated June 1, 2023, the expense ratios for Class AAA, A, C, and I Shares are 1.42%, 1.42%, 2.17%, and 1.17%, respectively. See page 13 for the expense ratios for the year ended September 30, 2023. 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
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI EQUITY INCOME FUND (CLASS AAA SHARES) AND S&P 500 INDEX (Unaudited)
Average Annual Total Returns* | |||
1 Year | 5 Year | 10 Year | |
Class AAA | 11.92% | 5.70% | 6.65% |
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
4
The Gabelli Equity Income Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from April 1, 2023 through September 30, 2023 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2023.
Beginning Account Value 04/01/23 | Ending Account Value 09/30/23 | Annualized Expense Ratio | Expenses Paid During Period | |||||||||||||
The Gabelli Equity Income Fund | ||||||||||||||||
Actual Fund Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 970.80 | 1.45% | $ | 7.16 | * | ||||||||
Class A | $ | 1,000.00 | $ | 971.10 | 1.45% | $ | 7.16 | * | ||||||||
Class C | $ | 1,000.00 | $ | 894.70 | 2.29% | $ | 7.31 | ** | ||||||||
Class C1 | $ | 1,000.00 | $ | 963.30 | 2.20% | $ | 10.83 | * | ||||||||
Class I | $ | 1,000.00 | $ | 972.50 | 1.20% | $ | 5.93 | * | ||||||||
Hypothetical 5% Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,017.80 | 1.45% | $ | 7.33 | * | ||||||||
Class A | $ | 1,000.00 | $ | 1,017.80 | 1.45% | $ | 7.33 | * | ||||||||
Class C | $ | 1,000.00 | $ | 1,013.59 | 2.29% | $ | 11.56 | * | ||||||||
Class C1 | $ | 1,000.00 | $ | 1,014.04 | 2.20% | $ | 11.11 | * | ||||||||
Class I | $ | 1,000.00 | $ | 1,019.05 | 1.20% | $ | 6.07 | * |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. | |
** | Expenses are equal to the Fund’s annualized expense ratio since inception, multiplied by the average account value over the period, multiplied by the number of days in the period since inception June 1, 2023 through September 30, 2023 (122 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 September 30, 2023:
The Gabelli Equity Income Fund
Food and Beverage | 17.9 | % | ||
Financial Services | 13.1 | % | ||
Diversified Industrial | 7.3 | % | ||
Equipment and Supplies | 6.0 | % | ||
Automotive: Parts and Accessories | 5.1 | % | ||
Retail | 4.7 | % | ||
Health Care | 4.5 | % | ||
Energy and Utilities: Oil | 4.4 | % | ||
Machinery | 4.3 | % | ||
Business Services | 4.0 | % | ||
Telecommunications | 3.8 | % | ||
Energy and Utilities: Natural Gas | 2.3 | % | ||
Computer Software and Services | 2.3 | % | ||
Electronics | 2.2 | % | ||
Transportation | 2.1 | % | ||
Building and Construction | 2.1 | % | ||
Computer Hardware | 1.8 | % | ||
Metals and Mining | 1.6 | % | ||
Consumer Products | 1.4 | % | ||
Entertainment | 1.2 | % | ||
Energy and Utilities: Services | 1.0 | % |
Specialty Chemicals | 1.0 | % | ||
Agriculture | 0.8 | % | ||
Aerospace | 0.7 | % | ||
Energy and Utilities: Integrated | 0.6 | % | ||
Automotive | 0.5 | % | ||
Broadcasting | 0.5 | % | ||
Real Estate Investment Trusts | 0.4 | % | ||
Energy and Utilities: Electric | 0.4 | % | ||
Communications Equipment | 0.3 | % | ||
U.S. Government Obligations | 0.2 | % | ||
Environmental Services | 0.2 | % | ||
Wireless Communications | 0.2 | % | ||
Energy and Utilities: Water | 0.2 | % | ||
Consumer Services | 0.1 | % | ||
Hotels and Gaming | 0.1 | % | ||
Cable and Satellite | 0.1 | % | ||
Publishing | 0.0 | %* | ||
Other Assets and Liabilities (Net) | 0.6 | % | ||
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.
6
The Gabelli Equity Income Fund
Schedule of Investments — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 99.2% | ||||||||||||
Aerospace — 0.7% | ||||||||||||
600 | L3Harris Technologies Inc. | $ | 111,189 | $ | 104,472 | |||||||
2,000 | Lockheed Martin Corp. | 47,350 | 817,920 | |||||||||
8,200 | Rockwell Automation Inc. | 246,347 | 2,344,134 | |||||||||
404,886 | 3,266,526 | |||||||||||
Agriculture — 0.8% | ||||||||||||
50,000 | Archer-Daniels-Midland Co. | 1,281,567 | 3,771,000 | |||||||||
10,000 | The Mosaic Co. | 155,338 | 356,000 | |||||||||
1,436,905 | 4,127,000 | |||||||||||
Automotive — 0.5% | ||||||||||||
2,000 | Daimler Truck Holding AG | 73,522 | 69,398 | |||||||||
20,000 | Iveco Group NV† | 175,902 | 187,387 | |||||||||
14,500 | PACCAR Inc. | 370,272 | 1,232,790 | |||||||||
44,000 | Traton SE | 796,414 | 927,124 | |||||||||
1,416,110 | 2,416,699 | |||||||||||
Automotive: Parts and Accessories — 5.1% | ||||||||||||
80,000 | Dana Inc. | 1,251,012 | 1,173,600 | |||||||||
166,400 | Genuine Parts Co. | 7,546,099 | 24,024,832 | |||||||||
8,797,111 | 25,198,432 | |||||||||||
Broadcasting — 0.5% | ||||||||||||
65,000 | Liberty Global plc, Cl. A† | 1,281,813 | 1,112,800 | |||||||||
11,000 | Liberty Global plc, Cl. C† | 232,019 | 204,160 | |||||||||
38,000 | Sinclair Inc. | 645,171 | 426,360 | |||||||||
44,000 | TEGNA Inc. | 713,699 | 641,080 | |||||||||
2,872,702 | 2,384,400 | |||||||||||
Building and Construction — 2.1% | ||||||||||||
30,000 | Carrier Global Corp. | 254,819 | 1,656,000 | |||||||||
39,500 | Fortune Brands Innovations Inc. | 336,150 | 2,455,320 | |||||||||
23,500 | Herc Holdings Inc. | 823,065 | 2,795,090 | |||||||||
47,500 | Johnson Controls International plc | 871,643 | 2,527,475 | |||||||||
10,000 | Knife River Corp.† | 360,497 | 488,300 | |||||||||
22,500 | Masterbrand Inc.† | 70,729 | 273,375 | |||||||||
2,716,903 | 10,195,560 | |||||||||||
Business Services — 4.0% | ||||||||||||
9,500 | Automatic Data Processing Inc. | 472,804 | 2,285,510 | |||||||||
24,300 | Mastercard Inc., Cl. A | 521,531 | 9,620,613 | |||||||||
2,400 | MSC Industrial Direct Co. Inc., Cl. A | 165,490 | 235,560 | |||||||||
30,500 | Pentair plc | 583,548 | 1,974,875 | |||||||||
16,000 | S&P Global Inc. | 728,327 | 5,846,560 | |||||||||
2,471,700 | 19,963,118 | |||||||||||
Cable and Satellite — 0.1% | ||||||||||||
40,000 | DISH Network Corp., Cl. A† | 578,565 | 234,400 |
Shares | Cost | Market Value | ||||||||||
16,000 | EchoStar Corp., Cl. A† | $ | 361,271 | $ | 268,000 | |||||||
939,836 | 502,400 | |||||||||||
Communications Equipment — 0.3% | ||||||||||||
42,000 | Corning Inc. | 481,575 | 1,279,740 | |||||||||
Computer Hardware — 1.8% | ||||||||||||
31,000 | Apple Inc. | 567,613 | 5,307,510 | |||||||||
25,800 | International Business Machines Corp. | 2,064,886 | 3,619,740 | |||||||||
2,632,499 | 8,927,250 | |||||||||||
Computer Software and Services — 2.3% | ||||||||||||
90,000 | Hewlett Packard Enterprise Co. | 509,279 | 1,563,300 | |||||||||
31,300 | Microsoft Corp. | 874,522 | 9,882,975 | |||||||||
1,383,801 | 11,446,275 | |||||||||||
Consumer Products — 1.4% | ||||||||||||
1,500 | Ball Corp. | 78,314 | 74,670 | |||||||||
5,500 | Edgewell Personal Care Co. | 166,525 | 203,280 | |||||||||
49,500 | Energizer Holdings Inc. | 1,254,450 | 1,585,980 | |||||||||
30,000 | Essity AB, Cl. A | 529,907 | 649,395 | |||||||||
1,000 | National Presto Industries Inc. | 30,628 | 72,460 | |||||||||
34,000 | Reckitt Benckiser Group plc | 1,008,398 | 2,403,548 | |||||||||
3,000 | The Scotts Miracle-Gro Co. | 148,954 | 155,040 | |||||||||
41,000 | Unilever plc, ADR | 818,025 | 2,025,400 | |||||||||
4,035,201 | 7,169,773 | |||||||||||
Consumer Services — 0.1% | ||||||||||||
1,600 | Allegion plc | 19,252 | 166,720 | |||||||||
14,000 | Rollins Inc. | 13,919 | 522,620 | |||||||||
33,171 | 689,340 | |||||||||||
Diversified Industrial — 7.3% | ||||||||||||
1,200 | AMETEK Inc. | 173,774 | 177,312 | |||||||||
68,500 | Crane Co. | 1,330,682 | 6,085,540 | |||||||||
32,000 | Crane NXT Co. | 307,723 | 1,778,240 | |||||||||
33,500 | Eaton Corp. plc | 1,238,138 | 7,144,880 | |||||||||
1,500 | Honeywell International Inc. | 32,160 | 277,110 | |||||||||
8,600 | Ingersoll Rand Inc. | 45,820 | 547,992 | |||||||||
48,000 | ITT Inc. | 961,318 | 4,699,680 | |||||||||
32,500 | Jardine Matheson Holdings Ltd. | 1,602,432 | 1,508,650 | |||||||||
19,200 | Modine Manufacturing Co.† | 399,387 | 878,400 | |||||||||
17,000 | Myers Industries Inc. | 338,975 | 304,810 | |||||||||
21,500 | nVent Electric plc | 227,954 | 1,139,285 | |||||||||
20,000 | Svenska Cellulosa AB SCA, Cl. A | 83,897 | 274,586 | |||||||||
110,000 | Textron Inc. | 1,047,092 | 8,595,400 | |||||||||
146,000 | Toray Industries Inc. | 973,915 | 760,091 | |||||||||
7,000 | Trane Technologies plc | 126,408 | 1,420,370 |
See accompanying notes to financial statements.
7
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Diversified Industrial (Continued) | ||||||||||||
25,000 | Trinity Industries Inc. | $ | 357,494 | $ | 608,750 | |||||||
9,247,169 | 36,201,096 | |||||||||||
Electronics — 2.2% | ||||||||||||
6,500 | Sony Group Corp. | 138,865 | 532,388 | |||||||||
33,000 | Sony Group Corp., ADR | 963,587 | 2,719,530 | |||||||||
48,000 | TE Connectivity Ltd. | 1,582,951 | 5,929,440 | |||||||||
10,000 | Texas Instruments Inc. | 147,000 | 1,590,100 | |||||||||
2,832,403 | 10,771,458 | |||||||||||
Energy and Utilities: Electric — 0.4% | ||||||||||||
8,000 | Avangrid Inc. | 230,688 | 241,360 | |||||||||
20,000 | Korea Electric Power Corp., ADR† | 224,961 | 128,800 | |||||||||
13,500 | Portland General Electric Co. | 586,781 | 546,480 | |||||||||
63,000 | The AES Corp. | 291,918 | 957,600 | |||||||||
1,334,348 | 1,874,240 | |||||||||||
Energy and Utilities: Integrated — 0.6% | ||||||||||||
50,000 | Energy Transfer LP | 0 | 701,500 | |||||||||
21,000 | Eni SpA | 220,487 | 338,717 | |||||||||
6,500 | Iberdrola SA, ADR | 98,020 | 290,810 | |||||||||
57,000 | OGE Energy Corp. | 760,843 | 1,899,810 | |||||||||
1,079,350 | 3,230,837 | |||||||||||
Energy and Utilities: Natural Gas — 2.3% | ||||||||||||
115,000 | National Fuel Gas Co. | 5,209,133 | 5,969,650 | |||||||||
11,500 | ONE Gas Inc. | 48,202 | 785,220 | |||||||||
59,000 | ONEOK Inc. | 0 | 3,742,370 | |||||||||
16,000 | Southwest Gas Holdings Inc. | 695,847 | 966,560 | |||||||||
5,953,182 | 11,463,800 | |||||||||||
Energy and Utilities: Oil — 4.4% | ||||||||||||
25,500 | Callon Petroleum Co.† | 940,569 | 997,560 | |||||||||
40,000 | Chevron Corp. | 1,622,327 | 6,744,800 | |||||||||
4,500 | ConocoPhillips | 82,502 | 539,100 | |||||||||
6,800 | Devon Energy Corp. | 69,081 | 324,360 | |||||||||
12,000 | Exxon Mobil Corp. | 312,521 | 1,410,960 | |||||||||
55,000 | Hess Corp. | 2,616,724 | 8,415,000 | |||||||||
18,000 | Marathon Petroleum Corp. | 234,717 | 2,724,120 | |||||||||
13,500 | TotalEnergies SE, ADR | 230,259 | 887,760 | |||||||||
1,706 | Vitesse Energy Inc. | 11,197 | 39,050 | |||||||||
6,119,897 | 22,082,710 | |||||||||||
Energy and Utilities: Services — 1.0% | ||||||||||||
4,000 | Dril-Quip Inc.† | 96,160 | 112,680 | |||||||||
94,500 | Halliburton Co. | 1,852,120 | 3,827,250 | |||||||||
23,000 | MDU Resources Group Inc. | 461,993 | 450,340 | |||||||||
11,000 | Schlumberger NV | 285,160 | 641,300 | |||||||||
2,695,433 | 5,031,570 |
Shares | Cost | Market Value | ||||||||||
Energy and Utilities: Water — 0.2% | ||||||||||||
3,600 | Essential Utilities Inc. | $ | 26,544 | $ | 123,588 | |||||||
22,000 | Severn Trent plc | 579,449 | 634,818 | |||||||||
605,993 | 758,406 | |||||||||||
Entertainment — 1.2% | ||||||||||||
20,000 | Atlanta Braves Holdings Inc., Cl. A† | 598,398 | 781,400 | |||||||||
80,200 | Grupo Televisa SAB, ADR | 471,779 | 244,610 | |||||||||
6,000 | Madison Square Garden Entertainment Corp.† | 69,853 | 197,460 | |||||||||
2,500 | Madison Square Garden Sports Corp. | 301,304 | 440,750 | |||||||||
268,800 | Paramount Global, Cl. A | 4,750,120 | 4,244,352 | |||||||||
6,000 | Sphere Entertainment Co.† | 58,706 | 222,960 | |||||||||
6,250,160 | 6,131,532 | |||||||||||
Environmental Services — 0.2% | ||||||||||||
7,500 | Republic Services Inc. | 284,610 | 1,068,825 | |||||||||
Equipment and Supplies — 6.0% | ||||||||||||
6,000 | A.O. Smith Corp. | 15,988 | 396,780 | |||||||||
1,000 | Crown Holdings Inc. | 81,810 | 88,480 | |||||||||
14,000 | Danaher Corp. | 406,841 | 3,473,400 | |||||||||
160,000 | Flowserve Corp. | 2,043,195 | 6,363,200 | |||||||||
50,000 | Graco Inc. | 853,683 | 3,644,000 | |||||||||
23,000 | Minerals Technologies Inc. | 962,788 | 1,259,480 | |||||||||
117,500 | Mueller Industries Inc. | 2,091,794 | 8,831,300 | |||||||||
15,000 | Parker-Hannifin Corp. | 809,385 | 5,842,800 | |||||||||
7,265,484 | 29,899,440 | |||||||||||
Financial Services — 13.1% | ||||||||||||
20,000 | AllianceBernstein Holding LP | 38,050 | 607,000 | |||||||||
19,000 | American Express Co. | 459,057 | 2,834,610 | |||||||||
19,000 | Ameris Bancorp | 200,916 | 729,410 | |||||||||
3,700 | Argo Group International Holdings Ltd. | 66,521 | 110,408 | |||||||||
5,195 | Banco Santander Chile, ADR | 29,250 | 95,276 | |||||||||
124,500 | Bank of America Corp. | 820,374 | 3,408,810 | |||||||||
12,000 | BNP Paribas SA | 513,665 | 766,675 | |||||||||
32,200 | Interactive Brokers Group Inc., Cl. A | 483,716 | 2,787,232 | |||||||||
14,500 | Jefferies Financial Group Inc. | 246,744 | 531,135 | |||||||||
8,500 | JPMorgan Chase & Co. | 164,948 | 1,232,670 | |||||||||
48,500 | Julius Baer Group Ltd. | 1,558,649 | 3,118,709 | |||||||||
6,000 | Kinnevik AB, Cl. A† | 122,062 | 60,519 | |||||||||
63,500 | Loews Corp. | 2,344,007 | 4,020,185 | |||||||||
11,200 | M&T Bank Corp. | 956,465 | 1,416,240 | |||||||||
14,500 | Marsh & McLennan Companies Inc. | 394,880 | 2,759,350 | |||||||||
10,000 | Morgan Stanley | 497,928 | 816,700 | |||||||||
5,800 | Popular Inc. | 93,651 | 365,458 |
See accompanying notes to financial statements.
8
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Financial Services (Continued) | ||||||||||||
64,000 | SLM Corp. | $ | 311,552 | $ | 871,680 | |||||||
122,000 | State Street Corp. | 5,565,671 | 8,169,120 | |||||||||
6,300 | T. Rowe Price Group Inc. | 157,957 | 660,681 | |||||||||
297,000 | The Bank of New York Mellon Corp. | 7,458,271 | 12,667,050 | |||||||||
15,000 | The Goldman Sachs Group Inc. | 1,887,537 | 4,853,550 | |||||||||
23,500 | The PNC Financial Services Group Inc. | 1,746,952 | 2,885,095 | |||||||||
600 | UBS Group AG | 13,361 | 14,873 | |||||||||
53,000 | Valley National Bancorp | 331,250 | 453,680 | |||||||||
116,500 | Webster Financial Corp. | 2,694,630 | 4,696,115 | |||||||||
105,000 | Wells Fargo & Co. | 2,940,970 | 4,290,300 | |||||||||
32,099,034 | 65,222,531 | |||||||||||
Food and Beverage — 17.9% | ||||||||||||
1,000 | Anheuser-Busch InBev SA/ NV | 15,876 | 55,516 | |||||||||
195,600 | Brown-Forman Corp., Cl. A | 3,372,741 | 11,364,360 | |||||||||
34,000 | Campbell Soup Co. | 1,061,533 | 1,396,720 | |||||||||
19,000 | Coca-Cola Europacific Partners plc | 427,500 | 1,187,120 | |||||||||
10,000 | Coca-Cola Femsa SAB de CV, ADR | 340,563 | 784,400 | |||||||||
5,200 | Constellation Brands Inc., Cl. A | 157,302 | 1,306,916 | |||||||||
35,000 | Danone SA | 1,347,433 | 1,933,816 | |||||||||
33,000 | Davide Campari-Milano NV | 110,940 | 389,538 | |||||||||
49,500 | Diageo plc, ADR | 3,063,927 | 7,384,410 | |||||||||
81,500 | Fomento Economico Mexicano SAB de CV, ADR | 1,986,761 | 8,895,725 | |||||||||
1,000 | General Mills Inc. | 26,640 | 63,990 | |||||||||
1,675,000 | Grupo Bimbo SAB de CV, Cl. A | 1,343,694 | 8,052,302 | |||||||||
93,000 | Heineken NV | 4,417,436 | 8,206,142 | |||||||||
132,000 | ITO EN Ltd. | 2,344,495 | 4,247,778 | |||||||||
17,500 | Kellanova | 910,204 | 1,041,425 | |||||||||
4,000 | McCormick & Co. Inc. | 137,120 | 315,520 | |||||||||
31,200 | McCormick & Co. Inc., Non-Voting | 675,130 | 2,359,968 | |||||||||
30,500 | Mondelēz International Inc., Cl. A | 549,430 | 2,116,700 | |||||||||
31,800 | Nestlé SA | 653,040 | 3,604,012 | |||||||||
54,000 | Nissin Foods Holdings Co. Ltd. | 1,657,298 | 4,489,762 | |||||||||
31,000 | PepsiCo Inc. | 2,087,320 | 5,252,640 | |||||||||
23,800 | Pernod Ricard SA | 2,337,623 | 3,971,909 | |||||||||
31,200 | Remy Cointreau SA | 1,660,939 | 3,814,854 | |||||||||
30,000 | Sapporo Holdings Ltd. | 664,276 | 954,965 |
Shares | Cost | Market Value | ||||||||||
4,500 | The Boston Beer Co. Inc., Cl. A† | $ | 1,466,395 | $ | 1,752,885 | |||||||
10,000 | The Coca-Cola Co. | 208,400 | 559,800 | |||||||||
1,000 | The Hershey Co. | 36,300 | 200,080 | |||||||||
50,000 | The Kraft Heinz Co. | 1,403,471 | 1,682,000 | |||||||||
64,000 | Yakult Honsha Co. Ltd. | 799,840 | 1,555,889 | |||||||||
35,263,627 | 88,941,142 | |||||||||||
Health Care — 4.5% | ||||||||||||
4,400 | Abbott Laboratories | 134,434 | 426,140 | |||||||||
3,000 | AbbVie Inc. | 74,560 | 447,180 | |||||||||
3,200 | Alcon Inc. | 106,703 | 246,592 | |||||||||
75,000 | Baxter International Inc. | 1,657,103 | 2,830,500 | |||||||||
4,400 | Bio-Rad Laboratories Inc., Cl. A† | 432,651 | 1,577,180 | |||||||||
87,500 | Bristol-Myers Squibb Co. | 2,105,675 | 5,078,500 | |||||||||
69,500 | Demant A/S† | 672,691 | 2,882,677 | |||||||||
6,400 | GSK plc, ADR | 270,041 | 232,000 | |||||||||
8,000 | Haleon plc, ADR | 57,324 | 66,640 | |||||||||
32,000 | Henry Schein Inc.† | 483,167 | 2,376,000 | |||||||||
16,000 | Merck & Co. Inc. | 283,402 | 1,647,200 | |||||||||
12,000 | Novartis AG, ADR | 585,253 | 1,222,320 | |||||||||
24,000 | Perrigo Co. plc | 780,640 | 766,800 | |||||||||
21,500 | Pfizer Inc. | 387,082 | 713,155 | |||||||||
42,500 | Roche Holding AG, ADR | 781,653 | 1,442,025 | |||||||||
2,300 | Zimmer Biomet Holdings Inc. | 193,245 | 258,106 | |||||||||
10,000 | Zimvie Inc.† | 86,104 | 94,100 | |||||||||
9,091,728 | 22,307,115 | |||||||||||
Hotels and Gaming — 0.1% | ||||||||||||
12,000 | MGM Resorts International | 144,776 | 441,120 | |||||||||
1,500 | Wynn Resorts Ltd. | 71,983 | 138,615 | |||||||||
216,759 | 579,735 | |||||||||||
Machinery — 4.3% | ||||||||||||
6,000 | Caterpillar Inc. | 35,181 | 1,638,000 | |||||||||
146,000 | CNH Industrial NV | 2,160,868 | 1,766,600 | |||||||||
44,400 | Deere & Co. | 1,385,417 | 16,755,672 | |||||||||
3,700 | Otis Worldwide Corp. | 210,099 | 297,147 | |||||||||
8,500 | Xylem Inc. | 274,006 | 773,755 | |||||||||
4,065,571 | 21,231,174 | |||||||||||
Metals and Mining — 1.6% | ||||||||||||
83,000 | Freeport-McMoRan Inc. | 1,050,009 | 3,095,070 | |||||||||
138,000 | Newmont Corp. | 3,315,522 | 5,099,100 | |||||||||
4,365,531 | 8,194,170 | |||||||||||
Publishing — 0.0% | ||||||||||||
3,000 | Value Line Inc. | 41,976 | 131,160 | |||||||||
Real Estate Investment Trusts — 0.4% | ||||||||||||
62,000 | Weyerhaeuser Co. | 944,665 | 1,900,920 |
See accompanying notes to financial statements.
9
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Retail — 4.7% | ||||||||||||
14,000 | Cie Financiere Richemont SA, Cl. A | $ | 470,500 | $ | 1,713,006 | |||||||
82,000 | Copart Inc.† | 181,043 | 3,533,380 | |||||||||
6,200 | Costco Wholesale Corp. | 283,039 | 3,502,752 | |||||||||
86,100 | CVS Health Corp. | 2,890,791 | 6,011,502 | |||||||||
44,600 | Ingles Markets Inc., Cl. A | 693,507 | 3,359,718 | |||||||||
63,000 | Seven & i Holdings Co. Ltd. | 1,897,136 | 2,468,315 | |||||||||
3,000 | The Home Depot Inc. | 83,470 | 906,480 | |||||||||
75,000 | Walgreens Boots Alliance Inc. | 2,325,665 | 1,668,000 | |||||||||
1,000 | Walmart Inc. | 43,340 | 159,930 | |||||||||
8,868,491 | 23,323,083 | |||||||||||
Specialty Chemicals — 1.0% | ||||||||||||
2,700 | Albemarle Corp. | 27,305 | 459,108 | |||||||||
2,500 | Ashland Inc. | 58,813 | 204,200 | |||||||||
2,200 | FMC Corp. | 57,788 | 147,334 | |||||||||
43,000 | H.B. Fuller Co. | 888,240 | 2,950,230 | |||||||||
2,000 | NewMarket Corp. | 7,719 | 910,080 | |||||||||
600 | Quaker Chemical Corp. | 6,478 | 96,000 | |||||||||
1,046,343 | 4,766,952 | |||||||||||
Telecommunications — 3.8% | ||||||||||||
105,000 | BCE Inc. | 2,004,577 | 4,007,850 | |||||||||
190,000 | Deutsche Telekom AG, ADR. | 2,540,248 | 3,982,400 | |||||||||
14,000 | Orange SA, ADR | 160,021 | 160,860 | |||||||||
70,000 | Telefonica SA, ADR | 293,673 | 284,900 | |||||||||
228,500 | Telephone and Data Systems Inc. | 3,799,565 | 4,183,835 | |||||||||
94,000 | TELUS Corp. | 713,431 | 1,535,960 | |||||||||
154,000 | Verizon Communications Inc. | 5,199,286 | 4,991,140 | |||||||||
14,710,801 | 19,146,945 | |||||||||||
Transportation — 2.1% | ||||||||||||
97,000 | GATX Corp. | 3,095,584 | 10,556,510 | |||||||||
Wireless Communications — 0.2% | ||||||||||||
80,000 | BT Group plc, Cl. A | 214,864 | 113,909 | |||||||||
40,000 | Telesat Corp., New York† | 372,453 | 572,000 | |||||||||
20,000 | Turkcell Iletisim Hizmetleri A/S, ADR† | 91,562 | 94,600 | |||||||||
5,000 | United States Cellular Corp.† | 88,375 | 214,850 | |||||||||
767,254 | 995,359 | |||||||||||
TOTAL COMMON STOCKS | 187,867,793 | 493,377,223 |
Shares | Cost | Market Value | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Retail — 0.0% | ||||||||||||
28,000 | Cie Financiere Richemont SA, expire 11/22/23† | $ | 0 | $ | 20,794 |
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 0.2% | ||||||||||||
$ | 1,125,000 | U.S. Treasury Bill, | ||||||||||
5.379%††, 12/28/23 | 1,110,403 | 1,110,577 | ||||||||||
TOTAL INVESTMENTS — 99.4% | $ | 188,978,196 | 494,508,594 | |||||||||
Other Assets and Liabilities (Net) — 0.6% | 2,957,521 | |||||||||||
NET ASSETS — 100.0% | $ | 497,466,115 |
† | Non-income producing security. | |
†† | Represents annualized yield at date of purchase. | |
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
10
The Gabelli Equity Income Fund
Statement of Assets and Liabilities
September 30, 2023
Assets: | ||||
Investments, at value (cost $188,978,196) | $ | 494,508,594 | ||
Cash | 61,831 | |||
Receivable for Fund shares sold | 2,138,179 | |||
Receivable for investments sold | 394,437 | |||
Dividends and interest receivable | 1,567,706 | |||
Prepaid expenses | 35,958 | |||
Total Assets | 498,706,705 | |||
Liabilities: | ||||
Payable for Fund shares redeemed | 562,266 | |||
Payable for investment advisory fees | 427,709 | |||
Payable for distribution fees | 92,234 | |||
Payable for accounting fees | 7,500 | |||
Other accrued expenses | 150,881 | |||
Total Liabilities | 1,240,590 | |||
Net Assets | ||||
(applicable to 71,254,483 shares outstanding) | $ | 497,466,115 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 196,285,777 | ||
Total distributable earnings | 301,180,338 | |||
Net Assets | $ | 497,466,115 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($227,247,903 ÷ 31,151,834 shares outstanding; 150,000,000 shares authorized) | $ | 7.29 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($114,513,452 ÷ 15,995,807 shares outstanding; 50,000,000 shares authorized) | $ | 7.16 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 7.60 | ||
Class C: | ||||
Net Asset Value and offering price per share ($607,715 ÷ 70,863 shares outstanding; 50,000,000 shares authorized) | $ | 8.58 | (a) | |
Class C1: | ||||
Net Asset Value and redemption price per share ($21,071,225 ÷ 8,471,133 shares outstanding; 50,000,000 shares authorized) | $ | 2.49 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($134,025,820 ÷ 15,564,846 shares outstanding; 50,000,000 shares authorized) | $ | 8.61 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2023
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $307,620) | $ | 11,471,561 | ||
Interest | 989,690 | |||
Total Investment Income | 12,461,251 | |||
Expenses: | ||||
Investment advisory fees | 5,371,936 | |||
Distribution fees - Class AAA | 624,175 | |||
Distribution fees - Class A | 282,917 | |||
Distribution fees - Class C | 989 | |||
Distribution fees - Class C1 | 289,695 | |||
Shareholder services fees | 349,057 | |||
Legal and audit fees | 180,808 | |||
Shareholder communications expenses | 105,766 | |||
Custodian fees | 89,089 | |||
Registration expenses | 65,587 | |||
Directors’ fees | 48,081 | |||
Accounting fees | 45,000 | |||
Interest expense | 5,602 | |||
Miscellaneous expenses | 60,114 | |||
Total Expenses | 7,518,816 | |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (7,747 | ) | ||
Net Expenses | 7,511,069 | |||
Net Investment Income | 4,950,182 | |||
Net Realized and Unrealized Gain on Investments and Foreign Currency: | ||||
Net realized gain on investments | 40,671,936 | |||
Net realized gain on foreign currency transactions | 2,430,397 | |||
Net realized gain on investments and foreign currency transactions | 43,102,333 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | 11,153,019 | |||
on foreign currency translations | 9,489 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 11,162,508 | |||
Net Realized and Unrealized Gain on Investments and Foreign Currency | 54,264,841 | |||
Net Increase in Net Assets Resulting from Operations | $ | 59,215,023 |
See accompanying notes to financial statements.
11
The Gabelli Equity Income Fund
Statement of Changes in Net Assets
Year Ended September 30, 2023 | Year Ended September 30, 2022 | |||||||
Operations: | ||||||||
Net investment income | $ | 4,950,182 | $ | 3,158,103 | ||||
Net realized gain on investments and foreign currency transactions | 43,102,333 | 44,877,858 | ||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 11,162,508 | (100,609,026 | ) | |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 59,215,023 | (52,573,065 | ) | |||||
Distributions to Shareholders: | ||||||||
Accumulated earnings | ||||||||
Class AAA | (21,408,216 | ) | (22,272,154 | ) | ||||
Class A | (9,925,480 | ) | (8,652,015 | ) | ||||
Class C | (23,419 | ) | — | |||||
Class C1 | (6,357,512 | ) | (7,436,270 | ) | ||||
Class I | (10,928,078 | ) | (9,375,536 | ) | ||||
(48,642,705 | ) | (47,735,975 | ) | |||||
Return of capital | ||||||||
Class AAA | (29,821,849 | ) | (25,806,376 | ) | ||||
Class A | (14,580,547 | ) | (10,503,964 | ) | ||||
Class C | (33,597 | ) | — | |||||
Class C1 | (5,018,493 | ) | (5,196,111 | ) | ||||
Class I | (16,447,112 | ) | (12,186,613 | ) | ||||
(65,901,598 | ) | (53,693,064 | ) | |||||
Total Distributions to Shareholders | (114,544,303 | ) | (101,429,039 | ) | ||||
Capital Share Transactions: | ||||||||
Class AAA | 19,288,612 | 6,853,900 | ||||||
Class A | 32,868,398 | 26,476,191 | ||||||
Class C | 699,312 | — | ||||||
Class C1 | (3,091,637 | ) | (3,093,552 | ) | ||||
Class I | 16,984,005 | 28,598,222 | ||||||
Net Increase in Net Assets from Capital Share Transactions | 66,748,690 | 58,834,761 | ||||||
Redemption Fees | 204 | 428 | ||||||
Net Increase/(Decrease) in Net Assets | 11,419,614 | (95,166,915 | ) | |||||
Net Assets: | ||||||||
Beginning of year | 486,046,501 | 581,213,416 | ||||||
End of year | $ | 497,466,115 | $ | 486,046,501 |
See accompanying notes to financial statements.
12
The Gabelli Equity Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Return of Capital | Total Distributions | Redemption Fees(a)(b) | Net Asset Value, End of Year | Total Return† | Net Assets, End of Year (in 000’s) | Net Investment Income (Loss) | Operating Expenses(c)(d) | Portfolio Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 8.09 | $ | 0.08 | $ | 0.91 | $ | 0.99 | $ | (0.08 | ) | $ | (0.67 | ) | $ | (1.04 | ) | $ | (1.79 | ) | $ | 0.00 | $ | 7.29 | 11.92 | % | $ | 227,248 | 0.89 | % | 1.43 | % | 5 | % | ||||||||||||||||||||||||||
2022 | 10.85 | 0.06 | (1.01 | ) | (0.95 | ) | (0.06 | ) | (0.78 | ) | (0.97 | ) | (1.81 | ) | 0.00 | 8.09 | (10.08 | ) | 230,926 | 0.56 | 1.42 | 1 | ||||||||||||||||||||||||||||||||||||||
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 | (e) | (0.02 | ) | 0.08 | (0.11 | ) | (2.39 | ) | (1.15 | ) | (3.65 | ) | 0.00 | 10.04 | 0.93 | 272,980 | 0.75 | (e) | 1.45 | 0 | (f) | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 7.96 | $ | 0.07 | $ | 0.91 | $ | 0.98 | $ | (0.08 | ) | $ | (0.67 | ) | $ | (1.03 | ) | $ | (1.78 | ) | $ | 0.00 | $ | 7.16 | 11.94 | % | $ | 114,513 | 0.90 | % | 1.43 | % | 5 | % | ||||||||||||||||||||||||||
2022 | 10.69 | 0.06 | (0.99 | ) | (0.93 | ) | (0.06 | ) | (0.77 | ) | (0.97 | ) | (1.80 | ) | 0.00 | 7.96 | (10.05 | ) | 95,186 | 0.57 | 1.42 | 1 | ||||||||||||||||||||||||||||||||||||||
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 | (e) | (0.02 | ) | 0.08 | (0.11 | ) | (2.39 | ) | (1.15 | ) | (3.65 | ) | 0.00 | 9.92 | 0.95 | 69,201 | 0.75 | (e) | 1.45 | 0 | (f) | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(g) | $ | 9.52 | $ | 0.01 | $ | 0.16 | $ | 0.17 | $ | (0.07 | ) | $ | (0.55 | ) | $ | (0.49 | ) | $ | (1.11 | ) | $ | 0.00 | $ | 8.58 | 1.67 | % | $ | 608 | 0.24 | %(h) | 2.29 | %(h) | 5 | % | ||||||||||||||||||||||||||
Class C1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 3.41 | $ | 0.00 | (b) | $ | 0.42 | $ | 0.42 | $ | (0.07 | ) | $ | (0.67 | ) | $ | (0.60 | ) | $ | (1.34 | ) | $ | 0.00 | $ | 2.49 | 11.34 | % | $ | 21,071 | 0.13 | % | 2.18 | % | 5 | % | |||||||||||||||||||||||||
2022 | 5.24 | (0.01 | ) | (0.42 | ) | (0.43 | ) | (0.04 | ) | (0.78 | ) | (0.58 | ) | (1.40 | ) | 0.00 | 3.41 | (10.84 | ) | 31,620 | (0.21 | ) | 2.17 | 1 | ||||||||||||||||||||||||||||||||||||
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)(e) | (0.02 | ) | (0.02 | ) | (0.06 | ) | (2.39 | ) | (1.20 | ) | (3.65 | ) | 0.00 | 5.81 | 0.27 | 53,605 | 0.00 | (e)(i) | 2.20 | 0 | (f) | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.36 | $ | 0.12 | $ | 1.04 | $ | 1.16 | $ | (0.09 | ) | $ | (0.67 | ) | $ | (1.15 | ) | $ | (1.91 | ) | $ | 0.00 | $ | 8.61 | 12.19 | % | $ | 134,026 | 1.14 | % | 1.18 | % | 5 | % | ||||||||||||||||||||||||||
2022 | 12.35 | 0.10 | (1.17 | ) | (1.07 | ) | (0.08 | ) | (0.77 | ) | (1.06 | ) | (1.92 | ) | 0.00 | 9.36 | (9.81 | ) | 128,315 | 0.81 | 1.17 | 1 | ||||||||||||||||||||||||||||||||||||||
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 | (e) | (0.02 | ) | 0.12 | (0.14 | ) | (2.39 | ) | (1.12 | ) | (3.65 | ) | 0.00 | 11.15 | 1.14 | 130,903 | 1.00 | (e) | 1.20 | 0 | (f) | |||||||||||||||||||||||||||||||||||||
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 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect the applicable sales charges. | |
(a) | Per share amounts have been calculated using the average shares outstanding method. | |
(b) | Amount represents less than $0.005 per share. | |
(c) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For all years presented, there was no impact on the expense ratios. | |
(d) | The Fund incurred interest expense during all fiscal years presented. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.42%, 1.41%, 1.41%, 1.42%, and 1.40% (Class AAA and Class A), 2.17%, 2.16%, 2.16%, 2.17%, and 2.15% (Class C1), 1.17%, 1.16%, 1.16%, 1.17%, and 1.15% (Class I), and 2.29% (Class C), respectively. | |
(e) | 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. | |
(f) | Amount represents less than 0.5%. | |
(g) | Class C commenced on June 1, 2023. | |
(h) | Annualized. | |
(i) | Amount represents less than 0.005%. |
See accompanying notes to financial statements.
13
The Gabelli Equity Income Fund
Notes to Financial Statements
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.
14
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of September 30, 2023 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 09/30/23 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks | ||||||||||||
Electronics | $ | 10,239,070 | $ | 532,388 | $ | 10,771,458 | ||||||
Retail | 21,610,077 | 1,713,006 | 23,323,083 | |||||||||
Other Industries (a) | 459,282,682 | — | 459,282,682 | |||||||||
Total Common Stocks | 491,131,829 | 2,245,394 | 493,377,223 | |||||||||
Warrants (a) | 20,794 | — | 20,794 | |||||||||
U.S. Government Obligations | — | 1,110,577 | 1,110,577 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 491,152,623 | $ | 3,355,971 | $ | 494,508,594 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at September 30, 2023 or September 30, 2022. The Fund’s policy is to recognize transfers among levels as of the beginning of the reporting period.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds 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.
15
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
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.
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 September 30, 2023, 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.
16
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in 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 September 30, 2023, 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. Permanent differences were primarily due to prior year post financial statement adjustments, and the tax treatment of currency gains and losses. These reclassifications have no impact on the NAV of the Fund. For the fiscal year ended September 30, 2023, reclassifications were made to decrease paid-in capital by $130,028, with an offsetting adjustment to total distributable earnings.
17
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
The tax character of distributions paid during the fiscal years ended September 30, 2023 and 2022 was as follows:
Year Ended September 30, 2023 | Year Ended September 30, 2022* | |||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 5,241,338 | $ | 3,432,763 | ||||
Net long term capital gains | 43,401,367 | 44,793,364 | ||||||
Return of capital | 65,901,598 | 53,693,064 | ||||||
Total distributions paid* | $ | 114,544,303 | $ | 101,919,191 |
* | 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.
At September 30, 2023, the components of accumulated earnings/losses on a tax basis were as follows:
Net unrealized appreciation on investments and foreign currency translations | $ | 301,467,320 | ||
Qualified late year loss deferrals* | (286,982 | ) | ||
Total | $ | 301,180,338 |
* | Under the current law, qualified late year losses realized after October 31 and prior to the Fund’s year end may be elected as occurring on the first day of the following year. For the year ended September 30, 2023, the Fund elected to defer $33,684 of late year ordinary losses and $253,298 of late year short term capital gain losses. |
At September 30, 2023, the temporary difference between book basis and tax basis net unrealized appreciation on investments was due to deferral of losses from wash sales for tax purposes and tax basis adjustments on investments in partnerships.
18
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | ||||||||||||||
Investments | $ | 193,036,819 | $ | 315,119,820 | $ | (13,648,045 | ) | $ | 301,471,775 |
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 fiscal year ended September 30, 2023, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2023, 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.
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, Class C, and Class C1 Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the fiscal year ended September 30, 2023, other than short term securities and U.S. Government obligations, aggregated $23,988,200 and $63,930,069, respectively.
6. Transactions with Affiliates and Other Arrangements. During the fiscal year ended September 30, 2023, the Fund paid $7,857 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $181,813 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the fiscal year ended September 30, 2023, 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 $7,747.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the fiscal year ended September 30, 2023, the Fund accrued $45,000, in connection with the cost of computing the Fund’s NAV.
19
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
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 February 28, 2024 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 September 30, 2023, there were no borrowings outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit for the four days of borrowings during the fiscal year ended September 30, 2023 was $5,317,500 with a weighted average interest rate of 4.41%. The maximum amount borrowed at any time during the fiscal year ended September 30, 2023 was $5,493,000.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. On March 13, 2023, Class C shares were renamed Class C1 shares, and effective March 15 through May 30, 2023, the Fund temporarily reopened its Class C1 shares to purchases by new investors. Effective March 15 through May 30, 2023, the Fund temporarily reopened its Class C1 shares to new investors. After May 30, 2023, neither new nor existing shareholders may purchase additional C1 shares. Class C shares were issued after May 30, 2023. These changes have no effect on existing Class C1 shareholders’ ability to redeem these 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 fiscal years ended September 30, 2023 and 2022, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
20
The Gabelli Equity Income Fund
Notes to Financial Statements (Continued)
Transactions in shares of capital stock were as follows:
Year Ended | Year Ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 1,174,663 | $ | 10,172,938 | 645,461 | $ | 6,748,143 | ||||||||||
Shares issued upon reinvestment of distributions | 6,147,305 | 49,649,725 | 4,931,483 | 46,611,265 | ||||||||||||
Shares redeemed | (4,706,054 | ) | (40,534,051 | ) | (4,439,438 | ) | (46,505,508 | ) | ||||||||
Net increase | 2,615,914 | $ | 19,288,612 | 1,137,506 | $ | 6,853,900 | ||||||||||
Class A | ||||||||||||||||
Shares sold | 4,258,757 | $ | 36,060,183 | 3,034,549 | $ | 31,417,004 | ||||||||||
Shares issued upon reinvestment of distributions | 2,979,277 | 23,521,783 | 1,968,136 | 18,209,199 | ||||||||||||
Shares redeemed | (3,201,866 | ) | (26,713,568 | ) | (2,267,796 | ) | (23,150,012 | ) | ||||||||
Net increase | 4,036,168 | $ | 32,868,398 | 2,734,889 | $ | 26,476,191 | ||||||||||
Class C* | ||||||||||||||||
Shares sold | 78,914 | $ | 783,387 | — | — | |||||||||||
Shares issued upon reinvestment of distributions | 6,499 | 57,017 | — | — | ||||||||||||
Shares redeemed | (14,550 | ) | (141,092 | ) | — | — | ||||||||||
Net increase | 70,863 | $ | 699,312 | — | — | |||||||||||
Class C1 | ||||||||||||||||
Shares sold | 238,073 | $ | 769,577 | 1,055,129 | $ | 5,423,547 | ||||||||||
Shares issued upon reinvestment of distributions | 3,538,227 | 11,034,199 | 2,813,019 | 12,443,798 | ||||||||||||
Shares redeemed | (4,569,461 | ) | (14,895,413 | ) | (4,363,620 | ) | (20,960,897 | ) | ||||||||
Net decrease | (793,161 | ) | $ | (3,091,637 | ) | (495,472 | ) | $ | (3,093,552 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 3,283,389 | $ | 33,307,281 | 3,822,498 | $ | 42,274,555 | ||||||||||
Shares issued upon reinvestment of distributions | 2,861,760 | 26,958,291 | 1,978,810 | 21,251,482 | ||||||||||||
Shares redeemed | (4,294,132 | ) | (43,281,567 | ) | (2,943,248 | ) | (34,927,815 | ) | ||||||||
Net increase | 1,851,017 | $ | 16,984,005 | 2,858,060 | $ | 28,598,222 |
* | Class C shares were first offered on May 31, 2023. |
9. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
10. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
21
The Gabelli Equity Income Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Equity Income Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Equity Income Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the schedule of investments, as of September 30, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli Funds investment companies since 1992.
New York, New York
November 29, 2023
22
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 16, 2023, 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.
23
The Gabelli Equity Income Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and Officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Equity Income Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
INTERESTED DIRECTORS4: | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer 1942 | Since 1991 | 31 | Chairman, Co-Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management, Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chair of Associated Capital Group, Inc. | Director of Morgan Group Holding Co. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013-2018) | ||||
John D. Gabelli Director 1944 | Since 1991 | 12 | Former Senior Vice President of G.research, LLC (and its predecessor) (1991-2019) | — | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Elizabeth C. Bogan Director 1944 | Since 2019 | 12 | Former Senior Lecturer in Economics at Princeton University | — | ||||
Anthony J. Colavita6 Director 1935 | Since 1991 | 18 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director 1943 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director 1939 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||
Anthonie C. van Ekris6 Director 1934 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc.(global import/ export company) | — |
24
The Gabelli Equity Income Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
Salvatore J. Zizza7 Director 1945 | Since 2001 | 35 | President, Zizza & Associates Corp. (private holding company); Chairman of Bergen Cove Realty Inc. (residential real estate) | Director and Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018); Retired Chairman of BAM (semiconductor and aerospace manufacturing);Director of Bion Environmental Technologies, Inc. |
25
The Gabelli Equity Income Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
John C. Ball President, Treasurer, Principal Financial & Accounting Officer 1976 | Since 2017 | Senior Vice President (since 2018) and other positions (2017 – 2018) of GAMCO Investors, Inc.; Chief Executive Officer, G. Distributors, LLC since 2020; Officer of registered investment companies within the Gabelli Fund Complex since 2017 | ||
Peter Goldstein Secretary & Vice President 1953 | Since 2020 | General Counsel, GAMCO Investors, Inc. and Chief Legal Officer, Associated Capital Group, Inc. since 2021; General Counsel and Chief Compliance Officer, Buckingham Capital Management, Inc. (2012-2020); Chief Legal Officer and Chief Compliance Officer, The Buckingham Research Group, Inc. (2012-2020) | ||
Richard J. Walz Chief Compliance Officer 1959 | Since 2013 | Chief Compliance Officer of registered investment companies within the Gabelli Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. | |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’s By-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. | |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. | |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. | |
5 | Directors who are not interested persons are considered “Independent” Directors. | |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. | |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule 13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
26
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.
THE GABELLI EQUITY INCOME FUND
2023 TAX NOTICE TO SHAREHOLDERS (Unaudited)
During the fiscal year ended September 30, 2023, the Fund paid to shareholders ordinary income distributions totaling $0.0788, $0.0793, $0.0676, $0.0699, and $0.0941 for each of Class AAA, Class A, Class C1, Class C, and Class I, respectively, and long term capital gains totaling $43,401,367, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors. For the fiscal year ended September 30, 2023, 100% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 7.57% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010.
U.S. Government Income:
The percentage of the ordinary income distribution paid by the Fund during the fiscal year ended September 30, 2023 which was derived from U.S. Treasury securities was 7.57%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Gabelli Equity Income Fund did not meet this strict requirement in 2023. The percentage of U.S. Government securities held as of September 30, 2023 was 0.2%. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser as to the applicability of the information provided to your specific situation.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
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.
The Gabelli Small Cap Growth Fund
Annual Report — September 30, 2023
To Our Shareholders,
For the fiscal year ended September 30, 2023, the net asset value (NAV) total return per Class AAA Share of The Gabelli Small Cap Growth Fund was 22.7% compared with a total return of 10.1% 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 September 30, 2023.
Investment Objective and Strategy (Unaudited)
Our stock selection process is based on the investment principles of Graham and Dodd, the first investors to articulate the fundamentals of value investing. Their work provided the framework for value investing, and we contributed to this framework with the discipline of Private Market Value with a Catalyst®. This proprietary research and valuation method identifies companies whose shares are selling at a discount to intrinsic value, with an identifiable path to realizing, or surfacing, that private market value. We define private market value as the price an informed acquirer would pay for an entire enterprise. The catalyst comprises identifiable events or circumstances that might reasonably result in the narrowing of the difference between the public market price of the stock and our estimate of the private market value. This realization of value can take place gradually or suddenly, with company specific changes such as management modifications or restructurings, the sale of assets or the business, in its entirety, or industry adjustments such as regulation revisions or changes in competition.
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)
During this Fund’s fiscal year ended September 30, 2023, the higher performing stocks in (y)our portfolio included Lennar Corporation (2.4% of net assets as of September 30, 2023), Crane NXT Co. (0.8%), and AMETEK Inc. (3.7%). Lennar Corporation, based in Florida, is one of the largest residential home builders in the U.S. Lennar’s operations include the construction and sale of single-family attached and detached homes and the purchase, development, and sale of residential land. Driven by continued Federal Reserve rate increases, net earnings and sales price per home have declined year over year, which has been offset by increased home deliveries and cost reductions. An additional high performer was Crane NXT Co. The company was formed in 2023 by the dissolution of Crane Holdings Company into two separate, publicly traded companies: Crane NXT and Crane Company. Crane NXT Co. is a pioneer in advanced, proprietary micro-optics technology for securing physical products, and its sophisticated electronic equipment and associated software leverages proprietary core capabilities with detection and sensing technologies. AMETEK Inc. was another high performer in fiscal 2023. AMETEK Inc. is a diversified supplier of highly engineered equipment used in a broad array of industrial end markets. The company offers a diverse product portfolio including test and measurement, metrology, and precision motion control equipment, in addition to specialty materials and aftermarket services.
Detractors from performance over the fiscal year included Kaman Corporation (0.8%), and Globus Medical Inc. (0.7%). Kaman Corporation is an American company and leading innovator in the aerospace industry, serving commercial and military customers around the world. Globus Medical Inc. is a medical device company that develops, manufactures, and distributes musculoskeletal device solutions.
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 September 30, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
1 Year | 5 Year | 10 Year | 15 Year | Since Inception (10/22/91) | ||||||||||||||||
Class AAA (GABSX) | 22.70 | % | 5.96 | % | 7.55 | % | 9.35 | % | 11.51 | % | ||||||||||
S&P SmallCap 600 Index (c) | 10.08 | 3.21 | 8.15 | 9.55 | N/A | |||||||||||||||
Lipper Small-Cap Core Funds Average (c) | 12.07 | 4.09 | 7.31 | 8.83 | N/A | |||||||||||||||
Class A (GCASX) (d) | 22.72 | 5.95 | 7.55 | 9.35 | 11.51 | |||||||||||||||
With sales charge (e) | 15.66 | 4.71 | 6.92 | 8.92 | 11.30 | |||||||||||||||
Class C (GCCSX) (d) | 21.79 | 5.16 | 6.75 | 8.53 | 11.00 | |||||||||||||||
With contingent deferred sales charge (f) | 20.79 | 5.16 | 6.75 | 8.53 | 11.00 | |||||||||||||||
Class I (GACIX) (d) | 23.02 | 6.22 | 7.82 | 9.62 | 11.65 |
(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 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 June 1, 2023, the expense ratios for Class AAA, A, C, and I Shares are 1.39%, 1.39%, 2.14%, and 1.14%, respectively. See page 12 for the expense ratios for the year ended September 30, 2023. 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
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI SMALL CAP GROWTH FUND CLASS AAA AND S&P SMALLCAP 600 INDEX (Unaudited)
Average Annual Total Returns* | |||
1 Year | 5 Year | 10 Year | |
Class AAA | 22.70% | 5.96% | 7.55% |
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
4
The Gabelli Small Cap Growth Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from April 1, 2023 through September 30, 2023 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2023.
Beginning Account Value 04/01/23 | Ending Account Value 09/30/23 | Annualized Expense Ratio | Expenses Paid During Period * | |||||||||||||
The Gabelli Small Cap Growth Fund | ||||||||||||||||
Actual Fund Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,012.00 | 1.38% | $ | 6.96 | |||||||||
Class A | $ | 1,000.00 | $ | 1,012.00 | 1.38% | $ | 6.96 | |||||||||
Class C | $ | 1,000.00 | $ | 1,008.00 | 2.13% | $ | 10.72 | |||||||||
Class I | $ | 1,000.00 | $ | 1,013.20 | 1.13% | $ | 5.70 | |||||||||
Hypothetical 5% Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,018.15 | 1.38% | $ | 6.98 | |||||||||
Class A | $ | 1,000.00 | $ | 1,018.15 | 1.38% | $ | 6.98 | |||||||||
Class C | $ | 1,000.00 | $ | 1,014.39 | 2.13% | $ | 10.76 | |||||||||
Class I | $ | 1,000.00 | $ | 1,019.40 | 1.13% | $ | 5.72 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
5
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2023:
The Gabelli Small Cap Growth Fund
Equipment and Supplies | 18.7 | % | ||
Diversified Industrial | 12.4 | % | ||
Building and Construction | 6.8 | % | ||
Retail | 6.4 | % | ||
Food and Beverage | 5.5 | % | ||
Financial Services | 4.7 | % | ||
Automotive: Parts and Accessories | 4.5 | % | ||
Hotels and Gaming | 4.0 | % | ||
Health Care | 3.5 | % | ||
Electronics | 3.1 | % | ||
Energy and Utilities | 2.8 | % | ||
Machinery | 2.6 | % | ||
Transportation | 2.6 | % | ||
U.S. Government Obligations | 2.2 | % | ||
Entertainment | 2.1 | % | ||
Business Services | 2.1 | % | ||
Real Estate | 2.1 | % | ||
Aviation: Parts and Services | 2.0 | % | ||
Specialty Chemicals | 2.0 | % | ||
Manufactured Housing and Recreational Vehicles | 1.7 | % |
Computer Software and Services | 1.4 | % | ||
Consumer Products | 1.4 | % | ||
Broadcasting | 1.3 | % | ||
Consumer Services | 0.9 | % | ||
Environmental Services | 0.5 | % | ||
Telecommunications | 0.5 | % | ||
Cable | 0.4 | % | ||
Publishing | 0.4 | % | ||
Automotive | 0.4 | % | ||
Home Furnishings | 0.3 | % | ||
Miscellaneous Investments | 0.2 | % | ||
Communications Equipment | 0.1 | % | ||
Wireless Communications | 0.1 | % | ||
Closed-End Funds | 0.1 | % | ||
Aerospace | 0.1 | % | ||
Agriculture | 0.1 | % | ||
Metals and Mining | 0.1 | % | ||
Other Assets and Liabilities (Net) | (0.1 | )% | ||
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.
6
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS* — 97.5% | ||||||||||||
Aerospace — 0.1% | ||||||||||||
77,500 | Various Securities | $ | 915,672 | $ | 1,352,200 | |||||||
Agriculture — 0.1% | ||||||||||||
66,000 | Various Securities | 1,012,309 | 891,020 | |||||||||
Automotive — 0.4% | ||||||||||||
530,000 | Various Securities | 2,602,270 | 5,736,360 | |||||||||
Automotive: Parts and Accessories — 4.4% | ||||||||||||
840,000 | Brembo SpA | 1,552,407 | 10,443,938 | |||||||||
1,108,000 | Dana Inc. | 8,991,197 | 16,254,360 | |||||||||
356,000 | Modine Manufacturing Co.† | 2,997,818 | 16,287,000 | |||||||||
249,000 | Strattec Security Corp.†(a) | 4,804,355 | 5,751,900 | |||||||||
627,722 | Various Securities | 4,248,631 | 20,366,910 | |||||||||
22,594,408 | 69,104,108 | |||||||||||
Aviation: Parts and Services — 2.0% | ||||||||||||
670,500 | Kaman Corp. | 9,942,571 | 13,175,325 | |||||||||
89,000 | Moog Inc., Cl. A | 1,052,574 | 10,053,440 | |||||||||
138,700 | Various Securities | 2,063,533 | 8,309,310 | |||||||||
13,058,678 | 31,538,075 | |||||||||||
Broadcasting — 1.3% | ||||||||||||
1,698,302 | Various Securities | 8,463,987 | 20,437,411 | |||||||||
Building and Construction — 6.8% | ||||||||||||
218,700 | Herc Holdings Inc. | 7,148,607 | 26,012,178 | |||||||||
362,500 | Lennar Corp., Cl. B | 8,661,417 | 37,058,375 | |||||||||
1,750 | NVR Inc.† | 1,203,399 | 10,435,775 | |||||||||
733,900 | Various Securities | 6,934,743 | 32,433,122 | |||||||||
23,948,166 | 105,939,450 | |||||||||||
Business Services — 2.1% | ||||||||||||
1,600,000 | Trans-Lux Corp.†(a) | 1,575,044 | 720,000 | |||||||||
34,000 | United Rentals Inc. | 209,146 | 15,115,380 | |||||||||
1,279,240 | Various Securities | 6,392,754 | 17,495,295 | |||||||||
8,176,944 | 33,330,675 | |||||||||||
Cable — 0.4% | ||||||||||||
462,500 | Various Securities | 7,083,843 | 6,955,710 | |||||||||
Communications Equipment — 0.1% | ||||||||||||
150,000 | Various Securities | 1,857,239 | 2,145,000 | |||||||||
Computer Software and Services — 1.4% | ||||||||||||
31,000 | Tyler Technologies Inc.† | 61,675 | 11,970,340 | |||||||||
436,800 | Various Securities | 2,269,390 | 10,062,517 | |||||||||
2,331,065 | 22,032,857 | |||||||||||
Consumer Products — 1.4% | ||||||||||||
1,097,125 | Various Securities | 8,355,135 | 21,717,882 | |||||||||
Consumer Services — 0.9% | ||||||||||||
281,200 | Rollins Inc. | 262,454 | 10,497,196 |
Shares | Cost | Market Value | ||||||||||
254,000 | Various Securities | $ | 1,514,413 | $ | 3,853,575 | |||||||
1,776,867 | 14,350,771 | |||||||||||
Diversified Industrial — 12.4% | ||||||||||||
355,000 | Crane Co. | 4,913,967 | 31,538,200 | |||||||||
229,500 | Crane NXT Co. | 1,394,411 | 12,753,315 | |||||||||
87,000 | EnPro Industries Inc. | 4,385,753 | 10,543,530 | |||||||||
369,400 | Griffon Corp. | 3,086,092 | 14,654,098 | |||||||||
915,000 | Myers Industries Inc. | 12,555,068 | 16,405,950 | |||||||||
335,500 | Textron Inc. | 2,028,771 | 26,215,970 | |||||||||
2,365,200 | Various Securities | 33,157,912 | 81,099,269 | |||||||||
61,521,974 | 193,210,332 | |||||||||||
Electronics — 3.1% | ||||||||||||
110,000 | Badger Meter Inc. | 1,352,007 | 15,825,700 | |||||||||
206,500 | Bel Fuse Inc., Cl. A(a) | 3,827,474 | 9,732,345 | |||||||||
400,000 | CTS Corp. | 3,294,245 | 16,696,000 | |||||||||
295,000 | Various Securities | 2,578,589 | 6,667,313 | |||||||||
11,052,315 | 48,921,358 | |||||||||||
Energy and Utilities — 2.8% | ||||||||||||
1,680,000 | RPC Inc. | 681,607 | 15,019,200 | |||||||||
575,600 | Various Securities | 11,590,806 | 28,442,208 | |||||||||
12,272,413 | 43,461,408 | |||||||||||
Entertainment — 2.1% | ||||||||||||
1,081,624 | Various Securities | 16,177,306 | 33,650,288 | |||||||||
Environmental Services — 0.5% | ||||||||||||
59,000 | Various Securities | 532,967 | 8,408,090 | |||||||||
Equipment and Supplies — 18.7% | ||||||||||||
387,600 | AMETEK Inc. | 659,537 | �� | 57,271,776 | ||||||||
315,000 | Core Molding Technologies Inc.† | 624,161 | 8,974,350 | |||||||||
189,000 | Federal Signal Corp. | 994,156 | 11,288,970 | |||||||||
241,000 | Flowserve Corp. | 1,445,693 | 9,584,570 | |||||||||
152,500 | Franklin Electric Co. Inc. | 594,728 | 13,607,575 | |||||||||
424,000 | Graco Inc. | 2,289,467 | 30,901,120 | |||||||||
491,000 | Mueller Industries Inc. | 12,055,821 | 36,903,560 | |||||||||
167,200 | Tennant Co. | 2,789,395 | 12,397,880 | |||||||||
740,000 | The Gorman-Rupp Co. | 11,286,239 | 24,346,000 | |||||||||
1,624,003 | Various Securities | 18,694,826 | 87,613,864 | |||||||||
51,434,023 | 292,889,665 | |||||||||||
Financial Services — 4.7% | ||||||||||||
674,000 | KKR & Co. Inc. | 2,722,550 | 41,518,400 | |||||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 5,000 | |||||||||
2,365,418 | Various Securities | 24,981,619 | 32,306,228 | |||||||||
27,705,542 | 73,829,628 | |||||||||||
Food and Beverage — 5.5% | ||||||||||||
240,000 | Kikkoman Corp. | 1,630,295 | 12,597,430 | |||||||||
635,000 | Maple Leaf Foods Inc. | 11,018,968 | 12,202,098 |
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS* (Continued) | ||||||||||||
Food and Beverage (Continued) | ||||||||||||
4,956,900 | Various Securities | $ | 25,910,626 | $ | 60,473,652 | |||||||
38,559,889 | 85,273,180 | |||||||||||
Health Care — 3.5% | ||||||||||||
216,000 | Globus Medical Inc., Cl. A† | 5,584,808 | 10,724,400 | |||||||||
1,237,530 | Various Securities | 15,197,089 | 43,305,283 | |||||||||
20,781,897 | 54,029,683 | |||||||||||
Home Furnishings — 0.3% | ||||||||||||
231,500 | Various Securities | 2,690,305 | 4,522,675 | |||||||||
Hotels and Gaming — 4.0% | ||||||||||||
140,000 | Churchill Downs Inc. | 562,239 | 16,245,600 | |||||||||
241,000 | Ryman Hospitality Properties Inc., REIT | 3,795,317 | 20,070,480 | |||||||||
6,709,872 | Various Securities | 14,163,998 | 25,857,506 | |||||||||
18,521,554 | 62,173,586 | |||||||||||
Machinery — 2.6% | ||||||||||||
326,000 | Astec Industries Inc. | 11,354,454 | 15,357,860 | |||||||||
1,415,000 | CNH Industrial NV | 3,631,392 | 17,121,500 | |||||||||
401,700 | Various Securities | 6,542,280 | 8,264,739 | |||||||||
21,528,126 | 40,744,099 | |||||||||||
Manufactured Housing and Recreational Vehicles — 1.7% | ||||||||||||
63,500 | Cavco Industries Inc.† | 1,236,391 | 16,869,410 | |||||||||
205,500 | Various Securities | 1,897,491 | 10,420,068 | |||||||||
3,133,882 | 27,289,478 | |||||||||||
Metals and Mining — 0.1% | ||||||||||||
140,000 | Various Securities | 529,906 | 818,843 | |||||||||
Publishing — 0.4% | ||||||||||||
816,050 | Various Securities | 5,281,230 | 6,583,900 | |||||||||
Real Estate — 2.1% | ||||||||||||
381,000 | The St. Joe Co. | 5,832,628 | 20,699,730 | |||||||||
530,700 | Various Securities | 6,285,716 | 11,858,341 | |||||||||
12,118,344 | 32,558,071 | |||||||||||
Retail — 6.4% | ||||||||||||
111,000 | AutoNation Inc.† | 1,763,898 | 16,805,400 | |||||||||
304,000 | Copart Inc.† | 637,079 | 13,099,360 | |||||||||
200,000 | Ingles Markets Inc., Cl. A | 2,545,477 | 15,066,000 | |||||||||
157,000 | Nathan’s Famous Inc | 264,162 | 11,093,620 | |||||||||
69,500 | Penske Automotive Group Inc | 1,013,547 | 11,610,670 | |||||||||
482,250 | Rush Enterprises Inc., Cl. B | 2,275,116 | 21,841,102 | |||||||||
368,223 | Various Securities | 4,668,973 | 10,984,257 | |||||||||
13,168,252 | 100,500,409 | |||||||||||
Specialty Chemicals — 2.0% | ||||||||||||
245,000 | H.B. Fuller Co. | 2,718,585 | 16,809,450 |
Shares | Cost | Market Value | ||||||||||
91,200 | The General Chemical Group Inc.†(b) | $ | 1,186 | $ | 0 | |||||||
216,100 | Various Securities | 2,599,661 | 13,793,939 | |||||||||
5,319,432 | 30,603,389 | |||||||||||
Telecommunications — 0.5% | ||||||||||||
391,100 | Various Securities | 2,946,225 | 7,918,320 | |||||||||
Transportation — 2.6% | ||||||||||||
347,500 | GATX Corp. | 9,803,043 | 37,818,425 | |||||||||
192,657 | Various Securities | 1,753,858 | 2,454,992 | |||||||||
11,556,901 | 40,273,417 | |||||||||||
Wireless Communications — 0.1% | ||||||||||||
50,000 | Various Securities | 1,308,189 | 2,148,500 | |||||||||
TOTAL COMMON STOCKS | 440,317,255 | 1,525,339,838 | ||||||||||
CLOSED-END FUNDS* — 0.1% | ||||||||||||
188,229 | Various Securities | 2,574,402 | 1,549,657 | |||||||||
PREFERRED STOCKS* — 0.1% | ||||||||||||
Automotive: Parts and Accessories — 0.1% | ||||||||||||
82,500 | Various Securities | 563,490 | 2,475,392 | |||||||||
RIGHTS* — 0.0% | ||||||||||||
Communications Equipment — 0.0% | ||||||||||||
60,500 | Various Securities | 0 | 139,465 | |||||||||
WARRANTS* — 0.0% | ||||||||||||
Business Services — 0.0% | ||||||||||||
1 | Internap Corp., expires 05/08/24†(b) | 0 | 652 | |||||||||
Diversified Industrial — 0.0% | ||||||||||||
140,000 | Various Securities | 95,648 | 44,800 | |||||||||
TOTAL WARRANTS | 95,648 | 45,452 | ||||||||||
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS* — 2.2% | ||||||||||||
$ | 19,065,000 | U.S. Treasury Bills, | ||||||||||
5.276% to 5.465%††, 10/05/23 to 03/14/24 | 18,910,598 | 18,914,018 |
See accompanying notes to financial statements.
8
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — September 30, 2023
Principal Amount | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS* (Continued) | ||||||||||||
$ | 15,275,000 | Various Securities | $ | 15,144,190 | $ | 15,146,312 | ||||||
TOTAL U.S. GOVERNMENT OBLIGATIONS | 34,054,788 | 34,060,330 | ||||||||||
TOTAL MISCELLANEOUS INVESTMENTS— 0.2%(c) | 3,261,921 | 2,509,370 | ||||||||||
TOTAL INVESTMENTS — 100.1% | $ | 480,867,504 | 1,566,119,504 | |||||||||
Other Assets and Liabilities (Net) — (0.1)% | (2,096,179 | ) | ||||||||||
NET ASSETS — 100.0% | $ | 1,564,023,325 |
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, or affiliated or Level 3 securities, if any.
* | “Various Securities” consist of issuers not identified as a top 50 holding, issues or issuers not exceeding 1% of net assets individually or in the aggregate, any issuers that are not affiliated or Level 3 securities, if any, as of September 30, 2023. 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 undisclosed, unrestricted securities which the Fund has held for less than one year. | |
† | Non-income producing security. | |
†† | Represents annualized yields at dates of purchase. | |
REIT | Real Estate Investment Trust |
See accompanying notes to financial statements.
9
The Gabelli Small Cap Growth Fund
Statement of Assets and Liabilities
September 30, 2023
Assets: | ||||
Investments, at value (cost $470,660,631) | $ | 1,549,915,259 | ||
Investments in affiliates, at value (cost $10,206,873) | 16,204,245 | |||
Cash | 109,782 | |||
Foreign currency, at value (cost $89,482) | 89,074 | |||
Receivable for Fund shares sold | 551,221 | |||
Receivable for investments sold | 152,056 | |||
Dividends and interest receivable | 1,420,050 | |||
Prepaid expenses | 48,205 | |||
Total Assets | 1,568,489,892 | |||
Liabilities: | ||||
Payable for investments purchased | 1,636,416 | |||
Payable for Fund shares redeemed | 898,305 | |||
Payable for investment advisory fees | 1,314,292 | |||
Payable for distribution fees | 239,619 | |||
Payable for accounting fees | 7,500 | |||
Other accrued expenses | 370,435 | |||
Total Liabilities | 4,466,567 | |||
Net Assets | ||||
(applicable to 38,299,853 shares outstanding) | $ | 1,564,023,325 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 371,411,561 | ||
Total distributable earnings | 1,192,611,764 | |||
Net Assets | $ | 1,564,023,325 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($899,375,717 ÷ 22,201,638 shares outstanding; 150,000,000 shares authorized) | $ | 40.51 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($118,556,896 ÷ 2,930,165 shares outstanding; 50,000,000 shares authorized) | $ | 40.46 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 42.93 | ||
Class C: | ||||
Net Asset Value and offering price per share ($28,818,447 ÷ 957,709 shares outstanding; 50,000,000 shares authorized) | $ | 30.09 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($517,272,265 ÷ 12,210,341 shares outstanding; 50,000,000 shares authorized) | $ | 42.36 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2023
Investment Income: | ||||
Dividends - unaffiliated (net of foreign withholding taxes of $277,617) | $ | 23,445,434 | ||
Dividends - affiliated | 50,502 | |||
Interest | 661,750 | |||
Total Investment Income | 24,157,686 | |||
Expenses: | ||||
Investment advisory fees | 15,935,591 | |||
Distribution fees - Class AAA | 2,300,969 | |||
Distribution fees - Class A | 300,483 | |||
Distribution fees - Class C | 345,316 | |||
Shareholder services fees | 1,240,014 | |||
Shareholder communications expenses | 291,839 | |||
Custodian fees | 175,368 | |||
Directors’ fees | 141,859 | |||
Registration expenses | 82,508 | |||
Legal and audit fees | 81,289 | |||
Interest expense | 68,649 | |||
Accounting fees | 45,000 | |||
Miscellaneous expenses | 130,063 | |||
Total Expenses | 21,138,948 | |||
Less: | ||||
Advisory fee reduction on unsupervised assets (See Note 3) | (65,517 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (20,643 | ) | ||
Total Reductions | (86,160 | ) | ||
Net Expenses | 21,052,788 | |||
Net Investment Income | 3,104,898 | |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments - unaffiliated | 152,950,846 | |||
Net realized gain on investments - affiliated | 91,142 | |||
Net realized loss on foreign currency transactions | (12,352 | ) | ||
Net realized gain on investments and foreign currency transactions | 153,029,636 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments - unaffiliated | 152,830,686 | |||
on investments - affiliated | 4,630,446 | |||
on foreign currency translations | 34,500 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 157,495,632 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 310,525,268 | |||
Net Increase in Net Assets Resulting from Operations | $ | 313,630,166 |
See accompanying notes to financial statements.
10
The Gabelli Small Cap Growth Fund
Statement of Changes in Net Assets
Year Ended | Year Ended | |||||||
September 30, 2023 | September 30, 2022 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,104,898 | $ | 1,881,684 | ||||
Net realized gain on investments and foreign currency transactions | 153,029,636 | 154,317,012 | ||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 157,495,632 | (448,165,801 | ) | |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 313,630,166 | (291,967,105 | ) | |||||
Distributions to Shareholders: | ||||||||
Accumulated earnings | ||||||||
Class AAA | (78,244,179 | ) | (133,745,388 | ) | ||||
Class A | (10,316,268 | ) | (17,235,275 | ) | ||||
Class C | (3,309,037 | ) | (10,378,509 | ) | ||||
Class I | (46,912,815 | ) | (79,705,424 | ) | ||||
Total Distributions to Shareholders | (138,782,299 | ) | (241,064,596 | ) | ||||
Capital Share Transactions: | ||||||||
Class AAA | 591,787 | 44,158,782 | ||||||
Class A | 1,334,405 | 9,841,866 | ||||||
Class C | (10,408,315 | ) | (13,302,976 | ) | ||||
Class I | (9,319,216 | ) | (123,739 | ) | ||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | (17,801,339 | ) | 40,573,933 | |||||
Redemption Fees | 2,662 | 390 | ||||||
Net Increase/(Decrease) in Net Assets | 157,049,190 | (492,457,378 | ) | |||||
Net Assets: | ||||||||
Beginning of year | 1,406,974,135 | 1,899,431,513 | ||||||
End of year | $ | 1,564,023,325 | $ | 1,406,974,135 |
See accompanying notes to financial statements.
11
The Gabelli Small Cap Growth Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | 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 Year | Total Return† | Net Assets, End of Year (in 000’s) | Net Investment Income (Loss)(b) | Operating Expenses(d)(e)(f) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 36.11 | $ | 0.05 | $ | 7.96 | $ | 8.01 | $ | (0.01 | ) | $ | (3.60 | ) | $ | (3.61 | ) | $ | 0.00 | $ | 40.51 | 22.70 | % | $ | 899,376 | 0.13 | % | 1.39 | % | 1 | % | |||||||||||||||||||||||||
2022 | 49.61 | 0.02 | (7.13 | ) | (7.11 | ) | (0.05 | ) | (6.34 | ) | (6.39 | ) | 0.00 | 36.11 | (17.07 | ) | 798,836 | 0.05 | 1.39 | 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 | 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 | 0 | (g) | |||||||||||||||||||||||||||||||||||
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 | 1 | ||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 36.06 | $ | 0.05 | $ | 7.95 | $ | 8.00 | $ | 0.00 | (c) | $ | (3.60 | ) | $ | (3.60 | ) | $ | 0.00 | $ | 40.46 | 22.72 | % | $ | 118,557 | 0.13 | % | 1.39 | % | 1 | % | |||||||||||||||||||||||||
2022 | 49.56 | 0.02 | (7.13 | ) | (7.11 | ) | (0.05 | ) | (6.34 | ) | (6.39 | ) | 0.00 | 36.06 | (17.08 | ) | 104,317 | 0.04 | 1.39 | 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 | 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 | 0 | (g) | |||||||||||||||||||||||||||||||||||
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 | 1 | ||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 27.02 | $ | (0.19 | ) | $ | 5.95 | $ | 5.76 | $ | — | $ | (2.69 | ) | $ | (2.69 | ) | $ | 0.00 | $ | 30.09 | 21.79 | % | $ | 28,818 | (0.64 | )% | 2.14 | % | 1 | % | |||||||||||||||||||||||||
2022 | 38.86 | (0.24 | ) | (5.26 | ) | (5.50 | ) | — | (6.34 | ) | (6.34 | ) | 0.00 | 27.02 | (17.69 | ) | 35,068 | (0.72 | ) | 2.14 | 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 | 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 | 0 | (g) | ||||||||||||||||||||||||||||||||||
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 | 1 | |||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 37.76 | $ | 0.16 | $ | 8.32 | $ | 8.48 | $ | (0.11 | ) | $ | (3.77 | ) | $ | (3.88 | ) | $ | 0.00 | $ | 42.36 | 23.02 | % | $ | 517,272 | 0.38 | % | 1.14 | % | 1 | % | |||||||||||||||||||||||||
2022 | 51.62 | 0.13 | (7.47 | ) | (7.34 | ) | (0.18 | ) | (6.34 | ) | (6.52 | ) | 0.00 | 37.76 | (16.88 | ) | 468,753 | 0.29 | 1.14 | 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 | 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 | 0 | (g) | |||||||||||||||||||||||||||||||||||
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 | 1 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect the applicable sales charges. | |
(a) | 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 years 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 fiscal year ended September 30, 2020. For the years ended September 30, 2023, 2022, 2021, and 2019, there was no impact on the expense ratios. | |
(f) | The Fund incurred interest expense during all the fiscal years presented. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.38%, 1.38%, 1.37%, 1.39%, and 1.38% (Class AAA and Class A), 2.13%, 2.13%, 2.12%, 2.14%, and 2.13% (Class C), and 1.13%, 1.13%, 1.12%, 1.14%, and 1.13% (Class I). | |
(g) | Amount represents less than 0.5%. |
See accompanying notes to financial statements.
12
The Gabelli Small Cap Growth Fund
Notes to Financial Statements
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
13
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (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 September 30, 2023 is as follows:
Valuation Inputs | ||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs (a) | Total Market Value at 09/30/23 | |||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Automotive: Parts and Accessories | $ | 69,104,104 | $ | 4 | — | $ | 69,104,108 | |||||||||
Aviation: Parts and Services | 31,172,675 | 365,400 | — | 31,538,075 | ||||||||||||
Building and Construction | 105,936,450 | 3,000 | — | 105,939,450 | ||||||||||||
Business Services | 33,124,150 | 509,525 | — | 33,633,675 | ||||||||||||
Consumer Products | 21,218,615 | 499,267 | — | 21,717,882 | ||||||||||||
Consumer Services | 14,125,786 | 224,985 | — | 14,350,771 | ||||||||||||
Diversified Industrial | 192,528,032 | 814,450 | — | 193,342,482 | ||||||||||||
Equipment and Supplies | 289,917,640 | 2,972,025 | — | 292,889,665 | ||||||||||||
Financial Services | 74,610,801 | 28,927 | $ | 5,000 | 74,644,728 | |||||||||||
Hotels and Gaming | 58,337,336 | 3,836,250 | — | 62,173,586 | ||||||||||||
Manufactured Housing and Recreational Vehicles | 25,124,265 | 2,165,213 | — | 27,289,478 | ||||||||||||
Real Estate | 31,446,071 | 1,112,000 | — | 32,558,071 | ||||||||||||
Retail | 99,761,496 | 738,913 | — | 100,500,409 | ||||||||||||
Specialty Chemicals | 30,603,389 | — | — | 30,603,389 | ||||||||||||
Other Industries (b) | 437,563,439 | — | — | 437,563,439 | ||||||||||||
Total Common Stocks | 1,514,574,249 | 13,269,959 | 5,000 | 1,527,849,208 | ||||||||||||
Closed-End Funds | 1,549,657 | — | — | 1,549,657 | ||||||||||||
Preferred Stocks (b) | 2,475,392 | — | — | 2,475,392 | ||||||||||||
Rights (b) | — | 139,465 | — | 139,465 | ||||||||||||
Warrants (b) | 44,800 | — | 652 | 45,452 | ||||||||||||
U.S. Government Obligations | — | 34,060,330 | — | 34,060,330 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 1,518,644,098 | $ | 47,469,754 | $ | 5,652 | $ | 1,566,119,504 |
14
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
(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. | |
(b) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
During the fiscal year ended September 30, 2023, the Fund did not have transfers into or out of Level 3. The Fund’s policy is to recognize transfers among levels as of the beginning of the reporting period.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds 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
15
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
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 September 30, 2023, 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 fiscal year ended September 30, 2023, 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
16
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
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 permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to utilization of tax equalization. These reclassifications have no impact on the NAV of the Fund. For the fiscal year ended September 30, 2023, reclassifications were made to increase paid-in capital by $9,639,973, with an offsetting adjustment to total distributable earnings.
The tax character of distributions paid during the fiscal years ended September 30, 2023 and 2022 was as follows:
Year Ended September 30, 2023* | Year Ended September 30, 2022* | |||||||
Distributions paid from: | ||||||||
Ordinary income (inclusive of short term capital gains) | $ | 2,325,442 | $ | 3,571,562 | ||||
Net long term capital gains | 146,113,135 | 246,311,919 | ||||||
Total distributions paid | $ | 148,438,577 | $ | 249,883,482 |
* | Total distributions paid differs from the Statement of Changes in Net Assets due to the utilization of equalization. |
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
At September 30, 2023, the components of accumulated earnings/losses on a tax basis were as follows:
Undistributed ordinary income | $ | 3,567,934 | ||
Undistributed long term capital gains | 123,175,271 | |||
Net unrealized appreciation on investments and foreign currency translations | 1,065,868,559 | |||
Total | $ | 1,192,611,764 |
At September 30, 2023, the temporary difference between book basis and tax basis net unrealized appreciation on investments was due to deferral of losses from wash sales for tax purposes, mark-to-market adjustments on investments considered passive foreign investment companies, tax basis adjustments on investments in partnerships, and tax basis adjustments on investments in real estate investment trusts.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Investments | $ | 500,234,201 | $ | 1,118,549,693 | $ | (52,664,390 | ) | $ | 1,065,885,303 |
17
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
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 fiscal year ended September 30, 2023, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2023, 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 fiscal year ended September 30, 2023, 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 $65,517.
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 fiscal year ended September 30, 2023, other than short term securities and U.S. Government obligations, aggregated $20,701,824 and $216,663,264, respectively.
6. Transactions with Affiliates and Other Arrangements. During the fiscal year ended September 30, 2023, the Fund paid $34,858 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $16,357 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the fiscal year ended September 30, 2023, 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 $20,643.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the fiscal year ended September 30, 2023, the Fund accrued $45,000 in connection with the cost of computing the Fund’s NAV.
18
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
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 February 28, 2024 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 September 30, 2023, there were no borrowings outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during thefiscal year endedSeptember 30, 2023 was $4,099,247 with a weighted average interest rate of 4.99%. The maximum amount borrowed at any time during the fiscal year ended September 30, 2023 was $10,818,000.
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 fiscal years ended September 30, 2023 and 2022, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
19
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2023 | Year Ended September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 1,459,702 | $ | 59,287,899 | 1,183,539 | $ | 52,061,933 | ||||||||||
Shares issued upon reinvestment of distributions | 1,968,082 | 75,790,825 | 2,817,801 | 129,196,144 | ||||||||||||
Shares redeemed | (3,350,834 | ) | (134,486,937 | ) | (3,140,556 | ) | (137,099,295 | ) | ||||||||
Net increase | 76,950 | $ | 591,787 | 860,784 | $ | 44,158,782 | ||||||||||
Class A | ||||||||||||||||
Shares sold | 386,753 | $ | 15,677,854 | 412,514 | $ | 18,248,925 | ||||||||||
Shares issued upon reinvestment of distributions | 253,242 | 9,739,703 | 353,484 | 16,189,558 | ||||||||||||
Shares redeemed | (602,502 | ) | (24,083,151 | ) | (577,265 | ) | (24,596,617 | ) | ||||||||
Net increase | 37,493 | $ | 1,334,406 | 188,733 | $ | 9,841,866 | ||||||||||
Class C | ||||||||||||||||
Shares sold | 72,924 | $ | 2,251,044 | 58,394 | $ | 1,979,388 | ||||||||||
Shares issued upon reinvestment of distributions | 114,578 | 3,297,561 | 298,257 | 10,298,825 | ||||||||||||
Shares redeemed | (527,702 | ) | (15,956,920 | ) | (769,124 | ) | (25,581,189 | ) | ||||||||
Net decrease | (340,200 | ) | $ | (10,408,315 | ) | (412,473 | ) | $ | (13,302,976 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 1,930,594 | $ | 82,465,637 | 1,392,147 | $ | 62,940,445 | ||||||||||
Shares issued upon reinvestment of distributions | 1,139,763 | 45,807,093 | 1,620,237 | 77,544,528 | ||||||||||||
Shares redeemed | (3,272,433 | ) | (137,591,946 | ) | (3,077,613 | ) | (140,608,712 | ) | ||||||||
Net decrease | (202,076 | ) | $ | (9,319,216 | ) | (65,229 | ) | $ | (123,739 | ) |
9. Transactions in Securities of Affiliated Issuers. The 1940 Act defines affiliated issuers as those in which the Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the Fund’s transactions in the securities of these issuers during the fiscal year ended September 30, 2023 is set forth below:
Market Value at September 30, 2022 | Purchases | Sales Proceeds | Realized Gain/(Loss) | Change In Unrealized Appreciation | Market Value at September 30, 2023 | Dividend Income | Percent Owned of Shares | |||||||||||||||||||||||||
Bel Fuse Inc., Cl. A | $ | 5,911,425 | — | $ | 242,672 | $ | 92,631 | $ | 3,970,961 | $ | 9,732,345 | $ | 50,502 | 10.00 | % | |||||||||||||||||
Strattec Security Corp.† | 5,109,728 | $ | 64,127 | — | — | 578,045 | 5,751,900 | — | 6.00 | % | ||||||||||||||||||||||
Trans-Lux Corp.† | 640,960 | — | 911 | (1,489 | ) | 81,440 | 720,000 | — | 12.00 | % | ||||||||||||||||||||||
Total | $ | 91,142 | $ | 4,630,446 | $ | 16,204,245 | $ | 50,502 |
† | Non-income producing security. |
20
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Continued)
10. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
21
The Gabelli Small Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Small Cap Growth Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Small Cap Growth Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the summary schedule of investments, as of September 30, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli Funds investment companies since 1992.
New York, New York
November 29, 2023
22
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 17, 2023, 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.
23
The Gabelli Small Cap Growth Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Small Cap Growth Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
INTERESTED DIRECTORS4: | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer 1942 | Since 1991 | 31 | Chair, Co-Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management, Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chair of Associated Capital Group, Inc. | Director of Morgan Group Holding Co. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013-2018) | ||||
John D. Gabelli Director 1944 | Since 1991 | 12 | Former Senior Vice President of G.research, LLC (and its predecessor) (1991-2019) | — | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Elizabeth C. Bogan Director 1944 | Since 2019 | 12 | Former Senior Lecturer in Economics at Princeton University | — | ||||
Anthony J. Colavita6 Director 1935 | Since 1991 | 18 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director 1943 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director 1939 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||
Anthonie C. van Ekris6 Director 1934 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc.(global import/ export company) | — |
24
The Gabelli Small Cap Growth Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
Salvatore J. Zizza7 Director 1945 | Since 2001 | 35 | President of Zizza & Associates Corp. (private holding company); Chairman of Bergen Cove Realty Inc. (residential real estate) | Director and Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018); Retired Chairman of BAM (semiconductor and aerospace manufacturing);Director of Bion Environmental Technologies, Inc. |
25
The Gabelli Small Cap Growth Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
John C. Ball 1976 | Since 2017 | Senior Vice President (since 2018) and other positions (2017 – 2018) of GAMCO Investors, Inc.; Chief Executive Officer, G. Distributors, LLC since 2020; Officer of registered investment companies within the Gabelli Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017 | ||
Peter Goldstein Secretary & Vice President 1953 | Since 2020 | General Counsel, GAMCO Investors, Inc. and Chief Legal Officer, Associated Capital Group, Inc. since 2021; General Counsel and Chief Compliance Officer, Buckingham Capital Management, Inc. (2012-2020); Chief Legal Officer and Chief Compliance Officer, The Buckingham Research Group, Inc. (2012-2020) | ||
Richard J. Walz Chief Compliance Officer 1959 | Since 2013 | Chief Compliance Officer of registered investment companies within the Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. | |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’s By-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. | |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. | |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. | |
5 | Directors who are not interested persons are considered “Independent” Directors. | |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli/GAMCO Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. | |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule 13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
26
THE GABELLI SMALL CAP GROWTH FUND
2023 TAX NOTICE TO SHAREHOLDERS (Unaudited)
During the fiscal year ended September 30, 2023, the Fund paid to shareholders ordinary income distributions (comprised of net investment income and short term capital gains) totaling $0.0164, $0.0157, $0.0086, and $0.1245 for each of Class AAA, Class A, Class C, and Class I, respectively, and long term capital gains totaling $146,113,135, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Directors. For the fiscal year ended September 30, 2023, 100% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 0.31% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010. The Fund designates 100% of the ordinary income distribution as qualified short term capital gain pursuant to the American Jobs Creation Act of 2004.
U.S. Government Income:
The percentage of the ordinary income distribution paid by the Fund during the fiscal year ended September 30, 2023 which was derived from U.S. Treasury securities was 0.22%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Gabelli Small Cap Growth Fund did not meet this strict requirement in 2023. The percentage of U.S. Government securities held as of September 30, 2023 was 2.2%. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser as to the applicability of the information provided to your specific situation.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
Gabelli 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.
THE GABELLI SMALL CAP GROWTH 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.
The Gabelli Focused Growth and Income Fund Annual Report — September 30, 2023 | ![]() | ||
Daniel M. Miller Portfolio Manager GAMCO Investors BS, University of Miami |
To Our Shareholders,
For the fiscal year ended September 30, 2023, the net asset value (NAV) total return per Class I Share of The Gabelli Focused Growth and Income Fund was 7.0% compared with a total return of 13.1% for the Lipper Equity Income Fund Average. 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 September 30, 2023.
Investment Objective and Strategy (Unaudited)
The Gabelli Focused Growth and Income Fund is a concentrated, actively managed strategy. 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 has a managed monthly distribution, currently set at $0.06 per share.
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 sharehold-er 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)
In Q4 2022, the stock market had terrific gains as investors anticipated a slower Federal Reserve tightening policy and cooling inflation. The first half of 2023, despite challenges like the ongoing Russia and Ukraine conflict, rising commodity prices, and significant bank failures in the U.S., was largely positive. Q3 2023, on the other hand, proved more challenging as investors shifted their outlook due to rising bond yields, stalling disinflation, and an uncertain global economic outlook. Throughout 2023, the Fed’s rate hikes pressured stocks significantly.
By the end of Q3 2023, 10-year treasury yields reached 4.6%, up nearly 18% from 3.9% at the year’s start. This high return scenario in a risk free asset made stocks less compelling to short term investors. While inflation cooled down through Q4 2022 and H1 2023, showing a positive trajectory from a peak of 9.1% in 2022 to 3% in June 2023, it reversed in Q3 2023 with September’s CPI index reaching upwards of 3.7%. Given the Fed’s 2% target, rising inflation could trigger further interest rate hikes, driving treasury yields higher and affecting the broader market vs. fixed income alternatives risk reward analysis.
Despite the challenging macro environment, positives include the near real time low unemployment rate of 3.8%, resilient U.S. consumers, pricing power demonstrated by consumer branded goods companies in attractive categories, and substantial future growth opportunities from a value standpoint.
As a Fund with a concentrated portfolio of holdings, stock selection is an important element of performance. The Fund is driven more by the results of the companies selected rather than the movement of the overall market. To this effect, the Gabelli Focused Growth and Income Fund had a positive return every quarter in the fiscal year except for Q3, where, it is worth noting that a single positions contribution, NextEra Energy Partners LP accounted for the entirety of the decline. While continued increases in interest rates over the past year have created significant consternation for investors in fixed income securities, historically dividend paying securities outperform in defensive periods while also providing a cushion in steep market declines. We continue to believe that organizations with robust and consistent cash flows are well equipped to flourish in the current environment.
Some of the better performing investments during the fiscal year were: Apollo Global Management Inc., (5.9% of net assets as of September 30, 2023), which engages in credit, private equity, and real estate investments and continues to benefit from an array of high quality assets and a strong growth relating to their lending activities and fee revenues; AbbVie Inc. (2.1%), the pharmaceutical research and development company that has continued to show strong performance and rising revenues from their immunology portfolio; and Blackstone Mortgage Trust Inc., (7.4%), a REIT that originates senior loans collateralized by commercial properties in North America, Europe, and Australia. It traded below book value for the better part of the year despite 95% of its loans performing according to expectations and reporting strong quarterly earnings.
A few of our weaker performers during the fiscal year included: NextEra Energy Partners LP (5.1%), a company that primarily operates high quality renewable projects with credit worthy counterparties. They announced a decision to forgo an additional asset drop-down in the fourth quarter, and thus lower the distribution growth rate to 5-8% from 12-15%. We believe the 14.5% current return on the $3.42 distribution per share is attractive, and the shares trade well below our revised Private Market Value (PMV) of $55 per share. Another detractor to performance this year was media conglomerate Qurate Retail Inc., 8%, 03/15/31 (5.2%), which continues to navigate a challenging operating environment but offers a very attractive $8 dividend yield that has been providing a great cushion against market declines.
We continue to position the portfolio toward high income producing securities. We appreciate your continued confidence and trust.
2
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 September 30, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
1 Year | 3 Year | 5 Year | 10 Year | Since Inception (12/31/02) | ||||||||||||||||
Class I (GWSIX)(c) | 6.97 | % | 11.63 | % | 4.77 | % | 3.74 | % | 6.78 | % | ||||||||||
Class AAA (GWSVX) | 5.91 | 10.56 | 4.05 | 3.26 | 6.46 | |||||||||||||||
S&P MidCap 400 Index (d) | 15.51 | 12.05 | 6.06 | 8.94 | 10.47 | |||||||||||||||
Lipper Equity Income Fund Average (d) | 13.10 | 10.15 | 6.92 | 8.59 | 8.33 | |||||||||||||||
Class A (GWSAX) | 6.53 | 10.78 | 4.20 | 3.32 | 6.52 | |||||||||||||||
With sales charge (e) | 0.40 | 8.61 | 2.97 | 2.71 | 6.20 | |||||||||||||||
Class C (GWSCX) | 5.17 | 9.76 | 3.30 | 2.50 | 5.70 | |||||||||||||||
With contingent deferred sales charge (f) | 4.17 | 9.76 | 3.30 | 2.50 | 5.70 |
(a) | The Fund’s fiscal year ends September 30. | |
(b) | Returns would have been lower had the Adviser not reimbursed various 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 June 1, 2023, the expense ratios for Class AAA, A, C, and I Shares are 1.72%, 1.72%, 2.47%, and 1.47%, respectively, and the net expense ratios for these share classes after contractual reimbursements by Gabelli Funds, LLC, (the Adviser) are 1.72%, 1.25%, 2.47%, and 0.80%, respectively. See page 12 for the expense ratios for the year ended September 30, 2023. The contractual reimbursements are in effect through June 1, 2024. 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.
4
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI FOCUSED GROWTH AND INCOME FUND (CLASS AAA SHARES)
AND S&P MIDCAP 400 INDEX (Unaudited)
Average Annual Total Returns* | |||
1 Year | 5 Year | 10 Year | |
Class AAA | 5.91% | 4.05% | 3.26% |
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
5
The Gabelli Focused Growth and Income Fund Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from April 1, 2023 through September 30, 2023 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2023.
Beginning Account Value 04/01/23 | Ending Account Value 09/30/23 | Annualized Expense Ratio | Expenses Paid During Period * | |||||||||||||
The Gabelli Focused Growth and Income Fund | ||||||||||||||||
Actual Fund Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,017.00 | 1.83% | $ | 9.25 | |||||||||
Class A | $ | 1,000.00 | $ | 1,020.10 | 1.26% | $ | 6.38 | |||||||||
Class C | $ | 1,000.00 | $ | 1,013.40 | 2.59% | $ | 13.07 | |||||||||
Class I | $ | 1,000.00 | $ | 1,022.30 | 0.80% | $ | 4.06 | |||||||||
Hypothetical 5% Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,015.89 | 1.83% | $ | 9.25 | |||||||||
Class A | $ | 1,000.00 | $ | 1,018.75 | 1.26% | $ | 6.38 | |||||||||
Class C | $ | 1,000.00 | $ | 1,012.08 | 2.59% | $ | 13.06 | |||||||||
Class I | $ | 1,000.00 | $ | 1,021.06 | 0.80% | $ | 4.05 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
6
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2023:
The Gabelli Focused Growth and Income Fund
Energy and Utilities | 25.1 | % | ||
Real Estate Investment Trusts | 21.5 | % | ||
Financial Services | 13.9 | % | ||
Telecommunications | 5.7 | % | ||
Retail | 5.2 | % | ||
U.S. Government Obligations | 5.1 | % | ||
Food and Beverage | 4.9 | % | ||
Health Care | 4.3 | % | ||
Diversified Industrial | 3.5 | % |
Building and Construction | 2.3 | % | ||
Computer Software and Services | 2.0 | % | ||
Metals and Mining | 1.6 | % | ||
Automotive: Parts and Accessories | 1.5 | % | ||
Entertainment | 1.1 | % | ||
Specialty Chemicals | 0.9 | % | ||
Other Assets and Liabilities (Net) | 1.4 | % | ||
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.
7
The Gabelli Focused Growth and Income Fund
Schedule of Investments — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 79.4% | ||||||||||||
Automotive: Parts and Accessories — 1.5% | ||||||||||||
6,000 | Aptiv plc† | $ | 311,893 | $ | 591,540 | |||||||
Building and Construction — 2.3% | ||||||||||||
7,500 | Herc Holdings Inc. | 144,069 | 892,050 | |||||||||
Computer Software and Services — 2.0% | ||||||||||||
6,150 | Alphabet Inc., Cl. C† | 182,408 | 810,878 | |||||||||
Energy and Utilities — 23.8% | ||||||||||||
173,819 | Energy Transfer LP | 1,175,147 | 2,438,681 | |||||||||
100,000 | Enterprise Products Partners LP | 1,602,577 | 2,737,000 | |||||||||
96,000 | Kinder Morgan Inc. | 1,013,347 | 1,591,680 | |||||||||
19,000 | New Fortress Energy Inc. | 581,821 | 622,820 | |||||||||
67,772 | NextEra Energy Partners LP | 2,776,944 | 2,012,828 | |||||||||
7,149,836 | 9,403,009 | |||||||||||
Financial Services — 10.9% | ||||||||||||
26,000 | Apollo Global Management Inc. | 752,163 | 2,333,760 | |||||||||
12,500 | Morgan Stanley | 525,580 | 1,020,875 | |||||||||
84,571 | New York Community Bancorp Inc. | 716,368 | 959,035 | |||||||||
1,994,111 | 4,313,670 | |||||||||||
Food and Beverage — 4.9% | ||||||||||||
47,500 | Maple Leaf Foods Inc. | 745,768 | 912,755 | |||||||||
9,500 | Mondelēz International Inc., Cl. A | 388,723 | 659,300 | |||||||||
4,500 | Post Holdings Inc.† | 101,078 | 385,830 | |||||||||
1,235,569 | 1,957,885 | |||||||||||
Health Care — 4.3% | ||||||||||||
5,500 | AbbVie Inc. | 580,809 | 819,830 | |||||||||
27,000 | Option Care Health Inc.† | 147,593 | 873,450 | |||||||||
728,402 | 1,693,280 | |||||||||||
Metals and Mining — 1.6% | ||||||||||||
17,500 | Newmont Corp. | 731,431 | 646,625 | |||||||||
Real Estate Investment Trusts — 21.5% | ||||||||||||
134,667 | Blackstone Mortgage Trust Inc., Cl. A | 3,080,752 | 2,929,007 | |||||||||
50,532 | Franklin BSP Realty Trust Inc. | 701,487 | 669,044 | |||||||||
128,133 | Medical Properties Trust Inc. | 1,111,578 | 698,325 | |||||||||
8,000 | Simon Property Group Inc. | 886,904 | 864,240 | |||||||||
115,000 | VICI Properties Inc. | 1,944,451 | 3,346,500 | |||||||||
7,725,172 | 8,507,116 |
Shares | Cost | Market Value | ||||||||||
Specialty Chemicals — 0.9% | ||||||||||||
5,000 | International Flavors & Fragrances Inc. | $ | 314,964 | $ | 340,850 | |||||||
Telecommunications — 5.7% | ||||||||||||
114,000 | AT&T Inc. | 1,757,004 | 1,712,280 | |||||||||
4,000 | GCI Liberty Inc., Escrow† | 0 | 0 | |||||||||
4,000 | T-Mobile US Inc. | 290,985 | 560,200 | |||||||||
2,047,989 | 2,272,480 | |||||||||||
TOTAL COMMON STOCKS | 22,565,844 | 31,429,383 | ||||||||||
PREFERRED STOCKS — 13.0% | ||||||||||||
Diversified Industrial — 3.5% | ||||||||||||
14,274 | Babcock & Wilcox Enterprises Inc., | |||||||||||
8.125%, 02/28/26 | 333,638 | 339,008 | ||||||||||
45,004 | Steel Partners Holdings LP, Ser. A, | |||||||||||
6.000%, 02/07/26 | 929,628 | 1,047,693 | ||||||||||
1,263,266 | 1,386,701 | |||||||||||
Energy and Utilities — 1.3% | ||||||||||||
19,991 | Energy Transfer LP, Ser. D, | |||||||||||
10.364% | 334,983 | 513,769 | ||||||||||
Financial Services — 3.0% | ||||||||||||
13,030 | Argo Blockchain plc, Ser. A, | |||||||||||
8.750%, 11/30/26 | 80,885 | 89,646 | ||||||||||
39,091 | FTAI Aviation Ltd., Ser. A, | |||||||||||
8.250% | 781,752 | 883,848 | ||||||||||
34,355 | Greenidge Generation Holdings Inc., | |||||||||||
8.500%, 10/31/26 | 270,411 | 216,436 | ||||||||||
1,133,048 | 1,189,930 | |||||||||||
Retail — 5.2% | ||||||||||||
72,095 | Qurate Retail Inc., | |||||||||||
8.000%, 03/15/31 | 3,429,958 | 2,065,522 | ||||||||||
TOTAL PREFERRED STOCKS | 6,161,255 | 5,155,922 | ||||||||||
MANDATORY CONVERTIBLE SECURITIES(a) — 1.1% | ||||||||||||
Entertainment — 1.1% | ||||||||||||
23,711 | Paramount Global, Ser. A, | |||||||||||
5.750%, 04/01/24 | 594,272 | 420,870 |
See accompanying notes to financial statements.
8
The Gabelli Focused Growth and Income Fund
Schedule of Investments (Continued) — September 30, 2023
Principal Amount | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 5.1% | ||||||||||||
$ | 2,030,000 | U.S. Treasury Bills, | ||||||||||
5.367% to 5.465%††, 12/07/23 to 12/21/23 | $ | 2,006,423 | $ | 2,006,769 | ||||||||
TOTAL INVESTMENTS — 98.6% | $ | 31,327,794 | 39,012,944 | |||||||||
Other Assets and Liabilities (Net) — 1.4%. | 547,305 | |||||||||||
NET ASSETS — 100.0% | $ | 39,560,249 |
(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 yields at dates of purchase. |
See accompanying notes to financial statements.
9
The Gabelli Focused Growth and Income Fund
Statement of Assets and Liabilities
September 30, 2023
Assets: | ||||
Investments, at value (cost $31,327,794) | $ | 39,012,944 | ||
Foreign currency, at value (cost $6,272) | 6,242 | |||
Receivable for Fund shares sold | 538,880 | |||
Receivable for investments sold | 177,242 | |||
Receivable from Adviser | 24,964 | |||
Dividends and interest receivable | 216,974 | |||
Prepaid expenses | 23,379 | |||
Total Assets | 40,000,625 | |||
Liabilities: | ||||
Payable to bank | 4,240 | |||
Payable for investments purchased | 359,766 | |||
Payable for Fund shares redeemed | 1,251 | |||
Payable for investment advisory fees | 32,668 | |||
Payable for distribution fees | 6,807 | |||
Payable for legal and audit fees | 24,200 | |||
Other accrued expenses | 11,444 | |||
Total Liabilities | 440,376 | |||
Net Assets | ||||
(applicable to 2,603,175 shares outstanding) | $ | 39,560,249 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 32,640,335 | ||
Total distributable earnings | 6,919,914 | |||
Net Assets | $ | 39,560,249 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($5,320,715 ÷ 356,770 shares outstanding; 100,000,000 shares authorized) | $ | 14.91 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($16,367,819 ÷ 1,077,478 shares outstanding; 50,000,000 shares authorized) | $ | 15.19 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 16.12 | ||
Class C: | ||||
Net Asset Value and offering price per share ($2,666,659 ÷ 219,442 shares outstanding; 50,000,000 shares authorized) | $ | 12.15 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($15,205,056 ÷ 949,485 shares outstanding; 50,000,000 shares authorized) | $ | 16.01 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended September 30, 2023
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $8,099) | $ | 2,088,074 | ||
Interest | 55,576 | |||
Total Investment Income | 2,143,650 | |||
Expenses: | ||||
Investment advisory fees | 382,758 | |||
Distribution fees - Class AAA | 12,610 | |||
Distribution fees - Class A | 35,186 | |||
Distribution fees - Class C | 35,942 | |||
Legal and audit fees | 70,700 | |||
Registration expenses | 56,630 | |||
Shareholder communications expenses | 27,638 | |||
Shareholder services fees | 24,013 | |||
Custodian fees | 6,847 | |||
Directors’ fees | 3,473 | |||
Interest expense | 2,672 | |||
Miscellaneous expenses | 12,989 | |||
Total Expenses | 671,458 | |||
Less: | ||||
Expense reimbursements (See Note 3) | (187,761 | ) | ||
Net Expenses | 483,697 | |||
Net Investment Income | 1,659,953 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized loss on investments | (719,050 | ) | ||
Net realized gain on foreign currency transactions. | 413 | |||
Net realized loss on investments and foreign currency transactions | (718,637 | ) | ||
Net change in unrealized appreciation/depreciation: | ||||
on investments | 1,474,974 | |||
on foreign currency translations | 110 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 1,475,084 | |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency | 756,447 | |||
Net Increase in Net Assets Resulting from Operations | $ | 2,416,400 |
See accompanying notes to financial statements.
10
The Gabelli Focused Growth and Income Fund
Statement of Changes in Net Assets
Year Ended September 30, 2023 | Year Ended September 30, 2022 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,659,953 | $ | 907,768 | ||||
Net realized gain/(loss) on investments and foreign currency transactions | (718,637 | ) | 1,696,905 | |||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 1,475,084 | (7,868,255 | ) | |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 2,416,400 | (5,263,582 | ) | |||||
Distributions to Shareholders: | ||||||||
Class AAA | (247,172 | ) | (261,923 | ) | ||||
Class A | (683,676 | ) | (463,689 | ) | ||||
Class C | (207,466 | ) | (309,413 | ) | ||||
Class I | (723,663 | ) | (694,230 | ) | ||||
Total Distributions to Shareholders | (1,861,977 | ) | (1,729,255 | ) | ||||
Capital Share Transactions: | ||||||||
Class AAA | 123,815 | (871,432 | ) | |||||
Class A | 5,597,058 | 3,794,627 | ||||||
Class C | (1,733,319 | ) | (2,842,573 | ) | ||||
Class I | (4,309,454 | ) | 5,996,510 | |||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | (321,900 | ) | 6,077,132 | |||||
Redemption Fees | 60 | — | ||||||
Net Increase/(Decrease) in Net Assets | 232,583 | (915,705 | ) | |||||
Net Assets: | ||||||||
Beginning of year | 39,327,666 | 40,243,371 | ||||||
End of year | $ | 39,560,249 | $ | 39,327,666 |
See accompanying notes to financial statements.
11
The Gabelli Focused Growth and Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a)(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 Year | Total Return† | Net Assets, End of Year (in 000’s) | Net Investment Income (Loss)(b) | Operating Expenses Before Reimbursement | Operating Expenses Net of Reimbursement(c) | Portfolio Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 14.79 | $ | 0.59 | $ | 0.29 | $ | 0.88 | $ | (0.66 | ) | $ | (0.10 | ) | $ | (0.76 | ) | $ | 0.00 | (d) | $ | 14.91 | 5.91 | % | $ | 5,321 | 3.79 | % | 1.79 | % | 1.79 | % | 36 | % | ||||||||||||||||||||||||||
2022 | 17.50 | 0.32 | (2.31 | ) | (1.99 | ) | (0.66 | ) | (0.06 | ) | (0.72 | ) | — | 14.79 | (11.85 | ) | 5,134 | 1.85 | 1.72 | 1.72 | 46 | |||||||||||||||||||||||||||||||||||||||
2021 | 12.48 | 0.34 | 5.22 | 5.56 | (0.54 | ) | — | (0.54 | ) | — | 17.50 | 44.76 | 6,927 | 2.15 | 1.96 | 1.96 | 54 | |||||||||||||||||||||||||||||||||||||||||||
2020 | 12.93 | (0.03 | ) | (0.42 | ) | (0.45 | ) | — | — | — | 0.00 | (d) | 12.48 | (3.48 | ) | 8,713 | (0.24 | ) | 1.71 | 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 | 1.64 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 14.97 | $ | 0.70 | $ | 0.28 | $ | 0.98 | $ | (0.66 | ) | $ | (0.10 | ) | $ | (0.76 | ) | $ | 0.00 | (d) | $ | 15.19 | 6.53 | % | $ | 16,368 | 4.43 | % | 1.79 | % | 1.26 | %(f) | 36 | % | ||||||||||||||||||||||||||
2022 | 17.71 | 0.34 | (2.36 | ) | (2.02 | ) | (0.66 | ) | (0.06 | ) | (0.72 | ) | — | 14.97 | (11.88 | ) | 10,810 | 1.94 | 1.72 | 1.70 | (f) | 46 | ||||||||||||||||||||||||||||||||||||||
2021 | 12.62 | 0.30 | 5.33 | 5.63 | (0.54 | ) | — | (0.54 | ) | — | 17.71 | 44.82 | 8,958 | 1.83 | 1.96 | 1.96 | 54 | |||||||||||||||||||||||||||||||||||||||||||
2020 | 13.06 | (0.03 | ) | (0.41 | ) | (0.44 | ) | — | — | — | 0.00 | (d) | 12.62 | (3.37 | ) | 6,644 | (0.24 | ) | 1.71 | 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 | 1.64 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 12.25 | $ | 0.37 | $ | 0.27 | $ | 0.64 | $ | (0.66 | ) | $ | (0.08 | ) | $ | (0.74 | ) | $ | 0.00 | (d) | $ | 12.15 | 5.17 | % | $ | 2,666 | 2.90 | % | 2.54 | % | 2.54 | % | 36 | % | ||||||||||||||||||||||||||
2022 | 14.73 | 0.15 | (1.91 | ) | (1.76 | ) | (0.66 | ) | (0.06 | ) | (0.72 | ) | — | 12.25 | (12.54 | ) | 4,357 | 1.02 | 2.47 | 2.47 | 46 | |||||||||||||||||||||||||||||||||||||||
2021 | 10.64 | 0.15 | 4.48 | 4.63 | (0.54 | ) | — | (0.54 | ) | — | 14.73 | 43.75 | 8,143 | 1.13 | 2.71 | 2.71 | 54 | |||||||||||||||||||||||||||||||||||||||||||
2020 | 11.10 | (0.11 | ) | (0.35 | ) | (0.46 | ) | — | — | — | 0.00 | (d) | 10.64 | (4.14 | ) | 6,926 | (1.00 | ) | 2.46 | 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 | 2.39 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 15.68 | $ | 0.79 | $ | 0.31 | $ | 1.10 | $ | (0.66 | ) | $ | (0.11 | ) | $ | (0.77 | ) | $ | 0.00 | (d) | $ | 16.01 | 6.97 | % | $ | 15,205 | 4.77 | % | 1.54 | % | 0.81 | %(f) | 36 | % | ||||||||||||||||||||||||||
2022 | 18.35 | 0.54 | (2.49 | ) | (1.95 | ) | (0.66 | ) | (0.06 | ) | (0.72 | ) | — | 15.68 | (11.07 | ) | 19,027 | 2.94 | 1.47 | 0.80 | (f) | 46 | ||||||||||||||||||||||||||||||||||||||
2021 | 12.94 | 0.46 | 5.49 | 5.95 | (0.54 | ) | — | (0.54 | ) | — | 18.35 | 46.21 | 16,215 | 2.70 | 1.71 | 0.95 | (f) | 54 | ||||||||||||||||||||||||||||||||||||||||||
2020 | 13.36 | 0.00 | (d) | (0.42 | ) | (0.42 | ) | — | — | — | 0.00 | (d) | 12.94 | (3.14 | ) | 8,333 | 0.01 | 1.46 | 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 | 1.39 | (e) | 67 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect the applicable sales charges. | |
(a) | 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 years ended September 30 2023, 2022 and 2020, if interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.78%, 1.72%, and 1.70% (Class AAA), 1.25%, 1.69%, and 1.70% (Class A), 2.53%, 2.47%, and 2.45% (Class C), and 0.80%, 0.80%, and 1.45% (Class I), respectively. For the fiscal years ended September 30, 2021, and 2019, the effect of interest expense was minimal. | |
(d) | Amount represents less than $0.005 per share. | |
(e) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. 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, 2019. | |
(f) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed expenses of $187,761 and $119,130 for the fiscal years ended September 30, 2023 and 2022, respectively. |
See accompanying notes to financial statements.
12
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements
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
13
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (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 September 30, 2023 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 09/30/23 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks | ||||||||||||
Telecommunications | $ | 2,272,480 | — | $ | 2,272,480 | |||||||
Other Industries (a) | 29,156,903 | — | 29,156,903 | |||||||||
Total Common Stocks | 31,429,383 | — | 31,429,383 | |||||||||
Preferred Stocks (a) | 5,066,276 | $ | 89,646 | 5,155,922 | ||||||||
Mandatory Convertible Securities (a) | 420,870 | — | 420,870 | |||||||||
U.S. Government Obligations | — | 2,006,769 | 2,006,769 | |||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 36,916,529 | $ | 2,096,415 | $ | 39,012,944 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at September 30, 2023 or September 30, 2022. The Fund’s policy is to recognize transfers among levels as of the beginning of the reporting period.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds 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.
14
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Continued)
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.
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.
15
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Continued)
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to prior year post financial statement adjustments. These reclassifications have no impact on the NAV of the Fund. For the fiscal year ended September 30, 2023, reclassifications were made to decrease paid-in capital by $187,796, with an offsetting adjustment to total distributable earnings.
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 years ended September 30, 2023 and 2022 was as follows:
Year Ended September 30, 2023 | Year Ended September 30, 2022 | |||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 1,600,441 | $ | 1,570,423 | ||||
Net long term capital gains | 261,536 | 158,832 | ||||||
Total distributions paid | $ | 1,861,977 | $ | 1,729,255 |
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
16
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Continued)
substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
At September 30, 2023, the components of accumulated earnings/losses on a tax basis were as follows:
Undistributed ordinary income | $ | 336,914 | ||
Net unrealized appreciation on investments and foreign currency translations | 7,664,168 | |||
Qualified late year loss deferrals* | (1,081,168 | ) | ||
Total | $ | 6,919,914 |
* | Under the current law, qualified late year losses realized after October 31 and prior to the Fund’s year end may be elected as occurring on the first day of the following year. For the year ended September 30, 2023, the Fund elected to defer $879,429 of late year short term capital gain losses and $201,739 of late year long term capital gain losses. |
At September 30, 2023, the temporary difference between book basis and tax basis net unrealized appreciation on investments was due to qualified late-year losses deferred, tax basis adjustments on investments in partnerships, tax basis adjustments on investments in real estate investment trusts, and deferral of losses from wash sales for tax purposes.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Investments | $ | 31,348,786 | $ | 10,931,802 | $ | (3,267,644 | ) | $ | 7,664,158 |
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 fiscal year ended September 30, 2023, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2023, 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.
Effective August 17, 2022, the Adviser agreed to add the Fund’s Class A shares to the classes of shares of the Fund for which 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 and Class A (excluding brokerage costs, acquired fund fees and expenses, interest, taxes, and extraordinary
17
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Continued)
expenses) at no more than an annual rate of 0.80% and 1.25% of the value of that class’s average daily net assets. This agreement is in effect through June 1, 2024 for Class I and Class A, and may be terminated only by the Board before such time. During the fiscal year ended September 30, 2023, the Adviser reimbursed expenses in the amount of $187,761 for Class I and Class A. 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 would not exceed 0.80% and 1.25% of the value of the average daily net assets of Class I and Class A, respectively. At September 30, 2023, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $306,891:
For the fiscal year ended September 30, 2022, expiring September 30, 2024 | $ | 119,130 | ||
For the fiscal year ended September 30, 2023, expiring September 30, 2025 | 187,761 | |||
$ | 306,891 |
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 fiscal year ended September 30, 2023, other than short term securities and U.S. Government obligations, aggregated $14,292,109 and $13,419,598, respectively.
6.Transactions with Affiliates and Other Arrangements. The Distributor retained a total of $32,162 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.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on February 28, 2024 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 September 30, 2023, there were no borrowings outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit for the fourteen days of borrowings during the fiscal year ended September 30, 2023 was $935,286 with a weighted average interest rate of 5.79%. The maximum amount borrowed at any time during the fiscal year ended September 30, 2023 was $2,467,000.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. From January 3, 2022 through March 14, 2023, the Fund’s Class C Shares were closed
18
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Continued)
to all purchases. On March 15, 2023, Class C Shares were re-opened for purchases. 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 fiscal years ended September 30, 2023 and 2022, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended September 30, 2023 | Year Ended September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 82,978 | $ | 1,292,550 | 13,659 | $ | 238,395 | ||||||||||
Shares issued upon reinvestment of distributions | 15,953 | 244,989 | 15,178 | 259,825 | ||||||||||||
Shares redeemed | (89,323 | ) | (1,413,724 | ) | (77,549 | ) | (1,369,652 | ) | ||||||||
Net increase/(decrease) | 9,608 | $ | 123,815 | (48,712 | ) | $ | (871,432 | ) | ||||||||
Class A | ||||||||||||||||
Shares sold | 444,081 | $ | 6,994,691 | 296,096 | $ | 5,199,572 | ||||||||||
Shares issued upon reinvestment of distributions | 41,391 | 645,659 | 24,683 | 424,570 | ||||||||||||
Shares redeemed | (129,980 | ) | (2,043,292 | ) | (104,658 | ) | (1,829,515 | ) | ||||||||
Net increase | 355,492 | $ | 5,597,058 | 216,121 | $ | 3,794,627 | ||||||||||
Class C | ||||||||||||||||
Shares sold | 7,733 | $ | 98,511 | 25,571 | $ | 379,123 | ||||||||||
Shares issued upon reinvestment of distributions | 16,264 | 205,883 | 21,458 | 307,817 | ||||||||||||
Shares redeemed | (160,129 | ) | (2,037,713 | ) | (244,093 | ) | (3,529,513 | ) | ||||||||
Net decrease | (136,132 | ) | $ | (1,733,319 | ) | (197,064 | ) | $ | (2,842,573 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 388,157 | $ | 6,526,936 | 442,419 | $ | 8,052,682 | ||||||||||
Shares issued upon reinvestment of distributions | 41,222 | 674,944 | 36,466 | 654,993 | ||||||||||||
Shares redeemed | (693,181 | ) | (11,511,334 | ) | (149,221 | ) | (2,711,165 | ) | ||||||||
Net increase/(decrease) | (263,802 | ) | $ | (4,309,454 | ) | 329,664 | $ | 5,996,510 |
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 Focused Growth and Income Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Focused Growth and Income Fund and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Focused Growth and Income Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the schedule of investments, as of September 30, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli Funds investment companies since 1992.
New York, New York
November 29, 2023
20
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 17, 2023, 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.
21
The Gabelli Focused Growth and Income Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and Officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Focused Growth and Income Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
INTERESTED DIRECTORS4: | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer 1942 | Since 1991 | 31 | Chair, Co-Chief Executive Officer, and Chief Investment Officer – Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management, Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chair of Associated Capital Group, Inc. | Director of Morgan Group Holding Co. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013-2018) | ||||
John D. Gabelli Director 1944 | Since 1991 | 12 | Former Senior Vice President of G. research, LLC (1991-2019) | — | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Elizabeth C. Bogan Director 1944 | Since 2019 | 12 | Former Senior Lecturer in Economics, Princeton University | — | ||||
Anthony J. Colavita6 Director 1935 | Since 1991 | 18 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director 1943 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director 1939 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank | ||||
Anthonie C. van Ekris6 Director 1934 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc.(global import/ export company) | — |
22
The Gabelli Focused Growth and Income Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
Salvatore J. Zizza7 Director 1945 | Since 2001 | 35 | President of Zizza & Associates Corp. (private holding company); Chairman of Bergen Cove Realty Inc. (residential real estate) | Director and Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018); Retired Chairman of BAM (semiconductor and aerospace manufacturing);Director of Bion Environmental Technologies, Inc. |
23
The Gabelli Focused Growth and Income Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
John C. Ball President, Treasurer, Principal Financial & Accounting Officer 1976 | Since 2017 | Senior Vice President (since 2018) and other positions (2017 – 2018) of GAMCO Investors, Inc.; Chief Executive Officer, G. Distributors, LLC since 2020; Officer of registered investment companies within the Gabelli Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017 | ||
Peter Goldstein Secretary & Vice President 1953 | Since 2020 | General Counsel, GAMCO Investors, Inc. and Chief Legal Officer, Associated Capital Group, Inc. since 2021; General Counsel and Chief Compliance Officer, Buckingham Capital Management, Inc. (2012-2020); Chief Legal Officer and Chief Compliance Officer, The Buckingham Research Group, Inc. (2012-2020) | ||
Richard J. Walz Chief Compliance Officer 1959 | Since 2013 | Chief Compliance Officer of registered investment companies within the Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. | |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’s By-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. | |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. | |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. | |
5 | Directors who are not interested persons are considered “Independent” Directors. | |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. | |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule 13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
24
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.
THE GABELLI FOCUSED GROWTH AND INCOME FUND
2023 TAX NOTICE TO SHAREHOLDERS (Unaudited)
During the fiscal year ended September 30, 2023, the Fund paid to shareholders ordinary income distributions (comprised of net investment income and short term capital gains) totaling $0.7595, $0.7608, $0.7422, and $0.7658 for each of Class AAA, Class A, Class C, and Class I, respectively, and long term capital gains totaling $261,536, or the maximum allowable. For the fiscal year ended September 30, 2023, 67.22% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 71.03% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relied Reconciliation Act of 2003. The Fund designates 2.3% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010.
U.S. Government Income:
The percentage of the ordinary income distribution paid by the Fund during the fiscal year ended September 30, 2023 which was derived from U.S. Treasury securities was 2.3%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Gabelli Focused Growth and Income Fund did not meet this strict requirement in 2023. The percentage of U.S. Government securities held as of September 30, 2023 was 5.1%. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser as to the applicability of the information provided to your specific situation.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
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.
The Gabelli Global Financial Services Fund Annual Report — September 30, 2023 | ![]() | ||
Ian Lapey |
To Our Shareholders,
For the fiscal year ended September 30, 2023, the net asset value (NAV) total return per Class AAA Share of The Gabelli Global Financial Services Fund was 26.5% compared with a total return of 19.8% for the Morgan Stanley Capital International (MSCI) World Financials Index. Other classes of shares are available. See page 5 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of September 30, 2023.
Performance Discussion (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 net 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 the Fund’s investment adviser, Gabelli Funds, LLC, believes informed investors would be willing to pay for a company.
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 sharehold-er 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. |
The largest contributor to performance for the fiscal year was the common stock of First Citizens BancShares (4.6% of the portfolio as of September 30, 2023; up 74%). In March, First Citizens purchased substantially all the loans and assumed the customer deposits of Silicon Valley Bridge Bank from the FDIC for $500 million. In its first quarter after completing the acquisition, the company reported an after tax gain of $9.8 billion on the transaction and a 112% increase in Tangible Book Value (“TBV”). The second largest contributor was the common stock of Commerzbank (3.3%; +62%), the second largest banking group in Germany. Commerzbank has been reporting strong financial results this year with a 65% increase in Earnings Per Share (“EPS”) driven by a 42% increase in Net Interest Income and a 52% decline in the Risk Result (provisions for loan losses). Additionally, the company recently announced a new capital return policy whereby it would return EUR 2.6 billion (19% of its market cap) to shareholders from 2023-2024 in dividends and share repurchases. Finally, the common stock of Daimler Truck (2.9%; +58%), a leading global truck producer with significant financial services operations, was a positive contributor. For the first half of 2023, Daimler’s Revenue and EPS increased by 20% and 41%, respectively, and the company announced a EUR 2 billion (7% of its market cap) share buyback program.
The largest negative contributor was the common stock of Flushing Financial (3.2%; -33%), a regional bank based in Uniondale, NY. Flushing reported a 77% decline in EPS for the first half of 2023 owing primarily to a significant single name charge-off and lower Net Interest Margin. Still, Flushing’s deposits increased 4% year to date, its credit metrics remain heathy, and it has a strong capital position with a 10.4% Tier One Common Equity (“CET 1”) ratio that is nearly 400 basis points above its regulatory minimum. The common stock of HG Holdings (1.4%; -16%), declined owing primarily to the impact of higher interest rates on its title insurance and real estate businesses. Nevertheless, the company remains strongly financed with a debt free balance sheet, and the common stock trades at a 28% discount to TBV. Finally, an unfavorable court ruling related to policies sold by Dutch insurer NN Group (2.1%; -10%) more than 15 years ago drove a sharp decline in its common stock price. The company plans to appeal this ruling to the Dutch Supreme Court, and the ultimate financial impact should be manageable and appears to be more than reflected in NN’s depressed valuation. The common stock trades at 47% of TBV with a 9% dividend yield.
Global Banks – Resilience and Multiple Compression
Since the end of 2019, global banks have faced many challenges: a global pandemic, a war in Ukraine, inflation and runs on deposits that caused major bank failures in the US and Switzerland. Nevertheless, most global banks have demonstrated impressive resilience by remaining profitable and maintaining or increasing their strong capital positions. However, there has been a significant divergence between the impressive business results and the performance of their common stocks. The table below, which includes several global banks that account for about 21% of the Fund’s net assets, shows that despite growth in TBV (even after dividends) and stable or increasing capital positions that are well in excess of their regulatory minimums, the multiples of TBV have fallen dramatically.
2
TBV (1) | CET 1 ratio (2) | Price to TBV | ||||||||||||||||||||||
Company | Growth | 12/31/2019 | 9/30/2023 | Reg. Min. | 12/31/2019 | 9/30/2023 | ||||||||||||||||||
Barclays | 21 | % | 13.8 | % | 14.0 | % | 11.8 | % | 69 | % | 50 | % | ||||||||||||
Capital One Financial | 5 | % | 12.2 | % | 13.0 | % | 9.3 | % | 123 | % | 110 | % | ||||||||||||
Citigroup | 23 | % | 11.8 | % | 13.5 | % | 12.3 | % | 113 | % | 47 | % | ||||||||||||
Dah Sing Bank (3) | 13 | % | 13.4 | % | 15.6 | % | 8.0 | % | 56 | % | 24 | % | ||||||||||||
Flushing Financial | 12 | % | 10.9 | % | 10.2 | % | 6.5 | % | 108 | % | 58 | % | ||||||||||||
Shinhan Financial Group | 21 | % | 11.2 | % | 12.9 | % | 10.5 | % | 64 | % | 44 | % | ||||||||||||
Societe Generale | 12 | % | 12.7 | % | 13.3 | % | 9.8 | % | 56 | % | 37 | % | ||||||||||||
Standard Chartered | 8 | % | 13.8 | % | 13.9 | % | 10.5 | % | 60 | % | 59 | % | ||||||||||||
Trustco Bank | 18 | % | 19.0 | % | 19.0 | % | 7.0 | % | 156 | % | 83 | % |
(1) | Tangible Book Value growth since 12/31/2019. | |
(2) | Tier 1 Common Equity Ratio (common equity capital/risk weighted assets). | |
(3) | TBV & CET1 ratio are as of 6/30/23. |
Sources: Company reports, GAMCO Investors.
The Fund’s aggregate valuation metrics appear to be very attractive at about 70% of book value, 80% of TBV and 8 times 2023 projected EPS. As the table below shows, many of the Fund’s holdings have been repurchasing shares. These companies, which account for about 50% of the Fund’s NAV, have strong financial positions, and the vast majority of the shares were purchased at discounts to my estimates of intrinsic value. Therefore, I believe they have increased the intrinsic value of the shares for the shareholders who have not sold, like the Fund.
3
The Gabelli Global Financial Services Fund – Shares repurchases
Share count % change (1) | ||||||||||||
Company | 1yr. | 4yr. | 8yr. | |||||||||
Aegon | -4.8 | % | -7.6 | % | -9.4 | % | ||||||
Ally Financial Inc. | 0.4 | % | -21.4 | % | -37.4 | % | ||||||
Barclays PLC | -4.1 | % | -11.8 | % | -9.2 | % | ||||||
BBVA | -1.0 | % | -10.9 | % | -5.5 | % | ||||||
BNY Mellon | -4.9 | % | -16.6 | % | -29.6 | % | ||||||
Capital One Financial | -0.3 | % | -18.2 | % | -28.8 | % | ||||||
Cavco Industries | -4.4 | % | -6.8 | % | -4.3 | % | ||||||
Citigroup | -1.2 | % | -12.3 | % | -36.8 | % | ||||||
Daiwa Securities Group | -2.2 | % | -7.4 | % | -16.4 | % | ||||||
Diamond Hill Investment Group | -3.9 | % | -14.2 | % | -14.4 | % | ||||||
E-L Financial | -3.0 | % | -11.6 | % | -11.6 | % | ||||||
First American Financial | -0.5 | % | -8.0 | % | -5.0 | % | ||||||
ING Group | -6.0 | % | -10.1 | % | -9.5 | % | ||||||
Jefferies Financial Group | 1.1 | % | -22.8 | % | -36.1 | % | ||||||
NatWest Group PLC | -8.1 | % | -26.6 | % | -23.4 | % | ||||||
NN Group | -5.7 | % | -16.6 | % | -16.8 | % | ||||||
Societe Generale | -2.6 | % | -6.3 | % | -1.2 | % | ||||||
Standard Chartered | -6.2 | % | -14.7 | % | 7.0 | % | ||||||
State Street Corporation | -16.1 | % | -15.1 | % | -23.6 | % | ||||||
Toyota Motor | -1.3 | % | -3.1 | % | -13.2 | % | ||||||
UniCredit | -11.8 | % | -20.7 | % | 198.1 | % |
(1) | As of 9/30/23 except for Aegon, E-L Financial, NN Group, which are as of 6/30/23, and Jefferies (8/31/23). |
Thank you for your continued interest 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. |
4
Comparative Results
Average Annual Returns through September 30, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
1 Year | 3 Year | Since Inception (10/1/18) | ||||||||||
Class AAA (GAFSX) | 26.47 | % | 19.69 | % | 4.51 | % | ||||||
MSCI World Financials Index (c) | 19.75 | 14.24 | 5.08 | |||||||||
Class A (GGFSX) | 26.44 | 19.71 | 4.55 | |||||||||
With sales charge (d) | 19.17 | 17.37 | 3.32 | |||||||||
Class C (GCFSX) | 25.48 | 18.76 | 3.71 | |||||||||
With contingent deferred sales charge (e) | 24.48 | 18.76 | 3.71 | |||||||||
Class I (GFSIX) | 26.82 | 20.01 | 4.77 |
(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 June 1, 2023, the gross expense ratios for Class AAA, A, C, and I Shares are 1.88%, 1.88%, 2.63%, and 1.63%, respectively, and the net expense ratios for these share classes after contractual reimbursements by Gabelli Funds, LLC, (the Adviser) are 1.27%, 1.27%, 2.02%, and 1.02%, respectively. See page 12 for the expense ratios for the year ended September 30, 2023. The contractual reimbursements are in effect through June 1, 2024. 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.
5
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI GLOBAL FINANCIAL SERVICES FUND (CLASS AAA SHARES) AND MSCI WORLD
FINANCIALS INDEX (Unaudited)
Average Annual Total Returns* | |||
1 Year | 3 Year | Since Inception | |
Class AAA | 26.47% | 19.69% | 4.51% |
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
6
The Gabelli Global Financial Services Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from April 1, 2023 through September 30, 2023 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you
paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the fiscal year ended September 30, 2023.
Beginning Account Value 04/01/23 | Ending Account Value 09/30/23 | Annualized Expense Ratio | Expenses Paid During Period * | |||||||||||||
The Gabelli Global Financial Services Fund | ||||||||||||||||
Actual Fund Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,055.40 | 1.25% | $ | 6.44 | |||||||||
Class A | $ | 1,000.00 | $ | 1,055.00 | 1.25% | $ | 6.44 | |||||||||
Class C | $ | 1,000.00 | $ | 1,051.10 | 2.00% | $ | 10.28 | |||||||||
Class I | $ | 1,000.00 | $ | 1,057.30 | 1.00% | $ | 5.16 | |||||||||
Hypothetical 5% Return | ||||||||||||||||
Class AAA | $ | 1,000.00 | $ | 1,018.80 | 1.25% | $ | 6.33 | |||||||||
Class A | $ | 1,000.00 | $ | 1,018.80 | 1.25% | $ | 6.33 | |||||||||
Class C | $ | 1,000.00 | $ | 1,015.04 | 2.00% | $ | 10.10 | |||||||||
Class I | $ | 1,000.00 | $ | 1,020.05 | 1.00% | $ | 5.06 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183 days), then divided by 365. |
7
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of September 30, 2023:
The Gabelli Global Financial Services Fund
Banks | 25.6 | % | ||
Diversified Banks | 14.2 | % | ||
Insurance | 11.3 | % | ||
Automobiles | 7.1 | % | ||
Investment Management | 6.9 | % | ||
Institutional Brokerage | 5.9 | % | ||
Institutional Trust, Fiduciary, and Custody | 5.9 | % | ||
Consumer Finance | 5.5 | % |
Homebuilders | 4.9 | % | ||
Reinsurance | 3.8 | % | ||
Energy and Utilities | 3.3 | % | ||
Institutional Banking | 3.1 | % | ||
U.S. Government Obligations | 2.2 | % | ||
Other Assets and Liabilities (Net) | 0.3 | % | ||
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.
8
The Gabelli Global Financial Services Fund
Schedule of Investments — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 97.5% | ||||||||||||
Automobiles — 7.1% | ||||||||||||
23,349 | Daimler Truck Holding AG | $ | 676,585 | $ | 810,186 | |||||||
7,450 | Mercedes-Benz Group AG | 400,900 | 518,983 | |||||||||
3,770 | Toyota Motor Corp., ADR | 467,591 | 677,658 | |||||||||
1,545,076 | 2,006,827 | |||||||||||
Banks — 25.6% | ||||||||||||
82,500 | Banco Bilbao Vizcaya Argentaria SA | 435,552 | 672,490 | |||||||||
82,000 | Commerzbank AG | 475,767 | 935,434 | |||||||||
642,300 | Dah Sing Banking Group Ltd. | 574,796 | 424,867 | |||||||||
242,200 | Dah Sing Financial Holdings Ltd. | 779,977 | 512,177 | |||||||||
936 | First Citizens BancShares Inc., Cl. A | 256,202 | 1,291,774 | |||||||||
68,663 | Flushing Financial Corp. | 1,121,445 | 901,545 | |||||||||
34,000 | ING Groep NV | 278,844 | 451,128 | |||||||||
58,900 | Japan Post Bank Co. Ltd. | 558,570 | 512,774 | |||||||||
16,150 | Shinhan Financial Group Co. Ltd., ADR | 459,565 | 427,813 | |||||||||
31,147 | TrustCo Bank Corp. NY | 974,362 | 850,002 | |||||||||
6,200 | Webster Financial Corp. | 171,046 | 249,922 | |||||||||
6,086,126 | 7,229,926 | |||||||||||
Consumer Finance — 5.5% | ||||||||||||
20,680 | Ally Financial Inc. | 504,832 | 551,742 | |||||||||
10,360 | Capital One Financial Corp. | 925,300 | 1,005,438 | |||||||||
1,430,132 | 1,557,180 | |||||||||||
Diversified Banks — 14.2% | ||||||||||||
98,000 | Barclays plc | 176,341 | 190,044 | |||||||||
25,450 | Citigroup Inc. | 1,332,296 | 1,046,759 | |||||||||
29,920 | Credit Agricole SA | 292,610 | 369,852 | |||||||||
15,168 | Hana Financial Group Inc. | 438,464 | 477,161 | |||||||||
152,285 | NatWest Group plc | 360,114 | 437,938 | |||||||||
7,110 | Societe Generale SA | 135,512 | 173,230 | |||||||||
88,900 | Standard Chartered plc | 558,381 | 822,179 | |||||||||
20,700 | UniCredit SpA | 270,951 | 497,448 | |||||||||
3,564,669 | 4,014,611 | |||||||||||
Energy and Utilities — 3.3% | ||||||||||||
40,572 | Vitesse Energy Inc. | 576,060 | 928,693 | |||||||||
Homebuilders — 4.9% | ||||||||||||
3,010 | Cavco Industries Inc.† | 443,036 | 799,637 | |||||||||
30,413 | Legacy Housing Corp.† | 367,231 | 590,316 | |||||||||
810,267 | 1,389,953 | |||||||||||
Institutional Banking — 3.1% | ||||||||||||
19,350 | Moelis & Co., Cl. A | 733,777 | 873,266 | |||||||||
Institutional Brokerage — 5.9% | ||||||||||||
140,000 | Daiwa Securities Group Inc. | 718,572 | 808,579 |
Shares | Cost | Market Value | ||||||||||
23,610 | Jefferies Financial Group Inc. | $ | 431,932 | $ | 864,834 | |||||||
1,150,504 | 1,673,413 | |||||||||||
Institutional Trust, Fiduciary, and Custody — 5.9% | ||||||||||||
9,930 | State Street Corp. | 541,436 | 664,913 | |||||||||
23,000 | The Bank of New York Mellon Corp. | 984,563 | 980,950 | |||||||||
1,525,999 | 1,645,863 | |||||||||||
Insurance — 11.3% | ||||||||||||
139,118 | Aegon Ltd. | 530,772 | 673,932 | |||||||||
1,317 | E-L Financial Corp. Ltd. | 937,401 | 863,941 | |||||||||
11,902 | First American Financial Corp. | 652,074 | 672,344 | |||||||||
58,850 | HG Holdings Inc. | 498,736 | 382,525 | |||||||||
18,579 | NN Group NV | 728,340 | 597,922 | |||||||||
3,347,323 | 3,190,664 | |||||||||||
Investment Management — 6.9% | ||||||||||||
3,737 | Diamond Hill Investment Group Inc. | 645,383 | 629,946 | |||||||||
221,600 | The Westaim Corp.† | 432,197 | 577,555 | |||||||||
72,715 | Westwood Holdings Group Inc. | 897,716 | 738,057 | |||||||||
1,975,296 | 1,945,558 | |||||||||||
Reinsurance — 3.8% | ||||||||||||
18,800 | Axis Capital Holdings Ltd. | 949,439 | 1,059,756 | |||||||||
TOTAL COMMON STOCKS | 23,694,668 | 27,515,710 |
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 2.2% | ||||||||||||
$ | 620,000 | U.S. Treasury Bills, | ||||||||||
5.312% to 5.379%††, 10/19/23 to 12/28/23 | 615,839 | 615,927 | ||||||||||
TOTAL INVESTMENTS — 99.7% | $ | 24,310,507 | 28,131,637 | |||||||||
Other Assets and Liabilities (Net) — 0.3% | 94,691 | |||||||||||
NET ASSETS — 100.0% | $ | 28,226,328 |
† | Non-income producing security. |
†† | Represents annualized yields at dates of purchase. |
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
9
The Gabelli Global Financial Services Fund
Statement of Assets and Liabilities September 30, 2023
Assets: | ||||
Investments, at value (cost $24,310,507) | $ | 28,131,637 | ||
Cash | 516 | |||
Receivable for Fund shares sold | 500 | |||
Receivable from Adviser | 27,291 | |||
Dividends and interest receivable | 83,345 | |||
Prepaid expenses | 46,124 | |||
Total Assets | 28,289,413 | |||
Liabilities: | ||||
Foreign currency overdraft, at value (cost $1,210) | 1,208 | |||
Payable for investments purchased | 4,518 | |||
Payable for investment advisory fees | 23,468 | |||
Payable for distribution fees | 127 | |||
Payable for legal and audit fees | 24,200 | |||
Payable for shareholder communications | 3,966 | |||
Other accrued expenses | 5,598 | |||
Total Liabilities | 63,085 | |||
Net Assets | ||||
(applicable to 2,467,913 shares outstanding) | $ | 28,226,328 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 24,099,384 | ||
Total distributable earnings | 4,126,944 | |||
Net Assets | $ | 28,226,328 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($577,496 ÷ 50,524 shares outstanding; 120,000,000 shares authorized) | $ | 11.43 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($5,498 ÷ 478 shares outstanding; 60,000,000 shares authorized) | $ | 11.50 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 12.20 | ||
Class C: | ||||
Net Asset Value and offering price per share ($1,200 ÷ 106 shares outstanding; 20,000,000 shares authorized) | $ | 11.32 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($27,642,134 ÷ 2,416,805 shares outstanding; 150,000,000 shares authorized) | $ | 11.44 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations For the Year Ended September 30, 2023
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $70,044) | $ | 977,785 | ||
Interest | 24,340 | |||
Total Investment Income | 1,002,125 | |||
Expenses: | ||||
Investment advisory fees | 266,060 | |||
Distribution fees - Class AAA | 1,359 | |||
Distribution fees - Class A | 39 | |||
Distribution fees - Class C | 11 | |||
Legal and audit fees | 54,660 | |||
Registration expenses | 50,571 | |||
Custodian fees | 21,369 | |||
Shareholder communications expenses | 21,068 | |||
Shareholder services fees | 12,479 | |||
Directors’ fees | 2,337 | |||
Interest expense | 3 | |||
Miscellaneous expenses | 13,069 | |||
Total Expenses | 443,025 | |||
Less: | ||||
Expense reimbursements (See Note 3) | (174,121 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (1,433 | ) | ||
Total Credits and Reimbursements | (175,554 | ) | ||
Net Expenses | 267,471 | |||
Net Investment Income | 734,654 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized gain on investments | 370,636 | |||
Net realized loss on foreign currency transactions | (2,536 | ) | ||
Net realized gain on investments and foreign currency transactions | 368,100 | |||
Net change in unrealized appreciation/depreciation: on investments | 4,713,352 | |||
on foreign currency translations | 704 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 4,714,056 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 5,082,156 | |||
Net Increase in Net Assets Resulting from Operations | $ | 5,816,810 |
See accompanying notes to financial statements.
10
The Gabelli Global Financial Services Fund
Statement of Changes in Net Assets
Year Ended September 30, 2023 | Year Ended September 30, 2022 | |||||||
Operations: | ||||||||
Net investment income | $ | 734,654 | $ | 682,244 | ||||
Net realized gain on investments, forward foreign exchange contracts and foreign currency transactions | 368,100 | 315,368 | ||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 4,714,056 | (6,208,507 | ) | |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 5,816,810 | (5,210,895 | ) | |||||
Distributions to Shareholders: | ||||||||
Accumulated earnings | ||||||||
Class AAA | (10,218 | ) | (11,914 | ) | ||||
Class A | (451 | ) | (541 | ) | ||||
Class C | (20 | ) | (15 | ) | ||||
Class I | (705,030 | ) | (520,749 | ) | ||||
Total Distributions to Shareholders | (715,719 | ) | (533,219 | ) | ||||
Capital Share Transactions: | ||||||||
Class AAA | 140,135 | (111,295 | ) | |||||
Class A | (13,049 | ) | (15,451 | ) | ||||
Class C | 20 | 15 | ||||||
Class I | 1,514,982 | 2,534,641 | ||||||
Net Increase in Net Assets from Capital Share Transactions | 1,642,088 | 2,407,910 | ||||||
Redemption Fees | 2 | - | ||||||
Net Increase/(Decrease) in Net Assets | 6,743,181 | (3,336,204 | ) | |||||
Net Assets: | ||||||||
Beginning of year | 21,483,147 | 24,819,351 | ||||||
End of year | $ | 28,226,328 | $ | 21,483,147 |
See accompanying notes to financial statements.
11
The Gabelli Global Financial Services Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.28 | $ | 0.28 | $ | 2.14 | $ | 2.42 | $ | (0.27 | ) | $ | (0.27 | ) | $ | — | $ | 11.43 | 26.47 | % | $ | 577 | 2.57 | % | 1.91 | % | 1.25 | %(c) | 21 | % | ||||||||||||||||||||||||||
2022 | 11.80 | 0.27 | (d) | (2.56 | ) | (2.29 | ) | (0.23 | ) | (0.23 | ) | — | 9.28 | (19.79 | ) | 339 | 2.39 | (d) | 1.88 | 1.27 | (c)(e) | 26 | ||||||||||||||||||||||||||||||||||
2021 | 7.08 | 0.33 | 4.52 | 4.85 | (0.13 | ) | (0.13 | ) | — | 11.80 | 69.04 | 564 | 2.99 | 2.04 | 1.25 | (c) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.09 | 0.11 | (1.90 | ) | (1.79 | ) | (0.22 | ) | (0.22 | ) | 0.00 | (f) | 7.08 | (20.33 | ) | 47 | 1.34 | 2.51 | 1.25 | (c) | 18 | |||||||||||||||||||||||||||||||||||
2019 | 10.00 | 0.27 | (1.15 | ) | (0.88 | ) | (0.03 | ) | (0.03 | ) | — | 9.09 | (8.76 | ) | 134 | 3.01 | 2.32 | 1.25 | 14 | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.34 | $ | 0.27 | $ | 2.17 | $ | 2.44 | $ | (0.28 | ) | $ | (0.28 | ) | $ | — | $ | 11.50 | 26.44 | % | $ | 6 | 2.51 | % | 1.91 | % | 1.25 | %(c) | 21 | % | ||||||||||||||||||||||||||
2022 | 11.86 | 0.27 | (d) | (2.57 | ) | (2.30 | ) | (0.22 | ) | (0.22 | ) | — | 9.34 | (19.75 | ) | 15 | 2.34 | (d) | 1.88 | 1.27 | (c)(e) | 26 | ||||||||||||||||||||||||||||||||||
2021 | 7.08 | 0.32 | 4.54 | 4.86 | (0.08 | ) | (0.08 | ) | — | 11.86 | 69.07 | 33 | 2.94 | 2.04 | 1.25 | (c) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.10 | 0.16 | (1.94 | ) | (1.78 | ) | (0.24 | ) | (0.24 | ) | 0.00 | (f) | 7.08 | (20.24 | ) | 8 | 2.12 | 2.51 | 1.25 | (c) | 18 | |||||||||||||||||||||||||||||||||||
2019 | 10.00 | 0.35 | (1.22 | ) | (0.87 | ) | (0.03 | ) | (0.03 | ) | — | 9.10 | (8.71 | ) | 10 | 3.77 | 2.32 | 1.25 | 14 | |||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.19 | $ | 0.19 | $ | 2.13 | $ | 2.32 | $ | (0.19 | ) | $ | (0.19 | ) | $ | — | $ | 11.32 | 25.48 | % | $ | 1 | 1.72 | % | 2.66 | % | 2.00 | %(c) | 21 | % | ||||||||||||||||||||||||||
2022 | 11.68 | 0.29 | (d) | (2.64 | ) | (2.35 | ) | (0.14 | ) | (0.14 | ) | — | 9.19 | (20.35 | ) | 1 | 2.62 | (d) | 2.63 | 2.02 | (c)(e) | 26 | ||||||||||||||||||||||||||||||||||
2021 | 7.03 | 0.18 | 4.55 | 4.73 | (0.08 | ) | (0.08 | ) | — | 11.68 | 67.59 | 1 | 1.77 | 2.79 | 2.00 | (c) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.05 | 0.06 | (1.91 | ) | (1.85 | ) | (0.17 | ) | (0.17 | ) | 0.00 | (f) | 7.03 | (20.97 | ) | 1 | 0.76 | 3.26 | 2.00 | (c) | 18 | |||||||||||||||||||||||||||||||||||
2019 | 10.00 | 0.17 | (1.11 | ) | (0.94 | ) | (0.01 | ) | (0.01 | ) | — | 9.05 | (9.39 | ) | 1 | 1.85 | 3.08 | 2.00 | 14 | |||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | $ | 9.29 | $ | 0.30 | $ | 2.16 | $ | 2.46 | $ | (0.31 | ) | $ | (0.31 | ) | $ | 0.00 | (f) | $ | 11.44 | 26.82 | % | $ | 27,642 | 2.77 | % | 1.66 | % | 1.00 | %(c) | 21 | % | |||||||||||||||||||||||||
2022 | 11.80 | 0.31 | (d) | (2.57 | ) | (2.26 | ) | (0.25 | ) | (0.25 | ) | — | 9.29 | (19.57 | ) | 21,128 | 2.76 | (d) | 1.63 | 1.02 | (c)(e) | 26 | ||||||||||||||||||||||||||||||||||
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 | (c) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.11 | 0.14 | (1.91 | ) | (1.77 | ) | (0.26 | ) | (0.26 | ) | 0.00 | (f) | 7.08 | (20.17 | ) | 13,445 | 1.84 | 2.26 | 1.00 | (c) | 18 | |||||||||||||||||||||||||||||||||||
2019 | 10.00 | 0.28 | (1.13 | ) | (0.85 | ) | (0.04 | ) | (0.04 | ) | — | 9.11 | (8.51 | ) | 13,093 | 3.05 | 2.07 | 1.00 | 14 |
† | Total return represents aggregate total return of a hypothetical 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 $174,121, $149,730, $165,217, $174,126, and $124,154 during all fiscal years presented, respectively. | |
(c) | The Fund received credits from a designated broker who agreed to pay certain Fund expenses. During all fiscal years presented, if credits had not been received, the expense ratios would have been 1.26%, 1.28%, 1.26%, and 1.26% (Class AAA and Class A), 2.01%, 2.02%, 2.01%, and 2.01% (Class C), and 1.01%, 1.03%, 1.01%, and 1.01% (Class I), respectively. | |
(d) | Includes income resulting from special dividends. Without these dividends, the per share income amounts would have been $0.21 (Class AAA and Class A), $0.23 (Class C), and $0.25 (Class I), and the net investment income ratios would have been 1.88% (Class AAA), 1.84% (Class A), 2.12% (Class C), and 2.25% (Class I) for the fiscal year ended September 30, 2022. | |
(e) | The Fund incurred tax expense for the fiscal year ended September 30, 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). | |
(f) | Amount represents less than $0.005 per share. |
See accompanying notes to financial statements.
12
The Gabelli Global Financial Services Fund
Notes to Financial Statements
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.
13
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of September 30, 2023 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 09/30/23 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $ | 27,515,710 | — | $ | 27,515,710 | |||||||
U.S. Government Obligations | — | $ | 615,927 | 615,927 | ||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 27,515,710 | $ | 615,927 | $ | 28,131,637 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at September 30, 2023 or September 30, 2022. The Fund’s policy is to recognize transfers among levels as of the beginning of the reporting period.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds 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 Global Financial Services Fund
Notes to Financial Statements (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.
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 September 30, 2023, the Fund did not hold any restricted securities.
15
The Gabelli Global Financial Services Fund
Notes to Financial Statements (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. Permanent differences were primarily due to the tax treatment of currency gains and losses. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal years ended September 30, 2023 and 2022 was as follows:
| | Year Ended September 30, 2023 | | | Year Ended September 30, 2022 | | ||
Distributions paid from: | ||||||||
Ordinary income | $ | 715,719 | $ | 533,219 | ||||
Total distributions paid | $ | 715,719 | $ | 533,219 |
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.
16
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
At September 30, 2023, the components of accumulated earnings/losses on a tax basis were as follows:
Undistributed ordinary income | $ | 670,460 | ||
Accumulated capital loss carryforwards | (325,892 | ) | ||
Net unrealized appreciation on investments and foreign currency translations | 3,782,376 | |||
Total | $ | 4,126,944 |
The Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses. The Fund has a short term capital loss carryforward with no expiration of $209,650 and a long term capital loss carryforward with no expiration of $116,242.
The Fund utilized $363,754 of the capital losses carryover for the fiscal year ended September 30, 2023.
At September 30, 2023, the temporary difference between book basis and tax basis net unrealized appreciation on investments was primarily due to the deferral of losses from wash sales for tax purposes and mark-to-market adjustments on investments in passive foreign investment companies.
The following summarizes the tax cost of investments and the related net unrealized appreciation at September 30, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Investments | $ | 24,347,819 | $ | 5,952,619 | $ | (2,168,801 | ) | $ | 3,783,818 |
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 fiscal year ended September 30, 2023, the Fund did not incur any income tax, interest, or penalties. As of September 30, 2023, 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
17
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
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 June 1, 2024. For the fiscal year ended September 30, 2023, the Adviser reimbursed the Fund in the amount of $174,121. 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 September 30, 2023, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $323,851:
For the fiscal year ended September 30, 2022, expiring September 30, 2024 | $ | 149,730 | ||
For the fiscal year ended September 30, 2023, expiring September 30, 2025 | 174,121 | |||
$ | 323,851 |
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 fiscal year ended September 30, 2023, other than short term securities and U.S. Government obligations, aggregated $6,478,069 and $5,484,038, respectively.
6.Transactions with Affiliates and Other Arrangements. During the fiscal year ended September 30, 2023, the Fund paid $4,298 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.
During the fiscal year ended September 30, 2023, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $1,433.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. The Adviser did not seek a reimbursement during the fiscal year ended September 30, 2023.
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 February 28, 2024 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 fiscal year ended September 30, 2023, there were no borrowings outstanding under the line of credit.
18
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a 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 fiscal years ended September 30, 2023 and 2022, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended | Year Ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 34,107 | $ | 370,430 | 62,953 | $ | 768,998 | ||||||||||
Shares issued upon reinvestment of distributions | 987 | 10,111 | 992 | 11,563 | ||||||||||||
Shares redeemed | (21,125 | ) | (240,406 | ) | (75,197 | ) | (891,856 | ) | ||||||||
Net increase/(decrease) | 13,969 | $ | 140,135 | (11,252 | ) | $ | (111,295 | ) | ||||||||
Class A | ||||||||||||||||
Shares sold | 136 | $ | 1,500 | 187 | $ | 2,125 | ||||||||||
Shares issued upon reinvestment of distributions | 44 | 451 | 46 | 541 | ||||||||||||
Shares redeemed | (1,302 | ) | (15,000 | ) | (1,438 | ) | (18,117 | ) | ||||||||
Net decrease | (1,122 | ) | $ | (13,049 | ) | (1,205 | ) | $ | (15,451 | ) | ||||||
Class C | ||||||||||||||||
Shares issued upon reinvestment of distributions | 2 | $ | 20 | 1 | $ | 15 | ||||||||||
Net increase | 2 | $ | 20 | 1 | $ | 15 | ||||||||||
Class I | ||||||||||||||||
Shares sold | 111,795 | $ | 1,212,544 | 199,044 | $ | 2,246,322 | ||||||||||
Shares issued upon reinvestment of distributions | 68,655 | 701,651 | 44,460 | 517,966 | ||||||||||||
Shares redeemed | (37,638 | ) | (399,213 | ) | (22,453 | ) | (229,647 | ) | ||||||||
Net increase | 142,812 | $ | 1,514,982 | 221,051 | $ | 2,534,641 |
9. Significant Shareholder. As of September 30, 2023, 92.64% 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.
19
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Continued)
11. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
20
The Gabelli Global Financial Services Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Global Financial Services Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of The Gabelli Global Financial Services Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the schedule of investments, as of September 30, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Gabelli Equity Series Funds, Inc.) at September 30, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli Funds investment companies since 1992.
New York, New York
November 29, 2023
21
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 17, 2023, 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.
22
The Gabelli Global Financial Services Fund
Additional Fund Information (Unaudited)
The business and affairs of the Corporation are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors and Officers of the Corporation is set forth below. The Corporation’s Statement of Additional Information includes additional information about the Corporation’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Global Financial Services Fund at One Corporate Center, Rye, NY 10580-1422.
.
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
INTERESTED DIRECTORS4: | ||||||||
Mario J. Gabelli, CFA Director and Chief Investment Officer 1942 | Since 1991 | 31 | Chairman, Co-Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management, Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies within the Gabelli Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chair of Associated Capital Group, Inc. | Director of Morgan Group Holding Co. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications) (2013-2018) | ||||
John D. Gabelli Director 1944 | Since 1991 | 12 | Former Senior Vice President of G. research, LLC (and its predecessor) (1991-2019) | — | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Elizabeth C. Bogan Director 1944 | Since 2019 | 12 | Former Senior Lecturer in Economics, Princeton University | — | ||||
Anthony J. Colavita6 Director 1935 | Since 1991 | 18 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
Vincent D. Enright Director 1943 | Since 1991 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of The LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Robert J. Morrissey Director 1939 | Since 1991 | 7 | Partner in the law firm of Morrissey, Hawkins & Lynch | Chairman of the Board of Directors, Belmont Savings Bank |
23
The Gabelli Global Financial Services Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director3 | ||||
Anthonie C. van Ekris6 Director 1934 | Since 1991 | 23 | Chairman and Chief Executive Officer of BALMAC International, Inc.(global import/ export company) | — | ||||
Salvatore J. Zizza7 Director 1945 | Since 2001 | 35 | President of Zizza & Associates Corp. (private holding company); Chairman of Bergen Cove Realty Inc. (residential real estate) | Director and Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals) (2009-2018); Retired Chairman of BAM (semiconductor and aerospace manufacturing);Director of Bion Environmental Technologies, Inc. |
24
The Gabelli Global Financial Services Fund
Additional Fund Information (Unaudited) (Continued)
Name, Position(s) Address1 and Year of Birth | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
John C. Ball President, Treasurer, Principal Financial & Accounting Officer 1976 | Since 2017 | Senior Vice President (since 2018) and other positions (2017 – 2018) of GAMCO Investors, Inc.; Chief Executive Officer, G. Distributors, LLC since 2020; Officer of registered investment companies within the Gabelli Fund Complex since 2017; Vice President and Assistant Treasurer of AMG Funds, 2014-2017 | ||
Peter Goldstein Secretary & Vice President 1953 | Since 2020 | General Counsel, GAMCO Investors, Inc. and Chief Legal Officer, Associated Capital Group, Inc. since 2021; General Counsel and Chief Compliance Officer, Buckingham Capital Management, Inc. (2012-2020); Chief Legal Officer and Chief Compliance Officer, The Buckingham Research Group, Inc. (2012-2020) | ||
Richard J. Walz Chief Compliance Officer 1959 | Since 2013 | Chief Compliance Officer of registered investment companies within the Fund Complex since 2013 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. | |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’s By-Laws and Articles of Incorporation. For officers, includes time served in prior officer positions with the Fund. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. | |
3 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. | |
4 | “Interested person” of the Fund as defined in the 1940 Act. Messrs. Gabelli are each considered an “interested person” because of their affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser. Mario J. Gabelli and John D. Gabelli are brothers. | |
5 | Directors who are not interested persons are considered “Independent” Directors. | |
6 | Mr. Colavita’s son, Anthony S. Colavita, serves as a director of other funds in the Gabelli Fund Complex. Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund, LDC, GAMA Capital Opportunities Master, Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. | |
7 | Mr. Zizza is an independent director of Gabelli International Ltd., which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation regarding the making of false statements or omissions to the accountants of a company concerning a related party transaction. The company in question is not an affiliate of, nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without admitting or denying the SEC’s findings and allegation, paid $150,000 and agreed to cease and desist committing or causing any future violations of Rule 13b2-2 of the Securities Exchange Act of 1934, as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent Director. |
25
The Gabelli Global Financial Services Fund
2023 TAX NOTICE TO SHAREHOLDERS (Unaudited)
During the fiscal year ended September 30, 2023, the Fund paid to shareholders ordinary income distributions totaling $0.2749, $0.2776, $0.1905, and $0.3054 per share for each of Class AAA, Class A, Class C, and Class I, respectively. For the fiscal year ended September 30, 2023, 44.47% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 100% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 0.51% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010.
U.S. Government Income:
The percentage of the ordinary income distribution paid by the Fund during the fiscal year ended September 30, 2023 which was derived from U.S. Treasury securities was 0.51%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Gabelli Global Financial Services Fund did not meet this strict requirement in 2023. The percentage of U.S. Government securities held as of September 30, 2023 was 2.2%. Due to the diversity in state and local tax law, it is recommended that you consult your personal tax adviser as to the applicability of the information provided to your specific situation.
All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
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.
The Gabelli Small Cap Growth Fund
Schedule of Investments — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 97.5% | ||||||||||||
Aerospace — 0.1% | ||||||||||||
30,500 | Allient Inc. | $ | 675,972 | $ | 943,060 | |||||||
40,000 | Innovative Solutions and Support Inc.† | 130,088 | 304,000 | |||||||||
7,000 | Kratos Defense & Security Solutions Inc.† | 109,612 | 105,140 | |||||||||
915,672 | 1,352,200 | |||||||||||
Agriculture — 0.1% | ||||||||||||
10,000 | Cadiz Inc.† | 67,958 | 33,100 | |||||||||
56,000 | Limoneira Co. | 944,351 | 857,920 | |||||||||
1,012,309 | 891,020 | |||||||||||
Automotive — 0.4% | ||||||||||||
33,000 | Blue Bird Corp.† | 685,774 | 704,550 | |||||||||
430,000 | Iveco Group NV† | 1,595,372 | 4,028,820 | |||||||||
67,000 | The Shyft Group Inc. | 321,124 | 1,002,990 | |||||||||
2,602,270 | 5,736,360 | |||||||||||
Automotive: Parts and Accessories — 4.4% | ||||||||||||
147,500 | BorgWarner Inc. | 609,138 | 5,954,575 | |||||||||
840,000 | Brembo SpA | 1,552,407 | 10,443,938 | |||||||||
94,022 | China Automotive Systems Inc.† | 443,798 | 365,746 | |||||||||
74,000 | Commercial Vehicle Group Inc.† | 656,530 | 574,240 | |||||||||
1,108,000 | Dana Inc. | 8,991,197 | 16,254,360 | |||||||||
356,000 | Modine Manufacturing Co.† | 2,997,818 | 16,287,000 | |||||||||
35,000 | Monro Inc. | 829,127 | 971,950 | |||||||||
4,300 | O’Reilly Automotive Inc.† | 92,532 | 3,908,098 | |||||||||
29,500 | Phinia Inc. | 82,070 | 790,305 | |||||||||
45,000 | Puradyn Filter Technologies Inc.† | 11,732 | 4 | |||||||||
180,000 | Standard Motor Products Inc. | 1,353,308 | 6,051,600 | |||||||||
249,000 | Strattec Security Corp.†(a) | 4,804,355 | 5,751,900 | |||||||||
18,400 | Thor Industries Inc. | 170,396 | 1,750,392 | |||||||||
22,594,408 | 69,104,108 | |||||||||||
Aviation: Parts and Services — 2.0% | ||||||||||||
20,000 | AAR Corp.† | 230,415 | 1,190,600 | |||||||||
9,500 | Astronics Corp.† | 13,628 | 150,670 | |||||||||
23,200 | Astronics Corp., Cl. B† | 38,562 | 365,400 | |||||||||
48,000 | Ducommun Inc.† | 1,015,870 | 2,088,480 | |||||||||
670,500 | Kaman Corp. | 9,942,571 | 13,175,325 | |||||||||
89,000 | Moog Inc., Cl. A | 1,052,574 | 10,053,440 | |||||||||
18,000 | Moog Inc., Cl. B | 621,230 | 2,028,960 | |||||||||
20,000 | Woodward Inc. | 143,828 | 2,485,200 | |||||||||
13,058,678 | 31,538,075 | |||||||||||
Broadcasting — 1.3% | ||||||||||||
150,000 | Beasley Broadcast Group Inc., Cl. A† | 481,224 | 130,695 |
Shares | Cost | Market Value | ||||||||||
10,000 | Cogeco Communications Inc. | $ | 340,851 | $ | 462,875 | |||||||
24,000 | Cogeco Inc. | 632,315 | 870,591 | |||||||||
200,000 | Corus Entertainment Inc., Cl. B | 719,271 | 151,666 | |||||||||
39,500 | Fox Corp., Cl. A | 1,641,225 | 1,232,400 | |||||||||
25,000 | Gray Television Inc. | 73,674 | 173,000 | |||||||||
72,350 | Gray Television Inc., Cl. A | 386,480 | 543,348 | |||||||||
280,000 | ITV plc | 497,942 | 241,258 | |||||||||
13,000 | Liberty Broadband Corp., Cl. A† | 78,211 | 1,181,830 | |||||||||
11,000 | Liberty Broadband Corp., Cl. C† | 57,594 | 1,004,520 | |||||||||
20,000 | Liberty Media Corp.-Liberty Formula One, Cl. A† | 64,271 | 1,130,800 | |||||||||
27,000 | Liberty Media Corp.-Liberty Formula One, Cl. C† | 88,133 | 1,682,100 | |||||||||
34,452 | Liberty Media Corp.-Liberty SiriusXM† | 230,901 | 877,148 | |||||||||
64,000 | Liberty Media Corp.-Liberty SiriusXM, Cl. A† | 160,824 | 1,628,800 | |||||||||
22,000 | Nexstar Media Group Inc. | 1,349,700 | 3,154,140 | |||||||||
100,000 | Salem Media Group Inc.† | 0 | 59,000 | |||||||||
480,000 | Sirius XM Holdings Inc. | 316,771 | 2,169,600 | |||||||||
93,000 | Sphere Entertainment Co.† | 999,044 | 3,455,880 | |||||||||
33,000 | Townsquare Media Inc., Cl. A | 345,556 | 287,760 | |||||||||
8,463,987 | 20,437,411 | |||||||||||
Building and Construction — 6.8% | ||||||||||||
78,200 | Arcosa Inc. | 931,495 | 5,622,580 | |||||||||
200,000 | Armstrong Flooring Inc.† | 26,719 | 3,000 | |||||||||
53,000 | D.R. Horton Inc. | 554,873 | 5,695,910 | |||||||||
30,000 | Gibraltar Industries Inc.† | 602,890 | 2,025,300 | |||||||||
218,700 | Herc Holdings Inc. | 7,148,607 | 26,012,178 | |||||||||
95,000 | KB Home | 894,415 | 4,396,600 | |||||||||
3,000 | Legacy Housing Corp.† | 38,431 | 58,230 | |||||||||
362,500 | Lennar Corp., Cl. B | 8,661,417 | 37,058,375 | |||||||||
77,000 | MDC Holdings Inc. | 1,392,999 | 3,174,710 | |||||||||
3,000 | Meritage Homes Corp. | 45,118 | 367,170 | |||||||||
1,750 | NVR Inc.† | 1,203,399 | 10,435,775 | |||||||||
69,000 | PulteGroup Inc. | 318,435 | 5,109,450 | |||||||||
70,000 | Titan Machinery Inc.† | 1,261,393 | 1,860,600 | |||||||||
55,700 | Toll Brothers Inc. | 867,975 | 4,119,572 | |||||||||
23,948,166 | 105,939,450 | |||||||||||
Business Services — 2.1% | ||||||||||||
13,000 | ACCO Brands Corp. | 60,332 | 74,620 | |||||||||
505,000 | Clear Channel Outdoor Holdings Inc.† | 896,360 | 797,900 | |||||||||
60,000 | Element Solutions Inc. | 537,606 | 1,176,600 | |||||||||
13,000 | GSE Systems Inc.† | 18,200 | 2,627 |
See accompanying notes to financial statements.
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Business Services (Continued) | ||||||||||||
22,900 | Keweenaw Land Association Ltd.† | $ | 505,518 | $ | 509,525 | |||||||
35,500 | Live Nation Entertainment Inc.† | 298,668 | 2,947,920 | |||||||||
40,000 | Loomis AB | 402,123 | 1,078,573 | |||||||||
92,340 | Madison Square Garden Entertainment Corp.† | 1,166,708 | 3,038,909 | |||||||||
15,000 | McGrath RentCorp. | 384,704 | 1,503,600 | |||||||||
25,000 | RB Global Inc. | 371,272 | 1,562,500 | |||||||||
20,000 | Sealed Air Corp. | 587,044 | 657,200 | |||||||||
345,000 | Sohgo Security Services Co. Ltd. | 799,632 | 2,082,836 | |||||||||
1,500 | Team Inc.† | 16,223 | 10,425 | |||||||||
66,000 | The Interpublic Group of Companies Inc. | 233,166 | 1,891,560 | |||||||||
25,000 | TransAct Technologies Inc.† | 115,198 | 160,500 | |||||||||
1,600,000 | Trans-Lux Corp.†(a) | 1,575,044 | 720,000 | |||||||||
34,000 | United Rentals Inc. | 209,146 | 15,115,380 | |||||||||
8,176,944 | 33,330,675 | |||||||||||
Cable — 0.4% | ||||||||||||
54,500 | AMC Networks Inc., Cl. A† | 36,140 | 642,010 | |||||||||
40,000 | EchoStar Corp., Cl. A† | 662,342 | 670,000 | |||||||||
142,000 | Liberty Global plc, Cl. A† | 3,069,796 | 2,431,040 | |||||||||
136,000 | Liberty Global plc, Cl. C† | 2,554,808 | 2,524,160 | |||||||||
90,000 | WideOpenWest Inc.† | 760,757 | 688,500 | |||||||||
7,083,843 | 6,955,710 | |||||||||||
Communications Equipment — 0.1% | ||||||||||||
150,000 | Telesat Corp.† | 1,857,239 | 2,145,000 | |||||||||
Computer Software and Services — 1.4% | ||||||||||||
14,000 | Activision Blizzard Inc. | 171,735 | 1,310,820 | |||||||||
370,000 | Alithya Group Inc., Cl. A† | 1,101,651 | 558,700 | |||||||||
10,000 | I3 Verticals Inc., Cl. A† | 243,267 | 211,400 | |||||||||
11,000 | MKS Instruments Inc. | 189,530 | 951,940 | |||||||||
24,500 | Rockwell Automation Inc. | 558,564 | 7,003,815 | |||||||||
31,000 | Tyler Technologies Inc.† | 61,675 | 11,970,340 | |||||||||
7,300 | Vimeo Inc.† | 4,643 | 25,842 | |||||||||
2,331,065 | 22,032,857 | |||||||||||
Consumer Products — 1.4% | ||||||||||||
130,000 | 1-800-Flowers.com Inc., Cl. A† | 1,296,047 | 910,000 | |||||||||
67,000 | Brunswick Corp. | 1,342,085 | 5,293,000 | |||||||||
32,000 | Chofu Seisakusho Co. Ltd. | 461,495 | 448,822 | |||||||||
39,700 | Church & Dwight Co. Inc. | 67,573 | 3,637,711 | |||||||||
28,525 | Energizer Holdings Inc. | 1,072,281 | 913,941 | |||||||||
2,000 | Harley-Davidson Inc. | 4,713 | 66,120 | |||||||||
4,000 | HNI Corp. | 104,560 | 138,520 | |||||||||
2,500 | Kobayashi Pharmaceutical Co. Ltd. | 103,323 | 111,667 |
Shares | Cost | Market Value | ||||||||||
3,200 | LCI Industries | $ | 52,916 | $ | 375,744 | |||||||
216,000 | Marine Products Corp. | 133,661 | 3,069,360 | |||||||||
5,500 | National Presto Industries Inc. | 276,783 | 398,530 | |||||||||
225,000 | Sally Beauty Holdings Inc.† | 1,550,370 | 1,885,500 | |||||||||
215,000 | Samick Musical Instruments Co. Ltd. | 289,566 | 174,945 | |||||||||
3,700 | Shimano Inc. | 414,540 | 499,267 | |||||||||
9,500 | Steven Madden Ltd. | 19,995 | 301,815 | |||||||||
12,000 | The Scotts Miracle-Gro Co. | 288,362 | 620,160 | |||||||||
8,000 | Vista Outdoor Inc.† | 219,630 | 264,960 | |||||||||
9,500 | WD-40 Co. | 248,399 | 1,930,780 | |||||||||
84,000 | Wolverine World Wide Inc. | 408,836 | 677,040 | |||||||||
8,355,135 | 21,717,882 | |||||||||||
Consumer Services — 0.9% | ||||||||||||
53,000 | Bowlin Travel Centers Inc.† | 53,948 | 224,985 | |||||||||
16,000 | H&E Equipment Services Inc. | 554,892 | 691,040 | |||||||||
5,000 | IAC Inc.† | 11,719 | 251,950 | |||||||||
180,000 | OPENLANE Inc.† | 893,854 | 2,685,600 | |||||||||
281,200 | Rollins Inc. | 262,454 | 10,497,196 | |||||||||
1,776,867 | 14,350,771 | |||||||||||
Diversified Industrial — 12.4% | ||||||||||||
10,000 | Acuity Brands Inc. | 94,378 | 1,703,100 | |||||||||
51,000 | Albany International Corp., Cl. A | 986,047 | 4,400,280 | |||||||||
195,000 | Ampco-Pittsburgh Corp.† | 963,838 | 512,850 | |||||||||
65,000 | Burnham Holdings Inc., Cl. A | 1,092,931 | 814,450 | |||||||||
355,000 | Crane Co. | 4,913,967 | 31,538,200 | |||||||||
229,500 | Crane NXT Co. | 1,394,411 | 12,753,315 | |||||||||
100,000 | Distribution Solutions Group Inc.† | 715,977 | 2,600,000 | |||||||||
87,000 | EnPro Industries Inc. | 4,385,753 | 10,543,530 | |||||||||
103,900 | Greif Inc., Cl. A | 1,854,577 | 6,941,559 | |||||||||
94,000 | Greif Inc., Cl. B | 4,235,888 | 6,256,640 | |||||||||
369,400 | Griffon Corp. | 3,086,092 | 14,654,098 | |||||||||
32,000 | Hyster-Yale Materials Handling Inc. | 1,181,454 | 1,426,560 | |||||||||
162,000 | INNOVATE Corp.† | 508,522 | 262,440 | |||||||||
5,500 | JSP Corp. | 91,473 | 75,191 | |||||||||
116,000 | L.B. Foster Co., Cl. A† | 1,628,663 | 2,193,560 | |||||||||
40,400 | Lincoln Electric Holdings Inc. | 1,030,540 | 7,344,316 | |||||||||
31,200 | Lindsay Corp. | 616,780 | 3,671,616 | |||||||||
37,500 | Matthews International Corp., Cl. A | 959,116 | 1,459,125 | |||||||||
915,000 | Myers Industries Inc. | 12,555,068 | 16,405,950 | |||||||||
71,700 | Oil-Dri Corp. of America | 497,856 | 4,427,475 | |||||||||
13,000 | Olin Corp. | 203,184 | 649,740 | |||||||||
323,000 | Park-Ohio Holdings Corp. | 2,985,549 | 6,430,930 |
See accompanying notes to financial statements.
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Diversified Industrial (Continued) | ||||||||||||
12,500 | Pentair plc | $ | 296,897 | $ | 809,375 | |||||||
14,000 | Roper Technologies Inc. | 263,139 | 6,779,920 | |||||||||
54,000 | Sonoco Products Co. | 1,554,252 | 2,934,900 | |||||||||
50,000 | Standex International Corp. | 1,288,137 | 7,284,500 | |||||||||
84,500 | Steel Partners Holdings LP† | 1,113,551 | 3,592,948 | |||||||||
13,000 | T. Hasegawa Co. Ltd. | 236,725 | 265,324 | |||||||||
7,000 | Terex Corp. | 166,670 | 403,340 | |||||||||
335,500 | Textron Inc. | 2,028,771 | 26,215,970 | |||||||||
458,000 | Tredegar Corp. | 6,081,517 | 2,477,780 | |||||||||
221,000 | Trinity Industries Inc. | 2,510,251 | 5,381,350 | |||||||||
61,521,974 | 193,210,332 | |||||||||||
Electronics — 3.1% | ||||||||||||
110,000 | Badger Meter Inc. | 1,352,007 | 15,825,700 | |||||||||
206,500 | Bel Fuse Inc., Cl. A(a) | 3,827,474 | 9,732,345 | |||||||||
400,000 | CTS Corp. | 3,294,245 | 16,696,000 | |||||||||
55,000 | Daktronics Inc.† | 399,526 | 490,600 | |||||||||
120,000 | Gentex Corp. | 1,305,089 | 3,904,800 | |||||||||
20,000 | IMAX Corp.† | 158,565 | 386,400 | |||||||||
10,000 | Napco Security Technologies Inc. | 232,442 | 222,500 | |||||||||
30,000 | Renesas Electronics Corp.† | 194,117 | 458,813 | |||||||||
60,000 | Stoneridge Inc.† | 288,850 | 1,204,200 | |||||||||
11,052,315 | 48,921,358 | |||||||||||
Energy and Utilities — 2.8% | ||||||||||||
10,000 | Avangrid Inc. | 387,500 | 301,700 | |||||||||
24,000 | Callon Petroleum Co.† | 550,395 | 938,880 | |||||||||
9,800 | Chesapeake Utilities Corp. | 127,440 | 957,950 | |||||||||
35,000 | CMS Energy Corp. | 135,338 | 1,858,850 | |||||||||
20,000 | Consolidated Water Co. Ltd. | 233,823 | 568,800 | |||||||||
36,800 | Diamondback Energy Inc. | 1,817,052 | 5,699,584 | |||||||||
108,000 | Dril-Quip Inc.† | 2,826,509 | 3,042,360 | |||||||||
74,000 | Energy Recovery Inc.† | 316,427 | 1,569,540 | |||||||||
29,000 | Landis+Gyr Group AG | 1,762,989 | 2,100,508 | |||||||||
22,000 | Marathon Petroleum Corp. | 106,912 | 3,329,480 | |||||||||
3,500 | Middlesex Water Co. | 54,166 | 231,875 | |||||||||
11,000 | Northwest Natural Holding Co. | 518,541 | 419,760 | |||||||||
21,500 | Northwestern Energy Group Inc. | 582,609 | 1,033,290 | |||||||||
10,000 | Otter Tail Corp. | 213,560 | 759,200 | |||||||||
28,200 | RGC Resources Inc. | 529,577 | 487,860 | |||||||||
1,680,000 | RPC Inc. | 681,607 | 15,019,200 | |||||||||
8,000 | SJW Group | 107,086 | 480,880 | |||||||||
32,000 | Southwest Gas Holdings Inc. | 524,817 | 1,933,120 | |||||||||
6,800 | Spire Inc. | 267,758 | 384,744 | |||||||||
31,000 | The York Water Co. | 433,596 | 1,162,190 |
Shares | Cost | Market Value | ||||||||||
55,000 | Vestas Wind Systems A/S† | $ | 94,711 | $ | 1,181,637 | |||||||
12,272,413 | 43,461,408 | |||||||||||
Entertainment — 2.1% | ||||||||||||
165,000 | Atlanta Braves Holdings Inc., Cl. A† | 4,202,224 | 6,446,550 | |||||||||
210,000 | Atlanta Braves Holdings Inc., Cl. C† | 3,417,288 | 7,503,300 | |||||||||
85,000 | Inspired Entertainment Inc.† | 608,341 | 1,016,600 | |||||||||
16,856 | Liberty Media Corp.-Liberty Live, Cl. A† | 54,885 | 538,044 | |||||||||
9,768 | Liberty Media Corp.-Liberty Live, Cl. C† | 65,382 | 313,553 | |||||||||
35,000 | Madison Square Garden Sports Corp. | 363,177 | 6,170,500 | |||||||||
66,000 | Manchester United plc, Cl. A† | 979,816 | 1,306,140 | |||||||||
296,000 | Sinclair Inc. | 4,771,451 | 3,321,120 | |||||||||
7,800 | Take-Two Interactive Software Inc.† | 58,796 | 1,095,042 | |||||||||
3,500 | The Walt Disney Co.† | 20,071 | 283,675 | |||||||||
47,700 | TKO Group Holdings Inc. | 502,393 | 4,009,662 | |||||||||
35,000 | Universal Entertainment Corp. | 210,518 | 516,662 | |||||||||
104,000 | Warner Bros Discovery Inc.† | 922,964 | 1,129,440 | |||||||||
16,177,306 | 33,650,288 | |||||||||||
Environmental Services — 0.5% | ||||||||||||
59,000 | Republic Services Inc. | 532,967 | 8,408,090 | |||||||||
Equipment and Supplies — 18.7% | ||||||||||||
17,200 | A.O. Smith Corp. | 35,260 | 1,137,436 | |||||||||
387,600 | AMETEK Inc. | 659,537 | 57,271,776 | |||||||||
20,000 | Ardagh Metal Packaging SA | 69,861 | 62,600 | |||||||||
56,000 | AZZ Inc. | 1,967,745 | 2,552,480 | |||||||||
9,200 | Chart Industries Inc.† | 301,823 | 1,555,904 | |||||||||
6,200 | Chase Corp. | 538,489 | 788,826 | |||||||||
160,000 | CIRCOR International Inc.† | 2,494,767 | 8,920,000 | |||||||||
315,000 | Core Molding Technologies Inc.† | 624,161 | 8,974,350 | |||||||||
92,000 | Crown Holdings Inc. | 370,570 | 8,140,160 | |||||||||
2,025 | Danaher Corp. | 13,122 | 502,403 | |||||||||
100,000 | Donaldson Co. Inc. | 575,112 | 5,964,000 | |||||||||
38,700 | Entegris Inc. | 164,986 | 3,634,317 | |||||||||
189,000 | Federal Signal Corp. | 994,156 | 11,288,970 | |||||||||
241,000 | Flowserve Corp. | 1,445,693 | 9,584,570 | |||||||||
152,500 | Franklin Electric Co. Inc. | 594,728 | 13,607,575 | |||||||||
424,000 | Graco Inc. | 2,289,467 | 30,901,120 | |||||||||
33,500 | IDEX Corp. | 122,751 | 6,968,670 | |||||||||
125,000 | Interpump Group SpA | 547,330 | 5,747,475 | |||||||||
6,800 | Littelfuse Inc. | 54,921 | 1,681,776 |
See accompanying notes to financial statements.
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Equipment and Supplies (Continued) | ||||||||||||
110,000 | Maezawa Kyuso Industries Co. Ltd. | $ | 359,609 | $ | 884,770 | |||||||
65,500 | Minerals Technologies Inc. | 2,846,598 | 3,586,780 | |||||||||
6,000 | MSA Safety Inc. | 179,592 | 945,900 | |||||||||
491,000 | Mueller Industries Inc. | 12,055,821 | 36,903,560 | |||||||||
335,000 | Mueller Water Products Inc., Cl. A | 2,243,532 | 4,247,800 | |||||||||
3,500 | Teleflex Inc. | 53,317 | 687,435 | |||||||||
167,200 | Tennant Co. | 2,789,395 | 12,397,880 | |||||||||
740,000 | The Gorman-Rupp Co. | 11,286,239 | 24,346,000 | |||||||||
97,000 | The Greenbrier Companies Inc. | 1,161,709 | 3,880,000 | |||||||||
115,003 | The L.S. Starrett Co., Cl. A† | 840,851 | 1,236,282 | |||||||||
50,500 | The Manitowoc Co. Inc.† | 499,591 | 760,025 | |||||||||
50,000 | The Middleby Corp.† | 533,815 | 6,400,000 | |||||||||
36,000 | The Timken Co. | 1,219,447 | 2,645,640 | |||||||||
30,000 | The Toro Co. | 524,020 | 2,493,000 | |||||||||
6,000 | Valmont Industries Inc. | 98,273 | 1,441,260 | |||||||||
7,875 | Watsco Inc., Cl. B | 23,627 | 2,972,025 | |||||||||
45,000 | Watts Water Technologies Inc., Cl. A | 854,108 | 7,776,900 | |||||||||
51,434,023 | 292,889,665 | |||||||||||
Financial Services — 4.7% | ||||||||||||
7,000 | Ameris Bancorp | 49,547 | 268,730 | |||||||||
22,200 | Argo Group International Holdings Ltd. | 423,922 | 662,448 | |||||||||
12,000 | Capitol Federal Financial Inc. | 120,000 | 57,240 | |||||||||
20,700 | Crazy Woman Creek Bancorp Inc. | 315,734 | 435,114 | |||||||||
325,000 | Energy Transfer LP | 0 | 4,559,750 | |||||||||
210 | Farmers & Merchants Bank of Long Beach | 1,339,033 | 1,020,179 | |||||||||
2,000 | First Horizon Corp. | 22,179 | 22,040 | |||||||||
346,500 | Flushing Financial Corp. | 5,636,909 | 4,549,545 | |||||||||
66,000 | FNB Corp. | 659,922 | 712,140 | |||||||||
100,000 | GAM Holding AG† | 154,308 | 49,435 | |||||||||
25,000 | Hanover Bancorp Inc. | 525,000 | 452,250 | |||||||||
270,000 | Hope Bancorp Inc. | 2,987,671 | 2,389,500 | |||||||||
410,000 | Huntington Bancshares Inc. | 3,921,829 | 4,264,000 | |||||||||
674,000 | KKR & Co. Inc. | 2,722,550 | 41,518,400 | |||||||||
80,000 | Medallion Financial Corp. | 362,763 | 561,600 | |||||||||
8,000 | PROG Holdings Inc.† | 5,116 | 265,680 | |||||||||
54,000 | Sandy Spring Bancorp Inc. | 1,741,783 | 1,157,220 | |||||||||
25,000 | Sculptor Capital Management Inc. | 362,444 | 290,000 | |||||||||
47,000 | Synovus Financial Corp. | 1,218,657 | 1,306,600 | |||||||||
16,000 | TFS Financial Corp. | 234,831 | 189,120 | |||||||||
15,000 | Thomasville Bancshares Inc. | 570,703 | 899,849 |
Shares | Cost | Market Value | ||||||||||
230,000 | Valley National Bancorp | $ | 1,437,500 | $ | 1,968,800 | |||||||
34,308 | Value Line Inc. | 425,084 | 1,499,946 | |||||||||
10,000 | Waterloo Investment Holdings Ltd.†(b) | 1,373 | 5,000 | |||||||||
116,500 | Webster Financial Corp. | 2,375,732 | 4,696,115 | |||||||||
133,000 | Wright Investors’ Service Holdings Inc.† | 90,952 | 28,927 | |||||||||
27,705,542 | 73,829,628 | |||||||||||
Food and Beverage — 5.5% | ||||||||||||
424,500 | Arca Continental SAB de CV | 762,263 | 3,867,328 | |||||||||
14,000 | BellRing Brands Inc.† | 14,534 | 577,220 | |||||||||
75,000 | Brown-Forman Corp., Cl. A | 407,541 | 4,357,500 | |||||||||
40,000 | Bull-Dog Sauce Co. Ltd. | 95,622 | 557,548 | |||||||||
90,000 | China Tontine Wines Group Ltd.† | 94,571 | 9,654 | |||||||||
269,200 | Crimson Wine Group Ltd.† | 2,353,691 | 1,616,546 | |||||||||
220,000 | Denny’s Corp.† | 736,620 | 1,863,400 | |||||||||
500,000 | Dynasty Fine Wines Group Ltd.† | 74,726 | 13,728 | |||||||||
98,000 | Farmer Brothers Co.† | 600,724 | 252,840 | |||||||||
400,000 | Flowers Foods Inc. | 950,682 | 8,872,000 | |||||||||
114,000 | ITO EN Ltd. | 2,136,608 | 3,668,536 | |||||||||
46,000 | Iwatsuka Confectionery Co. Ltd. | 1,584,932 | 1,582,174 | |||||||||
23,000 | J & J Snack Foods Corp. | 509,737 | 3,763,950 | |||||||||
110,000 | Kameda Seika Co. Ltd. | 4,334,584 | 3,014,253 | |||||||||
240,000 | Kikkoman Corp. | 1,630,295 | 12,597,430 | |||||||||
635,000 | Maple Leaf Foods Inc. | 11,018,968 | 12,202,098 | |||||||||
12,000 | MEIJI Holdings Co. Ltd. | 117,526 | 298,394 | |||||||||
8,000 | MGP Ingredients Inc. | 6,395 | 843,840 | |||||||||
62,000 | Morinaga Milk Industry Co. Ltd. | 1,182,249 | 2,334,542 | |||||||||
7,500 | National Beverage Corp.† | 330,160 | 352,650 | |||||||||
43,500 | Nissin Foods Holdings Co. Ltd. | 1,444,598 | 3,616,753 | |||||||||
13,000 | Post Holdings Inc.† | 36,151 | 1,114,620 | |||||||||
60,000 | Rock Field Co. Ltd. | 402,002 | 648,019 | |||||||||
3,000 | The Boston Beer Co. Inc., Cl. A† | 460,330 | 1,168,590 | |||||||||
70,000 | The Hain Celestial Group Inc.† | 705,657 | 725,900 | |||||||||
56,700 | The J.M. Smucker Co. | 1,309,514 | 6,968,997 | |||||||||
625,000 | Tingyi (Cayman Islands) Holding Corp. | 1,326,207 | 873,138 | |||||||||
32,500 | Tootsie Roll Industries Inc. | 261,510 | 970,450 | |||||||||
370,000 | Vina Concha y Toro SA | 676,677 | 411,478 | |||||||||
950,000 | Vitasoy International Holdings Ltd. | 542,729 | 1,150,052 | |||||||||
20,000 | Willamette Valley Vineyards Inc.† | 73,225 | 117,400 |
See accompanying notes to financial statements.
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Food and Beverage (Continued) | ||||||||||||
200,000 | Yakult Honsha Co. Ltd. | $ | 2,378,861 | $ | 4,862,152 | |||||||
38,559,889 | 85,273,180 | |||||||||||
Health Care — 3.5% | ||||||||||||
1,400 | Align Technology Inc.† | 9,766 | 427,448 | |||||||||
6,700 | Bio-Rad Laboratories Inc., Cl. A† | 283,604 | 2,401,615 | |||||||||
13,300 | Bruker Corp. | 105,444 | 828,590 | |||||||||
630 | Chemed Corp. | 8,650 | 327,411 | |||||||||
21,000 | CONMED Corp. | 429,146 | 2,117,850 | |||||||||
388,500 | Cutera Inc.† | 4,399,710 | 2,338,770 | |||||||||
50,000 | Dexcom Inc.† | 68,464 | 4,665,000 | |||||||||
15,000 | Evolent Health Inc., Cl. A† | 258,100 | 408,450 | |||||||||
216,000 | Globus Medical Inc., Cl. A† | 5,584,808 | 10,724,400 | |||||||||
70,500 | Henry Schein Inc.† | 483,808 | 5,234,625 | |||||||||
28,000 | ICU Medical Inc.† | 892,631 | 3,332,280 | |||||||||
33,000 | Masimo Corp.† | 790,451 | 2,893,440 | |||||||||
45,000 | Neogen Corp.† | 430,861 | 834,300 | |||||||||
4,000 | NeoGenomics Inc.† | 49,880 | 49,200 | |||||||||
20,000 | Neuronetics Inc.† | 104,941 | 27,000 | |||||||||
181,000 | OPKO Health Inc.† | 425,834 | 289,600 | |||||||||
125,000 | Orthofix Medical Inc.† | 2,733,471 | 1,607,500 | |||||||||
7,500 | Patterson Cos. Inc. | 159,413 | 222,300 | |||||||||
70,500 | QuidelOrtho Corp.† | 312,578 | 5,149,320 | |||||||||
24,000 | Seikagaku Corp. | 263,881 | 129,764 | |||||||||
23,400 | STERIS plc | 1,102,596 | 5,134,428 | |||||||||
19,000 | Straumann Holding AG | 170,618 | 2,432,731 | |||||||||
3,000 | Stryker Corp. | 142,188 | 819,810 | |||||||||
30,000 | SurModics Inc.† | 608,729 | 962,700 | |||||||||
19,000 | Teladoc Health Inc.† | 626,279 | 353,210 | |||||||||
100 | The Cooper Companies Inc. | 3,627 | 31,801 | |||||||||
38,000 | United-Guardian Inc. | 332,419 | 286,140 | |||||||||
20,781,897 | 54,029,683 | |||||||||||
Home Furnishings — 0.3% | ||||||||||||
161,500 | Bassett Furniture Industries Inc. | 1,528,689 | 2,365,975 | |||||||||
5,000 | Ethan Allen Interiors Inc. | 116,387 | 149,500 | |||||||||
65,000 | La-Z-Boy Inc. | 1,045,229 | 2,007,200 | |||||||||
2,690,305 | 4,522,675 | |||||||||||
Hotels and Gaming — 4.0% | ||||||||||||
50,000 | Boyd Gaming Corp. | 212,525 | 3,041,500 | |||||||||
190,000 | Canterbury Park Holding Corp. | 1,949,758 | 3,843,700 | |||||||||
140,000 | Churchill Downs Inc. | 562,239 | 16,245,600 | |||||||||
120,000 | Formosa International Hotels Corp. | 775,629 | 795,527 | |||||||||
530,000 | Full House Resorts Inc.† | 1,541,909 | 2,263,100 | |||||||||
48,000 | Gaming and Leisure Properties Inc., REIT | 367,543 | 2,186,400 |
Shares | Cost | Market Value | ||||||||||
750,000 | Genting Singapore Ltd. | $ | 688,148 | $ | 463,606 | |||||||
116,872 | Golden Entertainment Inc. | 1,695,244 | 3,994,685 | |||||||||
2,250,000 | Mandarin Oriental International Ltd. | 2,913,165 | 3,836,250 | |||||||||
3,000 | Penn Entertainment Inc.† | 13,028 | 68,850 | |||||||||
241,000 | Ryman Hospitality Properties Inc., REIT | 3,795,317 | 20,070,480 | |||||||||
2,500,000 | The Hongkong & Shanghai Hotels Ltd.† | 2,476,225 | 2,008,058 | |||||||||
139,000 | The Marcus Corp. | 1,530,824 | 2,154,500 | |||||||||
13,000 | Wynn Resorts Ltd. | 0 | 1,201,330 | |||||||||
18,521,554 | 62,173,586 | |||||||||||
Machinery — 2.6% | ||||||||||||
326,000 | Astec Industries Inc. | 11,354,454 | 15,357,860 | |||||||||
1,415,000 | CNH Industrial NV | 3,631,392 | 17,121,500 | |||||||||
95,000 | Kennametal Inc. | 1,788,710 | 2,363,600 | |||||||||
4,700 | Nordson Corp. | 77,665 | 1,048,899 | |||||||||
160,000 | The Eastern Co. | 3,114,959 | 2,904,000 | |||||||||
142,000 | Twin Disc Inc.† | 1,560,946 | 1,948,240 | |||||||||
21,528,126 | 40,744,099 | |||||||||||
Manufactured Housing and Recreational Vehicles — 1.7% | ||||||||||||
63,500 | Cavco Industries Inc.† | 1,236,391 | 16,869,410 | |||||||||
72,500 | Nobility Homes Inc. | 841,443 | 2,165,213 | |||||||||
81,500 | Skyline Champion Corp.† | 471,554 | 5,193,180 | |||||||||
51,500 | Winnebago Industries Inc. | 584,494 | 3,061,675 | |||||||||
3,133,882 | 27,289,478 | |||||||||||
Metals and Mining — 0.1% | ||||||||||||
45,000 | Ivanhoe Mines Ltd., Cl. A† | 117,783 | 385,643 | |||||||||
95,000 | Kinross Gold Corp. | 412,123 | 433,200 | |||||||||
529,906 | 818,843 | |||||||||||
Publishing — 0.4% | ||||||||||||
2,550 | Graham Holdings Co., Cl. B | 1,192,868 | 1,486,650 | |||||||||
4,500 | John Wiley & Sons Inc., Cl. B | 17,437 | 168,210 | |||||||||
34,000 | News Corp., Cl. A | 48,038 | 682,040 | |||||||||
775,000 | The E.W. Scripps Co., Cl. A† | 4,022,887 | 4,247,000 | |||||||||
5,281,230 | 6,583,900 | |||||||||||
Real Estate — 2.1% | ||||||||||||
80,000 | Capital Properties Inc., Cl. A | 952,236 | 1,008,000 | |||||||||
10,000 | Gyrodyne LLC† | 231,933 | 104,000 | |||||||||
18,000 | Lamar Advertising Co., Cl. A, REIT | 164,305 | 1,502,460 | |||||||||
89,500 | Morguard Corp. | 1,134,374 | 6,688,202 | |||||||||
25,000 | Reading International Inc., Cl. A† | 123,590 | 53,000 | |||||||||
4,000 | Reading International Inc., Cl. B† | 77,242 | 69,200 | |||||||||
35,000 | Seritage Growth Properties, Cl. A, REIT† | 435,596 | 270,900 |
See accompanying notes to financial statements.
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2023
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Real Estate (Continued) | ||||||||||||
130,200 | Tejon Ranch Co.† | $ | 2,851,518 | $ | 2,111,844 | |||||||
381,000 | The St. Joe Co. | 5,832,628 | 20,699,730 | |||||||||
139,000 | Trinity Place Holdings Inc.† | 314,922 | 50,735 | |||||||||
12,118,344 | 32,558,071 | |||||||||||
Retail — 6.4% | ||||||||||||
111,000 | AutoNation Inc.† | 1,763,898 | 16,805,400 | |||||||||
40,000 | Big 5 Sporting Goods Corp. | 305,241 | 280,400 | |||||||||
900 | Biglari Holdings Inc., Cl. A† | 548,428 | 738,913 | |||||||||
304,000 | Copart Inc.† | 637,079 | 13,099,360 | |||||||||
1,123 | Hertz Global Holdings Inc.† | 17,122 | 13,757 | |||||||||
200,000 | Ingles Markets Inc., Cl. A | 2,545,477 | 15,066,000 | |||||||||
52,000 | Lands’ End Inc.† | 564,895 | 388,440 | |||||||||
70,000 | Movado Group Inc. | 1,036,083 | 1,914,500 | |||||||||
157,000 | Nathan’s Famous Inc. | 264,162 | 11,093,620 | |||||||||
69,500 | Penske Automotive Group Inc. | 1,013,547 | 11,610,670 | |||||||||
90,000 | Pets at Home Group plc | 154,436 | 367,641 | |||||||||
482,250 | Rush Enterprises Inc., Cl. B | 2,275,116 | 21,841,102 | |||||||||
11,000 | Salvatore Ferragamo SpA | 215,479 | 145,837 | |||||||||
10,000 | The Cheesecake Factory Inc. | 93,274 | 303,000 | |||||||||
26,000 | Tractor Supply Co. | 222,903 | 5,279,300 | |||||||||
60,000 | Village Super Market Inc., Cl. A | 1,467,642 | 1,358,400 | |||||||||
6,700 | Vroom Inc.† | 9,280 | 7,504 | |||||||||
500 | Winmark Corp. | 34,190 | 186,565 | |||||||||
13,168,252 | 100,500,409 | |||||||||||
Specialty Chemicals — 2.0% | ||||||||||||
3,200 | Albemarle Corp. | 47,663 | 544,128 | |||||||||
28,000 | Ashland Inc. | 210,127 | 2,287,040 | |||||||||
245,000 | H.B. Fuller Co. | 2,718,585 | 16,809,450 | |||||||||
37,500 | Hawkins Inc. | 640,205 | 2,206,875 | |||||||||
25,000 | Huntsman Corp. | 74,302 | 610,000 | |||||||||
5,600 | NewMarket Corp. | 561,284 | 2,548,224 | |||||||||
8,400 | Quaker Chemical Corp. | 128,365 | 1,344,000 | |||||||||
1,500 | Rogers Corp.† | 172,480 | 197,205 | |||||||||
24,400 | Sensient Technologies Corp. | 470,723 | 1,426,912 | |||||||||
2,500 | Takasago International Corp. | 66,073 | 50,355 | |||||||||
91,200 | The General Chemical Group Inc.†(b) | 1,186 | 0 | |||||||||
80,000 | Valvoline Inc. | 228,439 | 2,579,200 | |||||||||
5,319,432 | 30,603,389 | |||||||||||
Telecommunications — 0.5% | ||||||||||||
20,000 | Consolidated Communications Holdings Inc.† | 108,441 | 68,400 | |||||||||
61,000 | Gogo Inc.† | 292,823 | 727,730 | |||||||||
3,500 | IDT Corp., Cl. B† | 11,346 | 77,175 |
Shares | Cost | Market Value | ||||||||||
85,100 | Nuvera Communications Inc. | $ | 625,036 | $ | 1,055,240 | |||||||
82,000 | Rogers Communications Inc., Cl. B | 293,920 | 3,147,980 | |||||||||
109,500 | Shenandoah Telecommunications Co. | 896,203 | 2,256,795 | |||||||||
30,000 | VEON Ltd., ADR† | 718,456 | 585,000 | |||||||||
2,946,225 | 7,918,320 | |||||||||||
Transportation — 2.6% | ||||||||||||
347,500 | GATX Corp. | 9,803,043 | 37,818,425 | |||||||||
18,600 | Irish Continental Group plc | 13,660 | 87,902 | |||||||||
124,000 | Navigator Holdings Ltd. | 1,188,912 | 1,831,480 | |||||||||
50,057 | Steel Connect Inc.† | 551,286 | 535,610 | |||||||||
11,556,901 | 40,273,417 | |||||||||||
Wireless Communications — 0.1% | ||||||||||||
50,000 | United States Cellular Corp.† | 1,308,189 | 2,148,500 | |||||||||
TOTAL COMMON STOCKS | 440,317,255 | 1,525,339,838 | ||||||||||
CLOSED-END FUNDS — 0.1% | ||||||||||||
44,000 | The Central Europe, Russia, and Turkey Fund Inc. | 763,041 | 378,400 | |||||||||
32,229 | The European Equity Fund Inc. | 319,370 | 256,217 | |||||||||
112,000 | The New Germany Fund Inc. | 1,491,991 | 915,040 | |||||||||
2,574,402 | 1,549,657 | |||||||||||
TOTAL CLOSED-END FUNDS | 2,574,402 | 1,549,657 | ||||||||||
PREFERRED STOCKS — 0.1% | ||||||||||||
Automotive: Parts and Accessories — 0.1% | ||||||||||||
82,500 | Jungheinrich AG | 563,490 | 2,475,392 | |||||||||
RIGHTS — 0.0% | ||||||||||||
Communications Equipment — 0.0% | ||||||||||||
60,500 | Pineapple Energy Inc., CVR† | 0 | 139,465 | |||||||||
WARRANTS — 0.0% | ||||||||||||
Business Services — 0.0% | ||||||||||||
1 | Internap Corp., expires | |||||||||||
05/08/24†(b) | 0 | 652 | ||||||||||
Diversified Industrial — 0.0% | ||||||||||||
140,000 | Ampco-Pittsburgh Corp., expires | |||||||||||
08/01/25† | 95,648 | 44,800 | ||||||||||
TOTAL WARRANTS | 95,648 | 45,452 |
See accompanying notes to financial statements.
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — September 30, 2023
Principal Amount | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 2.2% | ||||||||||||
$ | 34,340,000 | U.S. Treasury Bills, | ||||||||||
5.276% to 5.465%††, 10/05/23 to 03/14/24 | $ | 34,054,788 | $ | 34,060,330 | ||||||||
TOTAL MISCELLANEOUS INVESTMENTS — 0.2%(c) | 3,261,921 | 2,509,370 | ||||||||||
TOTAL INVESTMENTS — 100.1% | $ | 480,867,504 | 1,566,119,504 | |||||||||
Other Assets and Liabilities (Net) — (0.1)% | (2,096,179 | ) | ||||||||||
NET ASSETS — 100.0% | $ | 1,564,023,325 |
(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 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.
Report of Independent Registered Public Accounting Firm
To the Shareholders of The Gabelli Small Cap Growth Fund
and the Board of Directors of Gabelli Equity Series Funds, Inc.
Opinion on the Financial Statements and Schedule of Investments in Securities
We have audited the accompanying statement of assets and liabilities of The Gabelli Small Cap Growth Fund (the “Fund”) (one of the funds constituting Gabelli Equity Series Funds, Inc. (the “Corporation”)), including the summary schedule of investments, as of September 30, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”) (the financial statements are included in Item 1 of this Form N-CSR), and the schedule of investments in securities as of September 30, 2023 (included in Item 6 of this Form N-CSR). In our opinion, the financial statements and schedule of investments in securities present fairly, in all material respects, the financial position of the Fund at September 30, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and schedule of investments in securities are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Fund’s financial statements and schedule of investments in securities based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule of investments are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of the Corporation’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and schedule of investments in securities, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and schedule of investments in securities. Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule of investments in securities. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Gabelli Funds investment companies since 1992.
New York, New York
November 29, 2023
(b) | Not applicable. |
Item 2. | Code of Ethics. |
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. | Audit Committee Financial Expert. |
As of the end of the period covered by the report, the registrant’s board of directors has determined that Vincent D. Enright is qualified to serve as an audit committee financial expert serving on its audit committee and that he is “independent,” as defined in Item 3 of Form N-CSR.
Item 4. | Principal Accountant Fees and Services. |
Audit Fees
(a) | The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $113,400 in 2022 and $116,800 in 2023. |
Audit-Related Fees
(b) | The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $0 in 2022 and $0 in 2023. |
Tax Fees
(c) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $16,400 in 2022 and $16,400 in 2023. Tax fees represent tax compliance services provided in connection with the review of the Registrant’s tax returns. |
All Other Fees
(d) | The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $2,662 in 2022 and $2,019 in 2023. The fees relate to Passive Foreign Investment Company identification database subscription fees billed on an annual basis. |
(e)(1) | Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
Pre-Approval Policies and Procedures. The Audit Committee (“Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent registered public accounting firm to the registrant and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC (“Gabelli”) that provides services to the registrant (a “Covered Services Provider”) if the independent registered public accounting firm’s engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s). The Committee may also establish detailed pre-approval policies and procedures for pre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to the other persons (other than Gabelli or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (ii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit.
(e)(2) | The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: |
(b) | N/A |
(c) | 0% |
(d) | 0% |
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
(g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $59,750 in 2022 and $53,850 in 2023. |
(h) | The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
(i) | Not Applicable. |
(j) | The registrant is not a foreign issuer. |
Item 5. | Audit Committee of Listed Registrants. |
Not applicable.
Item 6. | Investments. |
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing. |
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) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(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/ John C. Ball | |
John C. Ball, Principal Executive Officer | ||
Date | 12/12/23 |
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/ John C. Ball | |
John C. Ball, Principal Executive Officer | ||
Date | 12/12/23 |
By (Signature and Title)* | /s/ John C. Ball | |
John C. Ball, Principal Financial Officer and Treasurer | ||
Date | 12/12/23 |
* | Print the name and title of each signing officer under his or her signature. |