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: March 31, 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.
Item 1. Reports to Stockholders.
(a) | The Report to Shareholders is attached herewith. |
The Gabelli Equity Income Fund
Semiannual Report — March 31, 2023
To Our Shareholders,
For the six months ended March 31, 2023, the net asset value (NAV) total return per Class AAA Share of The Gabelli Equity Income Fund was 15.3% compared with a total return of 15.6% 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 March 31, 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 Fund’s first fiscal quarter (fourth quarter of 2022) saw broad stock market averages rise. Although there were ongoing concerns about a slowing economy and a possible recession in 2023, the stock market responded positively as inflation started to come down. Another optimistic indicator was that the labor market started to come into better balance. Slowly, more workers entered the workforce and supply chain bottlenecks continued to loosen. With interest rates rising in the quarter, value stocks significantly outperformed growth stocks, as investors started to favor companies with good free cash flow and dividends. The S&P/Citigroup Value index was up over 13% while the S&P/Citigroup Growth index was only up about 1% for the quarter.
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. |
After a challenging 2022, the U.S. stock markets bounced back to life in the first quarter of 2023. Concerns about a looming recession remained, but a decrease in the yield on both the 5 year note and the 10 year bonds helped to move markets higher, especially for growth stocks. In fact, the technology heavy NASDAQ was up an impressive 17%, while small cap stocks, as measured by the Russell 2000, were up only about 3% in the quarter. The Federal Reserve continued its fight against inflation by raising the Federal Funds rate by an additional 50 basis points during the quarter to 5%, which is up an astonishing 450 basis points from just one year ago. The dramatic rise in short term rates has helped to start lowering the inflation rate, but it also is putting stress on the financial system.
One of the best performing stocks in (y)our portfolio during the six month period was Mueller Industries Inc. (1.7% of net assets as of March 31, 2023). Mueller Industries is a metal fabricating company and manufactures copper, brass, aluminum and plastic products. With an uptick in infrastructure spending and more manufacturing moving back to the United States due to supply chain concerns, Mueller Industries is well positioned to benefit from these trends. Another strong performer in the quarter was Microsoft Corp. (1.9%), the giant technology company that is a major player in the digital workplace. The stock has benefitted from strong earnings growth, continued demand for Microsoft’s cloud computing services, and the continued pursuit of an acquisition deal for Activision Blizzard.
Detractors from performance included CVS Health Corp. (1.2%) which faced challenges due to rising costs in labor and drug prices, increased competition in the healthcare and drug store space, and consumer behavior that continues to shift towards e-commerce and mail order pharmacies; and the PNC Financial Services Group Inc. (0.6%), the regional bank based in Pittsburgh PA. With the collapse and government takeover of Silicon Valley Bank, many regional banks experienced a weak quarter in terms of stock market performance.
We appreciate your confidence and trust.
The views expressed reflect the opinions of the Fund’s portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
2
Comparative Results
Average Annual Returns through March 31, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | Since Inception (1/2/92) | |||||||||||||
Class AAA (GABEX) | 15.30 | % | (1.11 | )% | 7.34 | % | 7.67 | % | 7.33 | % | 9.46 | % | ||||||
S&P 500 Index (c) | 15.62 | (7.73 | ) | 11.19 | 12.24 | 10.06 | 9.75 | |||||||||||
Lipper Equity Income Fund Average (c) | 12.65 | (4.54 | ) | 8.39 | 9.26 | 7.89 | 8.46 | |||||||||||
Class A (GCAEX) (d) | 15.28 | (1.07 | ) | 7.35 | 7.67 | 7.34 | 9.46 | |||||||||||
With sales charge (e) | 8.65 | (6.76 | ) | 6.09 | 7.03 | 6.91 | 9.25 | |||||||||||
Class C1 (GCCEX) (d) | 14.84 | (1.99 | ) | 6.52 | 6.86 | 6.53 | 8.96 | |||||||||||
With contingent deferred sales charge (f) | 13.84 | (2.97 | ) | 6.52 | 6.86 | 6.53 | 8.96 | |||||||||||
Class I (GCIEX) (d) | 15.36 | (0.90 | ) | 7.60 | 7.94 | 7.60 | 9.60 |
(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, 2003 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) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
In the current prospectuses dated January 27, 2023 as supplemented on March 15, 2023, the expense ratios for Class AAA, A, C1, and I Shares are 1.39%, 1.39%, 2.14%, and 1.14%, respectively. See page 12 for the expense ratios for the six months ended March 31, 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
The Gabelli Equity Income Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2022 through March 31, 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.
Beginning | Ending | Annualized | Expenses | ||
Account Value | Account Value | Expense | Paid During | ||
10/01/22 | 03/31/23 | Ratio | Period * | ||
The Gabelli Equity Income Fund | |||||
Actual Fund Return | |||||
Class AAA | $1,000.00 | $1,153.00 | 1.40% | $ | 7.51 |
Class A | $1,000.00 | $1,152.80 | 1.40% | $ | 7.51 |
Class C1 | $1,000.00 | $1,148.40 | 2.15% | $ | 11.52 |
Class I | $1,000.00 | $1,153.60 | 1.15% | $ | 6.17 |
Hypothetical 5% Return | |||||
Class AAA | $1,000.00 | $1,017.95 | 1.40% | $ | 7.04 |
Class A | $1,000.00 | $1,017.95 | 1.40% | $ | 7.04 |
Class C1 | $1,000.00 | $1,014.21 | 2.15% | $ | 10.80 |
Class I | $1,000.00 | $1,019.20 | 1.15% | $ | 5.79 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2023:
The Gabelli Equity Income Fund
Food and Beverage | 18.1 | % | Specialty Chemicals | 0.9 | % | |
Financial Services | 12.4 | % | Agriculture | 0.8 | % | |
Diversified Industrial | 6.2 | % | Aerospace | 0.8 | % | |
Automotive: Parts and Accessories | 5.3 | % | Energy and Utilities: Services | 0.7 | % | |
Equipment and Supplies | 5.3 | % | Energy and Utilities: Integrated | 0.6 | % | |
U.S. Government Obligations | 4.8 | % | Energy and Utilities: Electric | 0.5 | % | |
Retail | 4.7 | % | Real Estate Investment Trusts | 0.4 | % | |
Health Care | 4.4 | % | Cable and Satellite | 0.4 | % | |
Machinery | 4.2 | % | Automotive | 0.3 | % | |
Energy and Utilities: Oil | 3.7 | % | Broadcasting | 0.3 | % | |
Telecommunications | 3.7 | % | Communications Equipment | 0.3 | % | |
Business Services | 3.5 | % | Environmental Services | 0.2 | % | |
Energy and Utilities: Natural Gas | 2.2 | % | Consumer Services | 0.2 | % | |
Electronics | 2.1 | % | Energy and Utilities: Water | 0.2 | % | |
Computer Software and Services | 2.1 | % | Hotels and Gaming | 0.1 | % | |
Transportation | 2.0 | % | Wireless Communications | 0.1 | % | |
Metals and Mining | 1.8 | % | Publishing | 0.0 | %* | |
Building and Construction | 1.7 | % | Other Assets and Liabilities (Net) | 0.2 | % | |
Entertainment | 1.7 | % | 100.0 | % | ||
Computer Hardware | 1.7 | % | ||||
Consumer Products | 1.4 | % | * Amount represents less than 0.05%. |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-PORT is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Equity Income Fund
Schedule of Investments — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 94.9% | ||||||||||||
Aerospace — 0.8% | ||||||||||||
16,000 | Aerojet Rocketdyne | |||||||||||
Holdings Inc.† | $ | 872,648 | $ | 898,720 | ||||||||
2,000 | Lockheed Martin Corp. | 47,350 | 945,460 | |||||||||
8,200 | Rockwell Automation Inc. | 246,347 | 2,406,290 | |||||||||
1,166,345 | 4,250,470 | |||||||||||
Agriculture — 0.8% | ||||||||||||
50,000 | Archer-Daniels-Midland Co. | 1,281,567 | 3,983,000 | |||||||||
10,000 | The Mosaic Co. | 155,338 | 458,800 | |||||||||
1,436,905 | 4,441,800 | |||||||||||
Automotive — 0.3% | ||||||||||||
14,500 | PACCAR Inc. | 370,272 | 1,061,400 | |||||||||
30,000 | Traton SE | 515,824 | 586,606 | |||||||||
886,096 | 1,648,006 | |||||||||||
Automotive: Parts and Accessories — 5.3% | ||||||||||||
75,000 | Dana Inc. | 1,181,712 | 1,128,750 | |||||||||
167,000 | Genuine Parts Co. | 7,527,374 | 27,940,770 | |||||||||
8,709,086 | 29,069,520 | |||||||||||
Broadcasting — 0.3% | ||||||||||||
65,000 | Liberty Global plc, Cl. A† | 1,403,329 | 1,267,500 | |||||||||
9,000 | Liberty Global plc, Cl. C† | 195,254 | 183,420 | |||||||||
10,000 | TEGNA Inc. | 155,730 | 169,100 | |||||||||
1,754,313 | 1,620,020 | |||||||||||
Building and Construction — 1.7% | ||||||||||||
30,000 | Carrier Global Corp. | 254,819 | 1,372,500 | |||||||||
39,500 | Fortune Brands Innovations | |||||||||||
Inc. | 336,150 | 2,319,835 | ||||||||||
22,000 | Herc Holdings Inc. | 668,121 | 2,505,800 | |||||||||
47,500 | Johnson Controls | |||||||||||
International plc | 871,643 | 2,860,450 | ||||||||||
37,000 | Masterbrand Inc.† | 88,136 | 297,480 | |||||||||
2,218,869 | 9,356,065 | |||||||||||
Business Services — 3.5% | ||||||||||||
10,300 | Automatic Data Processing | |||||||||||
Inc. | 501,160 | 2,293,089 | ||||||||||
25,500 | Mastercard Inc., Cl. A | 526,211 | 9,266,955 | |||||||||
2,400 | MSC Industrial Direct Co. | |||||||||||
Inc., Cl. A | 165,490 | 201,600 | ||||||||||
32,000 | Pentair plc | 622,795 | 1,768,640 | |||||||||
16,000 | S&P Global Inc. | 728,327 | 5,516,320 | |||||||||
2,543,983 | 19,046,604 | |||||||||||
Cable and Satellite — 0.4% | ||||||||||||
129,000 | DISH Network Corp., Cl. A† | 2,343,606 | 1,203,570 | |||||||||
15,000 | EchoStar Corp., Cl. A† | 344,371 | 274,350 | |||||||||
20,000 | Liberty Media Corp. - | |||||||||||
Liberty Braves, Cl. A† | 598,398 | 691,600 | ||||||||||
3,286,375 | 2,169,520 |
Shares | Cost | Market Value | ||||||||||
Communications Equipment — 0.3% | ||||||||||||
42,000 | Corning Inc. | $ | 481,575 | $ | 1,481,760 | |||||||
Computer Hardware — 1.7% | ||||||||||||
35,000 | Apple Inc. | 640,853 | 5,771,500 | |||||||||
24,500 | International Business | |||||||||||
Machines Corp. | 1,892,888 | 3,211,705 | ||||||||||
2,533,741 | 8,983,205 | |||||||||||
Computer Software and Services — 2.1% | ||||||||||||
90,000 | Hewlett Packard Enterprise | |||||||||||
Co. | 509,279 | 1,433,700 | ||||||||||
35,000 | Microsoft Corp. | 977,900 | 10,090,500 | |||||||||
1,487,179 | 11,524,200 | |||||||||||
Consumer Products — 1.4% | ||||||||||||
3,500 | Ball Corp | 191,424 | 192,885 | |||||||||
5,500 | Edgewell Personal Care Co. | 166,525 | 233,310 | |||||||||
49,500 | Energizer Holdings Inc. | 1,254,450 | 1,717,650 | |||||||||
30,000 | Essity AB, Cl. A | 529,907 | 865,690 | |||||||||
1,000 | National Presto Industries | |||||||||||
Inc. | 30,628 | 72,090 | ||||||||||
34,000 | Reckitt Benckiser Group plc | 1,008,398 | 2,582,813 | |||||||||
41,000 | Unilever plc, ADR | 818,025 | 2,129,130 | |||||||||
3,999,357 | 7,793,568 | |||||||||||
Consumer Services — 0.2% | ||||||||||||
1,600 | Allegion plc | 19,252 | 170,768 | |||||||||
14,000 | Rollins Inc. | 13,919 | 525,420 | |||||||||
2,000 | TravelCenters of America | |||||||||||
Inc.† | 169,020 | 173,000 | ||||||||||
202,191 | 869,188 | |||||||||||
Diversified Industrial — 6.2% | ||||||||||||
600 | AMETEK Inc. | 87,190 | 87,198 | |||||||||
76,000 | Crane Holdings Co. | 2,305,225 | 8,626,000 | |||||||||
34,000 | Eaton Corp. plc | 1,256,618 | 5,825,560 | |||||||||
1,500 | Honeywell International Inc. | 32,160 | 286,680 | |||||||||
8,600 | Ingersoll Rand Inc. | 45,820 | 500,348 | |||||||||
48,000 | ITT Inc. | 961,318 | 4,142,400 | |||||||||
36,500 | Jardine Matheson Holdings | |||||||||||
Ltd. | 1,849,122 | 1,772,805 | ||||||||||
20,000 | Modine Manufacturing Co.† | 416,028 | 461,000 | |||||||||
21,500 | nVent Electric plc | 227,954 | 923,210 | |||||||||
21,500 | Svenska Cellulosa AB SCA, | |||||||||||
Cl. A | 89,315 | 285,866 | ||||||||||
110,000 | Textron Inc | 1,047,092 | 7,769,300 | |||||||||
150,000 | Toray Industries Inc. | 1,002,210 | 854,528 | |||||||||
8,000 | Trane Technologies plc | 137,872 | 1,471,840 | |||||||||
22,500 | Trinity Industries Inc. | 304,454 | 548,100 | |||||||||
9,762,378 | 33,554,835 | |||||||||||
Electronics — 2.1% | ||||||||||||
6,500 | Sony Group Corp | 138,865 | 586,726 | |||||||||
31,000 | Sony Group Corp., ADR | 772,478 | 2,810,150 |
See accompanying notes to financial statements.
6
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Electronics (Continued) | ||||||||||||
48,000 | TE Connectivity Ltd. | $ | 1,582,951 | $ | 6,295,200 | |||||||
10,000 | Texas Instruments Inc. | 147,000 | 1,860,100 | |||||||||
2,641,294 | 11,552,176 | |||||||||||
Energy and Utilities: Electric — 0.5% | ||||||||||||
8,000 | Avangrid Inc. | 230,688 | 319,040 | |||||||||
19,000 | Korea Electric Power Corp., | |||||||||||
ADR† | 223,895 | 131,860 | ||||||||||
13,500 | Portland General Electric | |||||||||||
Co. | 586,781 | 660,015 | ||||||||||
63,000 | The AES Corp. | 291,918 | 1,517,040 | |||||||||
1,333,282 | 2,627,955 | |||||||||||
Energy and Utilities: Integrated — 0.6% | ||||||||||||
50,000 | Energy Transfer LP | 0 | 623,500 | |||||||||
21,000 | Eni SpA | 220,487 | 293,928 | |||||||||
6,500 | Iberdrola SA, ADR | 98,020 | 323,180 | |||||||||
57,000 | OGE Energy Corp | 760,843 | 2,146,620 | |||||||||
1,079,350 | 3,387,228 | |||||||||||
Energy and Utilities: Natural Gas — 2.2% | ||||||||||||
110,000 | National Fuel Gas Co. | 4,949,283 | 6,351,400 | |||||||||
11,500 | ONE Gas Inc. | 48,202 | 911,145 | |||||||||
59,000 | ONEOK Inc. | 0 | 3,748,860 | |||||||||
16,000 | Southwest Gas Holdings | |||||||||||
Inc. | 695,847 | 999,200 | ||||||||||
5,693,332 | 12,010,605 | |||||||||||
Energy and Utilities: Oil — 3.7% | ||||||||||||
18,000 | Callon Petroleum Co.† | 699,489 | 601,920 | |||||||||
41,200 | Chevron Corp. | 1,658,503 | 6,722,192 | |||||||||
4,500 | ConocoPhillips | 82,502 | 446,445 | |||||||||
6,800 | Devon Energy Corp. | 69,081 | 344,148 | |||||||||
12,000 | Exxon Mobil Corp. | 312,521 | 1,315,920 | |||||||||
56,000 | Hess Corp. | 2,669,814 | 7,411,040 | |||||||||
18,000 | Marathon Petroleum Corp. | 234,717 | 2,426,940 | |||||||||
13,500 | TotalEnergies SE, ADR | 230,259 | 797,175 | |||||||||
1,706 | Vitesse Energy Inc. | 11,197 | 32,465 | |||||||||
5,968,083 | 20,098,245 | |||||||||||
Energy and Utilities: Services — 0.7% | ||||||||||||
4,000 | Dril-Quip Inc.† | 96,160 | 114,760 | |||||||||
90,000 | Halliburton Co. | 1,708,555 | 2,847,600 | |||||||||
11,000 | Schlumberger NV | 285,160 | 540,100 | |||||||||
2,089,875 | 3,502,460 | |||||||||||
Energy and Utilities: Water — 0.2% | ||||||||||||
3,600 | Essential Utilities Inc. | 26,544 | 157,140 | |||||||||
18,000 | Severn Trent plc | 451,623 | 639,276 | |||||||||
478,167 | 796,416 | |||||||||||
Entertainment — 1.6% | ||||||||||||
80,000 | Grupo Televisa SAB, ADR | 584,275 | 423,200 |
Shares | Cost | Market Value | ||||||||||
6,000 | Madison Square Garden | |||||||||||
Entertainment Corp.† | $ | 128,559 | $ | 354,420 | ||||||||
2,500 | Madison Square Garden | |||||||||||
Sports Corp. | 301,304 | 487,125 | ||||||||||
285,000 | Paramount Global, Cl. A | 6,751,924 | 7,364,400 | |||||||||
7,766,062 | 8,629,145 | |||||||||||
Environmental Services — 0.2% | ||||||||||||
7,500 | Republic Services Inc. | 284,610 | 1,014,150 | |||||||||
Equipment and Supplies — 5.3% | ||||||||||||
6,000 | A.O. Smith Corp. | 15,988 | 414,900 | |||||||||
1,000 | Crown Holdings Inc | 81,810 | 82,710 | |||||||||
14,000 | Danaher Corp. | 406,841 | 3,528,560 | |||||||||
44,000 | Diversey Holdings Ltd.† | 356,104 | 355,960 | |||||||||
160,000 | Flowserve Corp. | 2,043,195 | 5,440,000 | |||||||||
50,000 | Graco Inc. | 853,683 | 3,650,500 | |||||||||
18,500 | Minerals Technologies Inc. | 703,572 | 1,117,770 | |||||||||
124,000 | Mueller Industries Inc | 2,233,574 | 9,111,520 | |||||||||
15,000 | Parker-Hannifin Corp | 809,385 | 5,041,650 | |||||||||
7,504,152 | 28,743,570 | |||||||||||
Financial Services — 12.4% | ||||||||||||
20,000 | AllianceBernstein Holding | |||||||||||
LP | 39,320 | 731,200 | ||||||||||
19,000 | American Express Co. | 459,057 | 3,134,050 | |||||||||
19,000 | Ameris Bancorp | 200,916 | 695,020 | |||||||||
3,700 | Argo Group International | |||||||||||
Holdings Ltd. | 66,521 | 108,373 | ||||||||||
5,195 | Banco Santander Chile, ADR | 29,250 | 92,627 | |||||||||
125,000 | Bank of America Corp | 823,246 | 3,575,000 | |||||||||
12,000 | BNP Paribas SA | 513,665 | 718,503 | |||||||||
20,000 | Credit Suisse Group AG | 66,865 | 17,981 | |||||||||
37,500 | Interactive Brokers Group | |||||||||||
Inc., Cl. A | 560,693 | 3,096,000 | ||||||||||
14,500 | Jefferies Financial Group | |||||||||||
Inc. | 246,744 | 460,230 | ||||||||||
8,500 | JPMorgan Chase & Co | 164,948 | 1,107,635 | |||||||||
51,000 | Julius Baer Group Ltd. | 1,644,750 | 3,473,764 | |||||||||
21,000 | Kinnevik AB, Cl. A† | 509,320 | 341,131 | |||||||||
63,500 | Loews Corp. | 2,344,007 | 3,684,270 | |||||||||
11,200 | M&T Bank Corp. | 956,465 | 1,339,184 | |||||||||
15,000 | Marsh & McLennan | |||||||||||
Companies Inc. | 409,645 | 2,498,250 | ||||||||||
10,000 | Morgan Stanley | 497,928 | 878,000 | |||||||||
5,800 | Popular Inc. | 93,651 | 332,978 | |||||||||
64,000 | SLM Corp. | 311,552 | 792,960 | |||||||||
122,000 | State Street Corp. | 5,565,671 | 9,234,180 | |||||||||
6,300 | T. Rowe Price Group Inc. | 157,957 | 711,270 | |||||||||
297,000 | The Bank of New York | |||||||||||
Mellon Corp. | 7,458,271 | 13,495,680 | ||||||||||
15,000 | The Goldman Sachs Group | |||||||||||
Inc. | 1,887,537 | 4,906,650 |
See accompanying notes to financial statements.
7
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Financial Services (Continued) | ||||||||||||
24,300 | The PNC Financial Services | |||||||||||
Group Inc. | $ | 1,914,956 | $ | 3,088,530 | ||||||||
53,000 | Valley National Bancorp | 331,250 | 489,720 | |||||||||
117,000 | Webster Financial Corp | 2,707,823 | 4,612,140 | |||||||||
110,000 | Wells Fargo & Co. | 3,091,800 | 4,111,800 | |||||||||
33,053,808 | 67,727,126 | |||||||||||
Food and Beverage — 18.1% | ||||||||||||
1,000 | Anheuser-Busch InBev SA/ | |||||||||||
NV | 15,876 | 66,512 | ||||||||||
197,300 | Brown-Forman Corp., Cl. A | 3,394,918 | 12,861,987 | |||||||||
34,000 | Campbell Soup Co. | 1,061,533 | 1,869,320 | |||||||||
19,000 | Coca-Cola Europacific | |||||||||||
Partners plc | 427,500 | 1,124,610 | ||||||||||
10,000 | Coca-Cola Femsa SAB de | |||||||||||
CV, ADR | 340,563 | 804,700 | ||||||||||
5,000 | Constellation Brands Inc., | |||||||||||
Cl. A | 62,017 | 1,129,450 | ||||||||||
35,000 | Danone SA | 1,347,433 | 2,175,344 | |||||||||
35,000 | Davide Campari-Milano NV | 117,659 | 427,022 | |||||||||
49,500 | Diageo plc, ADR | 3,063,927 | 8,968,410 | |||||||||
81,500 | Fomento Economico | |||||||||||
Mexicano SAB de CV, | ||||||||||||
ADR | 1,986,761 | 7,757,985 | ||||||||||
1,000 | General Mills Inc. | 26,640 | 85,460 | |||||||||
1,700,000 | Grupo Bimbo SAB de CV, | |||||||||||
Cl. A | 1,363,229 | 8,545,283 | ||||||||||
93,000 | Heineken NV | 4,417,436 | 9,991,043 | |||||||||
132,000 | ITO EN Ltd. | 2,344,495 | 4,299,755 | |||||||||
17,500 | Kellogg Co. | 910,204 | 1,171,800 | |||||||||
4,000 | McCormick & Co. Inc. | 137,120 | 330,400 | |||||||||
31,200 | McCormick & Co. Inc., Non- | |||||||||||
Voting | 675,130 | 2,596,152 | ||||||||||
31,000 | Mondelēz International Inc., | |||||||||||
Cl. A | 558,437 | 2,161,320 | ||||||||||
31,800 | Nestlé SA | 653,040 | 3,873,904 | |||||||||
54,000 | Nissin Foods Holdings Co. | |||||||||||
Ltd. | 1,657,298 | 4,933,308 | ||||||||||
31,000 | PepsiCo Inc. | 2,087,320 | 5,651,300 | |||||||||
23,800 | Pernod Ricard SA | 2,337,623 | 5,386,777 | |||||||||
31,200 | Remy Cointreau SA | 1,660,939 | 5,684,515 | |||||||||
30,000 | Sapporo Holdings Ltd. | 664,276 | 769,347 | |||||||||
2,600 | The Boston Beer Co. Inc., | |||||||||||
Cl. A† | 854,509 | 854,620 | ||||||||||
10,000 | The Coca-Cola Co. | 208,400 | 620,300 | |||||||||
1,000 | The Hershey Co. | 36,300 | 254,410 | |||||||||
50,000 | The Kraft Heinz Co. | 1,403,471 | 1,933,500 | |||||||||
32,000 | Yakult Honsha Co. Ltd. | 799,840 | 2,320,919 | |||||||||
34,613,894 | 98,649,453 |
Shares | Cost | Market Value | ||||||||||
Health Care — 4.4% | ||||||||||||
4,400 | Abbott Laboratories | $ | 134,434 | $ | 445,544 | |||||||
3,000 | AbbVie Inc. | 74,560 | 478,110 | |||||||||
3,200 | Alcon Inc. | 106,703 | 225,728 | |||||||||
75,000 | Baxter International Inc. | 1,657,103 | 3,042,000 | |||||||||
4,400 | Bio-Rad Laboratories Inc., | |||||||||||
Cl. A† | 432,651 | 2,107,688 | ||||||||||
87,500 | Bristol-Myers Squibb Co. | 2,105,675 | 6,064,625 | |||||||||
69,500 | Demant A/S† | 672,691 | 2,430,201 | |||||||||
6,400 | GSK plc, ADR | 270,041 | 227,712 | |||||||||
8,000 | Haleon plc, ADR | 57,324 | 65,120 | |||||||||
29,700 | Henry Schein Inc.† | 306,559 | 2,421,738 | |||||||||
16,000 | Merck & Co. Inc. | 283,402 | 1,702,240 | |||||||||
12,000 | Novartis AG, ADR | 585,253 | 1,104,000 | |||||||||
1,600 | Organon & Co. | 12,724 | 37,632 | |||||||||
24,000 | Perrigo Co. plc | 780,640 | 860,880 | |||||||||
21,500 | Pfizer Inc. | 387,082 | 877,200 | |||||||||
42,500 | Roche Holding AG, ADR | 781,653 | 1,524,050 | |||||||||
2,000 | Zimmer Biomet Holdings | |||||||||||
Inc. | 158,739 | 258,400 | ||||||||||
3,000 | Zimvie Inc.† | 29,142 | 21,690 | |||||||||
8,836,376 | 23,894,558 | |||||||||||
Hotels and Gaming — 0.1% | ||||||||||||
12,000 | MGM Resorts International | 144,776 | 533,040 | |||||||||
1,500 | Wynn Resorts Ltd.† | 71,983 | 167,865 | |||||||||
216,759 | 700,905 | |||||||||||
Machinery — 4.2% | ||||||||||||
6,000 | Caterpillar Inc. | 35,181 | 1,373,040 | |||||||||
100,000 | CNH Industrial NV | 1,550,701 | 1,527,000 | |||||||||
45,000 | Deere & Co. | 1,414,409 | 18,579,600 | |||||||||
8,000 | Otis Worldwide Corp. | 345,874 | 675,200 | |||||||||
8,500 | Xylem Inc. | 274,006 | 889,950 | |||||||||
3,620,171 | 23,044,790 | |||||||||||
Metals and Mining — 1.8% | ||||||||||||
80,000 | Freeport-McMoRan Inc. | 937,109 | 3,272,800 | |||||||||
136,500 | Newmont Corp. | 3,244,212 | 6,691,230 | |||||||||
4,181,321 | 9,964,030 | |||||||||||
Publishing 0.0% | ||||||||||||
3,000 | Value Line Inc. | 41,976 | 144,990 | |||||||||
Real Estate Investment Trusts — 0.4% | ||||||||||||
7,200 | Indus Realty Trust Inc. | 208,039 | 477,288 | |||||||||
62,000 | Weyerhaeuser Co. | 944,665 | 1,868,060 | |||||||||
1,152,704 | 2,345,348 | |||||||||||
Retail — 4.7% | ||||||||||||
14,000 | Cie Financiere Richemont | |||||||||||
SA, Cl. A | 470,500 | 2,232,472 | ||||||||||
43,100 | Copart Inc.† | 190,295 | 3,241,551 | |||||||||
6,200 | Costco Wholesale Corp. | 283,039 | 3,080,594 | |||||||||
86,100 | CVS Health Corp. | 2,890,791 | 6,398,091 |
See accompanying notes to financial statements.
8
The Gabelli Equity Income Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Retail (Continued) | ||||||||||||
44,600 | Ingles Markets Inc., Cl. A | $ | 693,507 | $ | 3,956,020 | |||||||
65,000 | Seven & i Holdings Co. Ltd. | 1,953,948 | 2,925,061 | |||||||||
3,000 | The Home Depot Inc. | 83,470 | 885,360 | |||||||||
80,000 | Walgreens Boots Alliance | |||||||||||
Inc. | 2,581,077 | 2,766,400 | ||||||||||
1,000 | Walmart Inc. | 43,340 | 147,450 | |||||||||
9,189,967 | 25,632,999 | |||||||||||
Specialty Chemicals — 0.9% | ||||||||||||
2,700 | Albemarle Corp. | 27,306 | 596,808 | |||||||||
2,500 | Ashland Inc. | 58,813 | 256,775 | |||||||||
2,500 | FMC Corp. | 65,668 | 305,325 | |||||||||
43,000 | H.B. Fuller Co. | 888,240 | 2,943,350 | |||||||||
2,000 | NewMarket Corp. | 7,719 | 729,960 | |||||||||
600 | Quaker Chemical Corp. | 6,478 | 118,770 | |||||||||
1,054,224 | 4,950,988 | |||||||||||
Telecommunications — 3.7% | ||||||||||||
105,000 | BCE Inc | 2,004,577 | 4,702,950 | |||||||||
190,000 | Deutsche Telekom AG, ADR | 2,540,249 | 4,596,100 | |||||||||
14,000 | Orange SA, ADR | 160,021 | 167,020 | |||||||||
4,000 | Proximus SA | 39,855 | 38,582 | |||||||||
65,000 | Telefonica SA, ADR | 274,093 | 278,200 | |||||||||
205,000 | Telephone and Data | |||||||||||
Systems Inc. | 4,156,350 | 2,154,550 | ||||||||||
94,000 | TELUS Corp. | 713,431 | 1,866,840 | |||||||||
156,000 | Verizon Communications | |||||||||||
Inc. | 5,314,506 | 6,066,840 | ||||||||||
15,203,082 | 19,871,082 | |||||||||||
Transportation — 2.0% | ||||||||||||
98,700 | GATX Corp. | 3,135,264 | 10,858,974 | |||||||||
Wireless Communications — 0.1% | ||||||||||||
80,000 | BT Group plc, Cl. A | 214,864 | 143,887 | |||||||||
25,000 | Telesat Corp., New York† | 247,085 | 215,000 |
Shares | Cost | Market Value | ||||||||||
20,000 | Turkcell Iletisim Hizmetleri | |||||||||||
A/S, ADR | $ | 91,562 | $ | 86,000 | ||||||||
553,511 | 444,887 | |||||||||||
TOTAL COMMON STOCKS | 190,159,657 | 516,400,841 | ||||||||||
MANDATORY CONVERTIBLE SECURITIES(a) — 0.1% | ||||||||||||
Entertainment — 0.1% | ||||||||||||
20,000 | Paramount Global, Ser. A, | |||||||||||
5.750%, 04/01/24 | 571,225 | 598,800 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Retail — 0.0% | ||||||||||||
28,000 | Cie Financiere Richemont | |||||||||||
SA, expire 11/22/23† | 0 | 35,193 |
Principal | ||||||||||||
Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 4.8% | ||||||||||||
$ | 26,685,000 | U.S. Treasury Bills, | ||||||||||
4.562% to 4.961%††, | ||||||||||||
04/20/23 to 08/17/23 | 26,394,884 | 26,408,287 | ||||||||||
TOTAL INVESTMENTS — 99.8% | $ | 217,125,766 | 543,443,121 | |||||||||
Other Assets and Liabilities (Net) — 0.2% | 837,488 | |||||||||||
NET ASSETS — 100.0% | $ | 544,280,609 |
(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. |
ADR American Depositary Receipt
See accompanying notes to financial statements.
9
The Gabelli Equity Income Fund
Statement of Assets and Liabilities
March 31, 2023 (Unaudited)
Assets: | ||||
Investments, at value (cost $217,125,766) | $ | 543,443,121 | ||
Cash | 11,403 | |||
Foreign currency, at value (cost $15,432) | 15,400 | |||
Receivable for Fund shares sold | 503,130 | |||
Dividends receivable | 1,490,875 | |||
Prepaid expenses | 48,732 | |||
Total Assets | 545,512,661 | |||
Liabilities: | ||||
Payable for Fund shares redeemed | 379,975 | |||
Payable for investment advisory fees | 456,066 | |||
Payable for distribution fees | 101,600 | |||
Payable for accounting fees | 7,500 | |||
Payable for shareholder communications | 102,829 | |||
Payable for shareholder services fees | 86,688 | |||
Payable for legal and audit fees | 72,530 | |||
Other accrued expenses | 24,864 | |||
Total Liabilities | 1,232,052 | |||
Net Assets | ||||
(applicable to 65,696,108 shares outstanding) | $ | 544,280,609 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 218,235,307 | ||
Total distributable earnings | 326,045,302 | |||
Net Assets | $ | 544,280,609 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($252,641,880 ÷ 28,967,430 shares outstanding; 150,000,000 shares authorized) | $ | 8.72 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($113,696,248 ÷ 13,270,724 shares outstanding; 50,000,000 shares authorized) | $ | 8.57 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 9.09 | ||
Class C1: | ||||
Net Asset Value and offering price per share ($29,449,985 ÷ 8,888,498 shares outstanding; 50,000,000 shares authorized) | $ | 3.31 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($148,492,496 ÷ 14,569,456 shares outstanding; 50,000,000 shares authorized) | $ | 10.19 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the six months ended March 31, 2023 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding | ||||
taxes of $140,030) | $ | 5,413,077 | ||
Interest | 553,880 | |||
Total Investment Income | 5,966,957 | |||
Expenses: | ||||
Investment advisory fees | 2,689,343 | |||
Distribution fees - Class AAA | 315,843 | |||
Distribution fees - Class A | 134,853 | |||
Distribution fees - Class C1 | 160,931 | |||
Shareholder services fees | 174,050 | |||
Shareholder communications expenses | 52,738 | |||
Custodian fees | 44,423 | |||
Legal and audit fees | 34,735 | |||
Registration expenses | 32,704 | |||
Directors’ fees | 23,316 | |||
Accounting fees | 22,500 | |||
Interest expense | 4,860 | |||
Miscellaneous expenses | 26,265 | |||
Total Expenses | 3,716,561 | |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (3,783 | ) | ||
Net Expenses | 3,712,778 | |||
Net Investment Income | 2,254,179 | |||
Net Realized and Unrealized Gain on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments | 37,227,216 | |||
Net realized gain on foreign currency transactions | 2,436,240 | |||
Net realized gain on investments and foreign | ||||
currency transactions | 39,663,456 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | 31,939,976 | |||
on foreign currency translations | 23,450 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 31,963,426 | |||
Net Realized and Unrealized Gain on Investments and Foreign Currency | 71,626,882 | |||
Net Increase in Net Assets Resulting from Operations | $ | 73,881,061 |
See accompanying notes to financial statements.
10
The Gabelli Equity Income Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 2,254,179 | $ | 3,158,103 | ||||||
Net realized gain on investments, and foreign currency transactions | 39,663,456 | 44,877,858 | ||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 31,963,426 | (100,609,026 | ) | |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 73,881,061 | (52,573,065 | ) | |||||||
Distributions to Shareholders: | ||||||||||
Accumulated earnings | ||||||||||
Class AAA | (17,058,363 | )* | (22,272,154 | ) | ||||||
Class A | (7,454,613 | )* | (8,652,015 | ) | ||||||
Class C1 | (5,346,280 | )* | (7,436,270 | ) | ||||||
Class I | (8,454,495 | )* | (9,375,536 | ) | ||||||
(38,313,751 | ) | (47,735,975 | ) | |||||||
Return of capital | ||||||||||
Class AAA | — | (25,806,376 | ) | |||||||
Class A | — | (10,503,964 | ) | |||||||
Class C1 | — | (5,196,111 | ) | |||||||
Class I | — | (12,186,613 | ) | |||||||
— | (53,693,064 | ) | ||||||||
Total Distributions to Shareholders | (38,313,751 | ) | (101,429,039 | ) | ||||||
Capital Share Transactions: | ||||||||||
Class AAA | 3,835,044 | 6,853,900 | ||||||||
Class A | 11,507,605 | 26,476,191 | ||||||||
Class C1 | (1,416,573 | ) | (3,093,552 | ) | ||||||
Class I | 8,740,611 | 28,598,222 | ||||||||
Net Increase in Net Assets from Capital Share Transactions | 22,666,687 | 58,834,761 | ||||||||
Redemption Fees | 111 | 428 | ||||||||
Net Increase/(Decrease) in Net Assets | 58,234,108 | (95,166,915 | ) | |||||||
Net Assets: | ||||||||||
Beginning of year | 486,046,501 | 581,213,416 | ||||||||
End of period | $ | 544,280,609 | $ | 486,046,501 |
* | Based on year to date book income. Amounts are subject to change and recharacterization at year end. |
See accompanying notes to financial statements.
11
The Gabelli Equity Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Return of Capital | Total Distributions | Redemption Fees(a)(b) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income (Loss) | Operating Expenses(c)(d) | Portfolio Turnover Rate | |||||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(e) | $ | 8.09 | $ | 0.04 | $ | 1.19 | $ | 1.23 | $ | (0.50 | )* | $ | (0.10 | ) | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 8.72 | 15.30 | % | $ | 252,642 | 0.82 | %(f) | 1.40 | %(f) | 2 | % | |||||||||||||||||||||||||||
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 | (g) | (0.02 | ) | 0.08 | (0.11 | ) | (2.39 | ) | (1.15 | ) | (3.65 | ) | 0.00 | 10.04 | 0.93 | 272,980 | 0.75 | (g) | 1.45 | 0 | (h) | |||||||||||||||||||||||||||||||||||||
2019 | 19.09 | 0.13 | (0.38 | ) | (0.25 | ) | (0.15 | ) | (3.72 | ) | (1.36 | ) | (5.23 | ) | 0.00 | 13.61 | (1.09 | ) | 377,589 | 0.76 | 1.45 | 1 | ||||||||||||||||||||||||||||||||||||||
2018 | 22.84 | 0.19 | 1.34 | 1.53 | (0.20 | ) | (3.68 | ) | (1.40 | ) | (5.28 | ) | 0.00 | 19.09 | 6.77 | 521,485 | 0.82 | 1.40 | 0 | (h) | ||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(e) | $ | 7.96 | $ | 0.04 | $ | 1.17 | $ | 1.21 | $ | (0.50 | )* | $ | (0.10 | ) | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 8.57 | 15.28 | % | $ | 113,696 | 0.82 | %(f) | 1.40 | %(f) | 2 | % | |||||||||||||||||||||||||||
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 | (g) | (0.02 | ) | 0.08 | (0.11 | ) | (2.39 | ) | (1.15 | ) | (3.65 | ) | 0.00 | 9.92 | 0.95 | 69,201 | 0.75 | (g) | 1.45 | 0 | (h) | |||||||||||||||||||||||||||||||||||||
2019 | 18.97 | 0.13 | (0.38 | ) | (0.25 | ) | (0.15 | ) | (3.72 | ) | (1.36 | ) | (5.23 | ) | 0.00 | 13.49 | (1.08 | ) | 72,778 | 0.76 | 1.45 | 1 | ||||||||||||||||||||||||||||||||||||||
2018 | 22.73 | 0.19 | 1.33 | 1.52 | (0.20 | ) | (3.68 | ) | (1.40 | ) | (5.28 | ) | 0.00 | 18.97 | 6.76 | 86,332 | 0.82 | 1.40 | 0 | (h) | ||||||||||||||||||||||||||||||||||||||||
Class C1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(e) | $ | 3.41 | $ | 0.00 | (b) | $ | 0.50 | $ | 0.50 | $ | (0.50 | )* | $ | (0.10 | ) | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 3.31 | 14.84 | % | $ | 29,450 | 0.06 | %(f) | 2.15 | %(f) | 2 | % | ||||||||||||||||||||||||||
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)(g) | (0.02 | ) | (0.02 | ) | (0.06 | ) | (2.39 | ) | (1.20 | ) | (3.65 | ) | 0.00 | 5.81 | 0.27 | 53,605 | 0.00 | (g)(i) | 2.20 | 0 | (h) | ||||||||||||||||||||||||||||||||||||
2019 | 15.03 | (0.00 | )(b) | (0.32 | ) | (0.32 | ) | (0.05 | ) | (3.72 | ) | (1.46 | ) | (5.23 | ) | 0.00 | 9.48 | (1.87 | ) | 100,467 | (0.00 | )(i) | 2.20 | 1 | ||||||||||||||||||||||||||||||||||||
2018 | 19.17 | 0.01 | 1.13 | 1.14 | (0.07 | ) | (3.68 | ) | (1.53 | ) | (5.28 | ) | 0.00 | 15.03 | 6.02 | 176,167 | 0.07 | 2.15 | 0 | (h) | ||||||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(e) | $ | 9.36 | $ | 0.05 | $ | 1.38 | $ | 1.43 | $ | (0.50 | )* | $ | (0.10 | ) | $ | — | $ | (0.60 | ) | $ | 0.00 | $ | 10.19 | 15.36 | % | $ | 148,493 | 1.07 | %(f) | 1.15 | %(f) | 2 | % | |||||||||||||||||||||||||||
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 | (g) | (0.02 | ) | 0.12 | (0.14 | ) | (2.39 | ) | (1.12 | ) | (3.65 | ) | 0.00 | 11.15 | 1.14 | 130,903 | 1.00 | (g) | 1.20 | 0 | (h) | |||||||||||||||||||||||||||||||||||||
2019 | 20.13 | 0.19 | (0.41 | ) | (0.22 | ) | (0.19 | ) | (3.72 | ) | (1.32 | ) | (5.23 | ) | 0.00 | 14.68 | (0.86 | ) | 208,893 | 1.00 | 1.20 | 1 | ||||||||||||||||||||||||||||||||||||||
2018 | 23.75 | 0.26 | 1.40 | 1.66 | (0.26 | ) | (3.68 | ) | (1.34 | ) | (5.28 | ) | 0.00 | 20.13 | 7.07 | 357,812 | 1.08 | 1.15 | 0 | (h) |
* | Based on year to date book income. Amounts are subject to change and recharacterization at year end. |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Amount represents less than $0.005 per share. |
(c) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For all periods, there was no impact on the expense ratios. |
(d) | The Fund incurred interest expense during all periods presented. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.41%, 1.41%, 1.42%, 1.40%, and 1.39% (Class AAA and Class A), 2.16%, 2.16%, 2.17%, 2.15%, and 2.14% (Class C1), and 1.16%, 1.16%, 1.17%, 1.15%, and 1.14% (Class I) for the fiscal years ended September 30, 2022, 2021, 2020, 2019, and 2018, respectively. For the six months ended March 31, 2023, there was no impact on the expense ratios. |
(e) | For the six months ended March 31, 2023, unaudited. |
(f) | Annualized. |
(g) | 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 C1), 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 C1), and 0.93% (Class I), respectively. |
(h) | Amount represents less than 0.5%. |
(i) | Amount represents less than 0.005%. |
See accompanying notes to financial statements.
12
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Equity Income Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the Portfolios) of the Corporation. The Fund seeks to provide a high level of total return on its assets with an emphasis on income. The Fund commenced investment operations on January 2, 1992.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the Board) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by the Adviser.
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt obligations for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one of more dealers in the instrument in question by the Adviser.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S.
13
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of March 31, 2023 is as follows:
Valuation Inputs | ||||||||||||
Level 2 Other | ||||||||||||
Level 1 | Significant | Total Market Value | ||||||||||
Quoted Prices | Observable Inputs | at 03/31/23 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $ | 516,400,841 | — | $ | 516,400,841 | |||||||
Mandatory Convertible Securities (a) | 598,800 | — | 598,800 | |||||||||
Warrants (a) | 35,193 | — | 35,193 | |||||||||
U.S. Government Obligations | — | $ | 26,408,287 | 26,408,287 | ||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 517,034,834 | $ | 26,408,287 | $ | 543,443,121 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at March 31, 2023 or September 30, 2022.
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
14
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Securities Sold Short. The Fund enters into short sale transactions. Short selling involves selling securities that may or may not be owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of an open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The broker retains collateral for the value of the open positions, which is adjusted periodically as the value of the position fluctuates. At March 31, 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.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
15
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 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. These reclassifications have no impact on the NAV of the Fund.
16
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
The tax character of distributions paid during the fiscal year ended September 30, 2022 was as follows:
Distributions paid from: | ||||
Ordinary income | $ | 3,432,763 | ||
Net long term capital gains | 44,793,364 | |||
Return of capital | 53,693,064 | |||
Total distributions paid* | $ | 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.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $218,930,207 | $330,705,111 | $(6,192,197) | $324,512,914 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2023, the Fund did not incur any income tax, interest, or penalties. As of March 31, 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
17
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Directors of the Fund who are affiliated persons of the Adviser.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class 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%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2023, other than short term securities and U.S. Government obligations, aggregated $12,180,270 and $45,989,998, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2023, the Fund paid $3,131 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $83,537 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the six months ended March 31, 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 $3,783.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2023, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on 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 March 31, 2023, there were no borrowings 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 six months ended March 31, 2023 was $5,317,500 with a weighted average interest rate of 4.41%. The maximum amount borrowed at any time during the six months ended March 31, 2023 was $5,493,000.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C1 Shares, and Class I Shares. Effective March 15, 2023, the Fund has determined to reopen temporarily its Class C1 shares to new investors. As a result of the change, all references to the former Class C Shares will be deleted and replaced with the new Class C1 Shares. These changes will have no effect on existing shareholders’ ability to redeem shares of the Fund as described in the Fund’s Prospectus. Class AAA and Class I Shares are offered
18
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C1 Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2023 and the fiscal year ended September 30, 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:
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 608,582 | $ | 5,441,251 | 645,461 | $ | 6,748,143 | ||||||||||
Shares issued upon reinvestment of distributions | 1,865,539 | 16,527,995 | 4,931,483 | 46,611,265 | ||||||||||||
Shares redeemed | (2,042,611 | ) | (18,134,202 | ) | (4,439,438 | ) | (46,505,508 | ) | ||||||||
Net increase | 431,510 | $ | 3,835,044 | 1,137,506 | $ | 6,853,900 | ||||||||||
Class A | ||||||||||||||||
Shares sold | 1,790,655 | $ | 15,722,650 | 3,034,549 | $ | 31,417,004 | ||||||||||
Shares issued upon reinvestment of distributions | 818,857 | 7,127,797 | 1,968,136 | 18,209,199 | ||||||||||||
Shares redeemed | (1,298,427 | ) | (11,342,842 | ) | (2,267,796 | ) | (23,150,012 | ) | ||||||||
Net increase | 1,311,085 | $ | 11,507,605 | 2,734,889 | $ | 26,476,191 | ||||||||||
Class C1 | ||||||||||||||||
Shares sold | 8,817,993 | $ | 231,910 | 1,055,129 | $ | 5,423,547 | ||||||||||
Shares issued upon reinvestment of distributions | 1,475,778 | 5,195,596 | 2,813,019 | 12,443,798 | ||||||||||||
Shares redeemed | (10,669,567 | ) | (6,844,079 | ) | (4,363,620 | ) | (20,960,897 | ) | ||||||||
Net decrease | (375,796 | ) | $ | (1,416,573 | ) | (495,472 | ) | $ | (3,093,552 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 2,043,973 | $ | 21,120,915 | 3,822,498 | $ | 42,274,555 | ||||||||||
Shares issued upon reinvestment of distributions | 806,613 | 8,315,030 | 1,978,810 | 21,251,482 | ||||||||||||
Shares redeemed | (1,994,959 | ) | (20,695,334 | ) | (2,943,248 | ) | (34,927,815 | ) | ||||||||
Net increase | 855,627 | $ | 8,740,611 | 2,858,060 | $ | 28,598,222 | ||||||||||
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
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
Board Consideration and Re-Approval of Management Agreement (Unaudited)
During the six months ended March 31, 2023, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not “interested persons” of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2022) of the Fund against a peer group of seven other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional equity income funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Equity Income Index. The Independent Board Members noted that the Fund’s performance was in the second quartile for the one year period, the first quartile for the three year period, and the third quartile for the five year period, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the second quintile for the one year and three year periods and the fourth quintile for the five year period.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses and total expenses of the Fund to similar expense ratios of the Adviser Peer Group and a peer group of eighteen other equity income funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratio was above average within this group. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
21
The Gabelli Equity Income Fund
Board Consideration and Re-Approval of Management Agreement (Unaudited) (Continued)
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services and an acceptable overall performance record. The Independent Board Members also concluded that the Fund’s expense ratios and the profitability to the Adviser of managing the Fund were acceptable and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreement to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
22
THE GABELLI EQUITY INCOME FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager’s Biography
Mario J. Gabelli, CFA, is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.
The Gabelli Small Cap Growth Fund
Semiannual Report — March 31, 2023
To Our Shareholders,
For the six months ended March 31, 2023, the net asset value (NAV) total return per Class AAA Share of The Gabelli Small Cap Growth Fund was 21.3% compared with a total return of 12.0% for the Standard & Poor’s (S&P) SmallCap 600 Index. Other classes of shares are available. See page 3 for performance information for all classes.
Enclosed are the financial statements, including the summary schedule of investments, as of March 31, 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 changes or restructurings, sale of assets or of the business as a whole, or industry changes such as changes in regulation or changes in competition.
The Fund 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 the final quarter of 2022, a few of the better performing stocks in (y)our portfolio included: AMETEK Inc., which manufactures high tech industrial solutions, including electronic instruments and electromechanical devices. The company’s third quarter sales increased 8% year over year to a record $1.5 billion, and included organic sales growth of 11%. Operating income margins increased to a record 27.4% in the quarter; GATX Corp., which provides railcar leasing and services, and aircraft spare engine leasing. Its stock performed well despite an impairment charge relating to exiting its rail business in Russia, as the company guided to the upper end of its announced earnings guidance range; and CNH Industrial, which is an equipment and services company focused on agriculture and construction.
Of course, not all of the stocks in the portfolio did well in the fourth quarter. One of the poorer performing stocks was Kaman Corp., a provider of engineered products and solutions, which saw a year over year decrease in operating income, as margins were impacted by lower sales of defense and industrial bearings.
During the first quarter of 2023, several stocks in (y)our portfolio performed well. One of these was Mueller Industries, Inc., a global industrial corporation whose holdings include manufacturers and distributors of technical and essential products, serving industries including plumbing, heating, HVACR, and industrial manufacturing. Mueller’s first quarter net sales decreased 8.2%, while operating income increased by 10.6%. The company also ended the quarter with $678 million in cash and short term investments.
The top contributors to the Fund’s performance during the last six months were: AMETEK Inc. (3.6% of net assets as of March 31, 2023); Lennar Corp. (2.1%); and GATX Corp. (2.5%).
Some of our weaker performing stocks during the last six months were: Cutera Inc. (0.6%); Kaman Corp. (1.0%); and Kikkoman Corp. (0.8%).
We appreciate your confidence and trust.
The views expressed reflect the opinions of the Fund's portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
2
Comparative Results
Average Annual Returns through March 31, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Since | ||||||||||||||||||
Inception | ||||||||||||||||||
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | (10/22/91) | |||||||||||||
Class AAA (GABSX) | 21.25 | % | (1.08 | )% | 6.90 | % | 8.60 | % | 8.92 | % | 11.66 | % | ||||||
S&P SmallCap 600 Index (c) | 12.00 | (8.82 | ) | 6.30 | 9.87 | 9.64 | N/A | |||||||||||
Lipper Small-Cap Core Funds Average (c) | 12.58 | (7.72 | ) | 6.22 | 8.57 | 8.51 | N/A | |||||||||||
Class A (GCASX) (d) | 21.26 | (1.09 | ) | 6.90 | 8.60 | 8.92 | 11.66 | |||||||||||
With sales charge (e) | 14.29 | (6.78 | ) | 5.64 | 7.96 | 8.49 | 11.45 | |||||||||||
Class C (GCCSX) (d) | 20.82 | (1.82 | ) | 6.11 | 7.79 | 8.11 | 11.15 | |||||||||||
With contingent deferred sales charge (f) | 19.82 | (2.80 | ) | 6.11 | 7.79 | 8.11 | 11.15 | |||||||||||
Class I (GACIX) (d) | 21.43 | (0.84 | ) | 7.17 | 8.87 | 9.19 | 11.80 |
(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 January 27, 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 11 for the expense ratios for the six months ended March 31, 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
The Gabelli Small Cap Growth Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2022 through March 31, 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.
Beginning Account Value 10/01/22 | Ending Account Value 03/31/23 | Annualized Expense Ratio | Expenses Paid During Period * | ||
The Gabelli Small Cap Growth Fund | |||||
Actual Fund Return | |||||
Class AAA | $1,000.00 | $1,212.50 | 1.39% | $ | 7.67 |
Class A | $1,000.00 | $1,212.60 | 1.39% | $ | 7.67 |
Class C | $1,000.00 | $1,208.20 | 2.14% | $ | 11.78 |
Class I | $1,000.00 | $1,214.30 | 1.14% | $ | 6.29 |
Hypothetical 5% Return | |||||
Class AAA | $1,000.00 | $1,018.00 | 1.39% | $ | 6.99 |
Class A | $1,000.00 | $1,018.00 | 1.39% | $ | 6.99 |
Class C | $1,000.00 | $1,014.26 | 2.14% | $ | 10.75 |
Class I | $1,000.00 | $1,019.25 | 1.14% | $ | 5.74 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2023:
The Gabelli Small Cap Growth Fund
Equipment and Supplies | 17.8 | % | Computer Software and Services | 1.5 | % | |||
Diversified Industrial | 11.7 | % | Consumer Services | 0.9 | % | |||
Building and Construction | 6.5 | % | Aerospace | 0.9 | % | |||
Retail | 6.2 | % | Publishing | 0.6 | % | |||
Food and Beverage | 6.0 | % | U.S. Government Obligations | 0.6 | % | |||
Hotels and Gaming | 4.7 | % | Telecommunications | 0.6 | % | |||
Health Care | 4.5 | % | Cable | 0.5 | % | |||
Financial Services | 4.4 | % | Environmental Services | 0.5 | % | |||
Automotive: Parts and Accessories | 4.3 | % | Automotive | 0.4 | % | |||
Electronics | 3.0 | % | Home Furnishings | 0.3 | % | |||
Energy and Utilities | 2.8 | % | Miscellaneous Investments | 0.2 | % | |||
Machinery | 2.7 | % | Closed-End Funds | 0.1 | % | |||
Real Estate | 2.7 | % | Communications Equipment | 0.1 | % | |||
Transportation | 2.6 | % | Agriculture | 0.1 | % | |||
Manufactured Housing and Recreational | Metals and Mining | 0.0 | %* | |||||
Vehicles | 2.0 | % | Wireless Communications | 0.0 | %* | |||
Aviation: Parts and Services | 2.0 | % | Other Assets and Liabilities (Net) | (0.0 | )%* | |||
Specialty Chemicals | 2.0 | % | 100.0 | % | ||||
Entertainment | 1.8 | % | ||||||
Broadcasting | 1.8 | % | ___________________ | |||||
Business Services | 1.7 | % | * Amount represents less than 0.05%. | |||||
Consumer Products | 1.5 | % |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-PORT is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS* — 98.9% | ||||||||||||
Aerospace — 0.9% | ||||||||||||
214,000 | Aerojet Rocketdyne Holdings | |||||||||||
Inc.† | $ | 540,592 | $ | 12,020,380 | ||||||||
77,500 | Various Securities | 915,672 | 1,566,785 | |||||||||
1,456,264 | 13,587,165 | |||||||||||
Agriculture — 0.1% | ||||||||||||
62,000 | Various Securities | 950,733 | 906,720 | |||||||||
Automotive — 0.4% | ||||||||||||
497,500 | Various Securities | 1,918,937 | 5,604,398 | |||||||||
Automotive: Parts and Accessories — 4.1% | ||||||||||||
846,000 | Brembo SpA | 1,564,227 | 12,386,075 | |||||||||
1,108,000 | Dana Inc. | 8,991,197 | 16,675,400 | |||||||||
367,000 | Modine Manufacturing Co.† | 3,146,098 | 8,459,350 | |||||||||
246,000 | Strattec Security Corp.†(a) | 4,747,595 | 5,596,500 | |||||||||
610,522 | Various Securities | 4,329,378 | 22,203,159 | |||||||||
22,778,495 | 65,320,484 | |||||||||||
Aviation: Parts and Services — 2.0% | ||||||||||||
671,000 | Kaman Corp. | 9,955,957 | 15,339,060 | |||||||||
89,000 | Moog Inc., Cl. A | 1,052,574 | 8,966,750 | |||||||||
138,700 | Various Securities | 2,063,533 | 7,754,530 | |||||||||
13,072,064 | 32,060,340 | |||||||||||
Broadcasting — 1.8% | ||||||||||||
1,899,642 | Various Securities | 13,832,313 | 28,376,843 | |||||||||
Building and Construction — 6.5% | ||||||||||||
218,500 | Herc Holdings Inc. | 7,127,253 | 24,887,150 | |||||||||
368,000 | Lennar Corp., Cl. B | 8,818,501 | 32,866,080 | |||||||||
1,868 | NVR Inc.† | 1,289,947 | 10,408,851 | |||||||||
839,600 | Various Securities | 8,205,171 | 35,087,763 | |||||||||
25,440,872 | 103,249,844 | |||||||||||
Business Services — 1.7% | ||||||||||||
1,600,000 | Trans-Lux Corp.†(a) | 1,575,044 | 816,000 | |||||||||
34,000 | United Rentals Inc. | 209,146 | 13,455,840 | |||||||||
995,500 | Various Securities | 5,130,950 | 12,805,387 | |||||||||
6,915,140 | 27,077,227 | |||||||||||
Cable — 0.5% | ||||||||||||
478,000 | Various Securities | 7,388,787 | 8,124,190 | |||||||||
Communications Equipment — 0.1% | ||||||||||||
100,000 | Various Securities | 1,389,181 | 860,000 | |||||||||
Computer Software and Services — 1.5% | ||||||||||||
31,000 | Tyler Technologies Inc.† | 61,675 | 10,993,840 | |||||||||
463,300 | Various Securities | 2,594,460 | 12,640,299 | |||||||||
2,656,135 | 23,634,139 | |||||||||||
Consumer Products — 1.5% | ||||||||||||
1,069,600 | Various Securities | 7,709,617 | 24,152,142 |
Shares | Cost | Market Value | ||||||||||
Consumer Services — 0.9% | ||||||||||||
287,500 | Rollins Inc. | $ | 268,884 | $ | 10,789,875 | |||||||
254,000 | Various Securities | 1,514,413 | 3,699,705 | |||||||||
1,783,297 | 14,489,580 | |||||||||||
Diversified Industrial — 11.7% | ||||||||||||
357,000 | Crane Holdings Co | 7,642,467 | 40,519,500 | |||||||||
93,200 | EnPro Industries Inc. | 4,777,312 | 9,682,548 | |||||||||
375,000 | Griffon Corp. | 3,133,692 | 12,003,750 | |||||||||
910,000 | Myers Industries Inc. | 12,459,178 | 19,501,300 | |||||||||
335,500 | Textron Inc. | 2,028,771 | 23,696,365 | |||||||||
2,665,291 | Various Securities | 33,925,240 | 78,829,341 | |||||||||
63,966,660 | 184,232,804 | |||||||||||
Electronics — 3.0% | ||||||||||||
113,000 | Badger Meter Inc. | 1,394,859 | 13,765,660 | |||||||||
210,700 | Bel Fuse Inc., Cl. A(a) | 3,953,283 | 7,652,624 | |||||||||
400,000 | CTS Corp. | 3,294,245 | 19,784,000 | |||||||||
266,000 | Various Securities | 2,228,260 | 5,518,698 | |||||||||
10,870,647 | 46,720,982 | |||||||||||
Energy and Utilities — 2.8% | ||||||||||||
1,700,000 | RPC Inc. | 695,920 | 13,073,000 | |||||||||
573,500 | Various Securities | 11,938,221 | 30,723,926 | |||||||||
12,634,141 | 43,796,926 | |||||||||||
Entertainment — 1.8% | ||||||||||||
719,800 | Various Securities | 9,976,368 | 28,816,040 | |||||||||
Environmental Services — 0.5% | ||||||||||||
59,000 | Various Securities | 532,967 | 7,977,980 | |||||||||
Equipment and Supplies — 17.8% | ||||||||||||
391,500 | AMETEK Inc. | 666,173 | 56,896,695 | |||||||||
190,200 | Federal Signal Corp. | 1,000,847 | 10,310,742 | |||||||||
241,000 | Flowserve Corp. | 1,445,693 | 8,194,000 | |||||||||
154,200 | Franklin Electric Co. Inc. | 601,422 | 14,510,220 | |||||||||
428,000 | Graco Inc. | 2,331,187 | 31,248,280 | |||||||||
500,000 | Mueller Industries Inc. | 12,324,740 | 36,740,000 | |||||||||
168,500 | Tennant Co. | 2,821,716 | 11,547,305 | |||||||||
740,000 | The Gorman-Rupp Co. | 11,286,239 | 18,500,000 | |||||||||
1,933,003 | Various Securities | 19,345,934 | 92,691,891 | |||||||||
51,823,951 | 280,639,133 | |||||||||||
Financial Services — 4.4% | ||||||||||||
675,200 | KKR & Co. Inc. | 2,730,620 | 35,461,504 | |||||||||
10,000 | Waterloo Investment | |||||||||||
Holdings Ltd.†(b) | 1,373 | 5,000 | ||||||||||
2,414,858 | Various Securities | 24,821,492 | 33,360,803 | |||||||||
27,553,485 | 68,827,307 | |||||||||||
Food and Beverage — 6.0% | ||||||||||||
400,000 | Flowers Foods Inc. | 950,682 | 10,964,000 | |||||||||
240,000 | Kikkoman Corp. | 1,630,295 | 12,183,016 |
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS* (Continued) | ||||||||||||
Food and Beverage (Continued) | ||||||||||||
648,000 | Maple Leaf Foods Inc. | $ | 11,257,289 | $ | 12,538,069 | |||||||
56,700 | The J.M. Smucker Co. | 1,309,514 | 8,922,879 | |||||||||
5,168,468 | Various Securities | 23,234,958 | 49,794,197 | |||||||||
38,382,738 | 94,402,161 | |||||||||||
Health Care — 4.5% | ||||||||||||
398,000 | Cutera Inc.† | 4,853,339 | 9,400,760 | |||||||||
148,500 | Globus Medical Inc., Cl. A† | 3,323,398 | 8,411,040 | |||||||||
971,200 | Various Securities | 13,568,785 | 53,736,322 | |||||||||
21,745,522 | 71,548,122 | |||||||||||
Home Furnishings — 0.3% | ||||||||||||
231,500 | Various Securities | 2,690,305 | 4,902,200 | |||||||||
Hotels and Gaming — 4.7% | ||||||||||||
82,500 | Churchill Downs Inc. | 693,674 | 21,206,625 | |||||||||
247,700 | Ryman Hospitality Properties | |||||||||||
Inc., REIT | 3,960,761 | 22,226,121 | ||||||||||
6,789,076 | Various Securities | 13,488,901 | 30,440,009 | |||||||||
18,143,336 | 73,872,755 | |||||||||||
Machinery — 2.7% | ||||||||||||
326,000 | Astec Industries Inc. | 11,354,454 | 13,447,500 | |||||||||
1,415,000 | CNH Industrial NV | 3,631,392 | 21,607,050 | |||||||||
368,954 | Various Securities | 6,166,104 | 7,832,545 | |||||||||
21,151,950 | 42,887,095 | |||||||||||
Manufactured Housing and Recreational Vehicles — 2.0% | ||||||||||||
67,000 | Cavco Industries Inc.† | 1,314,707 | 21,288,580 | |||||||||
205,000 | Various Securities | 1,884,256 | 11,064,795 | |||||||||
3,198,963 | 32,353,375 | |||||||||||
Metals and Mining — 0.0% | ||||||||||||
140,000 | Various Securities | 529,906 | 853,998 | |||||||||
Publishing — 0.6% | ||||||||||||
816,000 | Various Securities | 5,252,030 | 9,543,590 | |||||||||
Real Estate — 2.7% | ||||||||||||
215,500 | Indus Realty Trust Inc., REIT | 3,222,502 | 14,285,495 | |||||||||
385,000 | The St. Joe Co. | 5,904,646 | 16,019,850 | |||||||||
534,300 | Various Securities | 6,368,974 | 12,560,114 | |||||||||
15,496,122 | 42,865,459 | |||||||||||
Retail — 6.2% | ||||||||||||
114,800 | AutoNation Inc.† | 1,833,590 | 15,424,528 | |||||||||
157,200 | Copart Inc.† | 659,849 | 11,823,012 | |||||||||
200,000 | Ingles Markets Inc., Cl. A | 2,545,477 | 17,740,000 | |||||||||
157,000 | Nathan's Famous Inc. | 264,162 | 11,869,200 | |||||||||
70,100 | Penske Automotive Group | |||||||||||
Inc. | 1,022,661 | 9,940,881 | ||||||||||
332,000 | Rush Enterprises Inc., Cl. B | 2,361,051 | 19,883,480 |
Shares | Cost | Market Value | ||||||||||
325,123 | Various Securities | $ | 4,325,424 | $ | 11,974,197 | |||||||
13,012,214 | 98,655,298 | |||||||||||
Specialty Chemicals — 2.0% | ||||||||||||
245,000 | H.B. Fuller Co. | 2,718,585 | 16,770,250 | |||||||||
91,200 | The General Chemical Group | |||||||||||
Inc.†(b) | 1,186 | 0 | ||||||||||
224,900 | Various Securities | 2,640,079 | 14,914,078 | |||||||||
5,359,850 | 31,684,328 | |||||||||||
Telecommunications — 0.6% | ||||||||||||
405,100 | Various Securities | 3,562,473 | 8,815,440 | |||||||||
Transportation — 2.6% | ||||||||||||
353,000 | GATX Corp. | 9,981,518 | 38,837,060 | |||||||||
142,600 | Various Securities | 1,202,572 | 1,824,049 | |||||||||
11,184,090 | 40,661,109 | |||||||||||
Wireless Communications — 0.0% | ||||||||||||
34,500 | Various Securities | 1,056,929 | 715,185 | |||||||||
TOTAL COMMON STOCKS | 445,416,482 | 1,562,214,359 | ||||||||||
CLOSED-END FUNDS* — 0.1% | ||||||||||||
200,229 | Various Securities | 2,906,396 | 1,745,865 | |||||||||
PREFERRED STOCKS* — 0.2% | ||||||||||||
Automotive: Parts and Accessories — 0.2% | ||||||||||||
83,000 | Various Securities | 566,929 | 2,894,834 | |||||||||
RIGHTS* — 0.0% | ||||||||||||
Communications Equipment — 0.0% | ||||||||||||
60,500 | Pineapple Energy Inc., | |||||||||||
CVR†(b) | 0 | 213,565 | ||||||||||
WARRANTS* — 0.0% | ||||||||||||
Business Services — 0.0% | ||||||||||||
1 | Internap Corp., | |||||||||||
expire 05/08/24†(b) | 0 | 652 | ||||||||||
Diversified Industrial — 0.0% | ||||||||||||
140,000 | Various Securities | 95,648 | 76,986 | |||||||||
TOTAL WARRANTS | 95,648 | 77,638 |
See accompanying notes to financial statements.
7
The Gabelli Small Cap Growth Fund
Summary Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Principal Amount | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS* — 0.6% | ||||||||||||
$ | 9,132,000 | Various Securities | $ | 9,043,232 | $ | 9,043,629 | ||||||
TOTAL U.S. GOVERNMENT OBLIGATIONS | 9,043,232 | 9,043,629 | ||||||||||
TOTAL MISCELLANEOUS INVESTMENTS — 0.2%(c) | 2,121,396 | 2,889,105 | ||||||||||
TOTAL INVESTMENTS — 100.0% | $ | 460,150,083 | 1,579,078,995 | |||||||||
Other Assets and Liabilities (Net) — (0.0)% | 197,672 | |||||||||||
NET ASSETS — 100.0% | $ | 1,579,276,667 |
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 March 31, 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. |
CVR | Contingent Value Right |
REIT | Real Estate Investment Trust |
See accompanying notes to financial statements.
8
The Gabelli Small Cap Growth Fund
Statement of Assets and Liabilities
March 31, 2023 (Unaudited)
Assets: | ||||
Investments, at value (cost $449,874,161) | $ | 1,565,013,871 | ||
Investments in affiliates, at value (cost $10,275,922) | 14,065,124 | |||
Cash | 759 | |||
Foreign currency, at value (cost $102,915) | 103,016 | |||
Receivable for Fund shares sold | 791,916 | |||
Receivable for investments sold | 461,742 | |||
Dividends and interest receivable | 1,737,018 | |||
Deferred offering expense | 14,368 | |||
Prepaid expenses | 62,454 | |||
Total Assets | 1,582,250,268 | |||
Liabilities: | ||||
Payable for investments purchased | 62,139 | |||
Payable for Fund shares redeemed | 641,553 | |||
Payable for investment advisory fees | 1,319,431 | |||
Payable for distribution fees | 248,431 | |||
Payable for accounting fees | 7,500 | |||
Payable for shareholder services fees | 290,128 | |||
Payable for shareholder communications | 286,243 | |||
Other accrued expenses | 118,176 | |||
Total Liabilities | 2,973,601 | |||
Net Assets | ||||
(applicable to 39,213,870 shares outstanding) | $ | 1,579,276,667 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 396,874,370 | ||
Total distributable earnings | 1,182,402,297 | |||
Net Assets | $ | 1,579,276,667 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($924,016,771 ÷ 23,081,418 shares outstanding; – shares authorized) | $ | 40.03 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($119,155,929 ÷ 2,980,020 shares outstanding; – shares authorized) | $ | 39.98 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 42.42 | ||
Class C: | ||||
Net Asset Value and offering price per share ($34,517,761 ÷ 1,156,419 shares outstanding; – shares authorized) | $ | 29.85 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($501,586,206 ÷ 11,996,013 shares outstanding; – shares authorized) | $ | 41.81 |
Statement of Operations
For the Six Months Ended March 31, 2023 (Unaudited)
Investment Income: | ||||
Dividends - unaffiliated (net of foreign withholding taxes of $115,717) | $ | 10,745,228 | ||
Dividends - affiliated | 25,380 | |||
Interest | 140,700 | |||
Total Investment Income | 10,911,308 | |||
Expenses: | ||||
Investment advisory fees. | 7,840,158 | |||
Distribution fees - Class AAA | 1,127,121 | |||
Distribution fees - Class A | 146,825 | |||
Distribution fees - Class C | 184,580 | |||
Shareholder services fees | 618,309 | |||
Shareholder communications expenses | 145,520 | |||
Custodian fees | 87,444 | |||
Directors’ fees. | 69,085 | |||
Interest expense | 61,738 | |||
Registration expenses | 41,141 | |||
Legal and audit fees | 39,004 | |||
Accounting fees | 22,500 | |||
Miscellaneous expenses | 64,941 | |||
Total Expenses | 10,448,366 | |||
Less: | ||||
Advisory fee reduction on unsupervised assets (See Note 3) | (35,382 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (10,381 | ) | ||
Total Reductions | (45,763 | ) | ||
Net Expenses | 10,402,603 | |||
Net Investment Income | 508,705 | |||
Net Realized and Unrealized Gain/(Loss) on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments - unaffiliated | 102,077,411 | |||
Net realized gain on investments - affiliated | 3,991 | |||
Net realized gain on foreign currency transactions | 17,728 | |||
Net realized gain on investments and foreign currency transactions | 102,099,130 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments - unaffiliated | 188,715,768 | |||
on investments - affiliated | 2,422,276 | |||
on foreign currency translations | 34,847 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 191,172,891 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 293,272,021 | |||
Net Increase in Net Assets Resulting from Operations | $ | 293,780,726 |
(a) Redemption price varies based on the length of time held.
See accompanying notes to financial statements.
9
The Gabelli Small Cap Growth Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 508,705 | $ | 1,881,684 | ||||||
Net realized gain on investments and foreign currency transactions | 102,099,130 | 154,317,012 | ||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 191,172,891 | (448,165,801 | ) | |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 293,780,726 | (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 | 36,921,869 | 44,158,782 | ||||||||
Class A | 3,358,628 | 9,841,866 | ||||||||
Class C | (4,321,505 | ) | (13,302,976 | ) | ||||||
Class I | (18,654,949 | ) | (123,739 | ) | ||||||
Net Increase in Net Assets from Capital Share Transactions | 17,304,043 | 40,573,933 | ||||||||
Redemption Fees | 62 | 390 | ||||||||
Net Increase/(Decrease) in Net Assets | 172,302,532 | (492,457,378 | ) | |||||||
Net Assets: | ||||||||||
Beginning of year | 1,406,974,135 | 1,899,431,513 | ||||||||
End of period | $ | 1,579,276,667 | $ | 1,406,974,135 |
See accompanying notes to financial statements.
10
The Gabelli Small Cap Growth Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a)(b) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Total Distributions | Redemption Fees(a)(c) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income (Loss) | Operating Expenses(d)(e) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(f) | $ | 36.11 | $ | 0.00 | (c) | $ | 7.53 | $ | 7.53 | $ | (0.01 | ) | $ | (3.60 | ) | $ | (3.61 | ) | $ | 0.00 | $ | 40.03 | 21.25 | % | $ | 924,017 | 0.00 | %(g)(h) | 1.39 | %(g) | 0 | %(i) | ||||||||||||||||||||||||
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 | (j) | 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 | (j) | 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 | (j) | 0 | (i) | ||||||||||||||||||||||||||||||||||
2019 | 59.61 | 0.03 | (3.50 | ) | (3.47 | ) | (0.09 | ) | (2.13 | ) | (2.22 | ) | 0.00 | 53.92 | (5.72 | ) | 1,243,608 | 0.06 | 1.39 | (j) | 1 | |||||||||||||||||||||||||||||||||||
2018 | 58.63 | 0.09 | 4.01 | 4.10 | — | (3.12 | ) | (3.12 | ) | 0.00 | 59.61 | 7.21 | 1,711,850 | 0.16 | 1.36 | (j) | 3 | |||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(f) | $ | 36.06 | $ | 0.00 | (c) | $ | 7.52 | $ | 7.52 | $ | 0.00 | (c) | $ | (3.60 | ) | $ | (3.60 | ) | $ | 0.00 | $ | 39.98 | 21.26 | % | $ | 119,156 | 0.00 | %(g)(h) | 1.39 | %(g) | 0 | %(i) | ||||||||||||||||||||||||
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 | (j) | 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 | (j) | 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 | (j) | 0 | (i) | ||||||||||||||||||||||||||||||||||
2019 | 59.58 | 0.03 | (3.50 | ) | (3.47 | ) | (0.09 | ) | (2.13 | ) | (2.22 | ) | 0.00 | 53.89 | (5.73 | ) | 170,189 | 0.06 | 1.39 | (j) | 1 | |||||||||||||||||||||||||||||||||||
2018 | 58.60 | 0.09 | 4.01 | 4.10 | — | (3.12 | ) | (3.12 | ) | 0.00 | 59.58 | 7.21 | 208,947 | 0.16 | 1.36 | (j) | 3 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(f) | $ | 27.02 | $ | (0.11 | ) | $ | 5.63 | $ | 5.52 | $ | — | $ | (2.69 | ) | $ | (2.69 | ) | $ | 0.00 | $ | 29.85 | 20.82 | % | $ | 34,518 | (0.76 | )%(g) | 2.14 | %(g) | 0 | %(i) | |||||||||||||||||||||||||
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 | (j) | 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 | (j) | 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 | (j) | 0 | (i) | |||||||||||||||||||||||||||||||||
2019 | 52.16 | (0.32 | ) | (3.08 | ) | (3.40 | ) | — | (2.13 | ) | (2.13 | ) | 0.00 | 46.63 | (6.44 | ) | 141,522 | (0.69 | ) | 2.14 | (j) | 1 | ||||||||||||||||||||||||||||||||||
2018 | 52.05 | (0.30 | ) | 3.53 | 3.23 | — | (3.12 | ) | (3.12 | ) | 0.00 | 52.16 | 6.41 | 215,939 | (0.59 | ) | 2.11 | (j) | 3 | |||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(f) | $ | 37.76 | $ | 0.05 | $ | 7.88 | $ | 7.93 | $ | (0.11 | ) | $ | (3.77 | ) | $ | (3.88 | ) | $ | 0.00 | $ | 41.81 | 21.43 | % | $ | 501,586 | 0.25 | %(g) | 1.14 | %(g)(j) | 0 | %(i) | |||||||||||||||||||||||||
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 | (j) | 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 | (j) | 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 | (j) | 0 | (i) | ||||||||||||||||||||||||||||||||||
2019 | 61.09 | 0.17 | (3.59 | ) | (3.42 | ) | (0.25 | ) | (2.13 | ) | (2.38 | ) | 0.00 | 55.29 | (5.50 | ) | 890,889 | 0.32 | 1.14 | (j) | 1 | |||||||||||||||||||||||||||||||||||
2018 | 59.86 | 0.25 | 4.10 | 4.35 | — | (3.12 | ) | (3.12 | ) | 0.00 | 61.09 | 7.49 | 1,624,806 | 0.43 | 1.11 | 3 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Due to capital share activity throughout the period, net investment income/(loss) per share and the ratio to average net assets are not necessarily correlated among the different classes of shares. |
(c) | Amount represents less than $0.005 per share. |
(d) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For all 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 six months ended March 31, 2023 and the years ended September 30, 2022, 2021, 2019, and 2018, there was no impact on the expense ratios. |
(f) | For the six months ended March 31, 2023, unaudited. |
(g) | Annualized. |
(h) | Amount represents less than 0.005%. |
(i) | Amount represents less than 0.5%. |
(j) | The Fund incurred interest expense during the six months ended March 31, 2023 and the fiscal years ended September 30, 2022, 2021, 2020, 2019, and 2018. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.39%, 1.38%, 1.37%, 1.39%, and 1.38% (Class AAA and Class A), 2.14%, 2.13%, 2.12%, 2.14%, and 2.13% (Class C), and 1.14%, 1.13%, 1.12%, 1.14%, and 1.13% (Class I). For the year ended September 30, 2018, the effect of interest expense was minimal. |
See accompanying notes to financial statements.
11
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Small Cap Growth Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the Portfolios) of the Corporation. The Fund seeks to provide a high level of capital appreciation. The Fund commenced investment operations on October 22, 1991. The Adviser currently characterizes small capitalization companies for the Fund as those with total common stock market values of $3 billion or less at the time of investment.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the Board) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by the Adviser.
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt obligations for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one of more dealers in the instrument in question by the Adviser.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and
12
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of March 31, 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 03/31/23 | |||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Aviation: Parts and Services | $ | 30,352,410 | $ | 1,707,930 | — | $ | 32,060,340 | |||||||||
Building and Construction | 103,248,724 | 1,120 | — | 103,249,844 | ||||||||||||
Consumer Services | 14,217,955 | 271,625 | — | 14,489,580 | ||||||||||||
Diversified Industrial | 183,449,714 | 821,340 | — | 184,271,054 | ||||||||||||
Equipment and Supplies | 278,142,010 | 2,497,123 | — | 280,639,133 | ||||||||||||
Financial Services | 68,870,239 | 487,588 | $ | 5,000 | 69,362,827 | |||||||||||
Publishing | 9,369,530 | 174,060 | — | 9,543,590 | ||||||||||||
Real Estate | 41,967,459 | 898,000 | — | 42,865,459 | ||||||||||||
Retail | 97,890,337 | 764,961 | — | 98,655,298 | ||||||||||||
Specialty Chemicals | 31,684,328 | — | — | 31,684,328 | ||||||||||||
Other Industries (b) | 698,282,011 | — | — | 698,282,011 | ||||||||||||
Total Common Stocks | 1,557,474,717 | 7,623,747 | 5,000 | 1,565,103,464 | ||||||||||||
Closed-End Funds | 1,745,865 | — | — | 1,745,865 | ||||||||||||
Preferred Stocks (b) | 2,894,834 | — | — | 2,894,834 | ||||||||||||
Rights (b) | — | — | 213,565 | 213,565 | ||||||||||||
Warrants (b) | 76,986 | — | 652 | 77,638 | ||||||||||||
U.S. Government Obligations | — | 9,043,629 | — | 9,043,629 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 1,562,192,402 | $ | 16,667,376 | $ | 219,217 | $ | 1,579,078,995 |
(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. |
13
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
During the six months ended March 31, 2023, the Fund did not have material transfers into or out of Level 3.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
14
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 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 six months ended March 31, 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 primarily due to differing treatments of income and gains as determined under the GAAP. Distributions from net investment income for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are
15
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise.
These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the year ended September 30, 2022 was as follows:
Distributions paid from: | ||||
Ordinary income (inclusive of short term capital gains) | $ | 3,571,562 | ||
Net long term capital gains | 246,311,919 | |||
Total distributions paid | $ | 249,883,482 |
____________
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2023:
Gross | Gross | ||||||
Unrealized | Unrealized | Net Unrealized | |||||
Cost | Appreciation | Depreciation | Appreciation | ||||
Investments | $465,549,441 | $1,137,377,290 | $(23,847,736) | $1,113,529,554 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2023, the Fund did not incur any income tax, interest, or penalties. As of March 31, 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 six months ended March 31, 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 $35,382.
16
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2023, other than short term securities and U.S. Government obligations, aggregated $7,454,181 and $147,133,006, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2023, the Fund paid $25,091 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $4,911 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the six months ended March 31, 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 $10,381.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended March 31, 2023, the Fund accrued $22,500 in connection with the cost of computing the Fund's NAV.
The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on 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 six months ended March 31, 2023, there were no borrowings under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the six months ended March 31, 2023 was $4,277,127 with a weighted average interest rate of 4.97%. The maximum amount borrowed at any time during the six months ended March 31, 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.
17
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (Continued)
The redemption fees retained by the Fund during the six months ended March 31, 2023 and the fiscal year ended September 30, 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:
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 995,435 | $ | 39,944,626 | 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 | (2,006,787 | ) | (78,813,582 | ) | (3,140,556 | ) | (137,099,295 | ) | ||||||||
Net increase | 956,730 | $ | 36,921,869 | 860,784 | $ | 44,158,782 | ||||||||||
Class A | ||||||||||||||||
Shares sold | 206,205 | $ | 8,188,484 | 412,514 | $ | 18,248,925 | ||||||||||
Shares issued upon reinvestment of distributions | 253,242 | 9,739,703 | 353,484 | 16,189,558 | ||||||||||||
Shares redeemed | (372,099 | ) | (14,569,559 | ) | (577,265 | ) | (24,596,617 | ) | ||||||||
Net increase | 87,348 | $ | 3,358,628 | 188,733 | $ | 9,841,866 | ||||||||||
Class C | ||||||||||||||||
Shares sold | 23,676 | $ | 697,992 | 58,394 | $ | 1,979,388 | ||||||||||
Shares issued upon reinvestment of distributions | 114,578 | 3,297,561 | 298,257 | 10,298,825 | ||||||||||||
Shares redeemed | (279,744 | ) | (8,317,058 | ) | (769,124 | ) | (25,581,189 | ) | ||||||||
Net decrease | (141,490 | ) | $ | (4,321,505 | ) | (412,473 | ) | $ | (13,302,976 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 760,231 | $ | 31,638,189 | 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 | (2,316,398 | ) | (96,100,231 | ) | (3,077,613 | ) | (140,608,712 | ) | ||||||||
Net decrease | (416,404 | ) | $ | (18,654,949 | ) | (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 six months ended March 31, 2023 is set forth below:
Market Value at September 30, 2022 | Purchases | Sales Proceeds | Realized Gain/(Loss) | Change In Unrealized Appreciation | Market Value at March 31, 2023 | Dividend Income | Percent Owned of Shares | |||||||||||||||||||||||||
Bel Fuse Inc., Cl. A | $ | 5,911,425 | — | $ | 29,712 | $ | 5,480 | $ | 1,765,431 | $ | 7,652,624 | $ | 25,380 | 9.69 | % | |||||||||||||||||
Strattec Security Corp.† | 5,109,728 | $ | 7,367 | — | — | 479,405 | 5,596,500 | — | 6.13 | % | ||||||||||||||||||||||
Trans-Lux Corp.† | 640,960 | — | 911 | (1,489 | ) | 177,440 | 816,000 | — | 11.90 | % | ||||||||||||||||||||||
Total | $ | 3,991 | $ | 2,422,276 | $ | 14,065,124 | $ | 25,380 |
† Non-income producing security.
18
The Gabelli Small Cap Growth Fund
Notes to Financial Statements (Unaudited) (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.
19
The Gabelli Small Cap Growth Fund
Liquidity Risk Management Program (Unaudited)
In accordance with Rule 22e-4 under the 1940 Act, the Fund has established a liquidity risk management program (the LRM Program) to govern its approach to managing liquidity risk. The LRM Program is administered by the Liquidity Committee (the Committee), which is comprised of members of Gabelli Funds, LLC management. The Board has designated the Committee to administer the LRM Program.
The LRM Program’s principal objectives include supporting the Fund’s compliance with limits on investments in illiquid assets and mitigating the risk that the Fund will be unable to meet its redemption obligations in a timely manner. The LRM Program also includes elements that support the management and assessment of liquidity risk, including an annual assessment of factors that influence the Fund’s liquidity and the monthly classification and re-classification of certain investments that reflect the Committee’s assessment of their relative liquidity under current market conditions.
At a meeting of the Board held on August 16, 2022, the Board received a written report from the Committee regarding the design and operational effectiveness of the LRM Program. The Committee determined, and reported to the Board, that the LRM Program is reasonably designed to assess and manage the Fund’s liquidity risk and has operated adequately and effectively since its implementation. The Committee reported that there were no liquidity events that impacted the Fund or its ability to timely meet redemptions without dilution to existing shareholders. The Committee noted that the Fund is primarily invested in highly liquid securities and, accordingly, continues to be exempt from the requirement to determine a “highly liquid investment minimum” as defined in the Rule 22e-4. Because of that continued qualification for the exemption, the Fund has not adopted a “highly liquid investment minimum” amount. The Committee further noted that while changes to the LRM Program were made during the Review Period and reported to the Board, no material changes were made to the LRM Program as a result of the Committee’s annual review.
There can be no assurance that the LRM Program will achieve its objectives in the future. Please refer to the Fund’s Prospectus for more information regarding its exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
20
The Gabelli Small Cap Growth Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)
During the six months ended March 31, 2023, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2022) of the Fund against a peer group of ten other comparable funds prepared by the Adviser (the “Adviser Peer Group”) and against a peer group prepared by Broadridge (the “Broadridge Performance Peer Group”) consisting of all retail and institutional small-cap core funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Small-Cap Core Index. The Independent Board Members noted that the Fund’s performance was in the second quartile for the one year and three year periods and in the third quartile for the five year period, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the second quintile for the one year, five year, and ten year periods and the first quintile for the three year period. The Independent Board Members noted the Fund’s total return was above the median total return for the one year and three year periods and at the median total return for the five year period within the Adviser Peer Group.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a peer group of sixteen other small cap core funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratio was above average within this group, and the Fund’s size was above average within this group. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with, but did not consider to be material to
21
The Gabelli Small Cap Growth Fund
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)
their decision, various information comparing the advisory fees to the fees for other types of accounts managed by affiliates of the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable overall performance record. The Independent Board Members also concluded that the Fund’s expense ratios and the profitability to the Adviser of managing the Fund were reasonable in light of the Fund’s performance and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreement to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
22
THE GABELLI SMALL CAP GROWTH FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Management 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
Semiannual Report — March 31, 2023
Daniel M. Miller
Portfolio Manager
GAMCO Investors
BS, University of Miami
To Our Shareholders,
For the six months ended March 31, 2023, the net asset value (NAV) total return per Class I Share of The Gabelli Focused Growth and Income Fund was 4.7% compared with a total return of 12.7% for the Lipper Equity Income Fund Average. Other classes of shares are available. See page 3 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 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 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)
Volatile equity markets driven by geopolitical conflict, rising commodity prices, higher interest rates, and inflation contributed to a challenging 2022 for investors. The S&P 500 declined 18.1% in calendar 2022, its worst performance in the last four decades, excluding 2002 and 2008. Energy was the only positive sector of the market, while Communication Services declined 40%, and Information Technology 29%. The Russell 3000 index declined 19.3% and the Russell 2000 was down 20.4%. The Gabelli Focused Growth & Income Fund decreased 13.8%, outperforming market benchmarks, but underperforming expectations. More than half of the Fund’s decline can be attributed to a small handful of holdings that ended the year significantly oversold due to tax loss selling.
While most equity benchmarks were positive in the first quarter of 2023, it was a challenging time for investors. Ongoing conflict between Russia and Ukraine, rising commodity prices, an increasingly hawkish Fed, and a banking crisis that caused the second and third largest bank failures in U.S. history contributed to significant volatility. Sentiment drifted as expectations about the Fed’s policy path drove a significant rotation into growth stocks, with big tech and software among the notable beneficiaries.
The S&P 500 returned 7.5% in the quarter ended March 31st, driven by a 21.8% increase in Information Technology. The Russell 2000 increased 2.7%, while the Russell 2000 Value index declined 0.7%. After increasing almost 12% in the first weeks of the year, the Fund ended the quarter up 1.4%. The sharp pullback in March can be attributed to the Fund’s large allocation to rate sensitive REITs and preferred securities, along with a substantial underweight to Information Technology. During the first quarter of 2023, the Fund distributed a total of $0.18.
The top contributors to the Fund’s performance during the last six months were: Apollo Global Management Inc. (5.6% of net assets as of March 31, 2023); AT&T Inc. (4.8%); and VICI Properties Inc. (9.3%).
Some of our weaker performing stocks during the last six months were: Qurate Retail Inc. 8% 03/15/31 (5.3%); Blackstone Mortgage Trust Inc. (8.7%); and Greenidge Generation Holdings Inc. 8.5% 10/31/26 (0.6%).
We continue to position the portfolio toward high income producing securities. We appreciate your continued confidence and trust.
The views expressed reflect the opinions of the Fund's portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. |
2
Comparative Results
Average Annual Returns through March 31, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Six Months | 1 Year | 3 Year | 5 Year | 10 Year | Since Inception (12/31/02) | |||||||||||||
Class I (GWSIX) (c) | 4.65 | % | (12.10 | )% | 21.86 | % | 4.71 | % | 4.18 | % | 6.84 | % | ||||||
Class AAA (GWSVX) | 4.13 | (12.87 | ) | 20.83 | 4.06 | 3.73 | 6.54 | |||||||||||
S&P MidCap 400 Index (d) | 15.00 | (5.12 | ) | 22.10 | 7.67 | 9.80 | 10.72 | |||||||||||
Lipper Equity Income Fund Average (d) | 12.65 | (4.54 | ) | 17.10 | 8.39 | 9.26 | 8.52 | |||||||||||
Class A (GWSAX) | 4.43 | (12.65 | ) | 20.97 | 4.14 | 3.77 | 6.58 | |||||||||||
With sales charge (e) | (1.58 | ) | (17.67 | ) | 18.61 | 2.92 | 3.15 | 6.26 | ||||||||||
Class C (GWSCX) | 3.78 | (13.55 | ) | 19.97 | 3.31 | 2.97 | 5.78 | |||||||||||
With contingent deferred sales charge (f) | 2.78 | (14.42 | ) | 19.97 | 3.31 | 2.97 | 5.78 |
(a) | The Fund's fiscal year ends September 30. |
(b) | Returns would have been lower had the Adviser not reimbursed certain expenses of the Fund. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. |
(c) | The Class AAA Share NAVs are used to calculate performance for the periods prior to the issuance of Class I Shares on January 11, 2008. The actual performance of Class I Shares would have been higher due to lower expenses associated with this class of shares. |
(d) | The S&P MidCap 400 Index is an index comprised of U.S. stocks in the middle capitalization range, which is generally considered to be between $200 million and $5 billion in market value. The Lipper Equity Income Fund Average includes the 30 largest equity funds in this category tracked by Lipper, Inc. Dividends are considered reinvested. You cannot invest directly in an index. |
(e) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(f) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
In the current prospectuses dated January 27, 2023 as updated in a supplement dated March 15, 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 10 for the expense ratios for the six months ended March 31, 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.
Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus, please visit our website at www.gabelli.com.
Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end.
3
The Gabelli Focused Growth and Income Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2022 through March 31, 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.
Beginning | Ending | Annualized | Expenses | ||
Account Value | Account Value | Expense | Paid During | ||
10/01/22 | 03/31/23 | Ratio | Period * | ||
The Gabelli Focused Growth and Income Fund | |||||
Actual Fund Return | |||||
Class AAA | $1,000.00 | $1,041.30 | 1.74% | $ | 8.86 |
Class A | $1,000.00 | $1,044.30 | 1.26% | $ | 6.42 |
Class C | $1,000.00 | $1,037.80 | 2.49% | $ | 12.65 |
Class I | $1,000.00 | $1,046.50 | 0.81% | $ | 4.13 |
Hypothetical 5% Return | |||||
Class AAA | $1,000.00 | $1,016.26 | 1.74% | $ | 8.75 |
Class A | $1,000.00 | $1,018.65 | 1.26% | $ | 6.34 |
Class C | $1,000.00 | $1,012.52 | 2.49% | $ | 12.49 |
Class I | $1,000.00 | $1,020.89 | 0.81% | $ | 4.08 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2023:
The Gabelli Focused Growth and Income Fund
Energy and Utilities | 26.0 | % | Building and Construction | 2.4 | % | |
Real Estate Investment Trusts | 21.7 | % | Automotive: Parts and Accessories | 1.9 | % | |
Financial Services | 14.3 | % | Metals and Mining | 1.7 | % | |
Telecommunications | 6.6 | % | Entertainment | 1.2 | % | |
Food and Beverage | 5.6 | % | Cable and Satellite | 1.1 | % | |
Retail | 5.3 | % | U.S. Government Obligations | 0.5 | % | |
Health Care | 5.0 | % | Other Assets and Liabilities (Net) | 0.4 | % | |
Diversified Industrial | 3.9 | % | 100.0 | % | ||
Computer Software and Services | 2.4 | % |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-PORT is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
5
The Gabelli Focused Growth and Income Fund
Schedule of Investments — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 84.0% | ||||||||||||
Automotive: Parts and Accessories — 1.9% | ||||||||||||
6,000 | Aptiv plc† | $ | 311,893 | $ | 673,140 | |||||||
Building and Construction — 2.4% | ||||||||||||
7,500 | Herc Holdings Inc. | 144,069 | 854,250 | |||||||||
Cable and Satellite — 1.1% | ||||||||||||
5,750 | Liberty Media Corp. - Liberty Formula One, Cl. A† | 162,046 | 388,125 | |||||||||
Computer Software and Services — 2.4% | ||||||||||||
8,300 | Alphabet Inc., Cl. C† | 246,177 | 863,200 | |||||||||
Energy and Utilities — 24.1% | ||||||||||||
158,819 | Energy Transfer LP | 1,085,315 | 1,980,473 | |||||||||
97,401 | Enterprise Products Partners LP | 1,631,250 | 2,522,686 | |||||||||
96,000 | Kinder Morgan Inc. | 1,013,347 | 1,680,960 | |||||||||
25,000 | New Fortress Energy Inc. | 850,267 | 735,750 | |||||||||
29,829 | NextEra Energy Partners LP | 1,231,247 | 1,812,112 | |||||||||
5,811,426 | 8,731,981 | |||||||||||
Entertainment — 0.5% | ||||||||||||
50,000 | Sirius XM Holdings Inc. | 144,219 | 198,500 | |||||||||
Financial Services — 11.0% | ||||||||||||
32,000 | Apollo Global Management Inc. | 1,022,396 | 2,021,120 | |||||||||
12,500 | Morgan Stanley | 525,580 | 1,097,500 | |||||||||
95,000 | New York Community Bancorp Inc. | 809,255 | 858,800 | |||||||||
2,357,231 | 3,977,420 | |||||||||||
Food and Beverage — 5.6% | ||||||||||||
50,000 | Maple Leaf Foods Inc. | 785,921 | 967,443 | |||||||||
9,500 | Mondelēz International Inc., Cl. A | 388,723 | 662,340 | |||||||||
4,500 | Post Holdings Inc.† | 101,077 | 404,415 | |||||||||
1,275,721 | 2,034,198 | |||||||||||
Health Care — 5.0% | ||||||||||||
6,000 | AbbVie Inc. | 636,524 | 956,220 | |||||||||
27,000 | Option Care Health Inc.† | 147,593 | 857,790 | |||||||||
784,117 | 1,814,010 | |||||||||||
Metals and Mining — 1.7% | ||||||||||||
12,500 | Newmont Corp | 531,465 | 612,750 | |||||||||
Real Estate Investment Trusts — 21.7% | ||||||||||||
175,167 | Blackstone Mortgage Trust Inc., Cl. A | 4,225,206 | 3,126,731 | |||||||||
100,000 | Medical Properties Trust Inc. | 1,140,700 | 822,000 | |||||||||
5,000 | Simon Property Group Inc. | 566,614 | 559,850 |
Shares | Cost | Market Value | ||||||||||
102,687 | VICI Properties Inc. | $ | 1,563,636 | $ | 3,349,650 | |||||||
7,496,156 | 7,858,231 | |||||||||||
Telecommunications — 6.6% | ||||||||||||
90,000 | AT&T Inc. | 1,399,472 | 1,732,500 | |||||||||
4,500 | T-Mobile US Inc.† | 328,888 | 651,780 | |||||||||
1,728,360 | 2,384,280 | |||||||||||
TOTAL COMMON STOCKS | 20,992,880 | 30,390,085 | ||||||||||
PREFERRED STOCKS — 14.4% | ||||||||||||
Diversified Industrial — 3.9% | ||||||||||||
14,274 | Babcock & Wilcox Enterprises Inc., 8.125%, 02/28/26 | 333,638 | 351,568 | |||||||||
45,004 | Steel Partners Holdings LP, Ser. A, 6.000%, 02/07/26 | 929,628 | 1,042,293 | |||||||||
1,263,266 | 1,393,861 | |||||||||||
Energy and Utilities — 1.9% | ||||||||||||
29,867 | Energy Transfer LP, Ser. D, 7.625% | 521,282 | 696,797 | |||||||||
Financial Services — 3.3% | ||||||||||||
8,592 | Argo Blockchain plc, Ser. A, 8.750%, 11/30/26 | 53,219 | 57,480 | |||||||||
39,091 | FTAI Aviation Ltd., Ser. A, 8.250% | 781,752 | 927,239 | |||||||||
44,775 | Greenidge Generation Holdings Inc., 8.500%, 10/31/26 | 713,282 | 200,592 | |||||||||
1,548,253 | 1,185,311 | |||||||||||
Retail — 5.3% | ||||||||||||
65,859 | Qurate Retail Inc., 8.000%, 03/15/31 | 3,462,387 | 1,930,327 | |||||||||
TOTAL PREFERRED STOCKS | 6,795,188 | 5,206,296 | ||||||||||
MANDATORY CONVERTIBLE SECURITIES(a) — 0.7% | ||||||||||||
Entertainment — 0.7% | ||||||||||||
8,000 | Paramount Global, Ser. A, 5.750%, 04/01/24 | 219,979 | 239,520 |
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 0.5% | ||||||||||||
$ | 190,000 | U.S. Treasury Bill, 4.562%††, 04/20/23 | 189,544 | 189,581 | ||||||||
TOTAL INVESTMENTS — 99.6% | $ | 28,197,591 | 36,025,482 | |||||||||
Other Assets and Liabilities (Net) — 0.4% | 156,424 | |||||||||||
NET ASSETS — 100.0% | $ | 36,181,906 |
See accompanying notes to financial statements.
6
The Gabelli Focused Growth and Income Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
(a) | Mandatory convertible securities are required to be converted on the dates listed; they generally may be converted prior to these dates at the option of the holder. |
† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
See accompanying notes to financial statements.
7
The Gabelli Focused Growth and Income Fund
Statement of Assets and Liabilities
March 31, 2023 (Unaudited)
Assets: | ||||
Investments, at value (cost $28,197,591) | $ | 36,025,482 | ||
Cash | 1,759 | |||
Foreign currency, at value (cost $6,596) | 6,604 | |||
Receivable for Fund shares sold | 49,530 | |||
Receivable from Adviser | 14,819 | |||
Dividends receivable | 192,809 | |||
Prepaid expenses | 21,221 | |||
Total Assets | 36,312,224 | |||
Liabilities: | ||||
Payable for investments purchased | 11,025 | |||
Payable for Fund shares redeemed | 4,127 | |||
Payable for investment advisory fees | 30,972 | |||
Payable for distribution fees | 6,997 | |||
Payable for legal and audit fees | 42,815 | |||
Payable for shareholder communications | 22,268 | |||
Other accrued expenses | 12,114 | |||
Total Liabilities | 130,318 | |||
Net Assets | ||||
(applicable to 2,389,446 shares outstanding) | $ | 36,181,906 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 29,127,281 | ||
Total distributable earnings | 7,054,625 | |||
Net Assets | $ | 36,181,906 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($4,741,378 ÷ 315,943 shares outstanding; 100,000,000 shares authorized) | $ | 15.01 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($13,731,374 ÷ 901,222 shares outstanding; 50,000,000 shares authorized) | $ | 15.24 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price). | $ | 16.17 | ||
Class C: | ||||
Net Asset Value and offering price per share ($3,552,514 ÷ 287,878 shares outstanding; 50,000,000 shares authorized) | $ | 12.34 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($14,156,640 ÷ 884,403 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 six months ended March 31, 2023 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $2,522) | $ | 859,173 | ||
Interest | 33,203 | |||
Total Investment Income | 892,376 | |||
Expenses: | ||||
Investment advisory fees | 195,391 | |||
Distribution fees - Class AAA | 6,527 | |||
Distribution fees - Class A | 16,078 | |||
Distribution fees - Class C | 20,498 | |||
Legal and audit fees | 28,971 | |||
Registration expenses | 28,237 | |||
Shareholder communications expenses | 13,781 | |||
Shareholder services fees | 11,974 | |||
Custodian fees | 3,414 | |||
Directors’ fees | 1,931 | |||
Interest expense | 1,784 | |||
Miscellaneous expenses | 6,098 | |||
Total Expenses | 334,684 | |||
Less: | ||||
Expense reimbursements (See Note 3) | (88,782 | ) | ||
Net Expenses | 245,902 | |||
Net Investment Income | 646,474 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized loss on investments | (393,639 | ) | ||
Net realized gain on foreign currency transactions | 319 | |||
Net realized loss on investments and foreign currency transactions | (393,320 | ) | ||
Net change in unrealized appreciation/depreciation: | ||||
on investments | 1,617,715 | |||
on foreign currency translations | 108 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 1,617,823 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 1,224,503 | |||
Net Increase in Net Assets Resulting from Operations | $ | 1,870,977 |
See accompanying notes to financial statements.
8
The Gabelli Focused Growth and Income Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 646,474 | $ | 907,768 | ||||||
Net realized gain/(loss) on investments and foreign currency transactions | (393,320 | ) | 1,696,905 | |||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 1,617,823 | (7,868,255 | ) | |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 1,870,977 | (5,263,582 | ) | |||||||
Distributions to Shareholders: | ||||||||||
Accumulated earnings | ||||||||||
Class AAA | (132,460 | )* | (261,923 | ) | ||||||
Class A | (329,871 | )* | (463,689 | ) | ||||||
Class C | (120,383 | )* | (309,413 | ) | ||||||
Class I | (411,333 | )* | (694,230 | ) | ||||||
Total Distributions to Shareholders | (994,047 | ) | (1,729,255 | ) | ||||||
Capital Share Transactions: | ||||||||||
Class AAA | (510,817 | ) | (871,432 | ) | ||||||
Class A | 2,849,160 | 3,794,627 | ||||||||
Class C | (874,988 | ) | (2,842,573 | ) | ||||||
Class I | (5,486,045 | ) | 5,996,510 | |||||||
Net Increase/(Decrease) in Net Assets from Capital Share Transactions | (4,022,690 | ) | 6,077,132 | |||||||
Net Decrease in Net Assets | (3,145,760 | ) | (915,705 | ) | ||||||
Net Assets: | ||||||||||
Beginning of year | 39,327,666 | 40,243,371 | ||||||||
End of period | $ | 36,181,906 | $ | 39,327,666 |
* | Based on year to date book income. Amounts are subject to change and recharacterization at year end. |
See accompanying notes to financial statements.
9
The Gabelli Focused Growth and Income Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Year | Net Investment Income (Loss)(a)(b) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Net Realized Gain on Investments | Total Distributions | Redemption Fees(a) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income (Loss)(b) | Operating Expenses Before Reimbursement | Operating Expenses Net of Reimbursement(c) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(d) | $ | 14.79 | $ | 0.22 | $ | 0.40 | $ | 0.62 | $ | (0.30 | ) | $ | (0.10 | ) | $ | (0.40 | ) | $ | — | $ | 15.01 | 4.13 | % | $ | 4,741 | 2.82 | %(e) | 1.74 | %(e) | 1.74 | %(e) | 21 | % | ||||||||||||||||||||||
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 | (f) | 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 | (g) | 67 | ||||||||||||||||||||||||||||||||
2018 | 14.61 | (0.09 | ) | (0.61 | ) | (0.70 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 13.84 | (4.78 | ) | 16,630 | (0.63 | ) | 1.53 | 1.53 | 105 | ||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(d) | $ | 14.97 | $ | 0.25 | $ | 0.42 | $ | 0.67 | $ | (0.30 | ) | $ | (0.10 | ) | $ | (0.40 | ) | $ | — | $ | 15.24 | 4.43 | % | $ | 13,731 | 3.21 | %(e) | 1.74 | %(e) | 1.26 | %(e)(h) | 21 | % | ||||||||||||||||||||||
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 | (h) | 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 | (f) | 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 | (g) | 67 | ||||||||||||||||||||||||||||||||
2018 | 14.76 | (0.09 | ) | (0.62 | ) | (0.71 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 13.98 | (4.80 | ) | 15,137 | (0.65 | ) | 1.53 | 1.53 | 105 | ||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(d) | $ | 12.25 | $ | 0.13 | $ | 0.34 | $ | 0.47 | $ | (0.30 | ) | $ | (0.08 | ) | $ | (0.38 | ) | $ | — | $ | 12.34 | 3.78 | % | $ | 3,553 | 2.09 | %(e) | 2.49 | %(e) | 2.49 | %(e) | 21 | % | ||||||||||||||||||||||
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 | (f) | 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 | (g) | 67 | ||||||||||||||||||||||||||||||||
2018 | 12.74 | (0.17 | ) | (0.53 | ) | (0.70 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 11.97 | (5.48 | ) | 24,992 | (1.38 | ) | 2.28 | 2.28 | 105 | ||||||||||||||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(d) | $ | 15.68 | $ | 0.32 | $ | 0.42 | $ | 0.74 | $ | (0.30 | ) | $ | (0.11 | ) | $ | (0.41 | ) | $ | — | $ | 16.01 | 4.65 | % | $ | 14,157 | 3.83 | %(e) | 1.49 | %(e) | 0.81 | %(e)(h) | 21 | % | ||||||||||||||||||||||
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 | (h) | 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 | (h) | 54 | |||||||||||||||||||||||||||||||||||||
2020 | 13.36 | 0.00 | (f) | (0.42 | ) | (0.42 | ) | — | — | — | 0.00 | (f) | 12.94 | (3.14 | ) | 8,333 | 0.01 | 1.46 | 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 | (g) | 67 | ||||||||||||||||||||||||||||||||
2018 | 15.02 | (0.06 | ) | (0.62 | ) | (0.68 | ) | — | (0.07 | ) | (0.07 | ) | 0.00 | (f) | 14.27 | (4.50 | ) | 34,947 | (0.39 | ) | 1.28 | 1.28 | 105 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Due to the expense caps applicable to the respective share classes, 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 six months ended March 31, 2023 and the fiscal years ended September 30, 2022 and 2020, if interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.73%, 1.72%, and 1.70% (Class AAA), 1.25%, 1.69%, and 1.70% (Class A), 2.48%, 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, 2019, and 2018, the effect of interest expense was minimal. |
(d) | For the six months ended March 31, 2023, unaudited. |
(e) | Annualized. |
(f) | Amount represents less than $0.005 per share. |
(g) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. 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. |
(h) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed expenses of $88,782, $119,130, and $97,862 for the six months ended March 31, 2023 and the fiscal years ended September 30, 2022, and 2021, respectively. |
See accompanying notes to financial statements.
10
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Focused Growth and Income Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the Portfolios) of the Corporation. The Fund seeks to provide a high level of capital appreciation. The Fund commenced investment operations on December 31, 2002.
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.
11
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of March 31, 2023 is as follows:
Valuation Inputs | ||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Total Market Value at 03/31/23 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $ | 30,390,085 | — | $ | 30,390,085 | |||||||
Preferred Stocks (a) | 5,206,296 | — | 5,206,296 | |||||||||
Mandatory Convertible Securities (a) | 239,520 | — | 239,520 | |||||||||
U.S. Government Obligations | — | $ | 189,581 | 189,581 | ||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 35,835,901 | $ | 189,581 | $ | 36,025,482 |
(a) Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings.
The Fund held no Level 3 investments at March 31, 2023 or September 30, 2022.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are
12
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
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.
13
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. These book/tax differences are either temporary or permanent in nature. These reclassifications have no impact on the NAV of the Fund.
The Fund has a fixed distribution policy. Under the policy, the Fund declares and pays monthly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the calendar year. Pursuant to this policy, distributions during the calendar year are made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board continues to evaluate its distribution policy in light of ongoing economic and market conditions and may change the amount of the monthly distributions in the future.
The tax character of distributions paid during the fiscal year ended September 30, 2022 was as follows:
Distributions paid from: | ||||
Ordinary income | $ | 1,570,423 | ||
Net long term capital gains | 158,832 | |||
Total distributions paid | $ | 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 substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | ||||||||||||||
Investments | $28,220,696 | $11,411,095 | $(3,606,309) | $7,804,786 |
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
14
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2023, the Fund did not incur any income tax, interest, or penalties. As of March 31, 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 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 January 31, 2024 for Class I and Class A, and may be terminated only by the Board before such time. During the six months ended March 31, 2023, the Adviser reimbursed expenses in the amount of $88,782 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 of the Class I Shares 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 March 31, 2023, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $305,774.
For the fiscal year ended September 30, 2021, expiring September 30, 2023 | $ | 97,862 | |||
For the fiscal year ended September 30, 2022, expiring September 30, 2024 | 119,130 | ||||
For the six months ended March 31, 2023, expiring September 30, 2025 | 88,782 | ||||
$ | 305,774 |
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2023, other than short term securities and U.S. Government obligations, aggregated $7,865,512 and $8,469,369, respectively.
15
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2023, the Fund paid $3,158 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $15,969 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 March 31, 2023, there were no borrowings under the line of credit.
The average daily amount of borrowings outstanding under the line of credit for the ten days of borrowings during the six months ended March 31, 2023 was $1,131,000 with a weighted average interest rate of 5.71%. The maximum amount borrowed at any time during the six months ended March 31, 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 to all purchases. On March 15, 2023, Class C Shares were re-opened for purchases. These changes will have no effect on existing shareholders’ ability to redeem shares of the Fund as described in the Fund’s Prospectus. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2023 and the fiscal year ended September 30, 2022, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
16
The Gabelli Focused Growth and Income Fund
Notes to Financial Statements (Unaudited) (Continued)
Transactions in shares of capital stock were as follows:
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 8,761 | $ | 136,702 | 13,659 | $ | 238,395 | ||||||||||
Shares issued upon reinvestment of distributions | 8,485 | 131,312 | 15,178 | 259,825 | ||||||||||||
Shares redeemed | (48,466 | ) | (778,831 | ) | (77,549 | ) | (1,369,652 | ) | ||||||||
Net decrease | (31,220 | ) | $ | (510,817 | ) | (48,712 | ) | $ | (871,432 | ) | ||||||
Class A | ||||||||||||||||
Shares sold | 215,777 | $ | 3,426,869 | 296,096 | $ | 5,199,572 | ||||||||||
Shares issued upon reinvestment of distributions | 19,716 | 309,657 | 24,683 | 424,570 | ||||||||||||
Shares redeemed | (56,257 | ) | (887,366 | ) | (104,658 | ) | (1,829,515 | ) | ||||||||
Net increase | 179,236 | $ | 2,849,160 | 216,121 | $ | 3,794,627 | ||||||||||
Class C | ||||||||||||||||
Shares sold | — | — | 25,571 | $ | 379,123 | |||||||||||
Shares issued upon reinvestment of distributions | 9,339 | $ | 119,654 | 21,458 | 307,817 | |||||||||||
Shares redeemed | (77,034 | ) | (994,642 | ) | (244,093 | ) | (3,529,513 | ) | ||||||||
Net decrease | (67,695 | ) | $ | (874,988 | ) | (197,064 | ) | $ | (2,842,573 | ) | ||||||
Class I | ||||||||||||||||
Shares sold | 186,975 | $ | 3,153,946 | 442,419 | $ | 8,052,682 | ||||||||||
Shares issued upon reinvestment of distributions | 23,534 | 386,476 | 36,466 | 654,993 | ||||||||||||
Shares redeemed | (539,393 | ) | (9,026,467 | ) | (149,221 | ) | (2,711,165 | ) | ||||||||
Net increase/(decrease) | (328,884 | ) | $ | (5,486,045 | ) | 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.
17
The Gabelli Focused Growth and Income Fund
Board Consideration and Re-Approval of Management Agreement (Unaudited)
During the six months ended March 31, 2023, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2022) of the Fund against ten other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of all retail and institutional mid-cap value funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Mid-Cap Value Index. The Independent Board Members noted that the Fund’s performance was in the second quartile for the one year and three year periods and the fourth quartile for the five year period, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the fifth quintile for the one year and five year periods and in the second quartile for the three year period.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge. The Independent Board Members also noted that an affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions and that the Adviser received a moderate level of soft dollar research benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop or any losses or diminished profitability to the Adviser in prior years.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with expense ratios of the Adviser Peer Group and a peer group of fifteen other midcap value funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that the Fund’s expense ratios were approximately average or above average within each peer group and that the Fund’s size was below average within the Adviser Peer Group and below average within the peer group of comparable funds selected by Broadridge. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members noted the recent amendments to the contractual Expense Deferral Agreement between the Adviser and the Company, on behalf of the Fund, pursuant to which
18
The Gabelli Focused Growth and Income Fund
Board Consideration and Re-Approval of Management Agreement (Unaudited) (Continued)
the net expense ratio was reduced to 1.25% for Class A Shares, effective August 17, 2022. The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable overall performance record. The Independent Board Members also concluded that the Fund’s expense ratios were reasonable given the size of the Fund relative to its peers and the unique nature of the Fund’s “best ideas” investment strategy and that economies of scale were not a factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreement to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
19
Gabelli Funds and Your Personal Privacy
Who are we?
The Gabelli Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc., a publicly held company with subsidiaries and affiliates that provide investment advisory services for a variety of clients.
What kind of non-public information do we collect about you if you become a fund shareholder?
If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is:
● | Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information. |
● | Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you. This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them. |
What information do we disclose and to whom do we disclose it?
We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www. sec.gov.
What do we do to protect your personal information?
We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential.
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THE GABELLI FOCUSED GROWTH AND INCOME FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager’s Biography
Daniel M. Miller currently serves as a portfolio manager of Gabelli Funds, LLC and is also a Managing Director of GAMCO Investors, Inc. Mr. Miller joined the Firm in 2002 and graduated magna cum laude with a degree in Finance from the University of Miami in Coral Gables, Florida.
The Gabelli Global Financial
Semiannual Report — March 31, 2023 | ||
Ian Lapey Portfolio Manager BA, Williams College MS, Northeastern University MBA, New York University |
To Our Shareholders,
For the six months ended March 31, 2023, the net asset value (NAV) total return per Class AAA Share of The Gabelli Global Financial Services Fund was 19.8% compared with a total return of 14.4% for the Morgan Stanley Capital International (MSCI) World Financials Index. Other classes of shares are available. See page 4 for performance information for all classes.
Enclosed are the financial statements, including the schedule of investments, as of March 31, 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 informed purchasers are willing to pay to acquire assets with similar characteristics.
As permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.gabelli.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. To elect to receive all future reports on paper free of charge, please contact your financial intermediary, or, if you invest directly with the Fund, you may call 800-422-3554 or send an email request to info@gabelli.com. |
The largest contributor to performance for the first half of the fiscal year was Cavco Industries Inc. (3.8% of the portfolio as of March 31, 2023; up 54%), a manufactured home producer with significant mortgage and insurance operations. Cavco reported robust fiscal third quarter (December quarter end) financial results with revenue and income from operations increasing by 16% and 33%, respectively. Also, in January, Cavco closed the acquisition of Solitaire Homes, an Oklahoma based vertically integrated manufactured housing producer with 4 manufacturing facilities and 22 retail stores. The transaction is projected to be accretive to earnings and cash flow from operations.
The second largest contributor was First Citizens BancShares Inc., Cl.A (4.3%; +22%). The company purchased substantially all the loans and assumed the customer deposits of Silicon Valley Bridge Bank from the FDIC. The purchase price represented a $16 billion (22%) discount to the value of the assets, and the transaction is projected to be significantly accretive to Earnings Per Share (EPS) and Tangible Book Value per share (TBV). Additionally, Commerzbank AG (3.3%; +41%), a German banking group, performed well owing to the company’s rebound in earnings in 2022, with net income more than tripling, and the announcement of a dividend and share repurchases in 2023.
The largest negative contributor was Flushing Financial Corp. (2.5%; -22%), a regional bank based in Uniondale, NY. In early March, Silicon Valley Bank and Signature Bank were seized by regulators owing to a massive run on their deposits. Understandably, the common stock prices of virtually all regional banks declined over the next few weeks. Flushing is very different from the banks that failed and others that appear to be troubled. The company has only minimal losses on its Available For Sale securities portfolio, and Held to Maturity securities account for less than 1% of assets (compared with 43% for Silicon Valley Bank). Additionally, unlike Silicon Valley Bank and Signature Bank, Flushing is not focused on the venture capital and crypto industries, areas the Fund has also avoided. Flushing’s valuation is very attractive at a 37% discount to TBV with a 5.9% dividend yield, and the Fund added to its position on the weakness.
The next largest detractor was Moelis & Co., Cl. A (3.4%; -5%), a global financial advisory boutique based in New York. Moelis’ earnings and stock price have been depressed owing primarily to the weak global Mergers & Acquisitions (M&A) market. However, the company has a very strong balance sheet with cash and short term investments of $413 million and no debt. Moelis appears to be well positioned for an inevitable recovery in M&A and an increase in restructuring activity. The common stock offers a 6.2% dividend yield and trades at only 7 times peak 2021 earnings, despite the strong potential for earnings during the next peak to be higher. Finally, HG Holdings Inc. (1.4%; -7%) declined owing primarily to weakness in its recently acquired title insurance business because of the slowdown in residential housing transactions. Nevertheless, the company reported a 36% increase in EPS in 2022, and the common stock trades at a 22% discount to TBV.
The Fund’s aggregate valuation metrics are very attractive at about 74% of book value, 84% of TBV and 8.3 times 2023 projected EPS. Despite the recent stress on the banking sector owing to the failures of the regional banks discussed above, I have been impressed with the resilience of most global banks during the last few years. There have been numerous macroeconomic challenges, including the Covid-19 global pandemic, the war in Ukraine, and rampant inflation in most counties. Nevertheless, most global banks have remained profitable, increased their TBV, and maintained strong capital positions. As the table below of several of the Fund’s global bank holdings shows, many banks have also repurchased shares, including European banks. In fact, over the last year, European banks have been more aggressive in returning capital to shareholders through dividends and share repurchases than US banks.
2
Global Banks – Resilient Business Performance Despite Pandemic, War, and Inflation
2000-2022 | CET 1 ratio (3) | |||||||||||||||||||||||
Company | Net Income (1) | TBV (2) Growth | % Change in O/S Shares | 12/31/2019 | 12/31/2022 | Regulatory Minimum | ||||||||||||||||||
Barclays | 12,757 | 16 | % | -8 | % | 13.8 | % | 13.9 | % | 11.3 | % | |||||||||||||
BBVA | 12,995 | 29 | % | -10 | % | 11.7 | % | 12.5 | % | 8.7 | % | |||||||||||||
Capital One Financial | 21,384 | 10 | % | -16 | % | 12.2 | % | 12.5 | % | 7.6 | % | |||||||||||||
Citigroup | 47,844 | 25 | % | -8 | % | 11.8 | % | 13.0 | % | 12.0 | % | |||||||||||||
ING Group | 10,935 | 10 | % | -7 | % | 13.7 | % | 14.5 | % | 10.6 | % | |||||||||||||
NatWest Group | 5,537 | 12 | % | -20 | % | 16.2 | % | 14.2 | % | 9.5 | % | |||||||||||||
Societe Generale | 7,401 | 16 | % | -6 | % | 12.7 | % | 13.5 | % | 9.4 | % | |||||||||||||
Standard Chartered | 4,781 | 7 | % | -10 | % | 13.8 | % | 14.0 | % | 10.2 | % |
(1) | In millions of USD except for Barclays (GBP), BBVA (EUR), NatWest (GBP) and Societe Generale (EUR). |
(2) | Tangible Book Value (adjusted for dividends). |
(3) | Tier 1 Common Equity Ratio (common equity capital / risk weighted assets). |
Sources: Company reports, GAMCO Investors.
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. |
3
Comparative Results
Average Annual Returns through March 31, 2023 (a)(b) (Unaudited)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
Six Months | 1 Year | 3 Year | Since Inception (10/1/18) | |||||||||
Class AAA (GAFSX) | 19.84 | % | 0.37 | % | 24.16 | % | 3.77 | % | ||||
MSCI World Financials Index (c) | 14.37 | (9.59 | ) | 18.01 | 4.58 | |||||||
Class A (GGFSX) | 19.85 | 0.39 | 24.26 | 3.83 | ||||||||
With sales charge (d) | 12.96 | (5.38 | ) | 21.83 | 2.47 | |||||||
Class C (GCFSX) | 19.38 | (0.45 | ) | 23.27 | 2.98 | |||||||
With contingent deferred sales charge (e) | 18.38 | (1.44 | ) | 23.27 | 2.98 | |||||||
Class I (GFSIX) | 19.95 | 0.57 | 24.48 | 4.02 |
(a) | The Fund’s fiscal year ends September 30. |
(b) | Returns would have been lower had the Adviser not reimbursed certain expenses of the Fund. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. |
(c) | The MSCI World Financials Index captures large and mid cap securities in the Financials sector across Developed Markets countries. Dividends are considered reinvested. You cannot invest directly in an index. |
(d) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(e) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
In the current prospectuses dated January 27, 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 10 for the expense ratios for the six months ended March 31, 2023. The contractual reimbursements are in effect through January 31, 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.
4
The Gabelli Global Financial Services Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from October 1, 2022 through March 31, 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.
Beginning | Ending | Annualized | Expenses | ||
Account Value | Account Value | Expense | Paid During | ||
10/01/22 | 03/31/23 | Ratio | Period * | ||
The Gabelli Global Financial Services Fund | |||||
Actual Fund Return | |||||
Class AAA | $1,000.00 | $1,198.40 | 1.25% | $ | 6.85 |
Class A | $1,000.00 | $1,198.50 | 1.25% | $ | 6.85 |
Class C | $1,000.00 | $1,193.80 | 2.00% | $ | 10.94 |
Class I | $1,000.00 | $1,341.40 | 1.00% | $ | 5.84 |
Hypothetical 5% Return | |||||
Class AAA | $1,000.00 | $1,018.70 | 1.25% | $ | 6.29 |
Class A | $1,000.00 | $1,018.70 | 1.25% | $ | 6.29 |
Class C | $1,000.00 | $1,014.96 | 2.00% | $ | 10.05 |
Class I | $1,000.00 | $1,019.95 | 1.00% | $ | 5.04 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182 days), then divided by 365. |
5
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of March 31, 2023:
The Gabelli Global Financial Services Fund
Banks | 24.9 | % | Consumer Finance | 5.2 | % | |||||
Diversified Banks | 13.7 | % | Reinsurance | 3.7 | % | |||||
Insurance | 11.6 | % | Institutional Banking | 3.4 | % | |||||
Automobiles | 7.1 | % | Energy and Utilities | 3.1 | % | |||||
Homebuilders | 6.5 | % | U.S. Government Obligations | 2.0 | % | |||||
Investment Management | 6.4 | % | Other Assets and Liabilities (Net) | 1.2 | % | |||||
Institutional Trust, Fiduciary, and Custody | 5.8 | % | 100.0 | % | ||||||
Institutional Brokerage | 5.4 | % |
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-PORT is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
6
The Gabelli Global Financial Services Fund
Schedule of Investments — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 96.8% | ||||||||||||
Automobiles — 7.1% | ||||||||||||
20,549 | Daimler Truck Holding AG† | $ | 589,810 | $ | 693,298 | |||||||
7,450 | Mercedes-Benz Group AG | 400,900 | 571,869 | |||||||||
4,200 | Toyota Motor Corp., ADR | 532,769 | 595,098 | |||||||||
1,523,479 | 1,860,265 | |||||||||||
Banks — 24.9% | ||||||||||||
82,500 | Banco Bilbao Vizcaya | |||||||||||
Argentaria SA | 435,552 | 587,915 | ||||||||||
82,000 | Commerzbank AG† | 475,767 | 862,789 | |||||||||
422,200 | Dah Sing Banking Group | |||||||||||
Ltd. | 416,333 | 323,243 | ||||||||||
199,100 | Dah Sing Financial Holdings | |||||||||||
Ltd. | 712,884 | 511,072 | ||||||||||
1,166 | First Citizens BancShares | |||||||||||
Inc., Cl. A | 340,818 | 1,134,635 | ||||||||||
43,864 | Flushing Financial Corp. | 815,125 | 653,135 | |||||||||
34,000 | ING Groep NV | 278,844 | 403,022 | |||||||||
58,900 | Japan Post Bank Co. Ltd. | 558,570 | 480,427 | |||||||||
13,950 | Shinhan Financial Group Co. | |||||||||||
Ltd., ADR | 409,518 | 375,813 | ||||||||||
28,647 | TrustCo Bank Corp. NY | 928,103 | 914,985 | |||||||||
7,300 | Webster Financial Corp | 214,875 | 287,766 | |||||||||
5,586,389 | 6,534,802 | |||||||||||
Consumer Finance — 5.2% | ||||||||||||
17,980 | Ally Financial Inc. | 435,791 | 458,310 | |||||||||
9,340 | Capital One Financial Corp. | 842,807 | 898,135 | |||||||||
1,278,598 | 1,356,445 | |||||||||||
Diversified Banks — 13.7% | ||||||||||||
85,000 | Barclays plc | 153,185 | 152,880 | |||||||||
19,200 | Citigroup Inc. | 1,063,270 | 900,288 | |||||||||
32,920 | Credit Agricole SA | 330,066 | 371,227 | |||||||||
12,086 | Hana Financial Group Inc. | 344,887 | 377,847 | |||||||||
176,285 | NatWest Group plc | 445,964 | 573,238 | |||||||||
7,010 | Societe Generale SA | 134,152 | 158,015 | |||||||||
88,100 | Standard Chartered plc | 551,703 | 667,513 | |||||||||
20,700 | UniCredit SpA | 270,950 | 390,840 |
| ||||||||
3,294,177 | 3,591,848 | |||||||||||
Energy and Utilities — 3.1% | ||||||||||||
42,572 | Vitesse Energy Inc. | 607,228 | 810,145 | |||||||||
Homebuilders — 6.5% | ||||||||||||
3,110 | Cavco Industries Inc.† | 463,687 | 988,171 | |||||||||
31,913 | Legacy Housing Corp.† | 389,730 | 726,340 | |||||||||
853,417 | 1,714,511 | |||||||||||
Institutional Banking — 3.4% | ||||||||||||
23,100 | Moelis & Co., Cl. A | 917,268 | 887,964 | |||||||||
Institutional Brokerage — 5.4% | ||||||||||||
140,000 | Daiwa Securities Group Inc. | 718,572 | 654,792 |
Shares | Cost | Market Value | ||||||||||
23,610 | Jefferies Financial Group | |||||||||||
Inc. | $ | 431,932 | $ | 749,381 | ||||||||
1,150,504 | 1,404,173 | |||||||||||
Institutional Trust, Fiduciary, and Custody — 5.8% | ||||||||||||
8,980 | State Street Corp | 477,506 | 679,696 | |||||||||
18,700 | The Bank of New York | |||||||||||
Mellon Corp | 802,255 | 849,728 | ||||||||||
1,279,761 | 1,529,424 | |||||||||||
Insurance — 11.6% | ||||||||||||
139,118 | Aegon NV | 531,888 | 596,101 | |||||||||
1,117 | E-L Financial Corp. Ltd. | 802,532 | 750,460 | |||||||||
12,000 | First American Financial | |||||||||||
Corp. | 665,508 | 667,920 | ||||||||||
52,129 | HG Holdings Inc.† | 452,637 | 375,329 | |||||||||
17,679 | NN Group NV | 700,390 | 641,525 | |||||||||
3,152,955 | 3,031,335 | |||||||||||
Investment Management — 6.4% | ||||||||||||
3,020 | Diamond Hill Investment | |||||||||||
Group Inc. | 526,240 | 497,032 | ||||||||||
221,600 | The Westaim Corp.† | 432,197 | 483,700 | |||||||||
61,797 | Westwood Holdings Group | |||||||||||
Inc. | 788,145 | 692,744 | ||||||||||
1,746,582 | 1,673,476 | |||||||||||
Reinsurance — 3.7% | ||||||||||||
17,800 | Axis Capital Holdings Ltd. | 896,108 | 970,456 | |||||||||
TOTAL COMMON STOCKS | 22,286,466 | 25,364,844 | ||||||||||
Principal Amount | ||||||||||||
U.S. GOVERNMENT OBLIGATIONS — 2.0% | ||||||||||||
$ | 525,000 | U.S. Treasury Bills, | ||||||||||
4.590% to 4.743%††, | ||||||||||||
04/27/23 to 05/18/23 | 522,401 | 522,541 | ||||||||||
TOTAL INVESTMENTS — 98.8% | $ | 22,808,867 | 25,887,385 | |||||||||
Other Assets and Liabilities (Net) — 1.2% | 313,709 | |||||||||||
NET ASSETS — 100.0% | $ | 26,201,094 | ||||||||||
† | Non-income producing security. |
†† | Represents annualized yields at dates of purchase. |
ADR American Depositary Receipt
See accompanying notes to financial statements.
7
The Gabelli Global Financial Services Fund
Statement of Assets and Liabilities
March 31, 2023 (Unaudited)
Assets: | ||||
Investments, at value (cost $22,808,867) | $ | 25,887,385 | ||
Cash | 91,389 | |||
Foreign currency, at value (cost $15,598) | 15,577 | |||
Receivable for investments sold | 225,775 | |||
Receivable from Adviser | 13,587 | |||
Dividends and interest receivable | 117,945 | |||
Prepaid expenses | 31,908 | |||
Total Assets | 26,383,566 | |||
Liabilities: | ||||
Payable for investments purchased | 101,554 | |||
Payable for investment advisory fees | 22,302 | |||
Payable for distribution fees | 126 | |||
Payable for legal and audit fees | 36,555 | |||
Payable for shareholder communications | 15,972 | |||
Other accrued expenses | 5,963 | |||
Total Liabilities | 182,472 | |||
Net Assets | ||||
(applicable to 2,421,129 shares outstanding) | $ | 26,201,094 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 23,574,396 | ||
Total distributable earnings | 2,626,698 | |||
Net Assets | $ | 26,201,094 | ||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($588,736 ÷ 54,358 shares outstanding; 120,000,000 shares authorized) | $ | 10.83 | ||
Class A: | ||||
Net Asset Value and redemption price per share ($18,677 ÷ 1,714 shares outstanding; 60,000,000 shares authorized) | $ | 10.90 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 11.56 | ||
Class C: | ||||
Net Asset Value and offering price per share ($1,141 ÷ 105.96 shares outstanding; 20,000,000 shares authorized) | $ | 10.77 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($25,592,540 ÷ 2,364,951 shares outstanding; 150,000,000 shares authorized) | $ | 10.82 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Six Months Ended March 31, 2023 (Unaudited)
Investment Income: | ||||
Dividends (net of foreign withholding | ||||
taxes of $10,368) | $ | 291,976 | ||
Interest | 7,919 | |||
Total Investment Income | 299,895 | |||
Expenses: | ||||
Investment advisory fees | 126,609 | |||
Distribution fees - Class AAA | 612 | |||
Distribution fees - Class A | 22 | |||
Distribution fees - Class C | 6 | |||
Registration expenses | 25,216 | |||
Legal and audit fees | 22,284 | |||
Shareholder communications expenses | 10,505 | |||
Custodian fees | 8,687 | |||
Shareholder services fees | 6,223 | |||
Directors’ fees | 1,054 | |||
Interest expense | 3 | |||
Miscellaneous expenses | 6,521 | |||
Total Expenses | 207,742 | |||
Less: | ||||
Expense reimbursements (See Note 3) | (79,771 | ) | ||
Expenses paid indirectly by broker (See Note 6) | (718 | ) | ||
Total Credits and Reimbursements | (80,489 | ) | ||
Net Expenses | 127,253 | |||
Net Investment Income | 172,642 | |||
Net Realized and Unrealized Gain on | ||||
Investments and Foreign Currency: | ||||
Net realized gain on investments | 171,203 | |||
Net realized gain on foreign currency transactions | 207 | |||
Net realized gain on investments and foreign currency transactions | 171,410 | |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | 3,970,740 | |||
on foreign currency translations | 1,772 | |||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 3,972,512 | |||
Net Realized and Unrealized Gain on Investments and Foreign Currency | 4,143,922 | |||
Net Increase in Net Assets Resulting from Operations | $ | 4,316,564 |
See accompanying notes to financial statements.
8
The Gabelli Global Financial Services Fund
Statement of Changes in Net Assets
Six Months Ended March 31, 2023 (Unaudited) | Year Ended September 30, 2022 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 172,642 | $ | 682,244 | ||||||
Net realized gain on investments and foreign currency transactions | 171,410 | 315,368 | ||||||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 3,972,512 | (6,208,507 | ) | |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 4,316,564 | (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 | 184,909 | (111,295 | ) | |||||||
Class A | 1,201 | (15,451 | ) | |||||||
Class C | 20 | 15 | ||||||||
Class I | 930,972 | 2,534,641 | ||||||||
Net Increase in Net Assets from Capital Share Transactions | 1,117,102 | 2,407,910 | ||||||||
Net Increase/(Decrease) in Net Assets | 4,717,947 | (3,336,204 | ) | |||||||
Net Assets: | ||||||||||
Beginning of year | 21,483,147 | 24,819,351 | ||||||||
End of period | $ | 26,201,094 | $ | 21,483,147 |
See accompanying notes to financial statements.
9
The Gabelli Global Financial Services Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended September 30 | Net Asset Value, Beginning of Period | Net Investment Income(a) | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Net Investment Income | Total Distributions | Redemption Fees(a) | Net Asset Value, End of Period | Total Return† | Net Assets, End of Period (in 000’s) | Net Investment Income | Operating Expenses Before Reimbursement | Operating Expenses Net of Reimbursement(b) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(c) | $ | 9.28 | $ | 0.06 | $ | 1.76 | $ | 1.82 | $ | (0.27 | ) | $ | (0.27 | ) | $ | — | $ | 10.83 | 19.84 | % | $ | 589 | 1.13 | %(d) | 1.89 | %(d) | 1.25 | %(d)(e) | 15 | % | ||||||||||||||||||||||||||
2022 | 11.80 | 0.27 | (f) | (2.56 | ) | (2.29 | ) | (0.23 | ) | (0.23 | ) | — | 9.28 | (19.79 | ) | 339 | 2.39 | (f) | 1.88 | 1.27 | (e)(g) | 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 | (e) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.09 | 0.11 | (1.90 | ) | (1.79 | ) | (0.22 | ) | (0.22 | ) | 0.00 | (h) | 7.08 | (20.33 | ) | 47 | 1.34 | 2.51 | 1.25 | (e) | 18 | |||||||||||||||||||||||||||||||||||
2019(i) | 10.00 | 0.27 | (1.15 | ) | (0.88 | ) | (0.03 | ) | (0.03 | ) | — | 9.09 | (8.76 | ) | 134 | 3.01 | 2.32 | 1.25 | 14 | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(c) | $ | 9.34 | $ | 0.06 | $ | 1.78 | $ | 1.84 | $ | (0.28 | ) | $ | (0.28 | ) | $ | — | $ | 10.90 | 19.85 | % | $ | 19 | 1.12 | %(d) | 1.89 | %(d) | 1.25 | %(d)(e) | 15 | % | ||||||||||||||||||||||||||
2022 | 11.86 | 0.27 | (f) | (2.57 | ) | (2.30 | ) | (0.22 | ) | (0.22 | ) | — | 9.34 | (19.75 | ) | 15 | 2.34 | (f) | 1.88 | 1.27 | (e)(g) | 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 | (e) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.10 | 0.16 | (1.94 | ) | (1.78 | ) | (0.24 | ) | (0.24 | ) | 0.00 | (h) | 7.08 | (20.24 | ) | 8 | 2.12 | 2.51 | 1.25 | (e) | 18 | |||||||||||||||||||||||||||||||||||
2019(i) | 10.00 | 0.35 | (1.22 | ) | (0.87 | ) | (0.03 | ) | (0.03 | ) | — | 9.10 | (8.71 | ) | 10 | 3.77 | 2.32 | 1.25 | 14 | |||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(c) | $ | 9.19 | $ | 0.02 | $ | 1.75 | $ | 1.77 | $ | (0.19 | ) | $ | (0.19 | ) | $ | — | $ | 10.77 | 19.38 | % | $ | 1 | 0.33 | %(d) | 2.63 | %(d) | 2.00 | %(d)(e) | 15 | % | ||||||||||||||||||||||||||
2022 | 11.68 | 0.29 | (f) | (2.64 | ) | (2.35 | ) | (0.14 | ) | (0.14 | ) | — | 9.19 | (20.35 | ) | 1 | 2.62 | (f) | 2.63 | 2.02 | (e)(g) | 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 | (e) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.05 | 0.06 | (1.91 | ) | (1.85 | ) | (0.17 | ) | (0.17 | ) | 0.00 | (h) | 7.03 | (20.97 | ) | 1 | 0.76 | 3.26 | 2.00 | (e) | 18 | |||||||||||||||||||||||||||||||||||
2019(i) | 10.00 | 0.17 | (1.11 | ) | (0.94 | ) | (0.01 | ) | (0.01 | ) | — | 9.05 | (9.39 | ) | 1 | 1.85 | 3.08 | 2.00 | 14 | |||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023(c) | $ | 9.29 | $ | 0.07 | $ | 1.77 | $ | 1.84 | $ | (0.31 | ) | $ | (0.31 | ) | $ | — | $ | 10.82 | 19.95 | % | $ | 25,592 | 1.37 | %(d) | 1.64 | %(d) | 1.00 | %(d)(e) | 15 | % | ||||||||||||||||||||||||||
2022 | 11.80 | 0.31 | (f) | (2.57 | ) | (2.26 | ) | (0.25 | ) | (0.25 | ) | — | 9.29 | (19.57 | ) | 21,128 | 2.76 | (f) | 1.63 | 1.02 | (e)(g) | 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 | (e) | 19 | |||||||||||||||||||||||||||||||||||||||
2020 | 9.11 | 0.14 | (1.91 | ) | (1.77 | ) | (0.26 | ) | (0.26 | ) | 0.00 | (h) | 7.08 | (20.17 | ) | 13,445 | 1.84 | 2.26 | 1.00 | (e) | 18 | |||||||||||||||||||||||||||||||||||
2019(i) | 10.00 | 0.28 | (1.13 | ) | (0.85 | ) | (0.04 | ) | (0.04 | ) | — | 9.11 | (8.51 | ) | 13,093 | 3.05 | 2.07 | 1.00 | 14 |
† | Total return represents aggregate total return of a hypothetical investment at the beginning of the period and sold at the end of the period. Total return for a period of less than one year is not annualized. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed expenses of $79,771, $149,730, $165,217, $174,126, and $124,154 for the six months ended March 31, 2023 and the fiscal years ended September 30, 2022, 2021, 2020, and 2019, respectively. |
(c) | For the six months ended March 31, 2023, unaudited. |
(d) | Annualized. |
(e) | The Fund received credits from a designated broker who agreed to pay certain Fund expenses. For the six months ended March 31, 2023, if credits had not been received, the expense ratios would have been 1.26% (Class AAA and Class A), 2.00% (Class C), and 1.01% (Class I). For the fiscal years ended September 30, 2022, 2021, and 2020, if credits had not been received, the expense ratios would have been 1.28%, 1.26%, and 1.26% (Class AAA and Class A), 2.02%, 2.01%, and 2.01% (Class C), and 1.03%, 1.01%, and 1.01% (Class I), respectively. |
(f) | Includes income resulting from special dividends. Without these dividends, the per share net investment 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. |
(g) | 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). |
(h) | Amount represents less than $0.005 per share. |
(i) | The Fund commenced investment operations on October 1, 2018. |
See accompanying notes to financial statements.
10
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Global Financial Services Fund, a series of the Gabelli Equity Series Funds, Inc. (the Corporation), was incorporated on July 25, 1991 in Maryland. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and is one of four separately managed portfolios (collectively, the Portfolios) of the Corporation. The Fund seeks to provide capital appreciation. The Fund commenced investment operations on October 1, 2018.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.
Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the Board) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the Adviser).
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt obligations for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one of more dealers in the instrument in question by the Adviser.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S.
11
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of March 31, 2023 is as follows:
Valuation Inputs | ||||||||||||
Level 2 Other | ||||||||||||
Level 1 | Significant | Total Market Value | ||||||||||
Quoted Prices | Observable Inputs | at 03/31/23 | ||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||
ASSETS (Market Value): | ||||||||||||
Common Stocks (a) | $ | 25,364,844 | — | $ | 25,364,844 | |||||||
U.S. Government Obligations | — | $ | 522,541 | 522,541 | ||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 25,364,844 | $ | 522,541 | $ | 25,887,385 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund held no Level 3 investments at March 31, 2023 or September 30, 2022.
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are
12
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2023, the Fund did not hold any restricted securities.
13
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. The characterization of distributions to shareholders is based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September 30, 2022 was ordinary income.
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related net unrealized appreciation at March 31, 2023:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $22,832,432 | $4,229,599 | $(1,174,646) | $3,054,953 |
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the
14
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended March 31, 2023, the Fund did not incur any income tax, interest, or penalties. As of March 31, 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 brokerage costs, acquired fund fees and expenses, interest, taxes, and extraordinary expenses) at no more than an annual rate of 1.25%, 1.25%, 2.00%, and 1.00% for Class AAA, Class A, Class C, and Class I shares, respectively. This arrangement is in effect through January 31, 2024. For the six months ended March 31, 2023, the Adviser reimbursed the Fund in the amount of $79,771. In addition, the Fund has also agreed, during the two year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent, that after giving effect to the repayments, such adjusted annualized total operating expenses of the Fund would not exceed the foregoing expense limitations of the value of the Fund’s average daily net assets for Class AAA, Class A, Class C, and Class I Shares. At March 31, 2023, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $394,718:
For the fiscal year ended September 30, 2021, expiring September 30, 2023 | $ | 165,217 | |||
For the fiscal year ended September 30, 2022, expiring September 30, 2024 | 149,730 | ||||
For the six months ended March 31, 2023, expiring September 30, 2025 | 79,771 | ||||
$ | 394,718 |
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended March 31, 2023, other than short term securities and U.S. Government obligations, aggregated $3,828,454 and $4,049,960, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended March 31, 2023, the Fund paid $3,158 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.
15
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
During the six months ended March 31, 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 $718.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. The Adviser did not seek a reimbursement during the six months ended March 31, 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 six months ended March 31, 2023, there were no borrowings under the line of credit.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA and Class I Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended March 31, 2023 and the fiscal year ended September 30, 2022, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
16
The Gabelli Global Financial Services Fund
Notes to Financial Statements (Unaudited) (Continued)
Transactions in shares of capital stock were as follows:
Six Months Ended | ||||||||||||||||
March 31, 2023 | Year Ended | |||||||||||||||
(Unaudited) | September 30, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 19,417 | $ | 204,299 | 62,953 | $ | 768,998 | ||||||||||
Shares issued upon reinvestment of distributions | 988 | 10,111 | 992 | 11,563 | ||||||||||||
Shares redeemed | (2,602 | ) | (29,501 | ) | (75,197 | ) | (891,856 | ) | ||||||||
Net increase/(decrease) | 17,803 | $ | 184,909 | (11,252 | ) | $ | (111,295 | ) | ||||||||
Class A | ||||||||||||||||
Shares sold | 70 | $ | 750 | 187 | $ | 2,125 | ||||||||||
Shares issued upon reinvestment of distributions | 44 | 451 | 46 | 541 | ||||||||||||
Shares redeemed | — | — | (1,438 | ) | (18,117 | ) | ||||||||||
Net increase/(decrease) | 114 | $ | 1,201 | (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 | 59,941 | $ | 628,534 | 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 | 90,958 | $ | 930,972 | 221,051 | $ | 2,534,641 |
9. Significant Shareholder. As of March 31, 2023, 92.85% of the Fund was beneficially owned by the Adviser and its affiliates, including managed accounts for which the Adviser and affiliates have voting control but disclaim pecuniary interest.
10. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
17
The Gabelli Global Financial Services Fund
Board Consideration and Re-Approval of Management Agreement (Unaudited)
During the six months ended March 31, 2023, the Board of Directors of the Corporation approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the directors (the Independent Board Members) who are not interested persons of the Fund. The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. The Independent Board Members reviewed the short term performance of the Fund (as of December 31, 2022) of the Fund against a peer group of seven other comparable funds prepared by the Adviser (the Adviser Peer Group) and against a peer group prepared by Broadridge (the Broadridge Performance Peer Group) consisting of the Fund and all retail and institutional global financial services fund, regardless of asset size or primary channel of distribution. The Independent Board Members noted that the Fund’s performance was in the third quartile for the one and three year periods, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was in the second quintile for the one year period and first quartile for the three year period.
Profitability. The Independent Board Members reviewed summary data regarding the historical lack of profitability of the Fund to the Adviser both with a pro rata administrative overhead charge and with a standalone administrative charge and noted the effect of the Deferral Agreement. The Independent Board Members also noted that a portion of the Fund’s portfolio transactions were executed by an affiliated broker of the Adviser and that another affiliated broker of the Adviser received distribution fees and minor amounts of sales commissions.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale and reviewed data provided by the Adviser.
Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment management fee, other expenses, and total expenses of the Fund with similar expense ratios of the Adviser Peer Group and a peer group of two other global financial services funds and nine other financial services funds selected by Broadridge and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted the effect of the Deferral Agreement in place for the Fund. The Independent Board Members noted that the Fund’s expense ratios were approximately average or above average within each peer group and that the Fund’s size was below average within the Adviser Peer Group and below average within the peer group of comparable funds selected by Broadridge. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members
18
The Gabelli Global Financial Services Fund
Board Consideration and Re-Approval of Management Agreement (Unaudited) (Continued)
were presented with, but did not consider to be material to their decision, various information comparing the advisory fee with the fee for other types of accounts managed by the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an acceptable overall performance record. The Independent Board Members also concluded that the Fund's expense ratios and profitability to the Adviser were acceptable, and that economies of scale were not a significant factor in their thinking at this time. The Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreement to the full Board.
Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was acceptable in light of the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based its decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.
19
Gabelli Funds and Your Personal Privacy
Who are we?
The Gabelli Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc., a publicly held company with subsidiaries and affiliates that provide investment advisory services for a variety of clients.
What kind of non-public information do we collect about you if you become a fund shareholder?
If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is:
● | Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information. |
● | Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you. This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them. |
What information do we disclose and to whom do we disclose it?
We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www. sec.gov.
What do we do to protect your personal information?
We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information.
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THE GABELLI GLOBAL FINANCIAL SERVICES FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager’s Biography
Ian Lapey joined Gabelli in October 2018 as a portfolio manager. Prior to joining Gabelli, Mr. Lapey was a research analyst and partner at Moerus Capital Management LLC. Prior to joining Moerus, he was a partner, research analyst, and a portfolio manager at Third Avenue Management. Mr. Lapey holds an MBA degree in Finance and Statistics from the Stern School of Business at New York University. He also holds a Master’s degree in Accounting from Northeastern University and a BA in Economics from Williams College.
(b) | Not applicable. |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
The Gabelli Small Cap Growth Fund
Schedule of Investments — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 98.9% | ||||||||||||
Aerospace — 0.9% | ||||||||||||
214,000 | Aerojet Rocketdyne | |||||||||||
Holdings Inc.† | $ | 540,592 | $ | 12,020,380 | ||||||||
30,500 | Allied Motion Technologies | |||||||||||
Inc. | 675,972 | 1,178,825 | ||||||||||
40,000 | Innovative Solutions and | |||||||||||
Support Inc.† | 130,088 | 293,600 | ||||||||||
7,000 | Kratos Defense & Security | |||||||||||
Solutions Inc.† | 109,612 | 94,360 | ||||||||||
1,456,264 | 13,587,165 | |||||||||||
Agriculture — 0.1% | ||||||||||||
10,000 | Cadiz Inc.† | 67,959 | 40,400 | |||||||||
52,000 | Limoneira Co | 882,774 | 866,320 | |||||||||
950,733 | 906,720 | |||||||||||
Automotive — 0.4% | ||||||||||||
430,000 | Iveco Group NV† | 1,595,372 | 4,068,773 | |||||||||
67,500 | The Shyft Group Inc. | 323,565 | 1,535,625 | |||||||||
1,918,937 | 5,604,398 | |||||||||||
Automotive: Parts and Accessories — 4.1% | ||||||||||||
147,500 | BorgWarner Inc. | 691,208 | 7,243,725 | |||||||||
846,000 | Brembo SpA | 1,564,227 | 12,386,075 | |||||||||
94,022 | China Automotive Systems | |||||||||||
Inc.† | 443,798 | 491,735 | ||||||||||
74,000 | Commercial Vehicle Group | |||||||||||
Inc.† | 656,530 | 540,200 | ||||||||||
1,108,000 | Dana Inc. | 8,991,197 | 16,675,400 | |||||||||
367,000 | Modine Manufacturing Co.† | 3,146,098 | 8,459,350 | |||||||||
35,000 | Monro Inc. | 829,127 | 1,730,050 | |||||||||
4,300 | O’Reilly Automotive Inc.† | 92,532 | 3,650,614 | |||||||||
45,000 | Puradyn Filter Technologies | |||||||||||
Inc.† | 11,732 | 5 | ||||||||||
180,000 | Standard Motor Products | |||||||||||
Inc. | 1,353,308 | 6,643,800 | ||||||||||
246,000 | Strattec Security Corp.†(a) | 4,747,595 | 5,596,500 | |||||||||
18,700 | Thor Industries Inc. | 173,180 | 1,489,268 | |||||||||
12,000 | Uni-Select Inc.† | 77,963 | 413,762 | |||||||||
22,778,495 | 65,320,484 | |||||||||||
Aviation: Parts and Services — 2.0% | ||||||||||||
20,000 | AAR Corp.† | 230,415 | 1,091,000 | |||||||||
9,500 | Astronics Corp.† | 13,628 | 126,920 | |||||||||
23,200 | Astronics Corp., Cl. B† | 38,562 | 255,200 | |||||||||
48,000 | Ducommun Inc.† | 1,015,870 | 2,626,080 | |||||||||
671,000 | Kaman Corp. | 9,955,957 | 15,339,060 | |||||||||
89,000 | Moog Inc., Cl. A | 1,052,574 | 8,966,750 | |||||||||
18,000 | Moog Inc., Cl. B | 621,230 | 1,707,930 | |||||||||
20,000 | Woodward Inc | 143,828 | 1,947,400 | |||||||||
13,072,064 | 32,060,340 |
Shares | Cost | Market Value | ||||||||||
Broadcasting — 1.8% | ||||||||||||
135,000 | Beasley Broadcast Group | |||||||||||
Inc., Cl. A† | $ | 466,449 | $ | 111,173 | ||||||||
10,000 | Cogeco Communications | |||||||||||
Inc. | 340,851 | 487,088 | ||||||||||
24,000 | Cogeco Inc. | 632,315 | 1,080,222 | |||||||||
200,000 | Corus Entertainment Inc., | |||||||||||
Cl. B | 719,271 | 254,532 | ||||||||||
39,500 | Fox Corp., Cl. A | 1,641,225 | 1,344,975 | |||||||||
25,000 | Gray Television Inc. | 73,674 | 218,000 | |||||||||
72,350 | Gray Television Inc., Cl. A | 386,480 | 615,699 | |||||||||
260,000 | ITV plc | 503,009 | 265,569 | |||||||||
13,000 | Liberty Broadband Corp., | |||||||||||
Cl. A† | 78,211 | 1,067,560 | ||||||||||
11,000 | Liberty Broadband Corp., | |||||||||||
Cl. C† | 57,595 | 898,700 | ||||||||||
20,000 | Liberty Media Corp.- Liberty | |||||||||||
Formula One, Cl. A† | 66,962 | 1,350,000 | ||||||||||
27,000 | Liberty Media Corp.- Liberty | |||||||||||
Formula One, Cl. C† | 91,359 | 2,020,410 | ||||||||||
64,000 | Liberty Media Corp.- Liberty | |||||||||||
SiriusXM, Cl. A† | 214,254 | 1,797,760 | ||||||||||
34,452 | Liberty Media Corp.- Liberty | |||||||||||
SiriusXM, Cl. C† | 294,602 | 964,311 | ||||||||||
92,340 | Madison Square Garden | |||||||||||
Entertainment Corp.† | 2,147,239 | 5,454,524 | ||||||||||
22,000 | Nexstar Media Group Inc. | 1,349,700 | 3,798,520 | |||||||||
100,000 | Salem Media Group Inc.† | 0 | 109,000 | |||||||||
270,000 | Sinclair Broadcast Group | |||||||||||
Inc., Cl. A | 4,452,346 | 4,633,200 | ||||||||||
480,000 | Sirius XM Holdings Inc | 316,771 | 1,905,600 | |||||||||
13,832,313 | 28,376,843 | |||||||||||
Building and Construction — 6.5% | ||||||||||||
79,000 | Arcosa Inc | 942,643 | 4,985,690 | |||||||||
200,000 | Armstrong Flooring Inc.† | 26,719 | 1,120 | |||||||||
66,300 | D.R. Horton Inc. | 707,838 | 6,476,847 | |||||||||
30,000 | Gibraltar Industries Inc.† | 602,890 | 1,455,000 | |||||||||
218,500 | Herc Holdings Inc | 7,127,253 | 24,887,150 | |||||||||
108,100 | KB Home | 1,043,572 | 4,343,458 | |||||||||
3,000 | Legacy Housing Corp.† | 38,431 | 68,280 | |||||||||
368,000 | Lennar Corp., Cl. B | 8,818,501 | 32,866,080 | |||||||||
87,100 | MDC Holdings Inc. | 1,587,116 | 3,385,577 | |||||||||
5,100 | Meritage Homes Corp | 76,751 | 595,476 | |||||||||
1,868 | NVR Inc.† | 1,289,947 | 10,408,851 | |||||||||
100,500 | PulteGroup Inc. | 541,132 | 5,857,140 | |||||||||
58,000 | Titan Machinery Inc.† | 934,556 | 1,766,100 | |||||||||
102,500 | Toll Brothers Inc | 1,703,523 | 6,153,075 | |||||||||
25,440,872 | 103,249,844 | |||||||||||
Business Services — 1.7% | ||||||||||||
13,000 | ACCO Brands Corp. | 60,332 | 69,160 |
See accompanying notes to financial statements.
1
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Business Services (Continued) | ||||||||||||
505,000 | Clear Channel Outdoor | |||||||||||
Holdings Inc.† | $ | 896,360 | $ | 606,000 | ||||||||
125,000 | Diebold Nixdorf Inc.† | 718,132 | 150,000 | |||||||||
60,000 | Element Solutions Inc. | 537,606 | 1,158,600 | |||||||||
13,000 | GSE Systems Inc.† | 18,200 | 9,035 | |||||||||
35,500 | Live Nation Entertainment | |||||||||||
Inc.† | 298,668 | 2,485,000 | ||||||||||
40,000 | Loomis AB | 402,123 | 1,368,147 | |||||||||
15,000 | McGrath RentCorp | 384,704 | 1,399,650 | |||||||||
20,000 | Sealed Air Corp. | 587,044 | 918,200 | |||||||||
69,000 | Sohgo Security Services Co. | |||||||||||
Ltd. | 799,632 | 1,852,645 | ||||||||||
5,000 | Team Inc.† | 63,745 | 27,400 | |||||||||
70,000 | The Interpublic Group of | |||||||||||
Companies Inc. | 249,206 | 2,606,800 | ||||||||||
25,000 | TransAct Technologies Inc.† | 115,198 | 154,750 | |||||||||
1,600,000 | Trans-Lux Corp.†(a) | 1,575,044 | 816,000 | |||||||||
34,000 | United Rentals Inc. | 209,146 | 13,455,840 | |||||||||
6,915,140 | 27,077,227 | |||||||||||
Cable — 0.5% | ||||||||||||
55,000 | AMC Networks Inc., Cl. A† | 45,175 | 966,900 | |||||||||
37,000 | DISH Network Corp., Cl. A† | 688,023 | 345,210 | |||||||||
30,000 | EchoStar Corp., Cl. A† | 479,334 | 548,700 | |||||||||
130,000 | Liberty Global plc, Cl. A† | 2,860,691 | 2,535,000 | |||||||||
136,000 | Liberty Global plc, Cl. C† | 2,554,808 | 2,771,680 | |||||||||
90,000 | WideOpenWest Inc.† | 760,756 | 956,700 | |||||||||
7,388,787 | 8,124,190 | |||||||||||
Communications Equipment — 0.1% | ||||||||||||
100,000 | Telesat Corp.† | 1,389,181 | 860,000 | |||||||||
Computer Software and Services — 1.5% | ||||||||||||
40,500 | Activision Blizzard Inc | 496,805 | 3,466,395 | |||||||||
370,000 | Alithya Group Inc., Cl. A† | 1,101,651 | 736,300 | |||||||||
10,000 | I3 Verticals Inc., Cl. A† | 243,267 | 245,300 | |||||||||
11,000 | MKS Instruments Inc | 189,530 | 974,820 | |||||||||
24,500 | Rockwell Automation Inc. | 558,564 | 7,189,525 | |||||||||
31,000 | Tyler Technologies Inc.† | 61,675 | 10,993,840 | |||||||||
7,300 | Vimeo Inc.† | 4,643 | 27,959 | |||||||||
2,656,135 | 23,634,139 | |||||||||||
Consumer Products — 1.5% | ||||||||||||
115,000 | 1-800-Flowers.com Inc., | |||||||||||
Cl. A† | 1,172,960 | 1,322,500 | ||||||||||
67,000 | Brunswick Corp | 1,342,085 | 5,494,000 | |||||||||
32,000 | Chofu Seisakusho Co. Ltd | 461,495 | 536,246 | |||||||||
39,700 | Church & Dwight Co. Inc. | 67,573 | 3,509,877 | |||||||||
26,000 | Energizer Holdings Inc | 984,814 | 902,200 | |||||||||
2,000 | Harley-Davidson Inc. | 4,713 | 75,940 | |||||||||
2,500 | Kobayashi Pharmaceutical | |||||||||||
Co. Ltd. | 103,323 | 152,325 |
Shares | Cost | Market Value | ||||||||||
3,200 | LCI Industries | $ | 52,915 | $ | 351,584 | |||||||
220,000 | Marine Products Corp | 136,308 | 2,901,800 | |||||||||
5,500 | National Presto Industries | |||||||||||
Inc. | 276,783 | 396,495 | ||||||||||
225,000 | Sally Beauty Holdings Inc.† | 1,550,370 | 3,505,500 | |||||||||
215,000 | Samick Musical Instruments | |||||||||||
Co. Ltd. | 289,566 | 204,125 | ||||||||||
3,700 | Shimano Inc | 414,540 | 636,475 | |||||||||
9,500 | Steven Madden Ltd | 19,995 | 342,000 | |||||||||
10,000 | The Scotts Miracle-Gro Co. | 174,942 | 697,400 | |||||||||
9,500 | WD-40 Co. | 248,399 | 1,691,475 | |||||||||
84,000 | Wolverine World Wide Inc. | 408,836 | 1,432,200 | |||||||||
7,709,617 | 24,152,142 | |||||||||||
Consumer Services — 0.9% | ||||||||||||
53,000 | Bowlin Travel Centers Inc.† | 53,948 | 271,625 | |||||||||
16,000 | H&E Equipment Services | |||||||||||
Inc. | 554,892 | 707,680 | ||||||||||
5,000 | IAC Inc.† | 11,719 | 258,000 | |||||||||
180,000 | KAR Auction Services Inc.† | 893,854 | 2,462,400 | |||||||||
287,500 | Rollins Inc. | 268,884 | 10,789,875 | |||||||||
1,783,297 | 14,489,580 | |||||||||||
Diversified Industrial — 11.7% | ||||||||||||
10,000 | Acuity Brands Inc. | 94,378 | 1,827,300 | |||||||||
51,000 | Albany International Corp., | |||||||||||
Cl. A | 986,047 | 4,557,360 | ||||||||||
195,000 | Ampco-Pittsburgh Corp.† | 963,838 | 477,750 | |||||||||
64,800 | Burnham Holdings Inc., | |||||||||||
Cl. A | 1,090,329 | 821,340 | ||||||||||
357,000 | Crane Holdings Co | 7,642,467 | 40,519,500 | |||||||||
49,300 | Distribution Solutions Group | |||||||||||
Inc.† | 643,994 | 2,241,178 | ||||||||||
93,200 | EnPro Industries Inc. | 4,777,312 | 9,682,548 | |||||||||
104,200 | Greif Inc., Cl. A | 1,865,644 | 6,603,154 | |||||||||
95,200 | Greif Inc., Cl. B | 4,308,460 | 7,284,704 | |||||||||
375,000 | Griffon Corp. | 3,133,692 | 12,003,750 | |||||||||
32,000 | Hyster-Yale Materials | |||||||||||
Handling Inc. | 1,181,454 | 1,596,480 | ||||||||||
162,000 | INNOVATE Corp.† | 508,522 | 481,140 | |||||||||
5,500 | JSP Corp. | 91,472 | 64,248 | |||||||||
100,000 | Kimball International Inc., | |||||||||||
Cl. B | 915,122 | 1,240,000 | ||||||||||
89,917 | L.B. Foster Co., Cl. A† | 1,261,793 | 1,032,247 | |||||||||
40,700 | Lincoln Electric Holdings | |||||||||||
Inc. | 1,038,489 | 6,882,370 | ||||||||||
31,200 | Lindsay Corp. | 616,780 | 4,715,256 | |||||||||
37,500 | Matthews International | |||||||||||
Corp., Cl. A | 959,116 | 1,352,250 | ||||||||||
910,000 | Myers Industries Inc. | 12,459,178 | 19,501,300 | |||||||||
72,000 | Oil-Dri Corp. of America | 501,026 | 2,995,920 | |||||||||
13,000 | Olin Corp. | 203,184 | 721,500 | |||||||||
321,500 | Park-Ohio Holdings Corp. | 2,966,649 | 3,883,720 |
See accompanying notes to financial statements.
2
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Diversified Industrial (Continued) | ||||||||||||
12,500 | Pentair plc | $ | 296,897 | $ | 690,875 | |||||||
14,000 | Roper Technologies Inc. | 263,139 | 6,169,660 | |||||||||
54,000 | Sonoco Products Co. | 1,554,252 | 3,294,000 | |||||||||
50,000 | Standex International Corp. | 1,288,137 | 6,122,000 | |||||||||
329,945 | Steel Connect Inc.† | 420,929 | 376,137 | |||||||||
84,029 | Steel Partners Holdings LP† | 1,091,664 | 3,687,991 | |||||||||
13,000 | T. Hasegawa Co. Ltd. | 236,725 | 290,891 | |||||||||
7,000 | Terex Corp. | 166,670 | 338,660 | |||||||||
335,500 | Textron Inc | 2,028,771 | 23,696,365 | |||||||||
405,000 | Tredegar Corp. | 5,900,279 | 3,697,650 | |||||||||
221,000 | Trinity Industries Inc. | 2,510,251 | 5,383,560 | |||||||||
63,966,660 | 184,232,804 | |||||||||||
Electronics — 3.0% | ||||||||||||
113,000 | Badger Meter Inc. | 1,394,859 | 13,765,660 | |||||||||
210,700 | Bel Fuse Inc., Cl. A(a) | 3,953,283 | 7,652,624 | |||||||||
400,000 | CTS Corp. | 3,294,245 | 19,784,000 | |||||||||
35,000 | Daktronics Inc.† | 273,724 | 198,450 | |||||||||
120,000 | Gentex Corp. | 1,305,089 | 3,363,600 | |||||||||
20,000 | IMAX Corp.† | 158,565 | 383,600 | |||||||||
30,000 | Renesas Electronics Corp.† | 194,117 | 432,348 | |||||||||
61,000 | Stoneridge Inc.† | 296,765 | 1,140,700 | |||||||||
10,870,647 | 46,720,982 | |||||||||||
Energy and Utilities — 2.8% | ||||||||||||
18,000 | Avangrid Inc. | 697,500 | 717,840 | |||||||||
20,000 | Callon Petroleum Co.† | 425,155 | 668,800 | |||||||||
9,800 | Chesapeake Utilities Corp. | 127,440 | 1,254,302 | |||||||||
35,000 | CMS Energy Corp | 135,338 | 2,148,300 | |||||||||
20,000 | Consolidated Water Co. Ltd. | 233,823 | 328,600 | |||||||||
36,800 | Diamondback Energy Inc. | 1,817,052 | 4,974,256 | |||||||||
108,000 | Dril-Quip Inc.† | 2,826,509 | 3,098,520 | |||||||||
74,000 | Energy Recovery Inc.† | 316,427 | 1,705,700 | |||||||||
29,000 | Landis+Gyr Group AG | 1,762,989 | 2,220,285 | |||||||||
22,000 | Marathon Petroleum Corp | 106,912 | 2,966,260 | |||||||||
3,500 | Middlesex Water Co | 54,166 | 273,420 | |||||||||
11,000 | Northwest Natural Holding | |||||||||||
Co. | 518,541 | 523,160 | ||||||||||
21,500 | NorthWestern Corp | 582,609 | 1,243,990 | |||||||||
10,500 | Otter Tail Corp. | 240,905 | 758,835 | |||||||||
1,700,000 | RPC Inc. | 695,920 | 13,073,000 | |||||||||
8,000 | SJW Group | 107,086 | 609,040 | |||||||||
32,000 | Southwest Gas Holdings | |||||||||||
Inc. | 524,817 | 1,998,400 | ||||||||||
7,200 | Spire Inc. | 283,562 | 505,008 | |||||||||
33,000 | The York Water Co | 461,596 | 1,475,100 | |||||||||
19,200 | TravelCenters of America | |||||||||||
Inc.† | 621,083 | 1,660,800 | ||||||||||
55,000 | Vestas Wind Systems A/S | 94,711 | 1,593,310 | |||||||||
12,634,141 | 43,796,926 |
Shares | Cost | Market Value | ||||||||||
Entertainment — 1.8% | ||||||||||||
76,500 | Inspired Entertainment Inc.† | $ | 479,260 | $ | 978,435 | |||||||
156,000 | Liberty Media Corp.- Liberty | |||||||||||
Braves, Cl. A† | 3,841,890 | 5,394,480 | ||||||||||
188,000 | Liberty Media Corp.- Liberty | |||||||||||
Braves, Cl. C† | 2,676,784 | 6,333,720 | ||||||||||
34,500 | Madison Square Garden | |||||||||||
Sports Corp. | 275,417 | 6,722,325 | ||||||||||
66,000 | Manchester United plc, Cl. A | 979,816 | 1,461,900 | |||||||||
7,800 | Take-Two Interactive | |||||||||||
Software Inc.† | 58,796 | 930,540 | ||||||||||
3,500 | The Walt Disney Co.† | 20,071 | 350,455 | |||||||||
35,000 | Universal Entertainment | |||||||||||
Corp.† | 210,518 | 647,675 | ||||||||||
104,000 | Warner Bros Discovery | |||||||||||
Inc.† | 922,964 | 1,570,400 | ||||||||||
48,500 | World Wrestling | |||||||||||
Entertainment Inc., Cl. A | 510,852 | 4,426,110 | ||||||||||
9,976,368 | 28,816,040 | |||||||||||
Environmental Services — 0.5% | ||||||||||||
59,000 | Republic Services Inc. | 532,967 | 7,977,980 | |||||||||
Equipment and Supplies — 17.8% | ||||||||||||
17,200 | A.O. Smith Corp. | 35,260 | 1,189,380 | |||||||||
391,500 | AMETEK Inc. | 666,173 | 56,896,695 | |||||||||
56,000 | AZZ Inc. | 1,967,745 | 2,309,440 | |||||||||
9,200 | Chart Industries Inc.† | 301,823 | 1,153,680 | |||||||||
6,200 | Chase Corp. | 538,489 | 649,326 | |||||||||
175,000 | CIRCOR International Inc.† | 2,884,796 | 5,446,000 | |||||||||
315,600 | Core Molding Technologies | |||||||||||
Inc.† | 628,139 | 5,677,644 | ||||||||||
92,400 | Crown Holdings Inc | 372,194 | 7,642,404 | |||||||||
2,025 | Danaher Corp. | 13,122 | 510,381 | |||||||||
100,000 | Donaldson Co. Inc | 575,112 | 6,534,000 | |||||||||
38,700 | Entegris Inc. | 164,986 | 3,173,787 | |||||||||
190,200 | Federal Signal Corp. | 1,000,847 | 10,310,742 | |||||||||
241,000 | Flowserve Corp. | 1,445,693 | 8,194,000 | |||||||||
154,200 | Franklin Electric Co. Inc. | 601,422 | 14,510,220 | |||||||||
428,000 | Graco Inc. | 2,331,187 | 31,248,280 | |||||||||
33,500 | IDEX Corp. | 122,751 | 7,739,505 | |||||||||
128,500 | Interpump Group SpA | 564,410 | 7,197,853 | |||||||||
6,800 | Littelfuse Inc. | 54,921 | 1,823,012 | |||||||||
110,000 | Maezawa Kyuso Industries | |||||||||||
Co. Ltd. | 359,609 | 794,502 | ||||||||||
60,000 | Minerals Technologies Inc. | 2,530,695 | 3,625,200 | |||||||||
6,000 | MSA Safety Inc. | 179,592 | 801,000 | |||||||||
500,000 | Mueller Industries Inc. | 12,324,740 | 36,740,000 | |||||||||
335,000 | Mueller Water Products | |||||||||||
Inc., Cl. A | 2,243,532 | 4,669,900 | ||||||||||
3,500 | Teleflex Inc. | 53,317 | 886,585 | |||||||||
168,500 | Tennant Co. | 2,821,716 | 11,547,305 | |||||||||
740,000 | The Gorman-Rupp Co. | 11,286,239 | 18,500,000 |
See accompanying notes to financial statements.
3
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Equipment and Supplies (Continued) | ||||||||||||
97,000 | The Greenbrier Companies | |||||||||||
Inc. | $ | 1,161,709 | $ | 3,120,490 | ||||||||
115,003 | The L.S. Starrett Co., Cl. A† | 840,851 | 1,290,334 | |||||||||
50,500 | The Manitowoc Co. Inc.† | 499,591 | 863,045 | |||||||||
50,000 | The Middleby Corp.† | 533,815 | 7,330,500 | |||||||||
36,000 | The Timken Co. | 1,219,447 | 2,941,920 | |||||||||
30,000 | The Toro Co. | 524,020 | 3,334,800 | |||||||||
6,000 | Valmont Industries Inc. | 98,273 | 1,915,680 | |||||||||
7,875 | Watsco Inc., Cl. B | 23,627 | 2,497,123 | |||||||||
45,000 | Watts Water Technologies | |||||||||||
Inc., Cl. A | 854,108 | 7,574,400 | ||||||||||
51,823,951 | 280,639,133 | |||||||||||
Financial Services — 4.4% | ||||||||||||
7,000 | Ameris Bancorp | 49,547 | 256,060 | |||||||||
22,200 | Argo Group International | |||||||||||
Holdings Ltd. | 423,922 | 650,238 | ||||||||||
12,000 | Capitol Federal Financial Inc. | 120,000 | 80,760 | |||||||||
20,700 | Crazy Woman Creek | |||||||||||
Bancorp Inc. | 315,734 | 487,588 | ||||||||||
325,000 | Energy Transfer LP | 0 | 4,052,750 | |||||||||
150 | Farmers & Merchants Bank | |||||||||||
of Long Beach | 1,004,895 | 907,500 | ||||||||||
345,000 | Flushing Financial Corp | 5,697,468 | 5,137,050 | |||||||||
66,000 | FNB Corp. | 659,922 | 765,600 | |||||||||
155,000 | GAM Holding AG† | 442,378 | 94,191 | |||||||||
25,000 | Hanover Bancorp Inc. | 525,000 | 450,000 | |||||||||
278,000 | Hope Bancorp Inc | 3,087,049 | 2,729,960 | |||||||||
410,000 | Huntington Bancshares Inc. | 3,921,829 | 4,592,000 | |||||||||
675,200 | KKR & Co. Inc. | 2,730,620 | 35,461,504 | |||||||||
80,000 | Medallion Financial Corp | 362,763 | 613,600 | |||||||||
8,000 | PROG Holdings Inc.† | 5,116 | 190,320 | |||||||||
47,000 | Sandy Spring Bancorp Inc. | 1,585,542 | 1,221,060 | |||||||||
25,000 | Sculptor Capital | |||||||||||
Management Inc. | 362,444 | 215,250 | ||||||||||
41,000 | Synovus Financial Corp. | 1,049,450 | 1,264,030 | |||||||||
16,000 | TFS Financial Corp. | 234,831 | 202,080 | |||||||||
15,000 | Thomasville Bancshares | |||||||||||
Inc. | 570,703 | 931,500 | ||||||||||
230,000 | Valley National Bancorp | 1,437,500 | 2,125,200 | |||||||||
34,308 | Value Line Inc. | 425,084 | 1,658,106 | |||||||||
10,000 | Waterloo Investment | |||||||||||
Holdings Ltd.†(b) | 1,373 | 5,000 | ||||||||||
119,500 | Webster Financial Corp | 2,449,363 | 4,710,690 | |||||||||
133,000 | Wright Investors’ Service | |||||||||||
Holdings Inc.† | 90,952 | 25,270 | ||||||||||
27,553,485 | 68,827,307 | |||||||||||
Food and Beverage — 6.0% | ||||||||||||
424,500 | Arca Continental SAB de CV | 762,263 | 3,848,769 | |||||||||
14,000 | BellRing Brands Inc.† | 14,534 | 476,000 |
Shares | Cost | Market Value | ||||||||||
75,000 | Brown-Forman Corp., Cl. A | $ | 407,541 | $ | 4,889,250 | |||||||
40,000 | Bull-Dog Sauce Co. Ltd | 95,622 | 576,012 | |||||||||
900,000 | China Tontine Wines Group | |||||||||||
Ltd.† | 94,571 | 9,516 | ||||||||||
270,000 | Crimson Wine Group Ltd.† | 2,361,167 | 1,660,500 | |||||||||
220,000 | Denny’s Corp.† | 736,620 | 2,455,200 | |||||||||
500,000 | Dynasty Fine Wines Group | |||||||||||
Ltd.† | 74,726 | 15,159 | ||||||||||
125,008 | Farmer Brothers Co.† | 973,609 | 482,531 | |||||||||
400,000 | Flowers Foods Inc. | 950,682 | 10,964,000 | |||||||||
114,000 | ITO EN Ltd. | 2,136,608 | 3,713,425 | |||||||||
46,000 | Iwatsuka Confectionery Co. | |||||||||||
Ltd. | 1,584,932 | 1,635,248 | ||||||||||
23,000 | J & J Snack Foods Corp. | 509,737 | 3,409,060 | |||||||||
106,000 | Kameda Seika Co. Ltd. | 4,234,272 | 3,508,718 | |||||||||
240,000 | Kikkoman Corp. | 1,630,295 | 12,183,016 | |||||||||
648,000 | Maple Leaf Foods Inc. | 11,257,289 | 12,538,069 | |||||||||
12,000 | MEIJI Holdings Co. Ltd. | 117,526 | 285,144 | |||||||||
12,000 | MGP Ingredients Inc. | 12,655 | 1,160,640 | |||||||||
62,000 | Morinaga Milk Industry Co. | |||||||||||
Ltd. | 1,182,249 | 2,227,377 | ||||||||||
7,500 | National Beverage Corp.† | 330,160 | 395,400 | |||||||||
43,500 | Nissin Foods Holdings Co. | |||||||||||
Ltd. | 1,444,598 | 3,974,054 | ||||||||||
13,000 | Post Holdings Inc.† | 36,151 | 1,168,310 | |||||||||
60,000 | Rock Field Co. Ltd. | 402,002 | 707,211 | |||||||||
3,000 | The Boston Beer Co. Inc., | |||||||||||
Cl. A† | 460,330 | 986,100 | ||||||||||
56,700 | The J.M. Smucker Co. | 1,309,514 | 8,922,879 | |||||||||
625,000 | Tingyi (Cayman Islands) | |||||||||||
Holding Corp. | 1,326,207 | 1,041,414 | ||||||||||
32,960 | Tootsie Roll Industries Inc. | 265,387 | 1,480,234 | |||||||||
370,000 | Vina Concha y Toro SA | 676,676 | 473,340 | |||||||||
950,000 | Vitasoy International | |||||||||||
Holdings Ltd. | 542,729 | 1,839,514 | ||||||||||
20,000 | Willamette Valley Vineyards | |||||||||||
Inc.† | 73,225 | 123,200 | ||||||||||
100,000 | Yakult Honsha Co. Ltd. | 2,378,861 | 7,252,871 | |||||||||
38,382,738 | 94,402,161 | |||||||||||
Health Care — 4.5% | ||||||||||||
1,400 | Align Technology Inc.† | 9,766 | 467,796 | |||||||||
6,700 | Bio-Rad Laboratories Inc., | |||||||||||
Cl. A† | 283,604 | 3,209,434 | ||||||||||
13,300 | Bruker Corp. | 105,444 | 1,048,572 | |||||||||
700 | Chemed Corp. | 9,612 | 376,425 | |||||||||
21,000 | CONMED Corp. | 429,146 | 2,181,060 | |||||||||
398,000 | Cutera Inc.† | 4,853,339 | 9,400,760 | |||||||||
50,000 | Dexcom Inc.† | 68,464 | 5,809,000 | |||||||||
15,000 | Evolent Health Inc., Cl. A† | 258,100 | 486,750 | |||||||||
148,500 | Globus Medical Inc., Cl. A† | 3,323,398 | 8,411,040 | |||||||||
70,500 | Henry Schein Inc.† | 483,808 | 5,748,570 |
See accompanying notes to financial statements.
4
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Health Care (Continued) | ||||||||||||
28,000 | ICU Medical Inc.† | $ | 892,631 | $ | 4,618,880 | |||||||
33,000 | Masimo Corp.† | 790,451 | 6,089,820 | |||||||||
45,000 | Neogen Corp.† | 430,861 | 833,400 | |||||||||
4,000 | NeoGenomics Inc.† | 49,880 | 69,640 | |||||||||
32,000 | Neuronetics Inc.† | 270,019 | 93,120 | |||||||||
90,000 | NuVasive Inc.† | 2,261,410 | 3,717,900 | |||||||||
190,000 | OPKO Health Inc.† | 456,972 | 277,400 | |||||||||
129,000 | Orthofix Medical Inc.† | 2,865,834 | 2,160,750 | |||||||||
14,000 | Patterson Cos. Inc. | 302,203 | 374,780 | |||||||||
70,500 | QuidelOrtho Corp.† | 312,578 | 6,280,845 | |||||||||
24,000 | Seikagaku Corp. | 280,995 | 146,956 | |||||||||
23,400 | STERIS plc | 1,102,596 | 4,475,952 | |||||||||
19,000 | Straumann Holding AG | 170,618 | 2,831,466 | |||||||||
3,000 | Stryker Corp. | 142,188 | 856,410 | |||||||||
30,000 | SurModics Inc.† | 608,729 | 683,400 | |||||||||
19,600 | Teladoc Health Inc.† | 646,830 | 507,640 | |||||||||
100 | The Cooper Companies Inc. | 3,627 | 37,336 | |||||||||
38,000 | United-Guardian Inc. | 332,419 | 353,020 | |||||||||
21,745,522 | 71,548,122 | |||||||||||
Home Furnishings — 0.3% | ||||||||||||
161,500 | Bassett Furniture Industries | |||||||||||
Inc. | 1,528,689 | 2,874,700 | ||||||||||
5,000 | Ethan Allen Interiors Inc. | 116,387 | 137,300 | |||||||||
65,000 | La-Z-Boy Inc. | 1,045,229 | 1,890,200 | |||||||||
2,690,305 | 4,902,200 | |||||||||||
Hotels and Gaming — 4.7% | ||||||||||||
50,000 | Boyd Gaming Corp. | 212,525 | 3,206,000 | |||||||||
190,000 | Canterbury Park Holding | |||||||||||
Corp. | 1,949,757 | 4,652,150 | ||||||||||
82,500 | Churchill Downs Inc. | 693,674 | 21,206,625 | |||||||||
120,000 | Formosa International | |||||||||||
Hotels Corp. | 775,629 | 1,099,598 | ||||||||||
530,000 | Full House Resorts Inc.† | 1,541,909 | 3,831,900 | |||||||||
48,508 | Gaming and Leisure | |||||||||||
Properties Inc., REIT | 388,133 | 2,525,326 | ||||||||||
750,000 | Genting Singapore Ltd. | 688,148 | 631,199 | |||||||||
96,000 | Golden Entertainment Inc.† | 836,772 | 4,176,960 | |||||||||
2,350,000 | Mandarin Oriental | |||||||||||
International Ltd.† | 3,083,545 | 4,065,500 | ||||||||||
3,000 | Penn Entertainment Inc.† | 13,028 | 88,980 | |||||||||
247,700 | Ryman Hospitality | |||||||||||
Properties Inc., REIT | 3,960,761 | 22,226,121 | ||||||||||
2,500,000 | The Hongkong & Shanghai | |||||||||||
Hotels Ltd.† | 2,476,225 | 2,490,478 | ||||||||||
138,568 | The Marcus Corp | 1,523,230 | 2,217,088 | |||||||||
13,000 | Wynn Resorts Ltd.† | 0 | 1,454,830 | |||||||||
18,143,336 | 73,872,755 |
Shares | Cost | Market Value | ||||||||||
Machinery — 2.7% | ||||||||||||
326,000 | Astec Industries Inc. | $ | 11,354,454 | $ | 13,447,500 | |||||||
1,415,000 | CNH Industrial NV | 3,631,392 | 21,607,050 | |||||||||
95,000 | Kennametal Inc. | 1,788,710 | 2,620,100 | |||||||||
4,700 | Nordson Corp. | 77,665 | 1,044,622 | |||||||||
160,000 | The Eastern Co. | 3,114,959 | 3,116,800 | |||||||||
109,254 | Twin Disc Inc.† | 1,184,770 | 1,051,023 | |||||||||
21,151,950 | 42,887,095 | |||||||||||
Manufactured Housing and Recreational Vehicles — 2.0% | ||||||||||||
67,000 | Cavco Industries Inc.† | 1,314,707 | 21,288,580 | |||||||||
72,000 | Nobility Homes Inc. | 828,208 | 1,962,000 | |||||||||
81,500 | Skyline Champion Corp.† | 471,554 | 6,131,245 | |||||||||
51,500 | Winnebago Industries Inc. | 584,494 | 2,971,550 | |||||||||
3,198,963 | 32,353,375 | |||||||||||
Metals and Mining — 0.0% | ||||||||||||
45,000 | Ivanhoe Mines Ltd., Cl. A† | 117,783 | 406,548 | |||||||||
95,000 | Kinross Gold Corp. | 412,123 | 447,450 | |||||||||
529,906 | 853,998 | |||||||||||
Publishing — 0.6% | ||||||||||||
2,500 | Graham Holdings Co., Cl. B | 1,163,667 | 1,489,600 | |||||||||
4,500 | John Wiley & Sons Inc., | |||||||||||
Cl. B | 17,438 | 174,060 | ||||||||||
34,000 | News Corp., Cl. A | 48,038 | 587,180 | |||||||||
775,000 | The E.W. Scripps Co., Cl. A† | 4,022,887 | 7,292,750 | |||||||||
5,252,030 | 9,543,590 | |||||||||||
Real Estate — 2.7% | ||||||||||||
80,000 | Capital Properties Inc., Cl. A | 952,236 | 898,000 | |||||||||
10,000 | Gyrodyne LLC† | 231,933 | 85,500 | |||||||||
215,500 | Indus Realty Trust Inc., | |||||||||||
REIT | 3,222,502 | 14,285,495 | ||||||||||
17,200 | Lamar Advertising Co., | |||||||||||
Cl. A, REIT | 86,607 | 1,718,108 | ||||||||||
89,500 | Morguard Corp. | 1,134,375 | 6,869,944 | |||||||||
25,000 | Reading International Inc., | |||||||||||
Cl. A† | 123,590 | 81,250 | ||||||||||
4,000 | Reading International Inc., | |||||||||||
Cl. B† | 77,243 | 85,200 | ||||||||||
33,000 | Seritage Growth Properties, | |||||||||||
Cl. A, REIT† | 419,102 | 259,710 | ||||||||||
136,600 | Tejon Ranch Co.† | 3,028,966 | 2,495,682 | |||||||||
385,000 | The St. Joe Co. | 5,904,646 | 16,019,850 | |||||||||
139,000 | Trinity Place Holdings Inc.† | 314,922 | 66,720 | |||||||||
15,496,122 | 42,865,459 | |||||||||||
Retail — 6.2% | ||||||||||||
114,800 | AutoNation Inc.† | 1,833,590 | 15,424,528 | |||||||||
9,000 | Big 5 Sporting Goods Corp. | 53,145 | 69,210 | |||||||||
900 | Biglari Holdings Inc., Cl. A† | 548,428 | 756,441 | |||||||||
157,200 | Copart Inc.† | 659,849 | 11,823,012 | |||||||||
523 | Hertz Global Holdings Inc.† | 5,957 | 8,520 |
See accompanying notes to financial statements.
5
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Retail (Continued) | ||||||||||||
200,000 | Ingles Markets Inc., Cl. A | $ | 2,545,477 | $ | 17,740,000 | |||||||
40,000 | Lands’ End Inc.† | 474,170 | 388,800 | |||||||||
70,000 | Movado Group Inc. | 1,036,083 | 2,013,900 | |||||||||
157,000 | Nathan’s Famous Inc. | 264,162 | 11,869,200 | |||||||||
70,100 | Penske Automotive Group | |||||||||||
Inc. | 1,022,661 | 9,940,881 | ||||||||||
90,000 | Pets at Home Group plc | 154,436 | 409,679 | |||||||||
332,000 | Rush Enterprises Inc., Cl. B | 2,361,051 | 19,883,480 | |||||||||
11,000 | Salvatore Ferragamo SpA | 215,479 | 201,012 | |||||||||
10,000 | The Cheesecake Factory Inc. | 93,274 | 350,500 | |||||||||
26,400 | Tractor Supply Co. | 226,339 | 6,205,056 | |||||||||
60,000 | Village Super Market Inc., | |||||||||||
Cl. A | 1,467,642 | 1,372,800 | ||||||||||
6,700 | Vroom Inc.† | 9,280 | 6,021 | |||||||||
600 | Winmark Corp. | 41,191 | 192,258 | |||||||||
13,012,214 | 98,655,298 | |||||||||||
Specialty Chemicals — 2.0% | ||||||||||||
3,200 | Albemarle Corp. | 47,663 | 707,328 | |||||||||
28,000 | Ashland Inc. | 210,127 | 2,875,880 | |||||||||
245,000 | H.B. Fuller Co. | 2,718,585 | 16,770,250 | |||||||||
37,500 | Hawkins Inc. | 640,205 | 1,641,750 | |||||||||
25,000 | Huntsman Corp. | 74,302 | 684,000 | |||||||||
5,600 | NewMarket Corp. | 561,284 | 2,043,888 | |||||||||
8,400 | Quaker Chemical Corp. | 128,365 | 1,662,780 | |||||||||
1,500 | Rogers Corp.† | 172,480 | 245,145 | |||||||||
25,200 | Sensient Technologies Corp. | 486,263 | 1,929,312 | |||||||||
2,500 | Takasago International Corp. | 66,073 | 49,275 | |||||||||
91,200 | The General Chemical Group | |||||||||||
Inc.†(b) | 1,186 | 0 | ||||||||||
88,000 | Valvoline Inc. | 253,317 | 3,074,720 | |||||||||
5,359,850 | 31,684,328 | |||||||||||
Telecommunications — 0.6% | ||||||||||||
30,000 | Consolidated | |||||||||||
Communications | ||||||||||||
Holdings Inc.† | 164,733 | 77,400 | ||||||||||
61,000 | Gogo Inc.† | 292,823 | 884,500 | |||||||||
3,500 | IDT Corp., Cl. B† | 11,346 | 119,280 | |||||||||
85,100 | Nuvera Communications | |||||||||||
Inc. | 625,036 | 1,250,970 | ||||||||||
82,000 | Rogers Communications | |||||||||||
Inc., Cl. B | 293,920 | 3,801,520 | ||||||||||
109,500 | Shenandoah | |||||||||||
Telecommunications Co. | 896,203 | 2,082,690 | ||||||||||
34,000 | VEON Ltd., ADR† | 1,278,412 | 599,080 | |||||||||
3,562,473 | 8,815,440 | |||||||||||
Transportation — 2.6% | ||||||||||||
353,000 | GATX Corp. | 9,981,518 | 38,837,060 | |||||||||
18,600 | Irish Continental Group plc | 13,660 | 88,049 |
Shares | Cost | Market Value | ||||||||||
124,000 | Navigator Holdings Ltd.† | $ | 1,188,912 | $ | 1,736,000 | |||||||
11,184,090 | 40,661,109 | |||||||||||
Wireless Communications — 0.0% | ||||||||||||
34,500 | United States Cellular | |||||||||||
Corp.† | 1,056,929 | 715,185 | ||||||||||
TOTAL COMMON STOCKS | 445,416,482 | 1,562,214,359 | ||||||||||
CLOSED-END FUNDS — 0.1% | ||||||||||||
52,500 | The Central Europe, Russia, | |||||||||||
and Turkey Fund Inc. | 1,033,002 | 424,079 | ||||||||||
32,729 | The European Equity Fund | |||||||||||
Inc. | 325,355 | 276,436 | ||||||||||
115,000 | The New Germany Fund Inc. | 1,548,039 | 1,045,350 | |||||||||
2,906,396 | 1,745,865 | |||||||||||
TOTAL CLOSED-END FUNDS | 2,906,396 | 1,745,865 | ||||||||||
PREFERRED STOCKS — 0.2% | ||||||||||||
Automotive: Parts and Accessories — 0.2% | ||||||||||||
83,000 | Jungheinrich AG | 566,929 | 2,894,834 | |||||||||
RIGHTS — 0.0% | ||||||||||||
Communications Equipment — 0.0% | ||||||||||||
60,500 | Pineapple Energy Inc., | |||||||||||
CVR†(b) | 0 | 213,565 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Business Services — 0.0% | ||||||||||||
1 | Internap Corp., | |||||||||||
expire 05/08/24†(b) | 0 | 652 | ||||||||||
Diversified Industrial — 0.0% | ||||||||||||
140,000 | Ampco-Pittsburgh Corp., | |||||||||||
expire 08/01/25† | 95,648 | 76,986 | ||||||||||
TOTAL WARRANTS | 95,648 | 77,638 |
See accompanying notes to financial statements.
6
The Gabelli Small Cap Growth Fund
Schedule of Investments (Continued) — March 31, 2023 (Unaudited)
Principal Amount | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 0.6% | ||||||||||||
$ | 9,132,000 | U.S. Treasury Bills, | ||||||||||
4.342% to 4.715%††, | ||||||||||||
04/20/23 to 06/29/23 | $ | 9,043,232 | $ | 9,043,629 | ||||||||
TOTAL MISCELLANEOUS INVESTMENTS — 0.2%(c) | 2,121,396 | 2,889,105 | ||||||||||
TOTAL INVESTMENTS — 100.0% | $ | 460,150,083 | 1,579,078,995 | |||||||||
Other Assets and Liabilities (Net) — (0.0)% | 197,672 | |||||||||||
NET ASSETS — 100.0% | $ | 1,579,276,667 |
(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.
7
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(2)(1) | Not applicable. |
(a)(2)(2) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Gabelli Equity Series Funds, Inc. |
By (Signature and Title)* | /s/ John C. Ball | ||
John C. Ball, Principal Executive Officer |
Date | June 2, 2023 |
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 | June 2, 2023 |
By (Signature and Title)* | /s/ John C. Ball | ||
John C. Ball, Principal Financial Officer and Treasurer |
Date | June 2, 2023 |
* Print the name and title of each signing officer under his or her signature.