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, NY 10580-1422 -------------------------------------------- (Address of principal executive offices) (Zip code) Bruce N. Alpert Gabelli Funds, LLC One Corporate Center Rye, NY 10580-1422 -------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 800-422-3554 -------------- Date of fiscal year end: September 30, 2004 ------------------ Date of reporting period: March 31, 2004 --------------- 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. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. THE GABELLI SMALL CAP GROWTH FUND SEMI-ANNUAL REPORT (B) MARCH 31, 2004 TO OUR SHAREHOLDERS, Small cap stocks continued to outperform during the six-month period through March 31, 2004, with the Russell 2000 Index gaining 21.7% and outpacing the 14.1% rise in the Standard & Poor's ("S&P") 500 Index and 11.7% rise in the Dow Jones Industrial Average by a substantial margin. The Gabelli Small Cap Growth Fund gained 20.8% during the trailing six-month period. Enclosed is the portfolio of investments and financial statements as of March 31, 2004. COMPARATIVE RESULTS - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2004 (A) ------------------------------------------------- SINCE QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION (C) ------- ------ ------ ------ ------- ------------- Gabelli Small Cap Growth Fund Class AAA .... 5.19% 52.43% 13.28% 14.34% 13.37% 15.68% Russell 2000 Index ......................... 6.26% 63.83% 10.90% 9.66% 10.44% 11.56% Value Line Composite Index ................. 5.29% 64.58% 13.20% 12.53% 13.71% 13.99% Class A .................................... 5.23% 52.49% 13.29% 14.35% 13.37% 15.69% (0.81)%(d) 43.71%(d) 11.07%(d) 13.00%(d) 12.71%(d) 15.14%(d) Class B .................................... 5.02% 52.19% 13.22% 14.30% 13.35% 15.67% 0.02%(e) 50.95%(e) 13.03%(e) 14.23%(e) 13.35%(e) 15.67%(e) Class C .................................... 5.02% 52.19% 13.22% 14.30% 13.35% 15.67% 4.02%(e) 51.94%(e) 13.22%(e) 14.30%(e) 13.35%(e) 15.67%(e) (a) Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price and reinvestment of dividends and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. The Russell 2000 and Value Line Composite Indices are unmanaged indicators of stock market performance. 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. Investors should consider the investment objectives, risks and charges and expenses of the Fund before investing. The prospectus contains more complete information about this and other matters and should be read carefully before investing. Performance for periods less than one year is not annualized. The Class AAA Shares' net asset values are used to calculate performance for the periods prior to the issuance of Class A Shares, Class B Shares and Class C Shares on December 31, 2003. The actual performance for the Class A Shares, Class B Shares and Class C Shares would have been lower due to the additional expenses associated with these classes of shares. (b) The Fund's fiscal year ends September 30. (c) From commencement of investment operations on October 22, 1991. (d) Includes the effect of the maximum 5.75% sales charge at the beginning of the period. (e) Includes the effect of the applicable contingent deferred sales charge at the end of the period shown for Class B and Class C Shares, respectively. Note: Investing in small capitalization securities involves special challenges because these securities may trade less frequently and experience more abrupt price movements than large capitalization securities. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A description of the Funds' proxy voting policies and procedures is available (i) without charge, upon request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580; and (iii) on the Securities and Exchange Commission's website at www.sec.gov. - -------------------------------------------------------------------------------- THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS -- 97.3% AEROSPACE -- 0.5% 25,000 Herley Industries Inc.+ ...........$ 499,141 $ 472,000 145,000 Titan Corp.+ ...................... 3,067,175 2,927,550 ------------ ------------ 3,566,316 3,399,550 ------------ ------------ AGRICULTURE -- 0.7% 140,000 AGCO Corp.+ ....................... 2,449,262 2,899,400 1,200 Cadiz Inc.+ ....................... 4,500 8,580 100,000 Sylvan Inc.+ ...................... 1,093,323 1,204,000 ------------ ------------ 3,547,085 4,111,980 ------------ ------------ AUTOMOTIVE -- 0.4% 90,000 Monaco Coach Corp.+ ............... 2,008,410 2,412,000 3,000 Oshkosh Truck Corp. ............... 89,796 167,100 ------------ ------------ 2,098,206 2,579,100 ------------ ------------ AUTOMOTIVE: PARTS AND ACCESSORIES -- 4.7% 3,816 Aftermarket Technology Corp.+ ..... 47,013 56,057 1,000 American Axle & Manufacturing Holdings Inc.+ .................. 24,350 36,850 40,000 BorgWarner Inc. ................... 1,650,298 3,393,200 90,000 Exide Technologies+ ............... 54,188 1,710 40,000 Federal-Mogul Corp.+ .............. 79,500 14,400 310,000 GenCorp Inc. ...................... 2,892,672 3,357,300 200,000 Midas Inc.+ ....................... 2,538,716 3,890,000 235,000 Modine Manufacturing Co. .......... 5,682,804 6,124,100 7,875 Monro Muffler Brake Inc.+ ......... 52,860 196,796 3,000 Pep Boys - Manny, Moe & Jack ...................... 22,503 83,250 2,000 Puradyn Filter Technologies Inc.+ .............. 5,025 4,280 153,500 Raytech Corp.+ .................... 494,691 442,080 195,000 Scheib (Earl) Inc.+ ............... 1,314,528 560,625 180,000 Standard Motor Products Inc. ...... 2,739,913 2,822,400 30,000 Strattec Security Corp.+ .......... 1,111,807 1,904,400 15,000 Superior Industries International Inc. .............. 412,318 531,600 375,000 Tenneco Automotive Inc.+ .......... 831,890 4,758,750 28,000 Thor Industries Inc. .............. 259,454 752,080 160,000 TransPro Inc.+ .................... 1,390,729 800,000 ------------ ------------ 21,605,259 29,729,878 ------------ ------------ AVIATION: PARTS AND SERVICES -- 3.4% 25,000 AAR Corp.+ ........................ 302,990 307,000 95,000 Aviall Inc.+ ...................... 818,019 1,444,000 17,000 Barnes Group Inc. ................. 293,350 474,130 86,300 Curtiss-Wright Corp. .............. 1,113,575 4,044,881 34,200 Curtiss-Wright Corp., Cl. B ....... 956,620 1,561,914 7,500 Ducommun Inc.+ .................... 80,125 175,275 16,000 EDO Corp. ......................... 328,407 385,280 30,000 Embraer-Empresa Brasileira de Aeronautica, S.A., ADR ....... 508,773 963,000 190,000 Fairchild Corp., Cl. A+ ........... 1,171,384 946,200 MARKET SHARES COST VALUE ------ ---- ------ 9,000 Gamesa Corporacion Tecnologica, S.A. ...............$ 165,313 $ 368,631 430,000 Kaman Corp., Cl. A ................ 6,855,690 6,419,900 118,000 Moog Inc., Cl. A+ ................. 1,096,860 4,026,160 8,000 Woodward Governor Co. ............. 347,309 509,920 ------------ ------------ 14,038,415 21,626,291 ------------ ------------ BROADCASTING -- 4.5% 120,000 Acme Communications Inc.+ ......... 968,947 941,400 24,100 Beasley Broadcast Group Inc., Cl. A+ .................... 271,741 424,160 200,000 Crown Media Holdings Inc., Cl. A+ .......................... 1,440,936 1,618,000 3,333 CTN Media Group Inc.+ (b) ...... 16,800 0 422,500 Granite Broadcasting Corp.+ ....... 1,722,038 705,575 400,000 Gray Television Inc. .............. 4,147,023 5,848,000 33,300 Gray Television Inc., Cl. A ....... 493,240 471,195 48,000 Hearst-Argyle Television Inc.+ .... 425,523 1,290,720 183,900 Liberty Corp. ..................... 5,983,141 8,509,053 10,000 Nexstar Broadcasting Group Inc., Cl. A+ .................... 116,050 116,900 250,000 Paxson Communications Corp.+ .......................... 2,343,488 975,000 112,000 Salem Communications Corp., Cl. A+ .......................... 1,803,159 3,066,560 150,000 Sinclair Broadcast Group Inc., Cl. A+ .......................... 1,677,557 1,875,000 62,000 Spanish Broadcasting System Inc., Cl. A+ .................... 541,076 647,900 110,000 Young Broadcasting Inc., Cl. A+ .......................... 1,812,595 1,991,000 ------------ ------------ 23,763,314 28,480,463 ------------ ------------ BUILDING AND CONSTRUCTION -- 0.4% 10,000 Cavco Industries Inc.+ ............ 368,850 368,500 100,000 Fleetwood Enterprises Inc.+ ....... 1,053,302 1,228,000 12,000 Florida Rock Industries Inc. ...... 103,533 505,800 25,000 Huttig Building Products Inc.+ .... 90,165 125,000 4,000 Universal Forest Products Inc. .... 49,375 123,440 ------------ ------------ 1,665,225 2,350,740 ------------ ------------ BUSINESS SERVICES -- 2.3% 5,000 BrandPartners Group Inc.+ ......... 4,850 3,400 610,400 Career Blazers Inc. (b) ........... 236,019 107,125 6,000 Carlisle Holdings Ltd.+ ........... 30,250 39,000 1,000 CheckFree Corp.+ .................. 9,040 29,460 30,000 Donnelley (R.H.) Corp.+ ........... 408,350 1,401,000 200,000 Edgewater Technology Inc.+ ........ 802,829 1,450,000 14,000 Fisher Scientific International Inc.+ ............. 323,617 770,560 20,000 Genuity Inc., Cl. A+ (b) .......... 1,620 0 140,000 GP Strategies Corp.+ .............. 546,300 964,600 See accompanying notes to financial statements. 2 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) BUSINESS SERVICES (CONTINUED) 80,000 Industrial Distribution Group Inc.+ .....................$ 224,062 $ 653,600 58,000 Interactive Data Corp.+ ........... 499,811 1,031,240 18,000 Interep National Radio Sales Inc., Cl. A+ .............. 72,100 34,200 13,000 Landauer Inc. ..................... 234,859 546,000 5,000 MDC Partners Inc.+ ................ 15,450 78,500 103,000 Nashua Corp.+ ..................... 939,467 883,740 60,000 National Processing Inc.+ ......... 575,323 1,140,000 15,000 New England Business Service Inc. .................... 270,375 507,750 65,000 Paxar Corp.+ ...................... 662,313 958,750 6,000 Princeton Video Image Inc.+ ....... 35,250 6 2,000 Protection One Inc.+ .............. 3,720 760 81,300 Sohgo Security Services Co. Ltd. ........................ 1,033,410 1,133,910 110,000 Stamps.com Inc.+ .................. 302,148 658,900 4,000 StarTek Inc. ...................... 75,725 145,360 53,000 The Brink's Co. ................... 1,092,906 1,461,740 95,000 Trans-Lux Corp. (a) ............... 781,543 744,800 ------------ ------------ 9,181,337 14,744,401 ------------ ------------ CABLE -- 2.4% 230,000 Adelphia Communications Corp., Cl. A+ ................... 29,650 190,900 575,000 Cablevision Systems Corp., Cl. A+ .......................... 3,365,084 13,156,000 15,100 Lin TV Corp., Cl. A+ .............. 333,812 359,531 1,600 Outdoor Channel Holdings Inc.+ .................. 44,765 63,000 148,823 UnitedGlobalCom Inc., Cl. A+ ...... 1,141,414 1,263,507 ------------ ------------ 4,914,725 15,032,938 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 0.6% 90,000 Andrew Corp.+ ..................... 533,824 1,575,000 109,500 Communications Systems Inc. ....... 659,500 955,935 260,900 Sycamore Networks Inc.+ ........... 778,040 1,064,472 ------------ ------------ 1,971,364 3,595,407 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 1.3% 90,000 Ascential Software Corp.+ ......... 1,061,665 1,972,800 21,450 Global Sources Ltd.+ .............. 364,342 264,693 50,000 Jupitermedia Corp.+ ............... 435,800 574,500 200 Macromedia Inc.+ .................. 2,370 4,014 1,500 MarketWatch.com Inc.+ ............. 18,312 20,910 15,187 MKS Instruments Inc.+ ............. 284,328 364,640 220,000 OpenTV Corp.+ ..................... 1,189,078 710,600 8,000 Phoenix Technologies Ltd.+ ........ 55,157 43,120 550 SafeNet Inc.+ ..................... 14,425 20,647 800,000 StorageNetworks Inc. Escrow+ ...... 0 24,000 350,000 Tyler Technologies Inc.+ .......... 1,343,893 3,398,500 MARKET SHARES COST VALUE ------ ---- ------ 114,000 VitalWorks Inc.+ ..................$ 561,118 $ 427,500 190,000 Xanser Corp.+ ..................... 667,708 484,500 ------------ ------------ 5,998,196 8,310,424 ------------ ------------ CONSUMER PRODUCTS -- 4.2% 3,500 Action Performance Companies Inc. .................. 16,187 53,445 21,500 Adams Golf Inc.+ .................. 63,940 27,520 5,250 Alberto-Culver Co. ................ 169,298 230,317 25,000 Ashworth Inc.+ .................... 107,281 217,500 33,500 Chofu Seisakusho Co. Ltd. ......... 484,644 695,535 25,000 Church & Dwight Co. Inc. .......... 354,732 1,082,750 15,000 Coachmen Industries Inc. .......... 117,198 250,200 3,075 Del Laboratories Inc.+ ............ 88,290 102,090 46,000 Department 56 Inc.+ ............... 542,911 679,880 8,000 Elizabeth Arden Inc.+ ............. 109,500 168,960 2,000 Genlyte Group Inc.+ ............... 8,580 112,080 2,000 Harley-Davidson Inc. .............. 4,713 106,680 200,000 Hartmarx Corp.+ ................... 967,321 1,200,000 74,400 Jacuzzi Brands Inc.+ .............. 477,471 697,872 42,500 Levcor International Inc.+ ........ 86,759 119,000 4,000 Madden (Steven) Ltd.+ ............. 30,540 79,840 235,000 Marine Products Corp. ............. 227,767 3,287,650 57,000 National Presto Industries Inc. ... 2,034,955 2,209,320 3,000 Nature's Sunshine Products Inc. ................... 36,938 44,520 25,000 Rayovac Corp.+ .................... 327,512 715,000 80,000 Revlon Inc., Cl. A+ ............... 344,837 221,600 3,000 Scotts Co., Cl. A+ ................ 61,223 192,450 140,000 Skyline Corp. ..................... 4,450,174 5,399,800 14,000 Stewart Enterprises Inc., Cl. A+ .......................... 65,467 101,780 84,425 Syratech Corp.+ ................... 15,626 29,549 17,000 WD-40 Co. ......................... 470,278 595,000 701,000 Weider Nutrition International Inc.+ ............. 1,989,410 3,322,740 180,000 Wolverine World Wide Inc. ......... 2,359,687 4,343,400 ------------ ------------ 16,013,239 26,286,478 ------------ ------------ CONSUMER SERVICES -- 2.4% 30,000 Bowlin Travel Centers Inc.+ ....... 22,612 59,250 5,600 Collectors Universe Inc.+ ......... 21,494 69,658 100,000 InterActiveCorp.+ ................. 1,068,180 3,159,000 40,000 Loewen Group Inc.+ (b) ............ 60,400 0 16,000 Martha Stewart Living Omnimedia Inc., Cl. A+ .......... 167,206 176,000 20,000 Response USA Inc.+ ................ 16,500 91 220,000 Rollins Inc. ...................... 2,856,358 5,669,400 120,300 Roto-Rooter Inc. .................. 4,028,096 6,081,165 5,000 TiVo Inc.+ ........................ 42,288 44,450 ------------ ------------ 8,283,134 15,259,014 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 9.8% 175,000 Acuity Brands Inc. ................ 2,351,391 4,179,000 43,000 Amatsuji Steel Ball Mfg. Co., Ltd. .................. 357,633 495,987 See accompanying notes to financial statements. 3 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) DIVERSIFIED INDUSTRIAL (CONTINUED) 100,000 Ampco-Pittsburgh Corp. ............$ 972,481 $ 1,291,000 6,000 Anixter International Inc.+ ....... 57,120 169,500 215,000 Baldor Electric Co. ............... 4,198,556 4,940,700 150,000 Crane Co. ......................... 3,282,255 4,950,000 5,000 ESCO Technologies Inc.+ ........... 166,379 230,600 55,200 Gardner Denver Inc.+ .............. 866,999 1,494,816 118,000 GATX Corp. ........................ 3,360,089 2,616,060 160,100 Greif Inc., Cl. A ................. 3,139,843 5,593,894 1,000 Greif Inc., Cl. B ................. 29,800 35,525 26,000 Harbor Global Co. Ltd.+ ........... 63,215 266,500 5,000 Insteel Industries Inc.+ .......... 4,250 8,750 66,000 Katy Industries Inc.+ ............. 546,731 395,340 220,300 Lamson & Sessions Co.+ ............ 1,280,436 1,244,695 74,000 Lindsay Manufacturing Co. ......... 746,915 1,781,920 209,000 MagneTek Inc.+ .................... 1,627,959 1,580,040 38,000 Matthews International Corp., Cl. A ........................... 884,314 1,261,600 260,000 Myers Industries Inc. ............. 2,633,153 3,198,000 40,000 Mykrolis Corp.+ ................... 507,507 570,400 610,400 Noel Group Inc.+ (b) .............. 55,045 117,685 84,500 Oil-Dri Corporation of America .... 878,811 1,394,250 15,000 Olin Corp. ........................ 232,292 267,750 256,200 Park-Ohio Holdings Corp.+ ......... 1,675,272 2,359,602 49,999 Precision Castparts Corp. ......... 1,702,840 2,201,470 40,000 Roper Industries Inc. ............. 1,533,092 1,930,000 280,000 Sensient Technologies Corp. ....... 5,652,884 5,227,600 10,000 Sonoco Products Co. ............... 231,715 242,800 65,000 Standex International Corp. ....... 1,318,407 1,755,000 15,500 Tech/Ops Sevcon Inc. .............. 108,753 101,525 296,000 Thomas Industries Inc. ............ 4,161,994 9,324,000 50,500 Tredegar Corp. .................... 679,193 738,815 25,666 WHX Corp.+ ........................ 338,289 75,972 ------------ ------------ 45,645,613 62,040,796 ------------ ------------ EDUCATIONAL SERVICES -- 0.1% 10,000 Career Education Corp.+ ........... 341,000 566,400 3,000 School Specialty Inc.+ ............ 71,820 106,710 ------------ ------------ 412,820 673,110 ------------ ------------ ELECTRONICS -- 2.0% 204,600 CTS Corp. ......................... 2,145,753 2,667,984 22,000 Fargo Electronics+ ................ 132,607 248,600 28,000 Lowrance Electronics Inc.+ ........ 74,921 611,240 85,000 Park Electrochemical Corp. ........ 1,949,368 2,150,500 300,000 Thomas & Betts Corp. .............. 5,553,334 6,546,000 40,000 Zoran Corp.+ ...................... 327,565 694,400 ------------ ------------ 10,183,548 12,918,724 ------------ ------------ ENERGY AND UTILITIES -- 5.0% 20,000 AGL Resources Inc. ................ 366,515 580,400 133,500 Aquila Inc.+ ...................... 365,838 628,785 6,400 BIW Ltd. .......................... 94,562 125,440 MARKET SHARES COST VALUE ------ ---- ------ 95,000 Callon Petroleum Co.+ .............$ 939,533 $ 992,750 142,000 CH Energy Group Inc. .............. 5,982,836 6,970,780 10,000 Chesapeake Utilities Corp. ........ 187,062 256,200 140,000 CMS Energy Corp.+ ................. 843,947 1,253,000 23,000 Connecticut Water Service Inc. .... 464,832 650,900 125,000 Duquesne Light Holdings Inc. ...... 1,769,535 2,437,500 150,000 El Paso Electric Co.+ ............. 1,983,209 2,076,000 66,666 Florida Public Utilities Co. ...... 792,692 1,366,653 44,399 Middlesex Water Co. ............... 768,686 919,059 1,500 Neg Micon A/S+ .................... 26,992 23,893 15,000 Nicor Inc. ........................ 320,259 528,450 15,000 Nordex AG+ ........................ 32,726 17,881 2,000 PetroQuest Energy Inc.+ ........... 5,250 7,140 285,000 RPC Inc. .......................... 954,877 3,174,900 30,000 SEMCO Energy Inc. ................. 213,250 169,800 48,000 SJW Corp. ......................... 1,557,739 1,663,680 48,159 Southern Union Co.+ ............... 685,594 912,613 112,000 Southwest Gas Corp. ............... 1,959,693 2,620,800 10,000 Tesoro Petroleum Corp.+ ........... 140,933 187,900 4,000 Toreador Resources Corp.+ ......... 15,250 19,760 10,000 Vestas Wind Systems A/S ........... 89,988 160,112 7,000 W-H Energy Services Inc.+ ......... 148,589 101,290 195,000 Westar Energy Inc. ................ 3,220,179 4,087,200 ------------ ------------ 23,930,566 31,932,886 ------------ ------------ ENTERTAINMENT -- 2.2% 20,000 Canterbury Park Holding Corp. ................... 215,807 382,000 150,000 Dover Motorsports Inc. ............ 821,068 577,500 62,000 Fisher Communications Inc.+ ....... 3,732,125 3,022,500 151,000 GC Companies Inc.+ ................ 164,590 70,215 545,000 Gemstar-TV Guide International Inc.+ ............. 3,198,164 3,656,950 500 Integrity Media Inc.+ ............. 3,550 3,170 16,000 International Speedway Corp., Cl. A .................... 515,479 752,000 2,500 International Speedway Corp., Cl. B .................... 45,000 116,375 30,000 Liberty Media Corp., Cl. A+ ....... 314,245 328,500 20,000 Loews Cineplex Entertainment Corp.+ (b) ........ 20,008 40 10,000 Metromedia International Group Inc.+ ..................... 6,700 3,400 460,800 Six Flags Inc.+ ................... 2,557,476 3,617,280 56,700 Topps Co. Inc. .................... 323,892 541,485 75,000 World Wrestling Entertainment Inc. .............. 904,287 1,083,750 ------------ ------------ 12,822,391 14,155,165 ------------ ------------ ENVIRONMENTAL SERVICES -- 1.3% 240,000 Allied Waste Industries Inc.+ ..... 2,348,086 3,194,400 30,000 Catalytica Energy Systems Inc.+ ................... 278,599 107,100 See accompanying notes to financial statements. 4 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) ENVIRONMENTAL SERVICES (CONTINUED) 175,000 Republic Services Inc. ............$ 2,490,315 $ 4,737,250 70,000 Trojan Technologies Inc.+ ......... 392,797 450,067 ------------ ------------ 5,509,797 8,488,817 ------------ ------------ EQUIPMENT AND SUPPLIES -- 11.9% 228,000 AMETEK Inc. ....................... 1,341,318 5,845,920 415,000 Baldwin Technology Co. Inc., Cl. A+ .......................... 1,322,609 1,203,500 120,000 Belden Inc. ....................... 2,301,081 2,276,400 12,000 C&D Technologies Inc. ............. 235,930 200,520 50,000 Capstone Turbine Corp.+ ........... 103,400 123,500 153,000 CIRCOR International Inc. ......... 1,903,630 3,457,800 217,000 CLARCOR Inc. ...................... 2,669,871 9,580,550 236,800 Core Molding Technologies Inc.+ .............. 411,233 959,040 200,000 Crown Holdings Inc.+ .............. 807,766 1,864,000 65,000 Cuno Inc.+ ........................ 1,119,768 2,917,200 1,500 Danaher Corp. ..................... 51,159 140,055 70,000 Donaldson Co. Inc. ................ 807,585 1,857,100 449,600 Fedders Corp. ..................... 2,046,808 2,567,216 200,000 Flowserve Corp.+ .................. 3,249,824 4,190,000 92,000 Franklin Electric Co. Inc. ........ 1,491,155 5,858,560 40,000 General Magnaplate Corp.+ (b) ..... 83,762 60,000 110,000 Gerber Scientific Inc.+ ........... 1,188,241 748,000 80,275 Gorman-Rupp Co. ................... 1,956,309 2,079,123 97,500 Graco Inc. ........................ 984,351 2,838,225 42,000 GrafTech International Ltd.+ ...... 574,742 627,900 2,000 Hughes Supply Inc. ................ 28,473 104,800 40,000 IDEX Corp. ........................ 556,738 1,739,200 22,000 Imagistics International Inc.+ .... 423,317 969,100 500,000 Interpump Group SpA ............... 1,946,509 2,199,720 3,000 Jarden Corp.+ ..................... 12,770 106,530 10,000 K-Tron International Inc.+ ........ 74,932 215,500 30,000 Littelfuse Inc.+ .................. 551,467 1,116,000 58,000 Lufkin Industries Inc. ............ 1,104,055 1,818,300 62,700 Maezawa Kyuso Industries Co. Ltd. ........................ 402,043 712,370 20,000 Met-Pro Corp. ..................... 192,469 336,000 1,000 Middleby Corp. .................... 37,310 45,680 12,000 Mueller Industries Inc.+ .......... 309,156 407,880 4,500 Plantronics Inc.+ ................. 56,548 164,745 30,000 Robbins & Myers Inc. .............. 564,553 646,500 40,500 Sequa Corp., Cl. A+ ............... 1,502,140 2,000,700 80,000 Sequa Corp., Cl. B+ ............... 3,631,578 4,304,000 90,000 SL Industries Inc.+ ............... 1,047,851 877,500 3,000 Smith (A.O.) Corp. ................ 49,213 86,850 15,000 Smith (A.O.) Corp., Cl. A ......... 336,569 434,250 5,000 Teleflex Inc. ..................... 76,167 246,150 48,000 Tennant Co. ....................... 1,556,465 1,904,160 5,000 Valmont Industries Inc. ........... 40,625 99,900 7,875 Watsco Inc., Cl. B ................ 23,627 231,446 MARKET SHARES COST VALUE ------ ---- ------ 210,000 Watts Water Technologies Inc., Cl. A .....................$ 3,577,612 $ 4,911,900 15,000 Wolverine Tube Inc.+ .............. 150,915 125,850 ------------ ------------ 42,903,644 75,199,640 ------------ ------------ FINANCIAL SERVICES -- 3.5% 12,036 Alleghany Corp.+ .................. 2,223,427 2,976,503 40,000 Argonaut Group Inc.+ .............. 867,813 761,200 66,000 Bankgesellschaft Berlin AG+ ....... 1,280,794 154,103 135,300 BKF Capital Group Inc. ............ 2,463,405 3,490,740 330,000 CNA Surety Corp.+ ................. 3,652,439 3,646,500 4,000 Crazy Woman Creek Bancorp Inc. .................... 51,340 70,000 60,000 Danielson Holding Corp.+ .......... 241,212 558,600 3,000 Federal Agricultural Mortgage Corp., Cl. C+ .......... 24,000 78,630 22,000 First Republic Bank ............... 636,067 848,320 75,000 Flushing Financial Corp. .......... 1,037,207 1,357,500 62,000 Hibernia Corp., Cl. A ............. 827,787 1,456,380 28,100 J Net Enterprises Inc.+ ........... 28,752 39,621 1,500 LandAmerica Financial Group Inc. ...................... 18,263 67,890 1,000 Leucadia National Corp. ........... 24,354 53,280 118,000 Midland Co. ....................... 896,759 2,944,100 1,500 NetBank Inc. ...................... 6,000 18,315 1,000 Republic Bancshares Inc. .......... 12,523 30,032 35,000 Riggs National Corp. .............. 563,309 602,350 32,000 Sterling Bancorp .................. 670,453 932,800 50,000 Wilmington Trust Corp. ............ 1,574,410 1,868,500 ------------ ------------ 17,100,314 21,955,364 ------------ ------------ FOOD AND BEVERAGE -- 5.3% 26,000 Boston Beer Co. Inc., Cl. A+ ...... 384,207 478,920 24,000 Brown-Forman Corp., Cl. A ......... 665,535 1,212,000 7,500 Cheesecake Factory Inc.+ .......... 37,036 345,975 30,000 Corn Products International Inc. ............................ 932,328 1,200,000 87,000 Del Monte Foods Co.+ .............. 872,203 978,750 85,000 Denny's Corp.+ .................... 132,580 181,900 2,500 Farmer Brothers Co. ............... 389,323 900,000 235,000 Flowers Foods Inc. ................ 2,883,841 6,166,400 500 Genesee Corp., Cl. A+ ............. 0 1,800 21,500 Genesee Corp., Cl. B+ ............. 49,823 77,400 701,500 Grupo Continental SA+ ............. 1,058,724 1,350,246 10,000 Hain Celestial Group Inc.+ ........ 184,774 220,900 110,000 International Multifoods Corp.+ .......................... 2,224,489 2,719,200 65,000 Interstate Bakeries Corp. ......... 865,132 739,050 7,000 J & J Snack Foods Corp.+ .......... 116,286 316,260 212,000 Kikkoman Corp. .................... 1,388,604 1,764,714 14,500 MGP Ingredients Inc. .............. 208,250 368,880 33,000 Mondavi (Robert) Corp., Cl. A+ .......................... 1,048,679 1,247,730 See accompanying notes to financial statements. 5 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) FOOD AND BEVERAGE (CONTINUED) 5,000 Northland Cranberries Inc., Cl. A+ ..........................$ 4,200 $ 4,350 4,000 Omni Nutraceuticals Inc.+ ......... 13,563 14 125,000 PepsiAmericas Inc. ................ 1,612,693 2,552,500 60,000 Ralcorp Holdings Inc.+ ............ 911,931 1,825,800 70,000 Smucker (J.M.) Co. ................ 1,627,033 3,694,600 100,000 The Steak n Shake Co.+ ............ 1,088,229 1,925,000 5,000 Todhunter International Inc.+ ..... 51,750 60,000 37,727 Tootsie Roll Industries Inc. ...... 596,834 1,379,293 60,000 Triarc Companies Inc. ............. 429,705 656,400 120,000 Triarc Companies Inc., Cl. B ...... 1,025,442 1,315,200 ------------ ------------ 20,803,194 33,683,282 ------------ ------------ HEALTH CARE -- 5.5% 20,000 ArthroCare Corp.+ ................. 398,949 462,200 7,000 Bio-Rad Laboratories Inc., Cl. A+ .......................... 257,683 394,590 1,000 Biomet Inc. ....................... 30,350 38,360 10,000 Biosite Inc.+ ..................... 253,600 319,700 4,600 Bruker BioSciences Corp.+ ......... 18,009 23,046 15,000 CNS Inc. .......................... 173,385 161,100 1,000 CONMED Corp.+ ..................... 15,430 29,540 10,000 Corixa Corp.+ ..................... 196,695 64,028 81,420 Del Global Technologies Corp.+ .......................... 258,928 164,469 3,000 Digene Corp.+ ..................... 24,000 103,080 5,000 Edwards Lifesciences Corp.+ .......................... 165,250 159,750 1,050 Enzo Biochem Inc.+ ................ 13,097 17,672 40,000 Exactech Inc.+ .................... 572,732 736,000 27,000 Henry Schein Inc.+ ................ 946,831 1,928,340 20,000 ICU Medical Inc.+ ................. 675,580 607,400 133,500 INAMED Corp.+ ..................... 2,304,490 7,112,880 2,000 Integra LifeSciences Holdings+ .... 43,600 61,240 55,000 Interpore International Inc.+ ..... 674,197 790,900 35,000 Inverness Medical Innovations Inc.+ ............... 638,388 640,500 29,000 Invitrogen Corp.+ ................. 1,514,135 2,079,010 15,700 Lifecore Biomedical Inc.+ ......... 108,622 117,750 15,000 Nabi Biopharmaceuticals+ .......... 105,625 233,250 1,300 Nobel Biocare Holding AG .......... 100,171 178,553 30,000 Orthodontic Centers of America Inc.+ ................... 234,149 237,000 29,000 Orthofix International NV+ ........ 937,100 1,433,760 2,000 OrthoLogic Corp.+ ................. 6,750 15,500 2,000 Osteotech Inc.+ ................... 14,420 12,900 31,500 Owens & Minor Inc. ................ 605,454 796,950 51,000 Penwest Pharmaceuticals Co.+ ...... 368,867 745,110 43,000 Priority Healthcare Corp., Cl. B+ .......................... 862,278 915,470 MARKET SHARES COST VALUE ------ ---- ------ 10,000 Regeneration Technologies Inc.+ ...........................$ 102,308 $ 113,500 40,000 Schick Technologies Inc.+ ......... 319,003 402,000 900,000 Snia SpA .......................... 418,887 309,681 86,000 Sola International Inc.+ .......... 1,116,692 1,999,500 1,976,000 Sorin SPA+ ........................ 6,713,174 5,475,803 2,500 Straumann Holding AG - Reg ........ 224,697 432,174 1,000 Stryker Corp. ..................... 65,440 88,530 185,000 Sybron Dental Specialties Inc.+ ........................... 3,427,065 5,041,250 10,000 Thoratec Corp.+ ................... 133,425 124,900 300,000 Twinlab Corp.+ .................... 783,952 11,400 75,000 Women First HealthCare Inc.+ ...... 97,658 13,500 1,000 Wright Medical Group Inc.+ ........ 16,460 30,700 5,100 Young Innovations Inc. ............ 128,516 178,959 ------------ ------------ 26,066,042 34,801,945 ------------ ------------ HOME FURNISHINGS -- 0.2% 16,000 Bassett Furniture Industries Inc. ................. 286,154 317,280 4,000 Bed Bath & Beyond Inc.+ ........... 11,125 167,040 15,000 Foamex International Inc.+ ........ 127,458 50,100 30,000 La-Z-Boy Inc. ..................... 250,200 652,800 70,000 Oneida Ltd. ....................... 732,976 171,500 ------------ ------------ 1,407,913 1,358,720 ------------ ------------ HOTELS AND GAMING -- 4.7% 165,000 Aztar Corp.+ ...................... 1,292,912 4,044,150 140,300 Boca Resorts Inc., Cl. A+ ......... 1,850,748 2,448,235 12,000 Boyd Gaming Corp. ................. 90,225 274,680 140,000 Caesars Entertainment Inc.+ ....... 1,276,659 1,825,600 46,000 Churchill Downs Inc. .............. 1,237,574 1,783,880 104,000 Dover Downs Gaming & Entertainment Inc. .............. 1,038,939 1,113,840 160,000 Gaylord Entertainment Co.+ ........ 4,578,906 4,944,000 5,000 Jury's Doyle Hotel Group plc ...... 27,762 60,216 58,000 Kerzner International Ltd+ ........ 1,195,218 2,572,300 380,000 La Quinta Corp.+ .................. 975,912 2,865,200 74,000 Lakes Entertainment Inc.+ ......... 771,260 1,881,080 375,000 Magna Entertainment Corp., Cl. A+ .......................... 2,445,344 2,257,500 55,000 Penn National Gaming Inc.+ ........ 263,646 1,582,350 90,000 Pinnacle Entertainment Inc.+ ...... 705,885 1,242,000 3,000 Station Casinos Inc. .............. 13,350 132,510 35,000 Trump Hotels & Casino Resorts Inc.+ ................... 273,418 84,000 70,000 Wyndham International Inc., Cl. A+ .......................... 153,945 70,000 22,000 Wynn Resorts Ltd.+ ................ 311,744 770,000 20,000 Youbet.com Inc.+ .................. 51,494 72,800 ------------ ------------ 18,554,941 30,024,341 ------------ ------------ See accompanying notes to financial statements. 6 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) METALS AND MINING -- 0.4% 142,115 Kinross Gold Corp.+ ...............$ 984,488 $ 1,041,703 10,000 Meridian Gold Inc.+ ............... 75,630 122,000 70,000 Placer Dome Inc. .................. 653,970 1,257,900 190,000 Royal Oak Mines Inc.+ ............. 322,487 950 26,148 Stillwater Mining Co.+ ............ 362,121 410,524 ------------ ------------ 2,398,696 2,833,077 ------------ ------------ MUTUAL FUNDS -- 0.4% 60,000 Central Europe and Russia Fund Inc. ....................... 970,809 1,470,000 36,266 France Growth Fund Inc.+ .......... 347,117 275,622 36,700 Germany Fund Inc. ................. 386,832 254,698 25,000 Italy Fund Inc. Escrow (b) ........ 0 0 60,000 New Germany Fund Inc. ............. 699,559 442,200 11,000 Spain Fund Inc. ................... 103,029 112,420 ------------ ------------ 2,507,346 2,554,940 ------------ ------------ PAPER AND FOREST PRODUCTS -- 0.3% 40,000 Packaging Dynamics Corp. .......... 296,567 530,400 27,000 Schweitzer-Manduit International Inc. .............. 651,602 872,100 24,000 Wausau-Mosinee Paper Corp. ........ 280,862 338,160 ------------ ------------ 1,229,031 1,740,660 ------------ ------------ PUBLISHING -- 4.6% 307,237 Independent News & Media plc ...... 431,671 743,796 10,000 Journal Communications Inc., Cl. A ..................... 190,482 200,000 120,000 Journal Register Co.+ ............. 1,938,438 2,508,000 14,000 Lee Enterprises Inc. .............. 330,830 632,520 53,500 McClatchy Co., Cl. A .............. 1,588,435 3,800,640 69,000 Media General Inc., Cl. A ......... 1,910,905 4,642,320 28,000 Meredith Corp. .................... 500,908 1,415,680 1,125,000 Penton Media Inc.+ ................ 1,738,342 810,000 400,000 PRIMEDIA Inc.+ .................... 1,290,397 1,080,000 130,000 Pulitzer Inc. ..................... 4,366,943 6,272,500 235,800 Thomas Nelson Inc. ................ 2,404,880 6,418,476 4,000 Value Line Inc. ................... 162,772 210,920 12,000 Wiley (John) & Sons Inc., Cl. B ........................... 46,500 360,000 ------------ ------------ 16,901,503 29,094,852 ------------ ------------ REAL ESTATE -- 1.3% 75,000 Catellus Development Corp. ........ 1,206,158 1,950,750 158,500 Griffin Land & Nurseries Inc.+ .... 1,919,832 4,025,900 10,000 Gyrodyne Company of America Inc.+ ................... 151,452 274,950 396 HomeFed Corp.+ .................... 10,969 13,701 25,000 Malan Realty Investors Inc. ....... 235,660 125,750 110,000 Morguard Corp. .................... 1,392,683 1,987,826 ------------ ------------ 4,916,754 8,378,877 ------------ ------------ MARKET SHARES COST VALUE ------ ---- ------ RETAIL -- 2.8% 35,000 Aaron Rents Inc. ..................$ 344,877 $ 871,150 97,500 Aaron Rents Inc., Cl. A ........... 524,217 2,120,625 28,000 Big 5 Sporting Goods Corp.+ ....... 507,360 707,000 100,000 Burlington Coat Factory Warehouse Corp. ................. 1,080,937 1,980,000 10,000 Casey's General Stores Inc. ....... 155,152 166,000 31,500 Coldwater Creek Inc.+ ............. 239,553 671,580 40,000 CSK Auto Corp.+ ................... 743,652 724,400 175,000 Ingles Markets Inc., Cl. A ........ 2,176,507 1,873,725 12,300 Movado Group Inc. ................. 340,162 368,262 130,000 Neiman Marcus Group Inc., Cl. B ........................... 4,106,529 6,519,500 3,000 The Sports Authority Inc.+ ........ 18,395 120,240 40,000 Weis Markets Inc. ................. 1,174,744 1,350,000 ------------ ------------ 11,412,085 17,472,482 ------------ ------------ SATELLITE -- 0.4% 20,000 Pegasus Communications Corp.+ .......................... 477,724 766,800 100,000 Sirius Satellite Radio Inc.+ ...... 279,419 340,000 40,000 XM Satellite Radio Holdings Inc., Cl. A+ .................... 370,830 1,120,000 ------------ ------------ 1,127,973 2,226,800 ------------ ------------ SPECIALTY CHEMICALS -- 4.5% 35,000 Airgas Inc. ....................... 211,400 745,500 30,000 Albemarle Corp. ................... 654,490 870,000 55,000 Arch Chemicals Inc. ............... 1,161,735 1,552,650 10,000 Cytec Industries Inc.+ ............ 278,296 355,700 9,000 Dionex Corp.+ ..................... 270,000 475,200 150,000 Ferro Corp. ....................... 3,405,165 3,922,500 130,000 Fuller (H.B.) Co. ................. 2,306,337 3,697,200 50,000 Great Lakes Chemical Corp. ........ 1,247,733 1,192,500 450,000 Hercules Inc.+ .................... 4,361,521 5,166,000 1,500 IMC Global Inc. ................... 10,470 21,450 155,000 MacDermid Inc. .................... 2,646,555 5,454,450 180,000 Material Sciences Corp.+ .......... 1,696,183 1,980,000 130,000 Omnova Solutions Inc.+ ............ 810,622 682,500 50,000 Penford Corp. ..................... 539,601 833,000 10,000 Quaker Chemical Corp. ............. 181,138 254,000 55,000 Schulman (A.) Inc. ................ 643,350 1,080,750 ------------ ------------ 20,424,596 28,283,400 ------------ ------------ TELECOMMUNICATIONS -- 1.0% 9,200 Atlantic Tele-Network Inc. ........ 92,644 286,580 190,000 Cincinnati Bell Inc.+ ............. 475,442 773,300 20,000 Citizens Communications Co.+ ...... 195,332 258,800 79,460 Commonwealth Telephone Enterprises Inc.+ ............... 1,517,147 3,258,655 6,795 Community Service Communications Inc.+ ............ 0 13,930 46,950 D&E Communications Inc. ........... 605,207 656,830 See accompanying notes to financial statements. 7 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) TELECOMMUNICATIONS (CONTINUED) 65,000 McLeodUSA Inc., Cl.A, Escrow+ (b) .....................$ 0 $ 0 277 NTL Inc.+ ......................... 8,407 16,468 2,000 RCN Corp.+ ........................ 9,221 580 25,000 Rogers Communications Inc., Cl. B ........................... 226,378 467,250 20,000 Shenandoah Telecommunications Co. .......... 296,543 457,000 2,500 Telewest Communications plc, ADR+ ....................... 8,875 15,000 53,000 Winstar Communications Inc.+ ...... 133 106 ------------ ------------ 3,435,329 6,204,499 ------------ ------------ TRANSPORTATION -- 0.1% 95,000 Grupo TMM SA de CV, Cl. A, ADR+ ..................... 863,299 263,150 2,000 Irish Continental Group plc ....... 18,082 29,957 50,000 OMI Corp.+ ........................ 313,120 572,000 5,100 Providence & Worcester Railroad Co. .................... 42,979 48,450 ------------ ------------ 1,237,480 913,557 ------------ ------------ WIRELESS COMMUNICATIONS -- 2.1% 6,000 Airgate Pcs Inc (New)+ ............ 137,880 89,994 50,000 Centennial Communications Corp.+ .......................... 545,692 338,000 11 Microcell Telecommunications Inc., Cl. B+ .................... 77 209 5,000 Nextel Communications Inc., Cl. A+ .......................... 35,338 123,650 75,000 Price Communications Corp.+ ....... 914,718 1,176,750 56,000 Rogers Wireless Communications Inc., Cl. B+ .......................... 806,844 1,481,200 55,000 Rural Cellular Corp., Cl. A+ ...... 374,090 526,350 25,000 Triton PCS Holdings Inc., Cl. A+ .......................... 388,518 137,250 10,000 Ubiquitel Inc.+ ................... 42,850 35,290 71,000 Vimpel-Communications, ADR+ ....... 1,836,938 7,383,290 80,000 Western Wireless Corp., Cl. A+ .... 279,042 1,869,600 ------------ ------------ 5,361,987 13,161,583 ------------ ------------ TOTAL COMMON STOCKS ............... 412,939,378 615,604,181 ------------ ------------ PREFERRED STOCKS -- 1.9% BROADCASTING -- 0.3% 1,063 Granite Broadcasting Corp., 12.750% Pfd.+ ................... 439,683 574,020 100 Gray Television Inc., 8.000% Cv. Pfd., Ser. C (b)(d) ................... 1,000,000 1,020,000 MARKET SHARES COST VALUE ------ ---- ------ 1,131 PTV Inc., 10.000% Pfd., Ser. A+ .........................$ 0 $ 6,079 ------------ ------------ 1,439,683 1,600,099 ------------ ------------ BUSINESS SERVICES -- 0.3% 20,787 Interep National Radio Sales Inc., 4.000% Cv. Pfd., Ser. A (b)(d) ................... 2,080,000 2,120,240 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 0.1% WHX Corp., 58,000 6.500% Cv. Pfd., Ser. A+ ........ 463,067 435,000 39,400 $3.75 Cv. Pfd., Ser. B+ ......... 191,751 278,558 ------------ ------------ 654,818 713,558 ------------ ------------ PUBLISHING -- 0.8% 160,000 News Corp. Ltd., Pfd., ADR ........ 941,920 5,073,600 ------------ ------------ TELECOMMUNICATIONS -- 0.4% 13,000 Andrew Corp., 7.750% Cv. Pfd., Ser. D ......... 633,275 2,691,000 ------------ ------------ TOTAL PREFERRED STOCKS ............ 5,749,696 12,198,497 ------------ ------------ RIGHTS -- 0.0% WIRELESS COMMUNICATIONS -- 0.0% 11 Microcell Telecommunications Inc. Rights+ .................... 0 5 ------------ ------------ WARRANTS -- 0.1% BUSINESS SERVICES -- 0.1% 250,000 GP Strategies Corp., Expire 08/14/08+ (b) ............ 637,065 637,065 125,000 Interep National Radio Sales Inc.+ (b) ................. 0 0 ------------ ------------ 637,065 637,065 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 0.0% 430 Anacomp Inc., Cl. B, Expire 12/10/06+ ................ 0 97 ------------ ------------ HEALTH CARE -- 0.0% 14,424 Del Global Technologies Corp., Expire 03/28/08+ ................ 24,809 5,192 ------------ ------------ TELECOMMUNICATIONS -- 0.0% 86 NTL Inc., Expire 01/13/11+ ........ 124 710 ------------ ------------ WIRELESS COMMUNICATIONS -- 0.0% 1,387 Microcell Telecommunications Inc., Cl. A, Expire 05/01/05+ ......... 1,991 6,322 2,312 Microcell Telecommunications Inc., Cl. B, Expire 05/01/08+ ......... 3,553 12,314 ------------ ------------ 5,544 18,636 ------------ ------------ TOTAL WARRANTS .................... 667,542 661,700 ------------ ------------ See accompanying notes to financial statements. 8 THE GABELLI SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------ CORPORATE BONDS -- 0.3% AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1% $ 800,000 Exide Corp., Sub. Deb. Cv., 2.900%, 12/15/05+ (c)(d) ........$ 6,000 $ 12,480 600,000 GenCorp Inc., Sub. Deb. Cv., 5.750%, 04/15/07 ................ 565,676 610,500 ------------ ------------ 571,676 622,980 ------------ ------------ BUILDING AND CONSTRUCTION -- 0.0% 100,000 Foster Wheeler Ltd., Sub. Deb. Cv., 6.500%, 06/01/07 ................ 36,294 63,125 ------------ ------------ BUSINESS SERVICES -- 0.2% 2,000,000 GP Strategies Corp., Sub. Deb., 6.000%, 08/14/08 (b) ............ 1,419,208 1,418,062 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 0.0% 300,000 Exodus Communications Inc., Sub. Deb. Cv., 5.250%, 02/15/08+ (c) ........... 1,185 1,125 ------------ ------------ ENERGY AND UTILITIES -- 0.0% 200,000 Friede Goldman Halter Inc., Sub. Deb. Cv., 4.500%, 09/15/04+ (c) ........... 26,000 17,500 100,000 Ogden Corp., Sub. Deb. Cv., 6.000%, 06/01/49+ (c) ........... 99,535 0 ------------ ------------ 125,535 17,500 ------------ ------------ HEALTH CARE -- 0.0% 28,847 Del Global Technologies Corp., 6.000%, 03/28/07 (b) ............ 28,847 21,636 10,000 Inhale Therapeutic Systems, Sub. Deb. Cv., 6.750%, 10/13/06 (d) ............ 6,952 14,824 ------------ ------------ 35,799 36,460 ------------ ------------ PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------ TELECOMMUNICATIONS -- 0.0% $ 400,000 Williams Comm Group Inc., Escrow, 10.875%, 10/01/09 (c) ...........$ 0 $ 0 200,000 XO Communications Inc., Sub. Deb. Cv., 5.750%, 01/15/09+ (c)(d) ........ 375 500 ------------ ------------ 375 500 ------------ ------------ TOTAL CORPORATE BONDS ............. 2,190,072 2,159,752 ------------ ------------ TOTAL INVESTMENTS -- 99.6% ............$421,546,688 630,624,135 ============ OTHER ASSETS AND LIABILITIES (NET) -- 0.4% ......... 2,315,081 ------------ NET ASSETS -- 100.0% ...............................$632,939,216 ============ - ---------------- For Federal tax purposes: Aggregate cost .....................................$421,546,688 ============ Gross unrealized appreciation ......................$228,009,637 Gross unrealized depreciation ...................... (18,932,190) ------------ Net unrealized appreciation ........................$209,077,447 ============ - ---------------- (a) Security considered an affiliated holding because the Fund owns at least 5% of the outstanding shares. (b) Security fair valued under procedures established by the Board of Directors. The procedures may include reviewing available financial information about the company and reviewing valuation of comparable securities and other factors on a regular basis. The aggregate value of such securities is $5,501,813 or 0.87% of net assets. (c) Security is in default. (d) Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2004, the market value of Rule 144A securities amounted to $3,168,044 or 0.50% of total net assets. + Non-income producing security. ++ Represents annualized yield at date of purchase. ADR - American Depository Receipt. See accompanying notes to financial statements. 9 THE GABELLI SMALL CAP GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investments, at value (Cost $421,546,688) .. $630,624,135 Cash ....................................... 1,314,227 Dividends and interest receivable .......... 1,324,872 Receivable for investments sold ............ 899,862 Receivable for capital shares sold ......... 568,017 Other assets ............................... 20,412 ------------ TOTAL ASSETS ............................... 634,751,525 ------------ LIABILITIES: Payable for investments purchased .......... 769,128 Payable for capital shares redeemed ........ 58,692 Payable for investment advisory fees ....... 529,914 Payable for distribution fees .............. 132,486 Payable for shareholder communication fees . 88,269 Payable for shareholder services fees ...... 138,637 Other accrued expenses ..................... 95,183 ------------ TOTAL LIABILITIES .......................... 1,812,309 ------------ NET ASSETS applicable to 24,568,979 shares outstanding ....................... $632,939,216 ============ NET ASSETS CONSIST OF: Capital stock, at par value ................ $ 24,569 Additional paid-in capital ................. 411,475,079 Accumulated net investment income .......... 27,445 Accumulated net realized gain on investments and foreign currency transactions ........ 12,332,969 Net unrealized appreciation on investments and foreign currency transactions ........ 209,079,154 ------------ NET ASSETS ................................. $632,939,216 ============ SHARES OF CAPITAL STOCK: CLASS AAA: Net asset value, offering and redemption price per share ($632,900,635 / 24,567,481 shares outstanding; 200,000,000 shares authorized of $0.001 par value) ..................... $25.76 ====== CLASS A: Net asset value and redemption price per share ($23,854 / 926 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ... $25.77 ====== Maximum sales charge 5.75% ====== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price at March 31, 2004) .... $27.34 ====== CLASS B: Net asset value and offering price per share ($13,677 / 531 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ... $25.72(a) ====== CLASS C: Net asset value and offering price per share ($1,050 / 41 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ... $25.72(a) ====== - ----------- (a) Redemption price varies based on length of time held. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends (net of foreign taxes of $13,143) $ 4,314,410 Interest ................................... 137,911 ------------ TOTAL INVESTMENT INCOME .................... 4,452,321 ------------ EXPENSES: Investment advisory fees ................... 3,040,554 Distribution fees .......................... 760,149 Shareholder services fees .................. 290,439 Custodian fees ............................. 52,233 Shareholder communications expenses ........ 72,612 Registration fees .......................... 32,337 Legal and audit fees ....................... 26,885 Directors' fees ............................ 22,566 Interest expense ........................... 22,954 Miscellaneous expenses ..................... 38,549 ------------ TOTAL EXPENSES ............................. 4,359,278 ------------ NET INVESTMENT INCOME ...................... 93,043 ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain on investments and foreign currency transactions .................... 16,152,777 Net change in unrealized appreciation/ depreciation on investments and foreign currency transactions .................... 95,600,338 ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ............................. 111,753,115 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......................... $111,846,158 ============ See accompanying notes to financial statements. 10 THE GABELLI SMALL CAP GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MARCH 31, 2004 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2003 ---------------- ------------------ OPERATIONS: Net investment income/(loss) ....................... $ 93,043 $ (1,046,497) Net realized gain on investments and foreign currency transactions .................... 16,152,777 5,606,020 Net change in unrealized appreciation/depreciation on investments and foreign currency transactions ............................ 95,600,338 112,208,652 ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 111,846,158 116,768,175 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS: Net realized short-term gain on investments ........ (2,246,976) (300,296) Net realized long-term gain on investments ......... (2,105,462) (6,071,352) ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (4,352,438) (6,371,648) ------------- ------------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares issued: Class AAA ........................................ 81,335,568 131,697,417 Class A .......................................... 23,621 -- Class B .......................................... 13,500 -- Class C .......................................... 1,000 -- ------------- ------------- 81,373,689 131,697,417 ------------- ------------- Proceeds from reinvestment of dividends: Class AAA ........................................ 4,162,298 6,099,180 Class A .......................................... -- -- Class B .......................................... -- -- Class C .......................................... -- -- ------------- ------------- 4,162,298 6,099,180 ------------- ------------- Cost of shares redeemed: Class AAA ........................................ (100,487,017) (136,212,243) Class A .......................................... -- -- Class B .......................................... -- -- Class C .......................................... -- -- ------------- ------------- (100,487,017) (136,212,243) ------------- ------------- Net increase/(decrease) in net assets from capital share transactions .................. (14,951,030) 1,584,354 ------------- ------------- NET INCREASE IN NET ASSETS ......................... 92,542,690 111,980,881 NET ASSETS: Beginning of period ................................ 540,396,526 428,415,645 ------------- ------------- End of period (including undistributed net investment income of $27,445 and $0, respectively) .................................... $ 632,939,216 $ 540,396,526 ============= ============= 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 (the "Fund") is a series of Gabelli Equity Series Funds, Inc. (the "Corporation"), which was organized on July 25, 1991 as a Maryland corporation. The Fund is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of three separately managed portfolios (collectively, the "Portfolios") of the Corporation, each with four separate classes of shares known as Class AAA, Class A, Class B and Class C. The Fund's primary objective is capital appreciation. The Fund commenced investment operations on October 22, 1991. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures in the 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. 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. All other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest average of the bid and asked prices. If there were no asked prices quoted on that day, then the security is valued at the closing bid price. 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 foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if, after the close, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board of Directors. Securities and assets for which market quotations are not readily available are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Board of Directors. Short-term debt securities with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors determines such does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board of Directors. Debt instruments having a maturity greater than 60 days are valued at the latest average of the bid and asked prices obtained from a pricing service approved by the Board of Directors, or a dealer maintaining an active market in those securities. Options are valued at the last sale price on the exchange on which they are listed. If no sales of such options have taken place that day, they will be valued at the mean between their closing bid and asked prices. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board of Directors. Under the terms of a typical repurchase agreement, the Fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Fund to resell, the obligation at an agreed-upon price and time, thereby determining the yield during the Fund's holding period. The Fund will always receive and maintain securities as collateral whose market value, including accrued 12 THE GABELLI SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- interest, will be at least equal to 102% of the dollar amount invested by the Fund in each agreement. The Fund will make payment for such securities only upon physical delivery or upon evidence of book entry transfer of the collateral to the account of the custodian. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to maintain the adequacy of the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. At March 31, 2004, there were no repurchase agreements. FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the "initial margin". Subsequent payments ("variation margin") are made or received by the Fund each day, depending on the daily fluctuation of the value of the contract. The daily changes in the contract are included in unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed. At March 31, 2004, there were no futures contracts. There are several risks in connection with the use of futures contracts as a hedging device. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign exchange contracts for hedging a specific transaction with respect to either the currency in which the transaction is denominated or another currency as deemed appropriate by the Adviser. Forward foreign exchange contracts are valued at the forward rate and are marked-to-market daily. The change in market value is included in unrealized appreciation/depreciation on investments and foreign currency transactions. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. At March 31, 2004, there were no open forward foreign exchange contracts. The use of forward foreign exchange contracts does not eliminate fluctuations in the underlying prices of the Fund's portfolio securities, but it does establish a rate of exchange that can be achieved in the future. Although forward foreign exchange contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain/loss that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained in United States (U.S.) dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the exchange rates prevailing at the end of the period, and 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, which 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 transactions. Net realized foreign currency gains and losses resulting from changes in exchange rates 13 THE GABELLI SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- 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 trade date and subsequent sale trade date is included in realized gain/loss on investments. SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are accounted for on the trade date with realized gain or loss on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded as earned. Dividend income is recorded on the ex-dividend date. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States. For fiscal year ended September 30, 2003, the tax character of distributions paid does not materially differ from the amounts recorded in accordance with accounting principles generally accepted in the United States. For the fiscal year ended September 30, 2003, reclassifications were made to decrease accumulated net investment loss for $984,787 and decrease accumulated net realized gain on investments for $974,892, with an offsetting adjustment to additional paid-in capital. EXPENSES. Certain administrative expenses are common to, and allocated among, the Portfolios. Such allocations are made on the basis of each Portfolio's average net assets or other criteria directly affecting the expenses as determined by the Adviser. 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. As a result, a Federal income tax provision is not required. As of September 30, 2003, the components of accumulated earnings/losses on a tax basis were as follows: Undistributed ordinary income (inclusive of short-term capital gains) .... $ 2,330,289 Undistributed long-term capital gains ........ 1,965,427 Post-October losses .......................... (710) Net unrealized appreciation .................. 109,715,730 Other temporary differences .................. (64,888) ------------ Total accumulated earnings ................. $113,945,848 ============ Dividends and interest from non-U.S. sources received by the Fund are generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such withholding taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties, and the Fund intends to undertake any procedural steps required to claim the benefits of such treaties. The difference between book and tax basis undistributed ordinary income is primarily due to the continued accrual of defaulted interest for tax purposes which has been written down for book purposes. 14 THE GABELLI SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- The difference between book and tax basis unrealized appreciation is primarily due to deferral of losses from wash sales for tax purposes. 3. INVESTMENT ADVISORY AGREEMENT. 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 the Fund's 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 its affiliates. 4. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution plan (the "Plan") for each Class of Shares pursuant to Rule 12b-1 under the 1940 Act. For the six months ended March 31, 2004, the Fund incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of the Adviser, of $760,131 and $3 for Class AAA and Class A Shares, respectively, or 0.25% of average daily net assets, the annual limitation under each Plan. Class B and Class C Shares incurred distribution costs of $12 and $3, respectively, or 1.00% of average daily net assets, the annual limitation under each Plan. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months ended March 31, 2004, other than short term securities, aggregated $28,674,414 and $46,351,065, respectively. 6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2004, the Fund paid brokerage commissions of $84,800 to Gabelli & Company, Inc. During the six months ended March 31, 2004, Gabelli & Company, Inc. received $155 from investors representing commissions (sales charges and underwriting fees) on sales of Fund shares. The cost of calculating the Fund's net asset value per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the six months ended March 31, 2004, the Fund reimbursed the Adviser $17,400 in connection with the cost of computing the Fund's net asset value. 7. LINE OF CREDIT. The Fund has access to an unsecured line of credit up to $25,000,000 from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at 0.75% above the Federal Funds rate on outstanding balances. The average daily amount of borrowings within the six months ended March 31, 2004 was $2,219,295 with a related weighted average interest rate of 1.78%. The maximum amount borrowed at any time during the six months ended March 31, 2004 was $9,451,000. 15 THE GABELLI SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- 8. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as follows: SIX MONTHS ENDED MARCH 31, 2004 PERIOD ENDED (UNAUDITED) SEPTEMBER 30, 2003 ------------------------------- ------------------------------- SHARES AMOUNT SHARES AMOUNT ------------ ------------- ------------ ------------- CLASS AAA Shares sold ................................ 3,321,697 $ 81,335,568 6,936,908 $ 131,697,417 Shares issued upon reinvestment of dividends 172,209 4,162,298 338,280 6,099,180 Shares redeemed ............................ (4,082,819) (100,487,017) (7,267,158) (136,212,243) ------------ ------------- ------------ ------------- Net increase/decrease in Class AAA shares .. (588,913) $ (14,989,151) 8,030 $ 1,584,354 ============ ============= ============ ============= CLASS A Shares sold ................................ 926 $ 23,621 -- -- ------------ ------------- ------------ ------------- Net increase in Class A shares ............. 926 $ 23,621 -- -- ============ ============= ============ ============= CLASS B Shares sold ................................ 531 $ 13,500 -- -- ------------ ------------- ------------ ------------- Net increase in Class B shares ............. 531 $ 13,500 -- -- ============ ============= ============ ============= CLASS C Shares sold ................................ 41 $ 1,000 -- -- ------------ ------------- ------------ ------------- Net increase in Class C shares ............. 41 $ 1,000 -- -- ============ ============= ============ ============= 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, 2004, is set forth below: PERCENT SHARES VALUE AT OWNED BEGINNING PURCHASED ENDING DIVIDEND MARCH 31, OF SHARES SHARES (SOLD) SHARES INCOME 2004 OUTSTANDING --------- --------- ------ -------- --------- ----------- Trans-Lux Corp. ... 95,000 0 95,000 $6,650 $744,800 9.76% ------ - ------ ------ -------- ----- 16 THE GABELLI SMALL CAP GROWTH FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of capital stock outstanding throughout each period: INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ----------------------------------------------------- ------------------------------------- Net Net Asset Realized and Total Net Net Asset Period Value, Net Unrealized from Net Realized Value, Ended Beginning Investment Gain/(Loss) on Investment Investment Gain on Total End of Total September 30 of Period Income/(Loss) Investments Operations Income Investments Distributions Period Return+ - ------------ --------- ------------- -------------- ---------- ---------- ----------- ------------- --------- ------- CLASS AAA 2004(c) $21.48 $ 0.00* $4.45 $4.45 -- $(0.17) $(0.17) $25.76 20.84% 2003 17.04 (0.05) 4.74 4.69 -- (0.25) (0.25) 21.48 27.84 2002 17.13 (0.04) 0.31 0.27 $(0.01) (0.35) (0.36) 17.04 1.39 2001 23.60 0.06 (1.75) (1.69) (0.05) (4.73) (4.78) 17.13 (7.47) 2000 21.84 0.06 4.16 4.22 -- (2.46) (2.46) 23.60 21.00 1999 18.81 (0.07) 3.63 3.56 -- (0.53) (0.53) 21.84 19.24 CLASS A 2004(a)(c) $24.49 $(0.00)* $1.28 $1.28 -- -- -- $25.77 5.23% CLASS B 2004(a)(c) $24.49 $ 0.00* $1.23 $1.23 -- -- -- $25.72 5.02% CLASS C 2004(a)(c) $24.49 $(0.03) $1.26 $1.23 -- -- -- $25.72 5.02% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ------------------------------------------------ Net Assets Period End of Net Portfolio Ended Period Investment Operating Turnover September 30 (in 000's) Income/(Loss) Expenses Rate - ------------ ---------- ------------- ---------- --------- CLASS AAA 2004(c) $632,900 0.03%(b) 1.44%(b) 5% 2003 540,397 (0.22) 1.45 4 2002 428,416 (0.22) 1.45 10 2001 372,865 0.30 1.45 17 2000 366,459 0.26 1.49 47 1999 305,403 (0.34) 1.56(d) 24 CLASS A 2004(a)(c) $ 24 (0.02)%(b) 1.44%(b) 5% CLASS B 2004(a)(c) $ 14 0.26%(b) 2.19%(b) 5% CLASS C 2004(a)(c) $ 1 (0.60)%(b) 2.19%(b) 5% - -------------- + Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period and sold at the end of the period including reinvestment of dividends. Total return for the period of less than one year is not annualized. (a) From the commencement of offering Class A, Class B and Class C Shares on December 31, 2003. (b) Annualized. (c) For the period ending March 31, 2004, unaudited. (d) The Fund incurred interest expense during the fiscal year ended September 30, 1999. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.53%. * Amount is less than $0.005 per share. See accompanying notes to financial statements. 17 - -------------------------------------------------------------------------------- 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, Gabelli Advisers, Inc. and Gabelli Fixed Income, LLC, which are affiliated with Gabelli Asset Management Inc. Gabelli Asset Management is a publicly-held company that has subsidiaries that provide investment advisory or brokerage services for a variety of clients. WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A GABELLI CUSTOMER? 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: o 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. o 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, and the deposits and withdrawals that you make. 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 web site, 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. - -------------------------------------------------------------------------------- GABELLI FAMILY OF FUNDS VALUE ________________________________________ GABELLI ASSET FUND Seeks to invest primarily in a diversified portfolio of common stocks selling at significant discounts to their private market value. The Fund's primary objective is growth of capital. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI BLUE CHIP VALUE FUND Seeks long term growth of capital through investment primarily in the common stocks of established companies which are temporarily out of favor. The fund's objective is to identify a catalyst or sequence of events that will return the company to a higher value. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA GABELLI WESTWOOD EQUITY FUND Seeks to invest primarily in the common stock of well-seasoned companies that have recently reported positive earnings surprises and are trading below Westwood's proprietary growth rate estimates. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE FOCUSED VALUE ______________________________ GABELLI VALUE FUND Seeks to invest in securities of companies believed to be undervalued. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA SMALL CAP VALUE ____________________________ GABELLI SMALL CAP FUND Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI WOODLAND SMALL CAP VALUE FUND Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company's value. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA GROWTH ______________________________________ GABELLI GROWTH FUND Seeks to invest primarily in large cap stocks believed to have favorable, yet undervalued, prospects for earnings growth. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA GABELLI INTERNATIONAL GROWTH FUND Seeks to invest in the equity securities of foreign issuers with long-term capital appreciation potential. The Fund offers investors global diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN AGGRESSIVE GROWTH _________________________ GABELLI GLOBAL GROWTH FUND Seeks capital appreciation through a disciplined investment program focusing on the globalization and interactivity of the world's marketplace. The Fund invests in companies at the forefront of accelerated growth. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED MICRO-CAP ___________________________________ GABELLI WESTWOOD MIGHTY MITES(SM) FUND Seeks to invest in micro-cap companies that have market capitalizations of $300 million or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED EQUITY INCOME _______________________________ GABELLI EQUITY INCOME FUND Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI WESTWOOD BALANCED FUND Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The Fund's primary objective is both capital appreciation and current income. (MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE MARK FREEMAN, CFA GABELLI WESTWOOD REALTY FUND Seeks to invest in securities that are primarily engaged in or related to the real estate industry. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE SPECIALTY EQUITY ____________________________ GABELLI GLOBAL CONVERTIBLE SECURITIES FUND Seeks to invest principally in bonds and preferred stocks which are convertible into common stock of foreign and domestic companies. The Fund's primary objective is total return through a combination of current income and capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI GLOBAL OPPORTUNITY FUND Seeks to invest in common stock of companies which have rapid growth in revenues and earnings and potential for above average capital appreciation or are undervalued. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED SECTOR ______________________________________ GABELLI GLOBAL TELECOMMUNICATIONS FUND Seeks to invest in telecommunications companies throughout the world - targeting undervalued companies with strong earnings and cash flow dynamics. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI GOLD FUND Seeks to invest in a global portfolio of equity securities of gold mining and related companies. The Fund's objective is long-term capital appreciation. Investment in gold stocks is considered speculative and is affected by a variety of world-wide economic, financial and political factors. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN GABELLI UTILITIES FUND Seeks to provide a high level of total return through a combination of capital appreciation and current income. (MULTICLASS) TEAM MANAGED MERGER AND ARBITRAGE _____________________ GABELLI ABC FUND Seeks to invest in securities with attractive opportunities for appreciation or investment income. The Fund's primary objective is total return in various market conditions without excessive risk of capital loss. (NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA CONTRARIAN_________________________________ Gabelli Mathers Fund Seeks long-term capital appreciation in various market conditions without excessive risk of capital loss. (CLASS AAA-NO-LOAD) PORTFOLIO MANAGER: HENRY VAN DER EB, CFA COMSTOCK CAPITAL VALUE FUND Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA COMSTOCK STRATEGY FUND The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA QUANTITATIVE_________________________________ NED DAVIS RESEARCH ASSET ALLOCATION FUND Seeks to achieve returns greater then the weighted composite benchmark consisting of 60% in the S&P 500 Index and 40% in the Lehman Long Term U.S. Government Bond Index through a flexible asset allocation strategy. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED SMALL CAP GROWTH __________________________ GABELLI WESTWOOD SMALLCAP EQUITY FUND Seeks to invest primarily in smaller capitalization equity securities - market caps of $1.5 billion or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) CO-PORTFOLIO MANAGERS: CHRISTOPHER J. MACDONALD, CFA FIXED INCOME ________________________________ GABELLI WESTWOOD INTERMEDIATE BOND FUND Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund's primary objective is total return. (MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA CASH MANAGEMENT-MONEY MARKET __________ GABELLI U.S. TREASURY MONEY MARKET FUND Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's primary objective is to provide high current income consistent with the preservation of principal and liquidity. (NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI THE TREASURER'S FUND Three money market portfolios designed to generate superior returns without compromising portfolio safety. U.S. Treasury Money Market seeks to invest in U.S. Treasury securities and repurchase agreements. Tax Exempt Money Market seeks to invest in municipal securities. Domestic Prime Money Market seeks to invest in prime quality, domestic money market instruments. (NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES OF THE FUND BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. Gabelli Equity Series Funds, Inc. THE GABELLI SMALL CAP GROWTH FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA Karl Otto Pohl CHAIRMAN AND CHIEF FORMER PRESIDENT INVESTMENT OFFICER DEUTSCHE BUNDESBANK GABELLI ASSET MANAGEMENT INC. Anthony J. Colavita Anthony R. Pustorino ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT ANTHONY J. COLAVITA, P.C. PROFESSOR EMERITUS PACE UNIVERSITY Vincent D. Enright Anthonie C. van Ekris FORMER SENIOR VICE PRESIDENT MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER BALMAC INTERNATIONAL, INC. KEYSPAN ENERGY CORP. John D. Gabelli Salvatore J. Zizza SENIOR VICE PRESIDENT CHAIRMAN GABELLI & COMPANY, INC. HALLMARK ELECTRICAL SUPPLIES CORP. Robert J. Morrissey ATTORNEY-AT-LAW MORRISSEY, HAWKINS & LYNCH OFFICERS Bruce N. Alpert James E. McKee PRESIDENT AND TREASURER SECRETARY DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP - -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The Gabelli Small Cap Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. - -------------------------------------------------------------------------------- GAB443Q104SR [GRAPHIC OMITTED] PICTURE OF MARIO GABELLI THE GABELLI SMALL CAP GROWTH FUND SEMI-ANNUAL REPORT MARCH 31, 2004 THE GABELLI EQUITY INCOME FUND SEMI-ANNUAL REPORT (B) MARCH 31, 2004 TO OUR SHAREHOLDERS, Higher yielding equities held up well as stocks retreated in March and the Gabelli Equity Income Fund posted a 16.2% gain during the six-month period ended March 31, 2004, compared with a 14.1% gain by the Standard & Poor's ("S&P") 500 Index during the same period. Enclosed is the portfolio of investments and financial statements as of March 31, 2004. COMPARATIVE RESULTS - ----------------------------------------------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2004 (A)(B) ---------------------------------------------------- SINCE QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION (C) ------- ------ ------ ------ ------- ------------- Gabelli Equity Income Fund Class AAA ..... 2.81% 36.40% 7.29% 8.31% 12.69% 12.39% S&P 500 Index ............................ 1.69% 35.10% 0.63% (1.20)% 11.68% 10.61% Nasdaq Composite Index ................... (0.46)% 48.69% 2.71% (4.12)% 10.37% 10.51% Lipper Equity Income Fund Avg. ........... 2.22% 35.78% 2.68% 3.30% 10.25% 10.17% Class A .................................. 2.74% 36.32% 7.27% 8.30% 12.69% 12.38% (3.16)%(d) 28.46%(d) 5.17%(d) 7.01%(d) 12.01%(d) 11.84%(d) Class B .................................. 2.56% 36.07% 7.21% 8.26% 12.67% 12.37% (2.44)%(e) 34.44%(e) 6.95%(e) 8.16%(e) 12.67%(e) 12.37%(e) Class C .................................. 2.62% 36.15% 7.23% 8.27% 12.67% 12.37% 1.62%(e) 35.83%(e) 7.23%(e) 8.27%(e) 12.67%(e) 12.37%(e) (a) Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price and reinvestment of dividends and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. The Class AAA Shares' net asset values are used to calculate performance for the periods prior to the issuance of Class A Shares, Class B Shares and Class C Shares on December 31, 2003. The actual performance for the Class A Shares, Class B Shares and Class C Shares would have been lower due to the additional expenses associated with these classes of shares. The S&P 500 Index and the Nasdaq Composite Index are unmanaged indicators of stock market performance, while the Lipper Average reflects the average performance of mutual funds classified in this particular category. 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. Investors should consider the investment objectives, risks and charges and expenses of the Fund before investing. The prospectus contains more complete information about this and other matters and should be read carefully before investing. Performance for periods less than one year is not annualized. (b) The Fund's fiscal year ends September 30. (c) From commencement of investment operations on January 2, 1992. (d) Includes the effect of the maximum 5.75% sales charge at the beginning of the period. (e) Includes the effect of the applicable contingent deferred sales charge at the end of the period shown for Class B and Class C Shares, respectively. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A description of the Funds' proxy voting policies and procedures is available (i) without charge, upon request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580; and (iii) on the Securities and Exchange Commission's website at www.sec.gov. - -------------------------------------------------------------------------------- THE GABELLI EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS -- 84.6% AEROSPACE -- 1.5% 32,000 Boeing Co. .............$ 1,082,148 $ 1,314,240 5,000 Lockheed Martin Corp. .. 104,386 228,200 7,000 Northrop Grumman Corp. . 431,350 688,940 10,000 Raytheon Co. ........... 279,250 313,400 2,000 Rockwell Automation Inc. 25,686 69,340 2,000 Rockwell Collins Inc. .. 15,844 63,220 105,000 Titan Corp.+ ........... 2,287,350 2,119,950 ------------ ------------ 4,226,014 4,797,290 ------------ ------------ AUTOMOTIVE -- 0.2% 4,500 Ford Motor Co. ......... 67,417 61,065 14,239 General Motors Corp. ... 538,747 670,657 ------------ ------------ 606,164 731,722 ------------ ------------ AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.6% 2,000 ArvinMeritor Inc. ...... 28,890 39,660 89,000 Dana Corp. ............. 1,252,433 1,767,540 6,400 Ethyl Corp.+ ........... 24,700 126,784 40,000 GenCorp Inc. ........... 342,710 433,200 125,000 Genuine Parts Co. ...... 3,542,196 4,090,000 5,000 Johnson Controls Inc. .. 127,000 295,750 60,000 Modine Manufacturing Co. 1,160,998 1,563,600 3,000 Pep Boys - Manny, Moe & Jack ........... 27,885 83,250 ------------ ------------ 6,506,812 8,399,784 ------------ ------------ AVIATION: PARTS AND SERVICES -- 0.8% 20,000 Barnes Group Inc. ...... 365,934 557,800 17,000 Curtiss-Wright Corp. ... 121,681 796,790 12,096 Curtiss-Wright Corp., Cl. B ................ 272,014 552,424 8,000 United Technologies Corp. ................ 281,946 690,400 ------------ ------------ 1,041,575 2,597,414 ------------ ------------ BROADCASTING -- 0.0% 20,000 Granite Broadcasting Corp.+ ............... 106,004 33,400 ------------ ------------ BUSINESS SERVICES -- 0.5% 4,000 Automatic Data Processing Inc. ...... 126,808 168,000 6,000 Donnelley (R.H.) Corp.+ 68,850 280,200 500 Imation Corp. .......... 7,150 18,810 2,500 Landauer Inc. .......... 60,337 105,000 5,000 National Processing Inc.+ ................ 77,065 95,000 26,000 New England Business Service Inc. ......... 494,245 880,100 ------------ ------------ 834,455 1,547,110 ------------ ------------ CABLE -- 0.1% 10,000 Comcast Corp., Cl. A+ .. 344,305 287,400 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 0.8% 45,000 Corning Inc.+ .......... 352,463 503,100 115,000 Motorola Inc. .......... 1,200,428 2,024,000 ------------ ------------ 1,552,891 2,527,100 ------------ ------------ MARKET SHARES COST VALUE ------ ---- ------ COMPUTER HARDWARE -- 0.1% 300 International Business Machines Corp. .......$ 3,810 $ 27,552 13,000 Xerox Corp.+ ........... 126,343 189,410 ------------ ------------ 130,153 216,962 ------------ ------------ COMPUTER SOFTWARE AND SERVICES -- 0.3% 10,000 Electronic Data Systems Corp. ........ 172,160 193,500 35,000 EMC Corp.+ ............. 331,520 476,350 15,000 PeopleSoft Inc.+ ....... 253,867 277,350 154 Telecom Italia Media SpA+ ........... 205 74 ------------ ------------ 757,752 947,274 ------------ ------------ CONSUMER PRODUCTS -- 6.0% 35,000 Altria Group Inc. ...... 1,051,855 1,905,750 1,000 Clorox Co. ............. 33,050 48,910 95,000 Eastman Kodak Co. ...... 2,653,246 2,486,150 44,000 Energizer Holdings Inc.+ ................ 1,104,727 2,054,360 74,000 Gallaher Group plc, ADR ............. 1,600,863 3,554,220 42,000 Gillette Co. ........... 1,233,027 1,642,200 70,000 Maytag Corp. ........... 1,736,480 2,209,900 36,000 National Presto Industries Inc. ...... 1,245,262 1,395,360 19,000 Procter & Gamble Co. ... 1,393,252 1,992,720 13,000 Rothmans Inc. .......... 237,941 338,786 26,000 Unilever NV, ADR ....... 1,542,066 1,805,440 ------------ ------------ 13,831,769 19,433,796 ------------ ------------ CONSUMER SERVICES -- 0.3% 35,000 Rollins Inc. ........... 454,969 901,950 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 3.7% 5,000 3M Co. ................. 213,645 409,350 22,000 Acuity Brands Inc. ..... 342,224 525,360 30,000 Cooper Industries Ltd., Cl. A ................ 1,194,666 1,715,400 22,000 GATX Corp. ............. 559,803 487,740 115,000 General Electric Co. ... 2,904,598 3,509,800 5,000 Harbor Global Co. Ltd.+ 24,172 51,250 100,000 Honeywell International Inc. ................. 2,429,693 3,385,000 47,000 Sensient Technologies Corp. ................ 953,833 877,490 22,000 Thomas Industries Inc. . 250,524 693,000 4,000 Trinity Industries Inc. 82,100 111,200 10,000 Tyco International Ltd. 128,601 286,500 ------------ ------------ 9,083,859 12,052,090 ------------ ------------ ELECTRONICS -- 1.8% 20,000 Intel Corp. ............ 370,400 544,000 125,000 Texas Instruments Inc. . 2,489,961 3,652,500 20,000 Thermo Electron Corp.+ . 424,925 565,600 50,000 Thomas & Betts Corp. ... 881,146 1,091,000 ------------ ------------ 4,166,432 5,853,100 ------------ ------------ ENERGY AND UTILITIES: ELECTRIC -- 3.5% 80,000 AES Corp.+ ............. 268,400 682,400 12,000 American Electric Power Co. Inc. ............. 310,790 395,040 See accompanying notes to financial statements. 2 THE GABELLI EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) ENERGY AND UTILITIES: ELECTRIC (CONTINUED) 81,000 Cinergy Corp. ..........$ 2,478,068 $ 3,312,090 17,000 DTE Energy Co. ......... 740,420 699,550 100,000 El Paso Electric Co.+ .. 790,289 1,384,000 20,000 FPL Group Inc. ......... 1,172,448 1,337,000 35,000 Great Plains Energy Inc. .......... 748,610 1,182,650 90,000 Northeast Utilities .... 1,660,471 1,678,500 8,000 UIL Holdings Corp. ..... 290,482 385,360 10,000 Unisource Energy Corp. . 244,500 245,700 ------------ ------------ 8,704,478 11,302,290 ------------ ------------ ENERGY AND UTILITIES: INTEGRATED -- 9.4% 38,000 Allegheny Energy Inc.+ . 318,325 520,980 110,000 Aquila Inc.+ ........... 317,164 518,100 44,000 BP plc, ADR ............ 1,030,210 2,252,800 42,000 Burlington Resources Inc. ....... 1,618,222 2,672,460 44,000 CH Energy Group Inc. ... 1,809,289 2,159,960 70,000 Constellation Energy Group Inc. ........... 1,664,815 2,796,500 1,000 Dominion Resources Inc. ................. 48,852 64,300 100,000 Duke Energy Corp. ...... 1,795,444 2,260,000 180,000 Duquesne Light Holdings Inc. ........ 2,955,682 3,510,000 135,000 El Paso Corp. .......... 1,263,718 959,850 150,000 Energy East Corp. ...... 3,071,332 3,804,000 29,000 Eni SpA ................ 304,221 583,036 40,000 NSTAR .................. 1,282,183 2,028,800 2,000 OGE Energy Corp. ....... 47,090 52,880 50,000 Progress Energy Inc. ... 2,144,038 2,354,000 15,000 Progress Energy Inc., CVO+ ................. 7,800 4,650 4,000 Public Service Enterprise Group Inc. ........... 131,300 187,920 12,000 Scottish Power plc, ADR ............. 314,381 340,320 55,000 TECO Energy Inc. ....... 754,173 804,650 27,000 TXU Corp. .............. 548,964 773,820 95,000 Westar Energy Inc. ..... 1,388,045 1,991,200 ------------ ------------ 22,815,248 30,640,226 ------------ ------------ ENERGY AND UTILITIES: NATURAL GAS -- 2.2% 33,400 AGL Resources Inc. ..... 640,619 969,268 25,000 Atmos Energy Corp. ..... 570,313 639,250 25,000 National Fuel Gas Co. .. 519,678 615,000 30,000 ONEOK Inc. ............. 477,001 676,500 3,000 Peoples Energy Corp. ... 103,188 133,950 12,000 Piedmont Natural Gas Co. Inc. ......... 394,017 506,640 18,000 SEMCO Energy Inc. ...... 160,883 101,880 63,282 Southern Union Co.+ .... 904,305 1,199,194 100,000 Southwest Gas Corp. .... 1,777,547 2,340,000 ------------ ------------ 5,547,551 7,181,682 ------------ ------------ ENERGY AND UTILITIES: OIL -- 6.1% 41,000 ChevronTexaco Corp. .... 1,927,546 3,598,980 58,000 ConocoPhillips ......... 3,187,718 4,048,980 15,000 Devon Energy Corp. ..... 692,247 872,250 MARKET SHARES COST VALUE ------ ---- ------ 123,000 Exxon Mobil Corp. ......$ 3,351,043 $ 5,115,570 18,000 Kerr-McGee Corp. ....... 778,337 927,000 95,000 Royal Dutch Petroleum Co. ........ 4,155,263 4,520,100 8,759 Total SA, ADR .......... 299,550 805,828 ------------ ------------ 14,391,704 19,888,708 ------------ ------------ ENERGY AND UTILITIES: SERVICES -- 0.4% 14,000 Halliburton Co. ........ 158,327 425,460 12,000 Schlumberger Ltd. ...... 547,706 766,200 ------------ ------------ 706,033 1,191,660 ------------ ------------ ENERGY AND UTILITIES: WATER -- 0.1% 18,750 Aqua America Inc. ...... 230,874 406,500 ------------ ------------ ENTERTAINMENT -- 1.3% 17,000 Fox Entertainment Group Inc., Cl. A+ ............... 372,969 460,700 105,000 The Walt Disney Co. .... 1,745,083 2,623,950 60,000 Time Warner Inc.+ ...... 784,500 1,011,600 3,000 Viacom Inc., Cl. A ..... 68,550 118,620 ------------ ------------ 2,971,102 4,214,870 ------------ ------------ ENVIRONMENTAL SERVICES -- 0.3% 30,000 Waste Management Inc. .. 543,511 905,400 ------------ ------------ EQUIPMENT AND SUPPLIES -- 1.1% 3,000 Caterpillar Inc. ....... 35,181 237,210 28,000 Deere & Co. ............ 567,189 1,940,680 11,000 Imagistics International Inc.+ ................ 212,935 484,550 3,000 Ingersoll-Rand Co., Cl. A ................ 125,173 202,950 1,500 Minerals Technologies Inc. ................. 37,938 85,650 2,000 Parker Hannifin Corp. .. 77,350 113,000 16,000 Smith (A.O.) Corp. ..... 343,317 463,200 ------------ ------------ 1,399,083 3,527,240 ------------ ------------ FINANCIAL SERVICES -- 15.4% 8,000 Aegon NV, ADR .......... 96,311 102,800 7,262 Alleghany Corp.+ ....... 1,311,997 1,795,991 5,000 Allstate Corp. ......... 177,405 227,300 73,500 American Express Co. ... 2,595,280 3,810,975 12,000 American International Group Inc. ........... 705,110 856,200 39,000 Argonaut Group Inc.+ ... 789,154 742,170 5,000 Banco Popular Espanol SA ........... 185,939 292,600 18,000 Banco Santander Central Hispano SA, ADR ...... 64,963 197,640 2,000 Banco Santander Chile, ADR ........... 29,250 53,800 8,500 Bank of America Corp. .. 158,255 688,330 44,000 Bank of New York Co. Inc. ............. 1,423,658 1,386,000 19,000 Bank One Corp. ......... 660,767 1,035,880 30,000 Bankgesellschaft Berlin AG+ ........... 201,349 70,047 8,000 Banque Nationale de Paris ............. 296,835 488,903 2,000 Bear Stearns Companies Inc. ....... 129,100 175,360 29,000 Citigroup Inc. ......... 1,061,657 1,499,300 39,000 Commerzbank AG, ADR .... 834,873 660,434 See accompanying notes to financial statements. 3 THE GABELLI EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) FINANCIAL SERVICES (CONTINUED) 35,000 Deutsche Bank AG, ADR ..$ 1,966,015 $ 2,921,800 2,000 Dun and Bradstreet Corp.+ .............. 20,476 107,000 3,500 Fannie Mae ............. 204,581 260,225 16,000 Fidelity Southern Corp. 153,870 236,160 80,000 FleetBoston Financial Corp. ................ 1,785,143 3,592,000 1,000 H&R Block Inc. ......... 15,746 51,030 25,000 Huntington Bancshares Inc. ...... 407,250 554,750 40,000 John Hancock Financial Services Inc. ........ 1,152,176 1,747,600 47,000 JP Morgan Chase & Co. .. 1,463,953 1,971,650 30,000 KeyCorp ................ 891,394 908,700 11,322 Leucadia National Corp. 372,160 603,236 55,000 Mellon Financial Corp. . 1,528,208 1,720,950 10,000 Merrill Lynch & Co. Inc. ............. 362,400 595,600 100,000 MONY Group Inc.+ ....... 3,097,944 3,144,000 4,000 Moody's Corp. .......... 64,841 283,200 3,000 Municipal Mortgage & Equity, LLC .......... 60,488 77,040 6,000 Northern Trust Corp. ... 60,300 279,540 50,000 Phoenix Companies Inc. . 650,511 670,500 47,000 PNC Financial Services Group ................ 1,985,813 2,604,740 20,000 Schwab (Charles) Corp. . 270,593 232,200 40,000 St. Paul Companies Inc. 1,590,526 1,600,400 90,000 Sterling Bancorp ....... 1,456,020 2,623,500 12,000 SunTrust Banks Inc. .... 251,737 836,520 10,000 T. Rowe Price Group Inc. 340,140 538,300 4,000 Travelers Property Casualty Corp., Cl. A ......... 64,200 68,600 57,000 Unitrin Inc. ........... 1,772,978 2,445,300 25,000 Wachovia Corp. ......... 735,625 1,175,000 45,000 Waddell & Reed Financial Inc., Cl. A .......... 816,259 1,103,400 75,000 Wilmington Trust Corp. . 2,342,833 2,802,750 ------------ ------------ 36,606,083 49,839,421 ------------ ------------ FOOD AND BEVERAGE -- 5.3% 45,000 Allied Domecq plc, ADR . 937,266 1,516,050 32,000 Cadbury Schweppes plc, ADR ............. 700,693 1,028,800 35,000 Campbell Soup Co. ...... 794,372 954,450 40,000 Coca-Cola Amatil Ltd., ADR ............ 246,845 416,540 33,000 Coca-Cola Co. .......... 1,523,535 1,659,900 10,000 Corn Products International Inc. ... 260,071 400,000 55,330 Del Monte Foods Co.+ ... 485,759 622,463 50,000 Diageo plc, ADR ........ 1,987,727 2,644,000 12,000 Fomento Economico Mexicano SA de CV, ADR ........ 416,490 591,240 25,000 General Mills Inc. ..... 1,158,300 1,167,000 64,000 Heinz (H.J.) Co. ....... 2,169,869 2,386,560 3,000 Hershey Foods Corp. .... 164,533 248,550 15,000 Kellogg Co. ............ 416,864 588,600 MARKET SHARES COST VALUE ------ ---- ------ 3,000 Mondavi (Robert) Corp., Cl. A+ ...............$ 62,180 $ 113,430 10,000 Nestle SA .............. 2,083,075 2,549,631 12,515 Tootsie Roll Industries Inc. ....... 339,643 457,530 ------------ ------------ 13,747,222 17,344,744 ------------ ------------ HEALTH CARE -- 7.9% 5,000 Abbott Laboratories .... 181,280 205,500 3,000 Aventis SA, ADR ........ 149,527 230,700 42,000 Baxter International Inc. ................. 1,140,398 1,297,380 16,000 Becton, Dickinson and Co. .............. 491,573 775,680 105,000 Bristol-Myers Squibb Co. ........... 2,778,533 2,544,150 68,000 Eli Lilly & Co. ........ 3,976,966 4,549,200 11,276 GlaxoSmithKline plc, ADR ............. 515,984 450,476 10,000 Henry Schein Inc.+ ..... 422,723 714,200 5,000 Interpore International Inc.+ ................ 37,780 71,900 30,000 Johnson & Johnson ...... 1,383,959 1,521,600 6,030 Medco Health Solutions Inc.+ ...... 134,931 205,020 60,000 Merck & Co. Inc. ....... 2,940,176 2,651,400 3,000 Orthofix International NV+ .................. 84,894 148,320 245,000 Pfizer Inc. ............ 7,775,358 8,587,250 102,000 Schering-Plough Corp. .. 1,847,226 1,654,440 5,000 Tenet Healthcare Corp.+ 58,560 55,800 2,000 Zimmer Holdings Inc.+ .. 103,551 147,560 ------------ ------------ 24,023,419 25,810,576 ------------ ------------ HOTELS AND GAMING -- 0.4% 35,000 Starwood Hotels & Resorts Worldwide Inc. ....... 868,448 1,417,500 ------------ ------------ METALS AND MINING -- 2.0% 75,000 Fording Canadian Coal Trust (Toronto) ...... 1,496,486 3,022,256 55,875 Freeport-McMoRan Copper & Gold Inc., Cl. B ... 1,202,109 2,184,154 25,000 Newmont Mining Corp. ... 650,026 1,165,750 ------------ ------------ 3,348,621 6,372,160 ------------ ------------ PAPER AND FOREST PRODUCTS -- 0.1% 11,000 Pactiv Corp.+ .......... 174,996 244,750 ------------ ------------ PUBLISHING -- 2.1% 25,000 Dow Jones & Co. Inc. ... 1,104,769 1,197,750 10,000 Knight-Ridder Inc. ..... 662,210 732,500 1,500 McClatchy Co., Cl. A ... 85,925 106,560 10,000 McGraw-Hill Companies Inc. ....... 502,221 761,400 3,008 News Corp. Ltd., ADR ... 70,880 108,228 90,000 Reader's Digest Association Inc. ..... 1,224,956 1,267,200 406 Seat Pagine Gialle SpA+ .......... 1,350 397 35,000 Tribune Co. ............ 1,679,207 1,765,400 1,200 Washington Post Co., Cl. B ................ 700,030 1,061,292 ------------ ------------ 6,031,548 7,000,727 ------------ ------------ See accompanying notes to financial statements. 4 THE GABELLI EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) RETAIL -- 0.7% 25,000 Albertson's Inc. .......$ 540,435 $ 553,750 2,500 Griffin Land & Nurseries Inc.+ ...... 11,716 63,500 47,300 Safeway Inc.+ .......... 932,752 973,434 2,000 Sears, Roebuck & Co. ... 51,241 85,920 6,000 The Home Depot Inc. .... 127,998 224,160 10,000 Weis Markets Inc. ...... 300,480 337,500 ------------ ------------ 1,964,622 2,238,264 ------------ ------------ SATELLITE -- 0.2% 36,000 DIRECTV Group Inc.+ .... 429,789 553,680 ------------ ------------ SPECIALTY CHEMICALS -- 1.5% 20,000 Albemarle Corp. ........ 434,626 580,000 1,200 Celenese AG+ ........... 16,129 48,720 8,611 Dow Chemical Co. ....... 303,693 346,851 10,000 E.I. du Pont de Nemours and Co. .............. 421,563 422,200 6,000 Ferro Corp. ............ 135,135 156,900 25,000 Great Lakes Chemical Corp. ................ 609,306 596,250 70,000 Monsanto Co. ........... 1,160,200 2,566,900 20,000 Omnova Solutions Inc.+ . 155,815 105,000 4,000 Quaker Chemical Corp. .. 79,615 101,600 ------------ ------------ 3,316,082 4,924,421 ------------ ------------ TELECOMMUNICATIONS -- 4.6% 10,000 ALLTEL Corp. ........... 492,835 498,900 33,000 AT&T Corp. ............. 933,765 645,810 52,800 BCE Inc. ............... 1,130,618 1,110,384 26,000 BellSouth Corp. ........ 689,187 719,940 300,000 BT Group plc ........... 1,251,761 975,905 30,000 BT Group plc, ADR ...... 1,006,938 1,001,700 30,000 Cable & Wireless plc, ADR ............. 185,030 213,600 180,000 Cincinnati Bell Inc.+ .. 1,319,847 732,600 15,000 Citizens Communications Co.+ ................. 172,500 194,100 12,000 Deutsche Telekom AG, ADR+ ............. 194,878 216,480 12,000 France Telecom SA, ADR . 347,118 307,680 300,000 Qwest Communications International Inc.+ .. 1,256,877 1,293,000 76,000 SBC Communications Inc. 2,325,426 1,865,040 40,000 Sprint Corp. - FON Group 569,646 737,200 3,300 Telecom Italia SpA, ADR+ 31,072 104,214 7,880 Telefonica SA, ADR ..... 86,776 358,855 12,000 TELUS Corp. ............ 192,898 212,745 100,000 Verizon Communications Inc. ................ 3,769,983 3,654,000 ------------ ------------ 15,957,155 14,842,153 ------------ ------------ WIRELESS COMMUNICATIONS -- 1.3% 200,000 AT&T Wireless Services Inc.+ ....... 2,374,904 2,722,000 300,000 mm02 plc+ .............. 336,932 554,116 20,000 mm02 plc, ADR+ ......... 199,884 373,000 50,000 Sprint Corp. - PCS Group+ ........... 364,715 460,000 ------------ ------------ 3,276,435 4,109,116 ------------ ------------ TOTAL COMMON STOCKS .... 210,697,158 274,282,480 ------------ ------------ MARKET SHARES COST VALUE ------ ---- ------ PREFERRED STOCKS -- 5.6% AUTOMOTIVE -- 0.1% 1,000 Ford Motor Co. Capital Trust II, 6.500% Cv. Pfd. ......$ 45,215 $ 53,050 General Motors Corp., 9,000 5.250% Cv. Pfd., Ser. B ............... 228,000 229,500 4,000 4.500% Cv. Pfd., Ser. A ............... 100,000 104,960 ------------ ------------ 373,215 387,510 ------------ ------------ AVIATION: PARTS AND SERVICES -- 0.1% 7,000 Coltec Capital Trust, 5.250% Cv. Pfd. ...... 281,500 315,000 ------------ ------------ BROADCASTING -- 2.3% 55,000 CVC Equity Securities Trust I, 6.500% Cv. Pfd. ...... 1,377,226 1,344,200 2,619 Granite Broadcasting Corp., 12.750% Pfd.+ ........ 1,488,446 1,414,260 100 Gray Television Inc., 8.000% Cv. Pfd., Ser. C (b)(c) ........ 1,000,000 1,020,000 46,100 Rainbow Equity Securities Trust II, 6.250% Cv. Pfd. ...... 801,487 1,164,025 50,000 Sinclair Broadcast Group Inc., 6.000% Cv. Pfd., Ser. D ............... 2,340,625 2,325,000 ------------ ------------ 7,007,784 7,267,485 ------------ ------------ COMMUNICATIONS EQUIPMENT -- 0.4% 1,100 Lucent Technologies Capital Trust I, 7.750% Cv. Pfd. ...... 759,000 1,392,820 ------------ ------------ DIVERSIFIED INDUSTRIAL -- 0.1% 26,200 WHX Corp., $3.75 Cv. Pfd., Ser. B+ .............. 177,129 185,234 ------------ ------------ ENTERTAINMENT -- 0.0% 3,000 Metromedia International Group Inc., 7.250% Cv. Pfd.+ ..... 5,310 30,000 ------------ ------------ EQUIPMENT AND SUPPLIES -- 0.4% 13,800 Sequa Corp., $5.00 Cv. Pfd. ....... 1,063,415 1,269,600 ------------ ------------ HEALTH CARE -- 0.0% 300 Bio-Rad Laboratories Inc., Cl. B+ ............... 11,100 16,911 ------------ ------------ PUBLISHING -- 0.1% 5,730 News Corp. Ltd., Pfd., ADR ............ 152,085 181,698 ------------ ------------ SPECIALTY CHEMICALS -- 0.0% 5,000 Hercules Trust I, 9.420% Pfd. .......... 111,930 125,500 ------------ ------------ See accompanying notes to financial statements. 5 THE GABELLI EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ PREFERRED STOCKS (CONTINUED) TELECOMMUNICATIONS -- 2.1% 33,000 Cincinnati Bell Inc., 6.750% Cv. Pfd., Ser. B ...............$ 918,894 $ 1,493,250 40,000 Citizens Communications Co., 5.000% Cv. Pfd. ...... 1,869,091 2,084,000 32,000 CSC Holdings Inc., 11.125% Cv. Pfd., Ser. M ............... 1,335,000 3,340,800 ------------ ------------ 4,122,985 6,918,050 ------------ ------------ TOTAL PREFERRED STOCKS . 14,065,453 18,089,808 ------------ ------------ WARRANTS -- 0.2% BUSINESS SERVICES -- 0.2% 250,000 GP Strategies Corp., Expire 08/14/08+ (c) . 637,065 637,065 ------------ ------------ PRINCIPAL AMOUNT ---------- CORPORATE BONDS -- 3.6% AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.7% $1,400,000 GenCorp Inc., Sub. Deb. Cv., 5.750%, 04/15/07 ..... 1,328,191 1,424,500 800,000 Standard Motor Products Inc., Sub. Deb. Cv., 6.750%, 07/15/09 ..... 649,088 788,000 100,000 Tenneco Automotive Inc., 11.625%, 10/15/09 .... 62,922 108,750 ------------ ------------ 2,040,201 2,321,250 ------------ ------------ BUSINESS SERVICES -- 0.4% 100,000 BBN Corp., Sub. Deb. Cv., 6.000%, 04/01/12+ (a)(c) ..... 97,499 0 2,000,000 GP Strategies Corp., Sub. Deb., 6.000%, 08/14/08 (c) . 1,419,208 1,418,062 ------------ ------------ 1,516,707 1,418,062 ------------ ------------ CABLE -- 0.4% 1,500,000 Charter Communications Inc., Cv., 4.750%, 06/01/06 ..... 988,829 1,425,000 ------------ ------------ ELECTRONICS -- 1.1% 1,800,000 Agere Systems Inc., Sub. Deb. Cv., 6.500%, 12/15/09 ..... 1,659,339 2,553,750 1,100,000 Oak Industries Inc., Sub. Deb. Cv., 4.875%, 03/01/08 ..... 800,547 1,123,375 ------------ ------------ 2,459,886 3,677,125 ------------ ------------ ENERGY AND UTILITIES -- 0.3% 1,400,000 Mirant Corp., Sub. Deb. Cv., 2.500%, 06/15/21+ (a) ........ 1,040,353 812,000 ------------ ------------ PRINCIPAL MARKET AMOUNT COST VALUE --------- ---- ------ FOOD AND BEVERAGE -- 0.0% $ 100,000 Parmalat Capital, Cv., 1.000%, 12/31/05 (a) .........$ 117,309 $ 13,026 100,000 Parmalat Netherlands BV, Cv., 0.875%, 06/30/21 (a) . 110,542 18,618 ------------ ------------ 227,851 31,644 ------------ ------------ HEALTH CARE -- 0.7% 2,000,000 IVAX Corp., Sub. Deb. Cv., 5.500%, 05/15/07 ..... 1,814,491 2,052,500 200,000 Twin Laboratories Inc., Sub. Deb. Cv., 10.250%, 05/15/06 (a) 98,105 47,000 ------------ ------------ 1,912,596 2,099,500 ------------ ------------ TELECOMMUNICATIONS -- 0.0% 200,000 Williams Comm Group Inc., Escrow, Zero Coupon, 10/01/09 (a)(c) ...... 0 0 ------------ ------------ TOTAL CORPORATE BONDS 10,186,423 11,784,581 ------------ ------------ U.S. GOVERNMENT OBLIGATIONS -- 5.6% 18,032,000 U.S. Treasury Bills, 0.850% to 0.990%++, 04/01/04 to 09/09/04 . 18,015,595 18,015,689 ------------ ------------ TOTAL INVESTMENTS -- 99.6% $253,601,694 322,809,623 ============ OTHER ASSETS AND LIABILITIES (NET) -- 0.4% ....................... 1,265,707 ------------ NET ASSETS -- 100.0% .................$324,075,330 ============ - ----------------- For Federal tax purposes: Aggregate cost .......................$253,601,694 ============ Gross unrealized appreciation ........$ 74,001,012 Gross unrealized depreciation ........ (4,793,083) ------------ Net unrealized appreciation ..........$ 69,207,929 ============ - ----------------- (a) Security in default. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2004, the market value of Rule 144A securities amounted to $1,020,000 or 0.31% of total net assets. (c) Securities fair valued under procedures established by the Board of Directors. The procedures may include reviewing available financial information about the company and reviewing valuation of comparable securities and other factors on a regular basis. The aggregate value of such securities is $3,075,127 or 0.95% of net assets. + Non-income producing security. ++ Represents annualized yield at date of purchase. ADR - American Depository Receipt. CVO - Contingent Value Obligation. See accompanying notes to financial statements. 6 THE GABELLI EQUITY INCOME FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investments, at value (Cost $253,601,694) .. $ 322,809,623 Cash ....................................... 595 Dividends and interest receivable .......... 980,595 Receivable for capital shares sold ......... 814,386 Other assets ............................... 10,360 ------------- TOTAL ASSETS ............................... 324,615,559 ------------- LIABILITIES: Payable for capital shares redeemed ........ 30,440 Payable for investment advisory fees ....... 272,939 Payable for distribution fees .............. 68,233 Payable for shareholder communication fees . 24,004 Payable for shareholder services fees ...... 30,908 Other accrued expenses ..................... 113,705 ------------- TOTAL LIABILITIES .......................... 540,229 ------------- NET ASSETS applicable to 19,329,024 shares outstanding ....................... $ 324,075,330 ============= NET ASSETS CONSIST OF: Capital stock, at par value ................ $ 19,329 Additional paid-in capital ................. 255,308,641 Accumulated net investment loss ............ (411,349) Accumulated net realized loss on investments and foreign currency transactions ........ (49,378) Net unrealized appreciation on investments and foreign currency transactions ........ 69,208,087 ------------- NET ASSETS ................................. $ 324,075,330 ============= SHARES OF CAPITAL STOCK: CLASS AAA: Net asset value, offering and redemption price per share ($324,072,070 / 19,328,830 shares outstanding; 200,000,000 shares authorized of $0.001 par value) .......... $16.77 ====== CLASS A: Net asset value and redemption price per share ($1,027 / 61 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ... $16.76 ====== Maximum sales charge ....................... 5.75% ====== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price at March 31, 2004) .... $17.78 ====== CLASS B: Net asset value and offering price per share ($1,026 / 61 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ... $16.73(a) ====== CLASS C: Net asset value and offering price per share ($1,207 / 72 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ... $16.74(a) ====== - --------------- (a) Redemption price varies based on length of time held. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends (net of foreign taxes of $34,519) $ 3,914,708 Interest .................................. 549,870 ----------- TOTAL INVESTMENT INCOME ................... 4,464,578 ----------- EXPENSES: Investment advisory fees .................. 1,490,211 Distribution fees ......................... 372,553 Shareholder services fees ................. 141,148 Custodian fees ............................ 43,329 Shareholder communications expenses ....... 43,020 Registration fees ......................... 40,061 Legal and audit fees ...................... 37,103 Directors' fees ........................... 11,074 Interest expense .......................... 1,352 Miscellaneous expenses .................... 28,604 ----------- TOTAL EXPENSES ............................ 2,208,455 ----------- NET INVESTMENT INCOME ..................... 2,256,123 ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain on investments and foreign currency transactions ........... 1,706,133 Net change in unrealized appreciation/ depreciation on investments and foreign currency transactions ................... 38,653,672 ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ............................ 40,359,805 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................... $42,615,928 =========== See accompanying notes to financial statements. 7 THE GABELLI EQUITY INCOME FUND STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MARCH 31, 2004 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2003 ---------------- ------------------ OPERATIONS: Net investment income .............................. $ 2,256,123 $ 4,932,398 Net realized gain/loss on investments and foreign currency transactions .................... 1,706,133 (1,080,553) Net change in unrealized appreciation/depreciation on investments and foreign currency transactions ............................ 38,653,672 47,288,390 ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 42,615,928 51,140,235 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class AAA ........................................ (3,339,935) (4,398,932) Class A .......................................... (6) -- Class B .......................................... (6) -- Class C .......................................... (6) -- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (3,339,953) (4,398,932) ------------- ------------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares issued: Class AAA ........................................ 61,528,022 197,502,549 Class A .......................................... 1,000 -- Class B .......................................... 1,000 -- Class C .......................................... 1,183 -- ------------- ------------- 61,531,205 197,502,549 ------------- ------------- Proceeds from reinvestment of dividends: Class AAA ........................................ 3,067,476 4,080,708 Class A .......................................... 6 -- Class B .......................................... 6 -- Class C .......................................... 6 -- ------------- ------------- 3,067,494 4,080,708 ------------- ------------- Cost of shares redeemed Class AAA ........................................ (41,576,501) (149,485,117) Class A .......................................... -- -- Class B .......................................... -- -- Class C .......................................... -- -- ------------- ------------- (41,576,501) (149,485,117) ------------- ------------- Net increase in net assets from capital share transactions ....................... 23,022,198 52,098,140 ------------- ------------- NET INCREASE IN NET ASSETS ......................... 62,298,173 98,839,443 NET ASSETS: Beginning of period ................................ 261,777,157 162,937,714 ------------- ------------- End of period (including undistributed net investment income of $0 and $672,481, respectively) ................... $ 324,075,330 $ 261,777,157 ============= ============= See accompanying notes to financial statements. 8 THE GABELLI EQUITY INCOME FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION. The Gabelli Equity Income Fund (the "Fund") is a series of Gabelli Equity Series Funds, Inc. (the "Corporation"), which was organized on July 25, 1991 as a Maryland corporation. The Fund is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of three separately managed portfolios (collectively, the "Portfolios") of the Corporation, each with four separate classes of shares known as Class AAA, Class A, Class B and Class C. The Fund's primary objective is to seek a high level of total return with an emphasis on income. The Fund commenced investment operations on January 2, 1992. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures in the 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. 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. All other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest average of the bid and asked prices. If there were no asked prices quoted on that day, then the security is valued at the closing bid price. 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 foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if, after the close, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board of Directors. Securities and assets for which market quotations are not readily available are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Board of Directors. Short-term debt securities with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors determines such does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board of Directors. Debt instruments having a maturity greater than 60 days are valued at the latest average of the bid and asked prices obtained from a pricing service approved by the Board of Directors, or a dealer maintaining an active market in those securities. Options are valued at the last sale price on the exchange on which they are listed. If no sales of such options have taken place that day, they will be valued at the mean between their closing bid and asked prices. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board of Directors. Under the terms of a typical repurchase agreement, the Fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Fund to resell, the obligation at an agreed-upon price and time, thereby determining the yield during the Fund's holding period. The Fund will always receive and maintain securities as collateral whose market value, including accrued 9 THE GABELLI EQUITY INCOME FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- interest, will be at least equal to 102% of the dollar amount invested by the Fund in each agreement. The Fund will make payment for such securities only upon physical delivery or upon evidence of book entry transfer of the collateral to the account of the custodian. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to maintain the adequacy of the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. At March 31, 2004, there were no repurchase agreements. FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the "initial margin". Subsequent payments ("variation margin") are made or received by the Fund each day, depending on the daily fluctuation of the value of the contract. The daily changes in the contract are included in unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed. At March 31, 2004, there were no open futures contracts. There are several risks in connection with the use of futures contracts as a hedging device. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign exchange contracts for hedging a specific transaction with respect to either the currency in which the transaction is denominated or another currency as deemed appropriate by the Adviser. Forward foreign exchange contracts are valued at the forward rate and are marked-to-market daily. The change in market value is included in unrealized appreciation/depreciation on investments and foreign currency transactions. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. At March 31, 2004, there were no open forward foreign exchange contracts. The use of forward foreign exchange contracts does not eliminate fluctuations in the underlying prices of the Fund's portfolio securities, but it does establish a rate of exchange that can be achieved in the future. Although forward foreign exchange contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained in United States (U.S.) dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the exchange rates prevailing at the end of the period, and 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, which 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 transactions. Net realized foreign currency gains and losses resulting from changes in exchange rates 10 THE GABELLI EQUITY INCOME FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- 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 trade date and subsequent sale trade date is included in realized gain/loss on investments. SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are accounted for on the trade date with realized gain or loss on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded as earned. Dividend income is recorded on the ex-dividend date. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income distributions and long-term capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States. For the fiscal year ended September 30, 2003, the tax character of distributions paid does not materially differ from accounting principles generally accepted in the United States. For the fiscal year ended September 30, 2003, reclassifications were made to increase accumulated net investment income for $118,559 and increase accumulated net realized loss on investments for $111,659, with an offsetting adjustment to additional paid-in capital. EXPENSES. Certain administrative expenses are common to, and allocated among, the Portfolios. Such allocations are made on the basis of each Portfolio's average net assets or other criteria directly affecting the expenses as determined by the Adviser. 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. As a result, a Federal income tax provision is not required. As of September 30, 2003, the components of accumulated earnings/losses on a tax basis were as follows: Undistributed ordinary income ........... $ 714,701 Post-October losses ..................... (249,013) Capital loss carryforward ............... (478,901) Net unrealized appreciation ............. 29,520,445 Other temporary differences ............. (35,847) ----------- Total accumulated earnings .............. $29,471,385 =========== The Fund has a capital loss carryforward for Federal income tax purposes at September 30, 2003 of $478,901 which is available through 2011. Dividends and interest from non-U.S. sources received by the Fund are generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such withholding taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties, and the Fund intends to undertake any procedural steps required to claim the benefits of such treaties. 11 THE GABELLI EQUITY INCOME FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- The difference between book and tax basis undistributed ordinary income is primarily due to the accrual of defaulted interest for tax purposes. The difference between book and tax basis unrealized appreciation is primarily due to deferral of losses from wash sales for tax purposes. 3. INVESTMENT ADVISORY AGREEMENT. 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 the Fund's 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 its affiliates. 4. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution plan (the "Plan") for each Class of Shares pursuant to Rule 12b-1 under the 1940 Act. For the six months ended March 31, 2004, the Fund incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of the Adviser, of $372,547 and $1 for Class AAA and Class A Shares, respectively, or 0.25% of average daily net assets, the annual limitation under each Plan. Class B and Class C Shares incurred distribution costs of $2 and $3, respectively, or 1.00% of average daily net assets, the annual limitation under each Plan. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months ended March 31, 2004, other than short term securities, aggregated $21,837,838 and $8,942,532, respectively. 6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2004, the Fund paid brokerage commissions of $44,384 to Gabelli & Company, Inc. and its affiliates. The cost of calculating the Fund's net asset value per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the six months ended March 31, 2004, the Fund reimbursed the Adviser $17,400 in connection with the cost of computing the Fund's net asset value. 7. LINE OF CREDIT. The Fund has access to an unsecured line of credit up to $25,000,000 from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at 0.75% above the Federal Funds rate on outstanding balances. There were no borrowings against the line of credit during the six months ended March 31, 2004. 12 THE GABELLI EQUITY INCOME FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- 8. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as follows: SIX MONTHS ENDED MARCH 31, 2004 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2003 -------------------------------- -------------------------------- SHARES AMOUNT SHARES AMOUNT ------------- ------------- ------------- ------------- CLASS AAA Shares sold ................................ 3,791,428 $ 61,528,022 14,773,776 $ 197,502,549 Shares issued upon reinvestment of dividends 189,235 3,067,476 292,370 4,080,708 Shares redeemed ............................ (2,581,249) (41,576,501) (10,797,815) (149,485,117) ------------- ------------- ------------- ------------- Net increase in Class AAA shares ........... 1,399,414 $ 23,018,997 4,268,331 $ 52,098,140 ============= ============= ============= ============= CLASS A Shares sold ................................ 61 $ 1,000 -- -- Shares issued upon reinvestment of dividends -- 6 -- -- ------------- ------------- ------------- ------------- Net increase in Class A shares ............. 61 $ 1,006 -- -- ============= ============= ============= ============= CLASS B Shares sold ................................ 61 $ 1,000 -- -- Shares issued upon reinvestment of dividends -- 6 -- -- ------------- ------------- ------------- ------------- Net increase in Class B shares ............. 61 $ 1,006 -- -- ============= ============= ============= ============= CLASS C Shares sold ................................ 72 $ 1,183 -- -- Shares issued upon reinvestment of dividends -- 6 -- -- ------------- ------------- ------------- ------------- Net increase in Class C shares ............. 72 $ 1,189 -- -- ============= ============= ============= ============= 13 THE GABELLI EQUITY INCOME FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of capital stock outstanding throughout each period: INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ------------------------------------------------------ ---------------------------------------- Net Net Asset Realized and Total Net Net Asset Period Value, Net Unrealized from Net Realized Value, Ended Beginning Investment Gain/(Loss) on Investment Investment Gain on Total End of Total September 30 of Period Income/(Loss) Investments Operations Income Investments Distributions Period Return+ - ------------ ---------- ------------- -------------- ---------- ---------- ----------- ------------- ---------- ------- CLASS AAA 2004(c) $14.60 $0.12 $ 2.23 $ 2.35 $(0.18) -- $(0.18) $16.77 16.15% 2003 11.93 0.28 2.64 2.92 (0.25) -- (0.25) 14.60 24.59 2002 13.88 0.23 (1.79) (1.56) (0.23) $(0.16) (0.39) 11.93 (11.58) 2001 16.35 0.25 (0.28) (0.03) (0.36) (2.08) (2.44) 13.88 (0.43) 2000 17.58 0.46 0.81 1.27 (0.36) (2.14) (2.50) 16.35 8.41 1999 15.97 0.23 2.82 3.05 (0.22) (1.22) (1.44) 17.58 19.82 CLASS A 2004(a)(c) $16.40 $0.05 $0.40 $0.45 $(0.09) -- $(0.09) $16.76 2.74% CLASS B 2004(a)(c) $16.40 $0.02 $0.40 $0.42 $(0.09) -- $(0.09) $16.73 2.56% CLASS C 2004(a)(c) $16.40 $0.04 $0.39 $0.43 $(0.09) -- $(0.09) $16.74 2.62% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ------------------------------------------------------- Net Net Assets Investment Operating Period End of Income/(Loss) Expenses to Portfolio Ended Period to Average Net Average Net Turnover September 30 (in 000's) Assets Assets Rate - ------------ ---------- ------------- ------------ ---------- CLASS AAA 2004(c) $324,075 1.51%(b) 1.48%(b) 3% 2003 261,777 2.09 1.49 27 2002 162,938 1.75 1.50 12 2001 121,499 1.65 1.55 41 2000 89,164 2.85 1.66(d) 33 1999 92,111 1.32 1.60 39 CLASS A 2004(a)(c) $ 1 1.29%(b) 1.48%(b) 3% CLASS B 2004(a)(c) $ 1 0.64%(b) 2.23%(b) 3% CLASS C 2004(a)(c) $ 1 0.84%(b) 2.23%(b) 3% - -------------------- + Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period and sold at the end of the period including reinvestment of dividends. Total return for the period of less than one year is not annualized. (a) From the commencement of offering Class A, Class B and Class C Shares on December 31, 2003. (b) Annualized. (c) For the period ending March 31, 2004, unaudited. (d) The Fund incurred interest expense during the year ended September 30, 2000. If interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.61%. See accompanying notes to financial statements. 14 GABELLI FAMILY OF FUNDS VALUE ________________________________________ GABELLI ASSET FUND Seeks to invest primarily in a diversified portfolio of common stocks selling at significant discounts to their private market value. The Fund's primary objective is growth of capital. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI BLUE CHIP VALUE FUND Seeks long term growth of capital through investment primarily in the common stocks of established companies which are temporarily out of favor. The fund's objective is to identify a catalyst or sequence of events that will return the company to a higher value. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA GABELLI WESTWOOD EQUITY FUND Seeks to invest primarily in the common stock of well-seasoned companies that have recently reported positive earnings surprises and are trading below Westwood's proprietary growth rate estimates. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE FOCUSED VALUE ______________________________ GABELLI VALUE FUND Seeks to invest in securities of companies believed to be undervalued. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA SMALL CAP VALUE ____________________________ GABELLI SMALL CAP FUND Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI WOODLAND SMALL CAP VALUE FUND Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company's value. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA GROWTH ______________________________________ GABELLI GROWTH FUND Seeks to invest primarily in large cap stocks believed to have favorable, yet undervalued, prospects for earnings growth. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA GABELLI INTERNATIONAL GROWTH FUND Seeks to invest in the equity securities of foreign issuers with long-term capital appreciation potential. The Fund offers investors global diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN AGGRESSIVE GROWTH _________________________ GABELLI GLOBAL GROWTH FUND Seeks capital appreciation through a disciplined investment program focusing on the globalization and interactivity of the world's marketplace. The Fund invests in companies at the forefront of accelerated growth. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED MICRO-CAP ___________________________________ GABELLI WESTWOOD MIGHTY MITES(SM) FUND Seeks to invest in micro-cap companies that have market capitalizations of $300 million or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED EQUITY INCOME _______________________________ GABELLI EQUITY INCOME FUND Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI WESTWOOD BALANCED FUND Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The Fund's primary objective is both capital appreciation and current income. (MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE MARK FREEMAN, CFA GABELLI WESTWOOD REALTY FUND Seeks to invest in securities that are primarily engaged in or related to the real estate industry. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE SPECIALTY EQUITY ____________________________ GABELLI GLOBAL CONVERTIBLE SECURITIES FUND Seeks to invest principally in bonds and preferred stocks which are convertible into common stock of foreign and domestic companies. The Fund's primary objective is total return through a combination of current income and capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI GLOBAL OPPORTUNITY FUND Seeks to invest in common stock of companies which have rapid growth in revenues and earnings and potential for above average capital appreciation or are undervalued. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED SECTOR ______________________________________ GABELLI GLOBAL TELECOMMUNICATIONS FUND Seeks to invest in telecommunications companies throughout the world - targeting undervalued companies with strong earnings and cash flow dynamics. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI GOLD FUND Seeks to invest in a global portfolio of equity securities of gold mining and related companies. The Fund's objective is long-term capital appreciation. Investment in gold stocks is considered speculative and is affected by a variety of world-wide economic, financial and political factors. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN GABELLI UTILITIES FUND Seeks to provide a high level of total return through a combination of capital appreciation and current income. (MULTICLASS) TEAM MANAGED MERGER AND ARBITRAGE _____________________ GABELLI ABC FUND Seeks to invest in securities with attractive opportunities for appreciation or investment income. The Fund's primary objective is total return in various market conditions without excessive risk of capital loss. (NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA CONTRARIAN_________________________________ Gabelli Mathers Fund Seeks long-term capital appreciation in various market conditions without excessive risk of capital loss. (CLASS AAA-NO-LOAD) PORTFOLIO MANAGER: HENRY VAN DER EB, CFA COMSTOCK CAPITAL VALUE FUND Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA COMSTOCK STRATEGY FUND The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA QUANTITATIVE_________________________________ NED DAVIS RESEARCH ASSET ALLOCATION FUND Seeks to achieve returns greater then the weighted composite benchmark consisting of 60% in the S&P 500 Index and 40% in the Lehman Long Term U.S. Government Bond Index through a flexible asset allocation strategy. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED SMALL CAP GROWTH __________________________ GABELLI WESTWOOD SMALLCAP EQUITY FUND Seeks to invest primarily in smaller capitalization equity securities - market caps of $1.5 billion or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) CO-PORTFOLIO MANAGERS: CHRISTOPHER J. MACDONALD, CFA FIXED INCOME ________________________________ GABELLI WESTWOOD INTERMEDIATE BOND FUND Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund's primary objective is total return. (MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA CASH MANAGEMENT-MONEY MARKET __________ GABELLI U.S. TREASURY MONEY MARKET FUND Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's primary objective is to provide high current income consistent with the preservation of principal and liquidity. (NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI THE TREASURER'S FUND Three money market portfolios designed to generate superior returns without compromising portfolio safety. U.S. Treasury Money Market seeks to invest in U.S. Treasury securities and repurchase agreements. Tax Exempt Money Market seeks to invest in municipal securities. Domestic Prime Money Market seeks to invest in prime quality, domestic money market instruments. (NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES OF THE FUND BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. Gabelli Equity Series Funds, Inc. THE GABELLI EQUITY INCOME FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA Karl Otto Pohl CHAIRMAN AND CHIEF FORMER PRESIDENT INVESTMENT OFFICER DEUTSCHE BUNDESBANK GABELLI ASSET MANAGEMENT INC. Anthony J. Colavita Anthony R. Pustorino ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT ANTHONY J. COLAVITA, P.C. PROFESSOR EMERITUS PACE UNIVERSITY Vincent D. Enright Anthonie C. van Ekris FORMER SENIOR VICE PRESIDENT MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER BALMAC INTERNATIONAL, INC. KEYSPAN ENERGY CORP. John D. Gabelli Salvatore J. Zizza SENIOR VICE PRESIDENT CHAIRMAN GABELLI & COMPANY, INC. HALLMARK ELECTRICAL SUPPLIES CORP. Robert J. Morrissey ATTORNEY-AT-LAW MORRISSEY, HAWKINS & LYNCH OFFICERS Bruce N. Alpert James E. McKee PRESIDENT AND TREASURER SECRETARY DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP - -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The Gabelli Equity Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. - -------------------------------------------------------------------------------- GAB444Q104SR [GRAPHIC OMITTED] PICTURE OF MARIO GABELLI THE GABELLI EQUITY INCOME FUND SEMI-ANNUAL REPORT MARCH 31, 2004 THE GABELLI WOODLAND SMALL CAP VALUE FUND SEMI-ANNUAL REPORT (B) MARCH 31, 2004 TO OUR SHAREHOLDERS, During the first quarter of 2004, the Gabelli Woodland Small Cap Value Fund (the "Fund") rose 5.2% while the Russell 2000 Index rose 6.3%. For the one-year period ended March 31, 2004, the Fund was up 38.0% versus a gain of 63.8% for the Russell 2000 Index. Enclosed is the portfolio of investments and financial statements as of March 31, 2004. COMPARATIVE RESULTS - ---------------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS -- MARCH 31, 2004 (A) -------------------------------------------- CLASS AAA SHARES CLASS A SHARES CLASS B SHARES CLASS C SHARES ---------------- -------------- -------------- -------------- First Quarter .......... 5.15% 5.15% 5.56% 4.92% (0.86)%(c) 1.42%(d) 4.09%(d) One Year ............... 37.99% 37.88% 38.75% 37.01% 29.97%(c) 33.75%(d) 36.01%(d) Since Inception (e) .... 26.95% 26.85% 27.65% 26.05% 19.56%(c) 23.65%(d) 26.05%(d) - ---------------------------------------------------------------------------------------- (a) Total returns and average annual returns reflect changes in share price and reinvestment of dividends and are net of expenses. 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. The Russell 2000 Index is an unmanaged indicator of stock market performance. Dividends are considered reinvested. The Adviser reimbursed expenses to limit the expense ratio. Had such limitation not been in place, returns would have been lower. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com to obtain performance information as of the most recent month-end. Investors should consider the investment objectives, risks and charges and expenses of the Fund before investing. The prospectus contains more complete information about this and other matters and should be read carefully before investing. (b) The Fund's fiscal year ends September 30. (c) Includes the effect of the maximum 5.75% sales charge at the beginning of the period. (d) Includes the effect of the applicable contingent deferred sales charge at the end of the period shown for Class B and Class C Shares, respectively. (e) Total returns from commencement of investment operations on December 31, 2002. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A description of the Funds' proxy voting policies and procedures is available (i) without charge, upon request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580; and (iii) on the Securities and Exchange Commission's website at www.sec.gov. - -------------------------------------------------------------------------------- THE GABELLI WOODLAND SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS -- 97.1% AEROSPACE -- 1.9% 980 Alliant Techsystems Inc.+ ..... $ 50,450 $ 53,312 ---------- ---------- AGRICULTURE -- 0.6% 730 Delta & Pine Land Co. ......... 17,562 18,213 ---------- ---------- AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.5% 880 American Axle & Manufacturing Holdings Inc.+ .............. 30,207 32,428 1,310 TBC Corp.+ .................... 31,046 38,475 ---------- ---------- 61,253 70,903 ---------- ---------- BUSINESS SERVICES -- 8.7% 1,720 Acxiom Corp.+ ................. 28,377 37,771 3,540 Bowne & Co. Inc. .............. 44,917 60,534 4,290 Danka Business Systems plc, ADR+ ................... 16,870 18,280 1,510 Hon Industries Inc. ........... 48,842 56,111 2,760 The Brink's Co. ............... 45,955 76,121 ---------- ---------- 184,961 248,817 ---------- ---------- COMPUTER SOFTWARE AND SERVICES -- 4.8% 110 Harland Co., John H. .......... 3,261 3,423 2,932 Intergraph Corp.+ ............. 68,424 70,896 2,410 Plato Learning Inc.+ .......... 21,311 24,317 5,110 Stellent Inc.+ ................ 43,981 38,171 ---------- ---------- 136,977 136,807 ---------- ---------- CONSUMER PRODUCTS -- 10.7% 1,410 Alberto-Culver Co. ............ 49,205 61,857 2,190 Brunswick Corp. ............... 57,611 89,418 810 Church & Dwight Co. Inc. ...... 27,029 35,081 3,380 CNS Inc. ...................... 36,624 36,301 1,000 Jarden Corp.+ ................. 25,501 35,510 3,060 ValueVision Media Inc., Cl. A+ ...................... 49,659 46,971 ---------- ---------- 245,629 305,138 ---------- ---------- CONSUMER SERVICES -- 2.1% 4,020 Insurance Auto Auctions Inc.+ . 52,567 58,411 ---------- ---------- DIVERSIFIED INDUSTRIAL -- 15.0% 1,560 Albany International Corp., Cl. A ....................... 43,843 41,949 5,940 Apogee Enterprises Inc. ....... 64,432 73,240 860 Carlisle Companies Inc. ....... 42,116 48,719 1,780 Griffon Corp.+ ................ 30,061 38,448 3,100 Material Sciences Corp.+ ...... 31,940 34,100 910 Matthews International Corp., Cl. A ....................... 28,666 30,212 1,730 Pentair Inc. .................. 70,835 102,070 1,620 Texas Industries Inc. ......... 38,961 58,563 ---------- ---------- 350,854 427,301 ---------- ---------- MARKET SHARES COST VALUE ------ ---- ------ EDUCATIONAL SERVICES -- 1.2% 1,380 Concorde Career Colleges Inc.+ $ 35,521 $ 33,120 ---------- ---------- ELECTRONICS -- 1.4% 1,090 Wilson Greatbatch Technologies Inc.+ .......... 41,648 39,545 ---------- ---------- ENERGY AND UTILITIES -- 4.5% 2,590 ALLETE Inc. ................... 69,003 90,883 3,470 Key Energy Services Inc.+ ..... 35,774 38,170 ---------- ---------- 104,777 129,053 ---------- ---------- ENTERTAINMENT -- 1.5% 4,510 Topps Co. Inc. ................ 41,559 43,070 ---------- ---------- EQUIPMENT AND SUPPLIES -- 4.4% 1,890 Tennant Co. ................... 69,246 74,976 820 Toro Co. ...................... 39,774 50,840 ---------- ---------- 109,020 125,816 ---------- ---------- FINANCIAL SERVICES -- 2.9% 1,620 TCF Financial Corp. ........... 68,759 82,733 ---------- ---------- FOOD AND BEVERAGE -- 9.4% 1,570 Darden Restaurants Inc. ....... 31,324 38,920 5,480 Del Monte Foods Co.+ .......... 49,974 61,650 1,420 Ionics Inc.+ .................. 38,015 40,328 1,830 PepsiAmericas Inc. ............ 27,333 37,369 2,630 Triarc Companies Inc. ......... 22,893 28,772 5,580 Triarc Companies Inc., Cl. B .. 56,832 61,157 ---------- ---------- 226,371 268,196 ---------- ---------- HEALTH CARE -- 10.0% 2,680 Apogent Technologies Inc.+ .... 54,791 82,222 1,130 Cytyc Corp.+ .................. 14,607 25,143 1,520 Laboratory Corporation of America Holdings+ ........... 47,701 59,660 2,870 Lifecore Biomedical Inc.+ ..... 22,990 21,525 1,160 NeighborCare Inc.+ ............ 25,104 28,130 1,990 SurModics Inc.+ ............... 43,921 39,621 710 Techne Corp.+ ................. 25,384 28,975 ---------- ---------- 234,498 285,276 ---------- ---------- HOTELS AND GAMING -- 4.2% 2,890 Gaylord Entertainment Co.+ .... 69,346 89,301 1,980 Vail Resorts Inc.+ ............ 32,764 31,205 ---------- ---------- 102,110 120,506 ---------- ---------- PUBLISHING -- 3.0% 2,720 Hollinger International Inc. .. 36,007 53,856 1,570 Journal Communications Inc., Cl. A ....................... 29,546 31,400 ---------- ---------- 65,553 85,256 ---------- ---------- See accompanying notes to financial statements. 2 THE GABELLI WOODLAND SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- MARKET SHARES COST VALUE ------ ---- ------ COMMON STOCKS (CONTINUED) RETAIL -- 5.7% 2,540 Cole National Corp.+ .......... $ 33,018 $ 56,058 2,530 Office Depot Inc.+ ............ 37,463 47,615 1,452 The Sports Authority Inc.+ .... 42,755 58,196 ---------- ---------- 113,236 161,869 ---------- ---------- SPECIALTY CHEMICALS -- 2.6% 1,150 Cytec Industries Inc.+ ........ 40,794 40,906 1,180 Fuller (H.B.) Co. ............. 28,457 33,559 ---------- ---------- 69,251 74,465 ---------- ---------- TOTAL COMMON STOCKS ........... 2,312,556 2,767,807 ---------- ---------- PRINCIPAL MARKET AMOUNT COST VALUE ------ ---- ------ SHORT TERM OBLIGATIONS -- 2.8% U.S. TREASURY BILLS -- 2.8% $81,000 U.S. Treasury Bill, 0.973%++, 09/02/04 .......... $ 80,669 $ 80,670 ---------- ---------- TOTAL INVESTMENTS -- 99.9% .... $2,393,225 2,848,477 ========== OTHER ASSETS AND LIABILITIES (NET) -- 0.1% . 1,510 ---------- NET ASSETS -- 100.0% ....................... $2,849,987 ========== - ---------------- For Federal tax purposes: Aggregate cost ............................. $2,393,225 ========== Gross unrealized appreciation .............. $ 477,795 Gross unrealized depreciation .............. (22,543) ---------- Net unrealized appreciation ................ $ 455,252 ========== - ---------------- + Non-income producing security. ++ Represents annualized yield at date of purchase. ADR - American Depository Receipt. See accompanying notes to financial statements. 3 THE GABELLI WOODLAND SMALL CAP VALUE FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investments, at value (Cost $2,393,225) .... $2,848,477 Cash ....................................... 46,613 Dividends and interest receivable .......... 286 Receivable from Adviser .................... 4,334 Receivable for investments sold ............ 356 Other assets ............................... 1,310 ---------- TOTAL ASSETS ............................... 2,901,376 ---------- LIABILITIES: Payable for investments purchased .......... 9,646 Payable for distribution fees .............. 648 Payable for shareholder communication fees . 109 Payable for shareholder services fees ...... 2,158 Other accrued expenses ..................... 38,828 ---------- TOTAL LIABILITIES .......................... 51,389 ---------- NET ASSETS applicable to 225,190 shares outstanding ....................... $2,849,987 ========== NET ASSETS CONSIST OF: Capital stock, at par value ................ $ 225 Additional paid-in capital ................. 2,223,925 Accumulated net investment loss ............ (15,924) Accumulated net realized gain on investments and foreign currency transactions ........ 186,509 Net unrealized appreciation on investments and foreign currency transactions ........ 455,252 ---------- NET ASSETS ................................. $2,849,987 ========== SHARES OF CAPITAL STOCK: CLASS AAA: Net asset value, offering and redemption price per share ($2,758,304 / 217,909 shares outstanding; 150,000,000 shares authorized of $0.001 par value) ...................... $12.66 ====== CLASS A: Net asset value and redemption price per share ($19,424 / 1,535 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ................................ $12.65 ====== Maximum sales charge ........................ 5.75% ====== Maximum offering price per share (NAV / 0.9425, based on maximum sales charge of 5.75% of the offering price at March 31, 2004) ..... $13.42 ====== CLASS B: Net asset value and offering price per share ($128 / 10 shares outstanding; 50,000,000 shares authorized of $0.001 par value) .... $12.73(a) ====== CLASS C: Net asset value and offering price per share ($72,131 / 5,736 shares outstanding; 50,000,000 shares authorized of $0.001 par value) ................................ $12.57(a) ====== STATEMENT OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends .......................................... $ 11,209 Interest ........................................... 338 -------- TOTAL INVESTMENT INCOME ............................ 11,547 -------- EXPENSES: Investment advisory fees ........................... 13,513 Distribution fees .................................. 3,790 Amortization of offering expenses .................. 14,820 Shareholder services fees .......................... 7,516 Custodian fees ..................................... 17,200 Shareholder communications expenses ................ 10,319 Registration fees .................................. 14,888 Legal and audit fees ............................... 14,995 Directors' fees .................................... 97 Interest expenses .................................. 109 Miscellaneous expenses ............................. 3,217 -------- TOTAL EXPENSES BEFORE FEES WAIVED AND EXPENSES REIMBURSED BY MANAGER ................... 100,464 -------- FEES WAIVED AND EXPENSES REIMBURSED BY MANAGER ....................................... (72,993) -------- TOTAL EXPENSES -- NET .............................. 27,471 -------- NET INVESTMENT LOSS ................................ (15,924) -------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain on investments and foreign currency transactions ............................ 202,974 Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions ..................................... 295,755 -------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ................ 498,729 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................. $482,805 ======== - ---------------- (a) Redemption price varies based on length of time held. See accompanying notes to financial statements. 4 THE GABELLI WOODLAND SMALL CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MARCH 31, 2004 PERIOD ENDED (UNAUDITED) SEPTEMBER 30, 2003* ---------------- ------------------- OPERATIONS: Net investment loss ................................ $ (15,924) $ (9,414) Net realized gain/loss on investments and foreign currency transactions ............................ 202,974 (586) Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions ............................ 295,755 159,497 ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 482,805 149,497 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS: Net realized short-term gain on investments ........ (7,367) -- ----------- ----------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (7,367) -- ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares issued: Class AAA ........................................ 601,534 2,835,643 Class A .......................................... 14,841 2,926 Class B .......................................... -- 100 Class C .......................................... -- 113,807 ----------- ----------- 616,375 2,952,476 ----------- ----------- Proceeds from reinvestment of dividends: Class AAA ........................................ 6,880 -- Class A .......................................... 29 -- Class B .......................................... -- -- Class C .......................................... 362 -- ----------- ----------- 7,271 -- ----------- ----------- Cost of shares redeemed Class AAA ........................................ (628,056) (656,918) Class A .......................................... -- -- Class B .......................................... -- -- Class C .......................................... (66,096) -- ----------- ----------- (694,152) (656,918) ----------- ----------- Net increase/(decrease) in net assets from capital share transactions ...................... (70,506) 2,295,558 ----------- ----------- NET INCREASE IN NET ASSETS ......................... 404,932 2,445,055 NET ASSETS: Beginning of period ................................ 2,445,055 -- ----------- ----------- End of period ...................................... $ 2,849,987 $ 2,445,055 =========== =========== - ------------------- * For the period December 31, 2002 (commencement of operations) through September 30, 2003. See accompanying notes to financial statements. 5 THE GABELLI WOODLAND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION. The Gabelli Woodland Small Cap Value Fund (the "Fund") is a series of Gabelli Equity Series Funds, Inc. (the "Corporation"), which was organized on July 25, 1991 as a Maryland corporation. The Fund is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and one of three separately managed portfolios (collectively, the "Portfolios") of the Corporation, each with four separate classes of shares known as Class AAA, Class A, Class B and Class C. The Fund's primary objective is capital appreciation. The Fund commenced investment operations on December 31, 2002. 2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures in the 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. 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. All other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest average of the bid and asked prices. If there were no asked prices quoted on that day, then the security is valued at the closing bid price. 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 foreign markets are generally valued at the preceding closing values of such securities on their respective exchanges or if, after the close, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board of Directors. Securities and assets for which market quotations are not readily available are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Board of Directors. Short-term debt securities with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors determines such does not reflect the securities' fair value, in which case these securities will be valued at their fair value as determined by the Board of Directors. Debt instruments having a maturity greater than 60 days are valued at the latest average of the bid and asked prices obtained from a pricing service approved by the Board of Directors, or a dealer maintaining an active market in those securities. Options are valued at the last sale price on the exchange on which they are listed. If no sales of such options have taken place that day, they will be valued at the mean between their closing bid and asked prices. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with primary government securities dealers recognized by the Federal Reserve Board, with member banks of the Federal Reserve System or with other brokers or dealers that meet credit guidelines established by the Adviser and reviewed by the Board of Directors. Under the terms of a typical repurchase agreement, the Fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Fund to resell, the obligation at an agreed-upon price and time, thereby determining the yield during the Fund's holding period. The Fund will always receive and maintain securities as collateral whose market value, including accrued interest, will be at least equal to 102% of the dollar amount invested by the Fund in each agreement. The Fund will make payment for such securities only upon physical delivery or upon evidence of book entry transfer of the collateral to the account of the custodian. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to maintain the adequacy of the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are 6 THE GABELLI WOODLAND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. At March 31, 2004, there were no repurchase agreements. SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are accounted for on the trade date with realized gain or loss on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded as earned. Dividend income is recorded on the ex-dividend date. OFFERING COSTS. The Fund incurred offering costs of $59,443. At March 31, 2004, the remaining balance of prepaid offering costs was $0. The offering costs were amortized on a straight-line basis over twelve months starting from the date of commencement of operations. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States. There were no distributions paid during the fiscal period ended September 30, 2003. For the fiscal period ended September 30, 2003, reclassifications were made to decrease accumulated net investment loss for $9,414 and increase accumulated net realized loss on investments for $8,512, with an offsetting adjustment to additional paid-in capital. For the fiscal period ended September 30, 2003, the tax character of distributions does not materially differ from the amounts recorded in accordance with accounting principles generally accepted in the United States. EXPENSES. Certain administrative expenses are common to, and allocated among, the Portfolios. Such allocations are made on the basis of each Portfolio's average net assets or other criteria directly affecting the expenses as determined by the Adviser. 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. As a result, a Federal income tax provision is not required. As of September 30, 2003, the components of accumulated earnings/(losses) on a tax basis were as follows: Net unrealized appreciation ............... $150,399 -------- Total accumulated earnings .............. $150,399 ======== Dividends and interest from non-U.S. sources received by the Fund are generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such withholding taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties, and the Fund intends to undertake any procedural steps required to claim the benefits of such treaties. The difference between book and tax basis unrealized appreciation is primarily due to deferral of losses from wash sales for tax purposes. 3. INVESTMENT ADVISORY AGREEMENT. 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 the Fund's 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 its affiliates. The Adviser has agreed to waive its fees and reimburse expenses of the Fund to the extent necessary to maintain the annualized total operating expenses at 2.00%, 2.00%, 2.75% and 7 THE GABELLI WOODLAND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- 2.75% of average daily net assets for Class AAA, Class A, Class B and Class C Shares, respectively. For the six months ended March 31, 2004, the Adviser reimbursed the Fund in the amount of $72,993. For the fiscal period ended September 30, 2003, the Adviser reimbursed the Fund in the amount of $124,599. The Fund is obliged to repay the Adviser for a period of two fiscal years following the fiscal year in which the Adviser reimbursed the Fund only to the extent that the operating expenses of the Fund fall below 2.00% of average daily net assets. 4. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months ended March 31, 2004, the Class AAA shares incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of the Adviser, of $3,228, or 0.25% of average daily net assets, the annual limitation under the Plan. Such payments are accrued daily and paid monthly. For the six months ended March 31, 2004, the Class A Shares incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of the Adviser, of $12 or 0.25% of average daily net assets. Such payments are accrued daily and paid monthly. For the six months ended March 31, 2004, the Class B Shares incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of the Adviser, of $1 or 1.00% of average daily net assets. Such payments are accrued daily and paid monthly. For the six months ended March 31, 2004, the Class C Shares incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of the Adviser, of $549 or 1.00% of average daily net assets. Such payments are accrued daily and paid monthly. 5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months ended March 31, 2004, other than short term securities, aggregated $1,041,681 and $968,219, respectively. 6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2004, the Fund paid brokerage commissions of $79 to Gabelli & Company, Inc. and its affiliates. 7. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as follows: SIX MONTHS ENDED MARCH 31, 2004 PERIOD ENDED (UNAUDITED) SEPTEMBER 30, 2003 ---------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ----------- ----------- ----------- ----------- CLASS AAA Shares sold ................................ 49,727 $ 601,534 283,812 $ 2,835,643 Shares issued upon reinvestment of dividends 579 6,880 -- -- Shares redeemed ............................ (52,077) (628,056) (64,132) (656,918) ----------- ----------- ----------- ----------- Net increase/(decrease) in Class AAA shares (1,771) $ (19,642) 219,680 $ 2,178,725 =========== =========== =========== =========== CLASS A Shares sold ................................ 1,218 $ 14,841 315 $ 2,926 Shares issued upon reinvestment of dividends 2 29 -- -- ----------- ----------- ----------- ----------- Net increase in Class A shares ............. 1,220 $ 14,870 315 $ 2,926 =========== =========== =========== =========== CLASS B Shares sold ................................ -- -- 10 $ 100 ----------- ----------- ----------- ----------- Net increase in Class B shares ............. -- -- 10 $ 100 =========== =========== =========== =========== CLASS C Shares sold ................................ -- -- 11,206 $ 113,807 Shares issued upon reinvestment of dividends 31 $ 362 -- -- Shares redeemed ............................ (5,501) (66,096) -- -- ----------- ----------- ----------- ----------- Net increase/(decrease) in Class C shares .. (5,470) $ (65,734) 11,206 $ 113,807 =========== =========== =========== =========== 8 THE GABELLI WOODLAND SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of capital stock outstanding throughout each period: INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS ------------------------------------------------------ --------------------------- Net Net Asset Realized and Total Net Net Asset Period Value, Net Unrealized from Realized Value, Ended Beginning Investment Gain/(Loss) on Investment Gain on Total End of Total September 30 of Period Income/(Loss) Investments Operations Investments Distributions Period Return+ - ------------ --------- ------------- -------------- ---------- ----------- ------------- --------- ------- CLASS AAA 2004(d) $10.58 $(0.07) $2.18 $2.11 $(0.03) $(0.03) $12.66 19.99% 2003(e) 10.00(a) (0.07) 0.65 0.58 -- -- 10.58 5.80 CLASS A 2004(d) $10.57 $(0.08) $2.19 $2.11 $(0.03) $(0.03) $12.65 20.01% 2003(e) 10.00(a) (0.07) 0.64 0.57 -- -- 10.57 5.70 CLASS B 2004(d) $10.59 $(0.01) $2.18 $2.17 $(0.03) $(0.03) $12.73 20.54% 2003(e) 10.00(a) (0.12) 0.71 0.59 -- -- 10.59 5.90 CLASS C 2004(d) $10.55 $(0.11) $2.16 $2.05 $(0.03) $(0.03) $12.57 19.48% 2003(e) 10.00(a) (0.11) 0.66 0.55 -- -- 10.55 5.50 RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------ Net Operating Net Assets Investment Expenses Expenses Expenses Period End of Income/(Loss) Net of Before Ratio Portfolio Ended Period to Average Net Waivers/ Waivers/ (Net of Turnover September 30 (in 000's) Assets(b) Reimbursements(b) Reimbursements(b)(c) Interest)(b) Rate - ------------ ---------- -------------- ----------------- -------------------- ------------ --------- CLASS AAA 2004(d) $2,758 (1.15)% 2.01% 7.41% 2.00%(f) 39% 2003(e) 2,323 (0.97) 2.00 15.05 2.00 39 CLASS A 2004(d) $ 19 (1.30)% 2.01% 7.41% 2.00%(f) 39% 2003(e) 3 (0.97) 2.00 15.05 2.00 39 CLASS B 2004(d) $ 0.1 (0.20)% 2.76% 8.16% 2.75%(f) 39% 2003(e) 0.1 (1.72) 2.75 15.80 2.00 39 CLASS C 2004(d) $ 72 (1.88)% 2.76% 8.16% 2.75%(f) 39% 2003(e) 118 (1.72) 2.75 15.80 2.00 39 - -------------------------- + Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period and sold at the end of the period including reinvestment of dividends. Total return for the period of less than one year is not annualized. (a) As of December 31, 2002 (commencement of operations). (b) Annualized. (c) During the period, certain fees were voluntarily reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratio would have been as shown. (d) For the period ending March 31, 2004, unaudited. (e) For the nine months ended September 30, 2003. (f) The Fund incurred interest expense during the period ended March 31, 2004. See accompanying notes to financial statements. 9 - -------------------------------------------------------------------------------- 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, Gabelli Advisers, Inc. and Gabelli Fixed Income, LLC, which are affiliated with Gabelli Asset Management Inc. Gabelli Asset Management is a publicly-held company that has subsidiaries that provide investment advisory or brokerage services for a variety of clients. WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A GABELLI CUSTOMER? 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: o 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. o 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, and the deposits and withdrawals that you make. 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 web site, 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. - -------------------------------------------------------------------------------- GABELLI FAMILY OF FUNDS VALUE ________________________________________ GABELLI ASSET FUND Seeks to invest primarily in a diversified portfolio of common stocks selling at significant discounts to their private market value. The Fund's primary objective is growth of capital. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI BLUE CHIP VALUE FUND Seeks long term growth of capital through investment primarily in the common stocks of established companies which are temporarily out of favor. The fund's objective is to identify a catalyst or sequence of events that will return the company to a higher value. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA GABELLI WESTWOOD EQUITY FUND Seeks to invest primarily in the common stock of well-seasoned companies that have recently reported positive earnings surprises and are trading below Westwood's proprietary growth rate estimates. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE FOCUSED VALUE ______________________________ GABELLI VALUE FUND Seeks to invest in securities of companies believed to be undervalued. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA SMALL CAP VALUE ____________________________ GABELLI SMALL CAP FUND Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI WOODLAND SMALL CAP VALUE FUND Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company's value. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA GROWTH ______________________________________ GABELLI GROWTH FUND Seeks to invest primarily in large cap stocks believed to have favorable, yet undervalued, prospects for earnings growth. The Fund's primary objective is capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA GABELLI INTERNATIONAL GROWTH FUND Seeks to invest in the equity securities of foreign issuers with long-term capital appreciation potential. The Fund offers investors global diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN AGGRESSIVE GROWTH _________________________ GABELLI GLOBAL GROWTH FUND Seeks capital appreciation through a disciplined investment program focusing on the globalization and interactivity of the world's marketplace. The Fund invests in companies at the forefront of accelerated growth. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED MICRO-CAP ___________________________________ GABELLI WESTWOOD MIGHTY MITES(SM) FUND Seeks to invest in micro-cap companies that have market capitalizations of $300 million or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) TEAM MANAGED EQUITY INCOME _______________________________ GABELLI EQUITY INCOME FUND Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA GABELLI WESTWOOD BALANCED FUND Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The Fund's primary objective is both capital appreciation and current income. (MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE MARK FREEMAN, CFA GABELLI WESTWOOD REALTY FUND Seeks to invest in securities that are primarily engaged in or related to the real estate industry. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE SPECIALTY EQUITY ____________________________ GABELLI GLOBAL CONVERTIBLE SECURITIES FUND Seeks to invest principally in bonds and preferred stocks which are convertible into common stock of foreign and domestic companies. The Fund's primary objective is total return through a combination of current income and capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI GLOBAL OPPORTUNITY FUND Seeks to invest in common stock of companies which have rapid growth in revenues and earnings and potential for above average capital appreciation or are undervalued. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED SECTOR ______________________________________ GABELLI GLOBAL TELECOMMUNICATIONS FUND Seeks to invest in telecommunications companies throughout the world - targeting undervalued companies with strong earnings and cash flow dynamics. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED GABELLI GOLD FUND Seeks to invest in a global portfolio of equity securities of gold mining and related companies. The Fund's objective is long-term capital appreciation. Investment in gold stocks is considered speculative and is affected by a variety of world-wide economic, financial and political factors. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN GABELLI UTILITIES FUND Seeks to provide a high level of total return through a combination of capital appreciation and current income. (MULTICLASS) TEAM MANAGED MERGER AND ARBITRAGE _____________________ GABELLI ABC FUND Seeks to invest in securities with attractive opportunities for appreciation or investment income. The Fund's primary objective is total return in various market conditions without excessive risk of capital loss. (NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA CONTRARIAN_________________________________ Gabelli Mathers Fund Seeks long-term capital appreciation in various market conditions without excessive risk of capital loss. (CLASS AAA-NO-LOAD) PORTFOLIO MANAGER: HENRY VAN DER EB, CFA COMSTOCK CAPITAL VALUE FUND Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA COMSTOCK STRATEGY FUND The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA QUANTITATIVE_________________________________ NED DAVIS RESEARCH ASSET ALLOCATION FUND Seeks to achieve returns greater then the weighted composite benchmark consisting of 60% in the S&P 500 Index and 40% in the Lehman Long Term U.S. Government Bond Index through a flexible asset allocation strategy. The Fund's primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED SMALL CAP GROWTH __________________________ GABELLI WESTWOOD SMALLCAP EQUITY FUND Seeks to invest primarily in smaller capitalization equity securities - market caps of $1.5 billion or less. The Fund's primary objective is long-term capital appreciation. (MULTICLASS) CO-PORTFOLIO MANAGERS: CHRISTOPHER J. MACDONALD, CFA FIXED INCOME ________________________________ GABELLI WESTWOOD INTERMEDIATE BOND FUND Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund's primary objective is total return. (MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA CASH MANAGEMENT-MONEY MARKET __________ GABELLI U.S. TREASURY MONEY MARKET FUND Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's primary objective is to provide high current income consistent with the preservation of principal and liquidity. (NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI THE TREASURER'S FUND Three money market portfolios designed to generate superior returns without compromising portfolio safety. U.S. Treasury Money Market seeks to invest in U.S. Treasury securities and repurchase agreements. Tax Exempt Money Market seeks to invest in municipal securities. Domestic Prime Money Market seeks to invest in prime quality, domestic money market instruments. (NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION, ECONOMIC AND POLITICAL RISKS. AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND EXPENSES OF THE FUND BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. Gabelli Equity Series Funds, Inc. THE GABELLI WOODLAND SMALL CAP VALUE FUND One Corporate Center Rye, New York 10580-1422 800-GABELLI 800-422-3554 FAX: 914-921-5118 WEBSITE: WWW.GABELLI.COM E-MAIL: INFO@GABELLI.COM Net Asset Value available daily by calling 800-GABELLI after 6:00 P.M. BOARD OF DIRECTORS Mario J. Gabelli, CFA Karl Otto Pohl CHAIRMAN AND CHIEF FORMER PRESIDENT INVESTMENT OFFICER DEUTSCHE BUNDESBANK GABELLI ASSET MANAGEMENT INC. Anthony J. Colavita Anthony R. Pustorino ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT ANTHONY J. COLAVITA, P.C. PROFESSOR EMERITUS PACE UNIVERSITY Vincent D. Enright Anthonie C. van Ekris FORMER SENIOR VICE PRESIDENT MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER BALMAC INTERNATIONAL, INC. KEYSPAN ENERGY CORP. John D. Gabelli Salvatore J. Zizza SENIOR VICE PRESIDENT CHAIRMAN GABELLI & COMPANY, INC. HALLMARK ELECTRICAL SUPPLIES CORP. Robert J. Morrissey ATTORNEY-AT-LAW MORRISSEY, HAWKINS & LYNCH OFFICERS AND PORTFOLIO MANAGER Elizabeth M. Lilly, CFA Bruce N. Alpert PORTFOLIO MANAGER PRESIDENT AND TREASURER James E. McKee SECRETARY DISTRIBUTOR Gabelli & Company, Inc. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT State Street Bank and Trust Company LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom LLP - -------------------------------------------------------------------------------- This report is submitted for the general information of the shareholders of The Gabelli Woodland Small Cap Value Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. - -------------------------------------------------------------------------------- GAB840Q104SR [GRAPHIC OMITTED] PICTURE OF MARIO GABELLI THE GABELLI WOODLAND SMALL CAP VALUE FUND SEMI-ANNUAL REPORT MARCH 31, 2004 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. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Board of Directors has a Nominating Committee comprised of two "non-interested" (as such term is defined by the Investment Company Act of 1940, as amended) Directors, namely Anthony J. Colavita and Robert J. Morrisey. The Nominating Committee is responsible for identifying individuals believed to be qualified to become Board members in the event that a position is vacated or created. The Nominating Committee will consider Director candidates recommended by shareholders. In considering candidates submitted by shareholders, the Nominating Committee will take into consideration the needs of the Board of Directors, the qualifications of the candidate and the interests of shareholders. The Nominating Committee may also take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held. To have a candidate considered by the Nominating Committee, a shareholder must submit the recommendation in writing and must include the following information: o The name of the shareholder and evidence of the person's ownership of shares of the Company, including the number of shares owned and the length of time of ownership; o The name of the candidate, the candidate's resume or a listing of his or her qualifications to be a Director of the Company and the person's consent to be named as a Director if selected by the Nominating Committee and nominated by the Board of Directors; and o If requested by the Nominating Committee, a completed and signed directors questionnaire. The shareholder recommendation and information described above must be sent to the Company's Secretary c/o Gabelli Funds, LLC, James E. McKee and must be received by the Secretary no less than 120 days prior to the anniversary date of the Company's most recent annual meeting of shareholders or, if the meeting has moved by more than 30 days, a reasonable amount of time before the meeting. The Nominating Committee believes that the minimum qualifications for serving as a Director of the Company are that the individual demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board of Directors' oversight of the business and affairs of the Company and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, the Nominating Committee examines a candidate's specific experiences and skills, time availability in light of other commitments, potential conflicts of interest and independence from management and the Fund. The Nominating Committee also seeks to have the Board of Directors represent a diversity of backgrounds and experience. The Company's Nominating Committee has not adopted a charter. In the event that a charter is adopted in the future, it will be available at that time on the Company's website (www.gabelli.com). ITEM 10. 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 registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. 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)(3) Not yet effective. (b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Gabelli Equity Series Funds, Inc. -------------------------------------------------------------------- By (Signature and Title)* /s/ Bruce N. Alpert ----------------------------------------------------- Bruce N. Alpert, Principal Executive Officer Date 6/8/2004 --------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Bruce N. Alpert ----------------------------------------------------- Bruce N. Alpert, Principal Executive Officer & Principal Financial Officer Date 6/8/2004 --------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.