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
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Gabelli Equity Series Funds, Inc.
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: September 30
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Date of reporting period: March 31, 2006
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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, 100 F Street, NE,
Washington, DC 20549. 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 (A)
MARCH 31, 2006
TO OUR SHAREHOLDERS,
Small cap stocks continued to outperform their large cap counterparts
across most if not all market sectors and styles. For the six month period ended
March 31, 2006, the Russell 2000 Index gained 15.23%, outperforming the 6.38%
rise in both the Standard & Poor's 500 Index and the Dow Jones Industrial
Average. The Gabelli Small Cap Growth Fund gained 11.49% during the trailing six
month period.
COMPARATIVE RESULTS
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AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2006 (A)(B)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (10/22/91)
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GABELLI SMALL CAP GROWTH FUND CLASS AAA ....10.23% 19.00% 27.21% 14.44% 13.47% 15.76%
Russell 2000 Index .........................13.94 25.85 29.53 12.59 10.15 12.05
Value Line Composite Index ................. 9.31 20.72 28.86 13.53 13.26 13.99
Class A ....................................10.23 18.99 27.23 14.45 13.47 15.78
3.89(c) 12.15(c) 24.74(c) 13.10(c) 12.80(c) 15.30(c)
Class B ....................................10.04 18.11 26.52 14.07 13.28 15.64
5.04(d) 13.11(d) 25.89(d) 13.83(d) 13.28(d) 15.64(d)
Class C ....................................10.04 18.08 26.51 14.06 13.28 15.64
9.04(d) 17.08(d) 26.51(d) 14.06(d) 13.28(d) 15.64(d)
(a) THE FUND'S FISCAL YEAR ENDS SEPTEMBER 30.
(b) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICES AND
REINVESTMENT OF DISTRIBUTIONS AND ARE NET OF EXPENSES. INVESTMENT RETURNS
AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE
REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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, CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE
PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD
BE READ CAREFULLY BEFORE INVESTING.
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 B
SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL
EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. THE RUSSELL 2000 INDEX OF
SMALL U.S. COMPANIES AND THE VALUE LINE COMPOSITE INDEX ARE UNMANAGED
INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE REINVESTED.
(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.
CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The
financial statements and investment portfolio are mailed separately from the
commentary. Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com/funds.
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THE GABELLI SMALL CAP GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from
October 1, 2005 through March 31, 2006 EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case - because the hypothetical return used is NOT the
Fund's actual return - the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the six months ended March 31, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
10/01/05 03/31/06 Ratio Period*
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THE GABELLI SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,114.90 1.42% $ 7.49
Class A $1,000.00 $1,114.90 1.42% $ 7.49
Class B $1,000.00 $1,110.90 2.17% $11.42
Class C $1,000.00 $1,110.50 2.17% $11.42
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.85 1.42% $ 7.14
Class A $1,000.00 $1,017.85 1.42% $ 7.14
Class B $1,000.00 $1,014.11 2.17% $10.90
Class C $1,000.00 $1,014.11 2.17% $10.90
*Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of March 31, 2006:
THE GABELLI SMALL CAP GROWTH FUND
Equipment and Supplies ......................... 14.1%
Diversified Industrial ......................... 8.4%
Health Care .................................... 8.2%
Energy and Utilities ........................... 6.4%
U.S. Government Obligations .................... 5.9%
Hotels and Gaming .............................. 5.1%
Specialty Chemicals ............................ 4.5%
Aviation: Parts and Services ................... 3.9%
Food and Beverage .............................. 3.9%
Financial Services ............................. 3.3%
Automotive: Parts and Accessories .............. 3.2%
Business Services .............................. 3.1%
Publishing ..................................... 3.0%
Consumer Products .............................. 2.7%
Communications Equipment ....................... 2.3%
Retail ......................................... 2.2%
Manufactured Housing and
Recreational Vehicles ........................ 2.2%
Cable .......................................... 1.9%
Entertainment .................................. 1.8%
Broadcasting ................................... 1.6%
Electronics .................................... 1.4%
Telecommunications ............................. 1.3%
Environmental Services ......................... 1.3%
Real Estate .................................... 1.1%
Computer Software and Services ................. 1.1%
Consumer Services .............................. 1.1%
Wireless Communications ........................ 1.1%
Transportation ................................. 0.9%
Closed-End Funds ............................... 0.8%
Metals and Mining .............................. 0.6%
Automotive ..................................... 0.3%
Satellite ...................................... 0.2%
Paper and Forest Products ...................... 0.2%
Aerospace ...................................... 0.2%
Building and Construction ...................... 0.2%
Home Furnishings ............................... 0.1%
Educational Services ........................... 0.1%
Agriculture .................................... 0.0%
Other Assets and Liabilities (Net) ............. 0.3%
------
100.0%
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THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED DECEMBER 31, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
3
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS -- 93.2%
AEROSPACE -- 0.2%
65,000 Herley Industries Inc.+ ...........$ 1,254,421 $ 1,357,200
------------ ------------
AGRICULTURE -- 0.0%
1,200 Cadiz Inc.+ ....................... 4,500 20,952
10,000 Mosaic Co.+ ....................... 131,264 143,500
------------ ------------
135,764 164,452
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AUTOMOTIVE -- 0.3%
90,000 Adesa Inc. ........................ 1,655,735 2,406,600
6,000 Oshkosh Truck Corp. ............... 89,796 373,440
------------ ------------
1,745,531 2,780,040
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AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.2%
3,816 Aftermarket Technology Corp.+ ..... 47,013 86,280
80,000 BorgWarner Inc. ................... 1,711,945 4,803,200
200,000 Dana Corp. ........................ 967,925 302,000
200,000 Earl Scheib Inc.+ ................. 1,331,353 730,000
40,000 Federal-Mogul Corp.+ .............. 79,500 12,800
206,000 Midas Inc.+ ....................... 2,658,592 4,505,220
195,000 Modine Manufacturing Co. .......... 4,699,190 5,752,500
7,875 Monro Muffler Brake Inc. .......... 52,860 292,477
120,000 Pep Boys - Manny, Moe & Jack ...... 1,628,358 1,813,200
199,693 Proliance International Inc.+ ..... 1,482,212 1,090,324
2,000 Puradyn Filter Technologies Inc.+ . 2,750 2,800
33,500 Spartan Motors Inc. ............... 365,562 385,250
170,000 Standard Motor Products Inc. ...... 2,539,350 1,509,600
27,000 Strattec Security Corp.+ .......... 1,058,830 1,006,830
7,000 Superior Industries
International Inc. ............... 186,596 135,520
90,000 Tenneco Inc.+ ..................... 188,100 1,952,100
28,000 Thor Industries Inc. .............. 259,454 1,494,080
------------ ------------
19,259,590 25,874,181
------------ ------------
AVIATION: PARTS AND SERVICES -- 3.9%
25,000 AAR Corp.+ ........................ 302,990 712,000
10,000 Astronics Corp.+ .................. 48,990 134,900
73,000 Aviall Inc.+ ...................... 522,008 2,779,840
7,000 Barnes Group Inc. ................. 119,437 283,500
61,200 Curtiss-Wright Corp. .............. 1,497,271 4,051,440
7,500 Ducommun Inc.+ .................... 80,125 166,500
20,000 EDO Corp. ......................... 441,767 617,000
30,000 Embraer-Empresa Brasileira
de Aeronautica SA, ADR ........... 508,773 1,105,500
240,000 Fairchild Corp., Cl. A+ ........... 1,311,458 624,000
24,000 Gamesa Corporacion
Tecnologica SA ................... 146,892 461,572
240,000 GenCorp Inc.+ ..................... 2,275,688 4,932,000
450,000 Kaman Corp. ....................... 7,139,210 11,322,000
95,000 Moog Inc., Cl. A+ ................. 609,477 3,371,550
24,000 Woodward Governor Co. ............. 347,309 798,000
------------ ------------
15,351,395 31,359,802
------------ ------------
MARKET
SHARES COST VALUE
------ ------- -------
BROADCASTING -- 1.4%
120,000 Acme Communications Inc.+ .........$ 919,240 $ 496,800
25,000 Beasley Broadcast Group
Inc., Cl. A ...................... 284,341 303,250
2,000 Cogeco Inc. ....................... 39,014 48,208
260,000 Crown Media Holdings Inc.,
Cl. A+ ........................... 1,892,272 1,648,400
3,333 CTN Media Group Inc.+ (b) ......... 16,800 3
2,000 Global Traffic Network Inc.+ ...... 11,904 11,960
300,000 Granite Broadcasting Corp.+ ....... 449,578 36,000
390,000 Gray Television Inc. .............. 3,539,564 3,276,000
38,300 Gray Television Inc., Cl. A ....... 489,977 308,698
48,000 Hearst-Argyle Television Inc. ..... 425,523 1,121,280
22,000 Nexstar Broadcasting Group
Inc., Cl. A+ ..................... 209,552 114,400
142,550 Paxson Communications Corp.+ ...... 513,405 133,997
96,650 Salem Communications Corp.,
Cl. A+ ........................... 1,449,253 1,450,717
200,000 Sinclair Broadcast Group Inc.,
Cl. A ............................ 2,156,325 1,630,000
57,000 Spanish Broadcasting System Inc.,
Cl. A+ ........................... 508,514 315,210
185,000 Young Broadcasting Inc., Cl. A+ ... 2,107,038 629,000
------------ ------------
15,012,300 11,523,923
------------ ------------
BUILDING AND CONSTRUCTION -- 0.2%
16,500 Florida Rock Industries Inc. ...... 96,939 927,630
25,000 Huttig Building Products Inc.+ .... 90,165 232,750
1,000 Universal Forest Products Inc. .... 12,125 63,490
------------ ------------
199,229 1,223,870
------------ ------------
BUSINESS SERVICES -- 2.7%
5,000 Acco Brands Corp.+ ................ 123,890 111,000
220,000 AMICAS Inc.+ ...................... 981,583 1,038,400
6,000 BB Holdings Ltd. .................. 23,159 27,600
5,000 BrandPartners Group Inc.+ ......... 4,850 2,150
610,400 Career Blazers Inc.+ (b) .......... 236,019 107,125
2,400 Carlisle Group Ltd.+ .............. 3,630 4,754
1,000 CheckFree Corp.+ .................. 9,040 50,500
256,000 Edgewater Technology Inc.+ ........ 1,098,274 1,674,240
33,300 GP Strategies Corp.+ .............. 113,057 235,764
22,589 GSE Systems Inc.+ ................. 31,625 39,531
80,000 Industrial Distribution
Group Inc.+ ...................... 224,062 676,000
60,000 Interactive Data Corp. ............ 534,171 1,410,000
130,000 Intermec Inc.+ .................... 2,457,802 3,966,300
13,000 Landauer Inc. ..................... 234,859 652,860
4,000 MDC Partners Inc., Cl. A+ ......... 12,360 34,120
166,000 Nashua Corp.+ ..................... 1,597,567 1,411,000
375 OneSource Services Inc.+ .......... 3,461 5,049
100,000 Paxar Corp.+ ...................... 1,199,175 1,957,000
See accompanying notes to financial statements.
4
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
BUSINESS SERVICES (CONTINUED)
20,000 R. H. Donnelley Corp.+ ............$ 269,035 $ 1,164,600
80,000 Sohgo Security Services
Co. Ltd. ......................... 1,016,197 1,282,583
25,000 Stamps.com Inc.+ .................. 137,340 881,500
4,000 StarTek Inc. ...................... 62,677 94,240
80,000 The Brink's Co. ................... 1,986,050 4,060,800
100,500 Trans-Lux Corp. (a) ............... 823,961 657,270
------------ ------------
13,183,844 21,544,386
------------ ------------
CABLE -- 1.9%
230,000 Adelphia Communications
Corp., Cl. A+ .................... 29,650 10,120
510,000 Cablevision Systems Corp.,
Cl. A+ ........................... 3,013,883 13,617,000
9,329 Liberty Global Inc., Cl. A+ ....... 249,972 190,964
9,329 Liberty Global Inc., Cl. C+ ....... 240,169 184,248
105,000 Lin TV Corp., Cl. A+ .............. 1,976,678 945,000
4,000 Outdoor Channel Holdings Inc.+ .... 44,765 40,760
------------ ------------
5,555,117 14,988,092
------------ ------------
CLOSED-END FUNDS -- 0.8%
87,158 Central Europe and
Russia Fund Inc. ................. 2,011,890 4,238,494
36,700 European Equity Fund Inc. ......... 386,832 376,542
50,000 MVC Capital Inc. .................. 461,995 610,000
54,000 New Germany Fund Inc. ............. 635,491 699,300
11,000 Spain Fund Inc. ................... 103,029 140,800
------------ ------------
3,599,237 6,065,136
------------ ------------
COMMUNICATIONS EQUIPMENT -- 2.3%
65,000 Andrew Corp.+ ..................... 265,246 798,200
150,000 Communications Systems Inc. ....... 1,040,821 1,582,500
260,900 Sycamore Networks Inc.+ ........... 778,040 1,226,230
290,000 Thomas & Betts Corp.+ ............. 5,352,259 14,900,200
------------ ------------
7,436,366 18,507,130
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 1.1%
276 Adobe Systems Inc.+ ............... 2,371 9,638
73,000 Borland Software Corp.+ ........... 612,810 394,200
90,000 FalconStor Software Inc.+ ......... 636,867 850,500
22,990 Global Sources Ltd.+ .............. 306,293 255,189
50,000 Jupitermedia Corp.+ ............... 435,800 899,000
20,187 MKS Instruments Inc.+ ............. 367,981 472,981
3,000 NAVTEQ Corp.+ ..................... 115,450 151,950
114,400 Net Perceptions Inc.+ ............. 71,277 68,640
160,000 OpenTV Corp., Cl. A+ .............. 860,410 470,400
8,000 Phoenix Technologies Ltd.+ ........ 55,158 54,240
800,000 StorageNetworks Inc. Escrow+ (b) .. 0 24,000
MARKET
SHARES COST VALUE
------ ------- -------
360,000 Tyler Technologies Inc.+ ..........$ 1,411,950 $ 3,960,000
288,600 Xanser Corp.+ ..................... 1,053,858 1,278,498
------------ ------------
5,930,225 8,889,236
------------ ------------
CONSUMER PRODUCTS -- 2.7%
27,000 Adams Golf Inc.+ .................. 71,200 42,120
5,250 Alberto-Culver Co. ................ 169,298 232,208
16,000 Ashworth Inc.+ .................... 69,906 158,880
33,500 Chofu Seisakusho Co. Ltd. ......... 484,644 796,941
37,500 Church & Dwight Co. Inc. .......... 354,732 1,384,500
35,000 Coachmen Industries Inc. .......... 436,787 398,300
6,000 Elizabeth Arden Inc.+ ............. 82,125 139,920
4,000 Genlyte Group Inc.+ ............... 8,580 272,560
2,000 Harley-Davidson Inc. .............. 4,712 103,760
200,000 Hartmarx Corp.+ ................... 1,011,455 1,782,000
80,000 Jacuzzi Brands Inc.+ .............. 534,949 786,400
100,000 Lenox Group Inc.+ ................. 1,188,025 1,310,000
5,000 Levcor International Inc.+ ........ 7,650 4,875
4,000 Madden (Steven) Ltd. .............. 30,540 142,000
292,000 Marine Products Corp. ............. 194,337 3,209,080
50,700 National Presto Industries Inc. ... 1,753,578 2,492,919
99,513 Revlon Inc., Cl. A+ ............... 338,053 314,461
699,100 Schiff Nutrition .
International Inc.+ ............. 1,873,361 4,180,618
4,000 Scotts Miracle-Gro Co., Cl. A ..... 45,880 183,040
4,000 Spectrum Brands Inc.+ ............. 46,000 86,880
14,000 Stewart Enterprises Inc., Cl. A ... 65,467 79,940
87,425 Syratech Corp.+ ................... 17,426 4,371
30,000 Water Pik Technologies Inc.+ ...... 724,649 831,300
17,000 WD-40 Co. ......................... 470,278 524,450
112,000 Wolverine World Wide Inc. ......... 1,072,631 2,478,560
------------ ------------
11,056,263 21,940,083
------------ ------------
CONSUMER SERVICES -- 1.1%
30,500 Bowlin Travel Centers Inc.+ ....... 23,611 48,800
20,000 Central Parking Corp. ............. 305,761 320,000
2,500 Collectors Universe Inc.+ ......... 8,720 34,975
12,000 eLong Inc., ADR+ .................. 140,711 146,520
15,000 Expedia Inc.+ ..................... 148,714 304,050
47,500 IAC/InterActiveCorp+ .............. 558,573 1,399,825
16,000 Martha Stewart Living
Omnimedia Inc., Cl. A+ .......... 167,206 269,760
20,000 Response USA Inc.+ ................ 16,500 2
310,000 Rollins Inc. ...................... 2,677,158 6,274,400
10,000 TiVo Inc.+ ........................ 74,563 72,300
------------ ------------
4,121,517 8,870,632
------------ ------------
DIVERSIFIED INDUSTRIAL -- 8.4%
173,000 Acuity Brands Inc. ................ 2,323,864 6,920,000
100,000 Ampco-Pittsburgh Corp. ............ 972,481 2,000,000
6,000 Anixter International Inc. ........ 57,120 286,680
140,000 Baldor Electric Co. ............... 2,781,723 4,741,800
See accompanying notes to financial statements.
5
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
DIVERSIFIED INDUSTRIAL (CONTINUED)
150,000 Crane Co. .........................$ 3,282,255 $ 6,151,500
100,000 Delta plc ......................... 212,289 215,439
5,000 ESCO Technologies Inc.+ ........... 83,190 253,250
803 Foster Wheeler Ltd.+ .............. 3,183 37,990
6,000 Gardner Denver Inc.+ .............. 103,046 391,200
155,500 Greif Inc., Cl. A ................. 3,074,650 10,639,310
1,000 Greif Inc., Cl. B ................. 29,800 63,160
140,000 Griffon Corp.+ .................... 3,491,183 3,477,600
26,000 Harbor Global Co. Ltd.+ ........... 63,215 234,000
5,000 Insteel Industries Inc. ........... 4,250 283,900
70,000 Katy Industries Inc.+ ............. 562,756 251,300
150,000 Lamson & Sessions Co.+ ............ 778,710 4,174,500
73,000 Lindsay Manufacturing Co. ......... 781,892 1,977,570
160,000 MagneTek Inc.+ .................... 1,053,438 635,200
37,000 Matthews International
Corp., Cl. A ..................... 861,644 1,415,620
275,000 Myers Industries Inc. ............. 2,505,876 4,397,250
130,000 National Patent
Development Corp.+ ............... 86,241 191,100
80,000 Oil-Dri Corporation of America .... 810,055 1,600,000
15,000 Olin Corp. ........................ 232,292 322,050
220,000 Park-Ohio Holdings Corp.+ ......... 1,220,379 4,391,200
100,000 Precision Castparts Corp. ......... 1,702,840 5,940,000
32,000 Roper Industries Inc. ............. 620,029 1,556,160
40,000 Sonoco Products Co. ............... 1,071,921 1,354,800
63,000 Standex International Corp. ....... 1,253,307 1,994,580
59,900 Tech/Ops Sevcon Inc. .............. 377,987 383,360
65,000 Tredegar Corp. .................... 890,105 1,034,150
50,048 WHX Corp.+ ........................ 983,605 507,987
------------ ------------
32,275,326 67,822,656
------------ ------------
EDUCATIONAL SERVICES -- 0.1%
2,000 Career Education Corp.+ ........... 61,350 75,460
10,000 School Specialty Inc.+ ............ 409,947 345,000
------------ ------------
471,297 420,460
------------ ------------
ELECTRONICS -- 1.4%
10,000 Badger Meter Inc. ................. 360,815 569,800
190,000 California Micro
Devices Corp.+ ................... 1,457,814 1,502,900
210,000 CTS Corp. ......................... 2,213,523 2,809,800
20,000 Fargo Electronics+ ................ 118,827 338,200
20,000 Greatbatch Inc.+ .................. 487,480 438,200
17,000 Imax Corp.+ ....................... 159,970 172,550
170,000 KEMET Corp.+ ...................... 1,378,474 1,609,900
95,000 Park Electrochemical Corp. ........ 2,193,420 2,802,500
20,000 Trident Microsystems Inc.+ ........ 119,857 581,200
20,000 Zoran Corp.+ ...................... 121,523 437,600
------------ ------------
8,611,703 11,262,650
------------ ------------
MARKET
SHARES COST VALUE
------ ------- -------
ENERGY AND UTILITIES -- 6.4%
5,000 AGL Resources Inc. ................$ 85,875 $ 180,250
420,000 Aquila Inc.+ ...................... 1,430,627 1,675,800
6,400 BIW Ltd. .......................... 94,563 124,992
95,000 Callon Petroleum Co.+ ............. 939,533 1,996,900
142,000 CH Energy Group Inc. .............. 5,982,836 6,816,000
12,000 Chesapeake Utilities Corp. ........ 236,752 374,880
115,000 CMS Energy Corp.+ ................. 683,157 1,489,250
23,000 Connecticut Water Service Inc. .... 464,832 603,060
175,000 Covanta Holding Corp.+ ............ 748,662 2,917,250
120,000 Duquesne Light Holdings Inc. ...... 1,663,452 1,980,000
150,000 El Paso Electric Co.+ ............. 1,983,209 2,856,000
20,000 Environmental Power Corp.+ ........ 110,000 141,600
119,200 Florida Public Utilities Co. ...... 1,070,066 1,686,680
43,000 Middlesex Water Co. ............... 743,997 814,420
10,000 Nicor Inc. ........................ 221,002 395,600
10,000 Oceaneering International
Inc.+ ............................ 544,313 573,000
2,000 PetroQuest Energy Inc.+ ........... 5,250 20,180
650,000 RPC Inc. .......................... 1,022,565 14,852,500
35,000 SEMCO Energy Inc.+ ................ 218,317 193,900
96,000 SJW Corp. ......................... 1,557,739 2,577,600
52,500 Southern Union Co. ................ 682,575 1,303,575
112,000 Southwest Gas Corp. ............... 1,959,693 3,130,400
10,000 Tesoro Corp. ...................... 140,934 683,400
4,000 Toreador Resources Corp.+ ......... 15,250 124,440
10,000 Vestas Wind Systems A/S+ .......... 89,988 249,277
10,000 W-H Energy Services Inc.+ ......... 212,864 444,900
170,000 Westar Energy Inc. ................ 2,801,066 3,537,700
------------ ------------
25,709,117 51,743,554
------------ ------------
ENTERTAINMENT -- 1.8%
42,500 Canterbury Park Holding Corp. ..... 594,314 578,000
6,048 Chestnut Hill Ventures+ (b) ....... 164,590 129,864
500 Discovery Holding Co., Cl. A+ ..... 6,095 7,500
201,000 Dover Motorsports Inc. ............ 1,104,623 1,103,490
84,000 Fisher Communications Inc.+ ....... 4,797,217 3,759,000
580,000 Gemstar-TV Guide
International Inc.+ .............. 3,218,364 1,792,200
16,000 International Speedway Corp.,
Cl. A ............................ 515,479 814,400
2,500 International Speedway Corp.,
Cl. B ............................ 45,000 126,250
5,000 Liberty Media Corp., Cl. A+ ....... 37,439 41,050
10,000 Metromedia International
Group Inc.+ ...................... 6,700 15,200
325,000 Six Flags Inc.+ ................... 1,639,211 3,308,500
200,000 Topps Co. Inc. .................... 1,626,618 1,754,000
50,030 Triple Crown Media Inc.+ .......... 608,308 295,177
See accompanying notes to financial statements.
6
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
50,000 World Wrestling
Entertainment Inc. ...............$ 581,121 $ 845,000
38,000 WPT Enterprises Inc.+ ............. 298,988 279,680
------------ ------------
15,244,067 14,849,311
------------ ------------
ENVIRONMENTAL SERVICES -- 1.3%
225,000 Allied Waste Industries Inc.+ ..... 2,183,048 2,754,000
22,000 Catalytica Energy Systems Inc.+ ... 153,722 33,440
175,000 Republic Services Inc. ............ 2,490,315 7,439,250
------------ ------------
4,827,085 10,226,690
------------ ------------
EQUIPMENT AND SUPPLIES -- 14.1%
170,000 AMETEK Inc. ....................... 1,017,397 7,643,200
425,000 Baldwin Technology Co. Inc.,
Cl. A+ ........................... 1,353,684 2,647,750
73,000 Belden CDT Inc. ................... 1,196,036 1,987,790
12,000 C&D Technologies Inc. ............. 235,930 110,880
50,000 Capstone Turbine Corp.+ ........... 103,400 182,000
205,000 CIRCOR International Inc. ......... 3,175,395 5,986,000
414,000 CLARCOR Inc. ...................... 2,561,338 14,738,400
235,300 Core Molding Technologies Inc.+ ... 407,743 1,317,680
180,000 Crown Holdings Inc.+ .............. 727,278 3,193,200
2,000 Danaher Corp. ..................... 34,106 127,100
66,000 Donaldson Co. Inc. ................ 761,576 2,230,140
97,300 Entegris Inc.+ .................... 781,566 1,035,272
450,000 Fedders Corp. ..................... 2,002,393 684,000
205,000 Flowserve Corp.+ .................. 3,728,714 11,959,700
176,000 Franklin Electric Co. Inc. ........ 1,428,629 9,618,400
40,000 General Magnaplate Corp.+ (b) ..... 83,762 60,000
150,000 Gerber Scientific Inc.+ ........... 1,451,283 1,551,000
100,343 Gorman-Rupp Co. ................... 1,956,301 2,448,369
84,000 Graco Inc. ........................ 928,834 3,816,120
150,000 GrafTech International Ltd.+ ...... 1,005,827 915,000
60,000 IDEX Corp. ........................ 556,738 3,130,200
150,000 Interpump Group SpA ............... 589,120 1,178,834
4,500 Jarden Corp.+ ..................... 12,770 147,825
10,000 K-Tron International Inc.+ ........ 74,932 486,800
50,500 L.S. Starrett Co., Cl. A .......... 901,266 720,635
28,000 Littelfuse Inc.+ .................. 538,592 955,640
107,000 Lufkin Industries Inc. ............ 1,029,240 5,932,080
55,000 Maezawa Kyuso Industries
Co. Ltd. ......................... 359,609 930,841
26,666 Met-Pro Corp. ..................... 192,463 353,058
1,000 Middleby Corp.+ ................... 37,310 83,720
19,000 Mueller Industries Inc. ........... 577,116 678,110
10,000 Plantronics Inc. .................. 246,559 354,300
50,000 Robbins & Myers Inc. .............. 1,023,975 1,080,000
40,500 Sequa Corp., Cl. A+ ............... 1,502,140 3,960,900
80,000 Sequa Corp., Cl. B+ ............... 3,631,577 7,813,600
MARKET
SHARES COST VALUE
------ ------- -------
95,000 SL Industries Inc.+ ...............$ 1,114,953 $ 1,567,500
15,000 Smith A.O. Corp., Cl. A ........... 336,569 792,000
5,000 Teleflex Inc. ..................... 76,167 358,150
50,000 Tennant Co. ....................... 1,655,914 2,616,000
5,000 Valmont Industries Inc. ........... 40,625 210,200
7,875 Watsco Inc., Cl. B ................ 23,627 562,157
190,500 Watts Water Technologies Inc.,
Cl. A ............................ 3,366,746 6,922,770
15,000 Wolverine Tube Inc.+ .............. 150,915 60,300
------------ ------------
42,980,115 113,147,621
------------ ------------
FINANCIAL SERVICES -- 3.3%
10,710 Alleghany Corp.+ .................. 1,893,812 3,100,545
40,000 Argonaut Group Inc.+ .............. 867,813 1,422,000
90,000 Bancshares of Florida Inc.+ ....... 1,350,000 1,976,805
66,000 Bankgesellschaft Berlin AG+ ....... 1,280,794 395,914
75,000 BKF Capital Group Inc. ............ 1,447,111 975,000
365,000 CNA Surety Corp.+ ................. 4,005,795 6,106,450
19,100 Crazy Woman Creek Bancorp Inc. .... 285,742 317,537
37,000 Epoch Holding Corp.+ .............. 63,098 177,600
3,000 Federal Agricultural Mortgage
Corp., Cl. C ..................... 24,000 88,260
33,000 First Republic Bank ............... 636,067 1,248,060
95,000 Flushing Financial Corp. .......... 1,388,607 1,658,700
76,700 LaBranche & Co. Inc.+ ............. 717,613 1,212,627
1,000 LandAmerica Financial Group Inc. .. 12,175 67,850
1,500 Leucadia National Corp. ........... 24,354 89,490
107,500 Midland Co. ....................... 822,714 3,760,350
1,500 NetBank Inc. ...................... 6,000 10,860
25,000 NewAlliance Bancshares Inc. ....... 373,848 360,750
40,320 Sterling Bancorp .................. 670,453 830,592
20,000 SWS Group Inc. .................... 338,350 523,000
50,000 Wilmington Trust Corp. ............ 1,574,410 2,167,500
------------ ------------
17,782,756 26,489,890
------------ ------------
FOOD AND BEVERAGE -- 3.9%
30,000 Boston Beer Co. Inc., Cl. A+ ...... 468,757 780,300
24,000 Brown-Forman Corp., Cl. A ......... 665,535 1,878,000
11,250 Cheesecake Factory Inc.+ .......... 37,036 421,312
100 Compania Cervecerias
Unidas SA, ADR ................... 2,455 2,490
38,000 Corn Products International Inc. .. 617,424 1,123,660
100,000 Del Monte Foods Co. ............... 997,536 1,186,000
85,000 Denny's Corp.+ .................... 132,580 404,600
40,000 Dynasty Fine Wines
Group Ltd. ....................... 13,958 16,754
100 Embotelladora Andina SA,
Cl. A, ADR ....................... 1,295 1,385
25,000 Farmer Brothers Co. ............... 389,323 557,500
280,000 Flowers Foods Inc. ................ 2,302,226 8,316,000
See accompanying notes to financial statements.
7
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE (CONTINUED)
500 Genesee Corp., Cl. A+ .............$ 0 $ 815
21,500 Genesee Corp., Cl. B+ ............. 32,823 34,078
701,500 Grupo Continental SA .............. 1,058,724 1,173,276
10,000 Hain Celestial Group Inc.+ ........ 184,774 261,900
12,000 J & J Snack Foods Corp. ........... 100,375 403,080
210,000 Kikkoman Corp. .................... 1,375,672 2,362,277
12,500 Lifeway Foods Inc.+ ............... 144,647 153,144
20,000 Meiji Seika Kaisha Ltd. ........... 87,470 101,954
35,000 MGP Ingredients Inc. .............. 243,900 567,000
10,000 Nathan's Famous Inc.+ ............. 82,691 122,875
4,000 Omni Nutraceuticals Inc.+ ......... 13,563 5
20,000 PepsiAmericas Inc. ................ 286,588 489,000
55,000 Ralcorp Holdings Inc.+ ............ 828,181 2,092,750
64,000 The J.M. Smucker Co. .............. 1,518,450 2,540,800
100,000 The Steak n Shake Co.+ ............ 1,088,229 2,110,000
50,023 Tootsie Roll Industries Inc. ...... 873,915 1,464,165
50,000 Triarc Companies Inc., Cl. A ...... 355,474 911,500
120,000 Triarc Companies Inc., Cl. B ...... 1,025,442 2,097,600
250 Vina Concha Y Toro SA, ADR ........ 8,305 7,368
1,000 Willamette Valley
Vineyards Inc.+ .................. 3,994 6,510
------------ ------------
14,941,342 31,588,098
------------ ------------
HEALTH CARE -- 8.2%
50,000 Align Technology Inc.+ ............ 444,171 458,500
50,571 Allergan Inc. ..................... 1,981,796 5,486,953
90,000 AngioDynamics Inc.+ ............... 2,002,085 2,705,400
5,000 Anika Therapeutics Inc.+ .......... 64,475 61,100
55,000 ArthroCare Corp.+ ................. 1,133,267 2,630,100
7,800 Bio-Rad Laboratories Inc.,
Cl. A+ ........................... 309,943 486,330
1,000 Biomet Inc. ....................... 30,350 35,520
60,000 Biosite Inc.+ ..................... 2,738,011 3,115,800
9,000 Bruker BioSciences Corp.+ ......... 34,729 48,600
185,000 Chemed Corp. ...................... 3,053,070 10,977,900
1,000 CNS Inc. .......................... 12,240 21,540
70,000 CONMED Corp.+ ..................... 1,874,287 1,340,500
82,000 Del Global Technologies Corp.+ .... 251,543 324,720
40,000 DexCom Inc.+ ...................... 769,514 810,800
1,000 Digene Corp.+ ..................... 8,000 39,100
95,000 Edwards Lifesciences Corp.+ ....... 3,358,437 4,132,500
1,102 Enzo Biochem Inc.+ ................ 13,091 14,877
65,000 Exactech Inc.+ .................... 920,376 908,700
8,000 Fisher Scientific
International Inc.+ .............. 184,008 544,400
48,000 Henry Schein Inc.+ ................ 844,631 2,297,280
35,000 ICU Medical Inc.+ ................. 1,043,366 1,266,650
2,000 Integra LifeSciences
Holdings+ ........................ 43,600 81,960
MARKET
SHARES COST VALUE
------ ------- -------
1,000 Invacare Corp. ....................$ 33,835 $ 31,060
33,000 Inverness Medical
Innovations Inc.+ ................ 604,926 948,090
26,000 Invitrogen Corp.+ ................. 1,338,073 1,823,380
100,000 Lifecore Biomedical Inc.+ ......... 958,195 1,170,000
30,000 MWI Veterinary Supply Inc.+ ....... 661,312 987,000
15,000 Nabi Biopharmaceuticals+ .......... 105,625 84,600
3,000 NeoPharm Inc.+ .................... 29,760 25,080
5,000 NeuroMetrix Inc.+ ................. 132,176 194,700
1,300 Nobel Biocare Holding AG .......... 100,171 289,437
10,600 NWH Inc. .......................... 161,306 147,764
34,000 Orthofix International NV+ ........ 1,133,250 1,353,880
2,000 OrthoLogic Corp.+ ................. 6,750 4,400
35,000 Owens & Minor Inc. ................ 692,324 1,146,950
60,000 Penwest Pharmaceuticals Co.+ ...... 482,987 1,301,400
18,900 Possis Medical Inc.+ .............. 194,460 192,024
30,000 PSS World Medical Inc.+ ........... 367,273 578,700
200,000 Quidel Corp.+ ..................... 1,253,437 2,574,000
100,000 Regeneration Technologies Inc.+ ... 1,003,406 781,000
38,000 Schick Technologies Inc.+ ......... 332,839 1,896,200
590,000 Snia SpA+ ......................... 133,755 62,491
96,200 Sonic Innovations Inc.+ ........... 429,858 481,000
1,880,000 Sorin SpA+ ........................ 6,403,312 3,772,850
100,000 SSL International plc ............. 540,319 559,011
2,500 Straumann Holding AG .............. 224,697 569,555
4,200 Stryker Corp. ..................... 162,570 186,228
145,000 Sybron Dental Specialties Inc.+ ... 2,780,674 5,979,800
40,000 Thoratec Corp.+ ................... 478,455 770,800
2,000 Vascular Solutions Inc.+ .......... 18,660 15,840
1,000 Wright Medical Group Inc.+ ........ 16,460 19,750
5,100 Young Innovations Inc. ............ 128,516 186,252
------------ ------------
42,024,371 65,922,472
------------ ------------
HOME FURNISHINGS -- 0.1%
13,000 Bassett Furniture
Industries Inc. .................. 215,616 259,350
4,000 Bed Bath & Beyond Inc.+ ........... 11,125 153,600
1,000 Foamex International Inc.+ ........ 8,062 150
30,000 La-Z-Boy Inc. ..................... 250,200 510,000
------------ ------------
485,003 923,100
------------ ------------
HOTELS AND GAMING -- 5.1%
269,000 Aztar Corp.+ ...................... 4,420,952 11,295,310
12,000 Boyd Gaming Corp. ................. 90,225 599,280
70,000 Churchill Downs Inc. .............. 2,235,482 2,682,400
80,000 Dover Downs Gaming &
Entertainment Inc. ............... 796,488 1,741,600
150,000 Gaylord Entertainment Co.+ ........ 4,244,031 6,807,000
10,002 Harrah's Entertainment Inc. ....... 498,147 779,756
See accompanying notes to financial statements.
8
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
HOTELS AND GAMING (CONTINUED)
58,000 Kerzner International Ltd.+ .......$ 1,376,659 $ 4,513,560
145,000 Lakes Entertainment Inc.+ ......... 766,240 1,577,600
1,200 Las Vegas Sands Corp.+ ............ 34,800 67,992
405,000 Magna Entertainment Corp.,
Cl. A+ ........................... 2,672,344 2,749,950
20,000 Marcus Corp. ...................... 377,480 399,000
82,000 Penn National Gaming Inc.+ ........ 186,907 3,458,760
95,000 Pinnacle Entertainment Inc.+ ...... 828,043 2,676,150
3,000 Station Casinos Inc. .............. 11,670 238,110
16,000 Wynn Resorts Ltd.+ ................ 231,002 1,229,600
20,000 Youbet.com Inc.+ .................. 51,494 109,200
------------ ------------
18,821,964 40,925,268
------------ ------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 2.2%
58,000 Cavco Industries Inc.+ ............ 1,127,032 2,818,220
335,000 Champion Enterprises Inc.+ ........ 3,495,127 5,011,600
17,000 Drew Industries Inc.+ ............. 296,303 604,350
205,000 Fleetwood Enterprises Inc.+ ....... 2,634,462 2,289,850
70,000 Monaco Coach Corp. ................ 1,540,819 938,000
141,000 Skyline Corp. ..................... 4,489,399 5,834,580
36,000 Southern Energy Homes Inc.+ ....... 265,405 214,560
------------ ------------
13,848,547 17,711,160
------------ ------------
METALS AND MINING -- 0.6%
80,000 Arizona Star Resource Corp.+ ...... 327,099 704,885
52,003 Barrick Gold Corp. ................ 1,522,648 1,416,562
15,000 Ivanhoe Mines Ltd.+ ............... 111,730 144,450
142,115 Kinross Gold Corp.+ ............... 984,488 1,553,317
10,000 Meridian Gold Inc.+ ............... 75,630 296,500
22,000 Novelis Inc. ...................... 470,548 452,540
190,000 Royal Oak Mines Inc.+ ............. 322,487 1,330
30,148 Stillwater Mining Co.+ ............ 389,561 496,236
------------ ------------
4,204,191 5,065,820
------------ ------------
PAPER AND FOREST PRODUCTS -- 0.2%
40,000 Packaging Dynamics Corp. .......... 296,567 554,000
70,000 Pope & Talbot Inc. ................ 1,091,740 476,000
18,000 Schweitzer-Mauduit
International Inc. ............... 424,690 432,000
22,000 Wausau Paper Corp. ................ 255,362 311,740
------------ ------------
2,068,359 1,773,740
------------ ------------
PUBLISHING -- 3.0%
307,237 Independent News & Media plc ...... 431,671 994,114
50,000 Journal Communications Inc.,
Cl. A ............................ 882,277 620,000
115,000 Journal Register Co. .............. 1,843,717 1,400,700
11,000 Lee Enterprises Inc. .............. 261,685 366,190
53,000 McClatchy Co., Cl. A .............. 1,581,315 2,589,050
70,000 Media General Inc., Cl. A ......... 1,989,584 3,263,400
MARKET
SHARES COST VALUE
------ ------- -------
23,000 Meredith Corp. ....................$ 429,183 $ 1,283,170
310,000 News Corp., Cl. A ................. 912,485 5,149,100
1,050,000 Penton Media Inc.+ ................ 951,840 661,500
395,000 PRIMEDIA Inc.+ .................... 1,258,127 817,650
215,000 Thomas Nelson Inc. ................ 2,192,528 6,288,750
4,000 Value Line Inc. ................... 162,772 148,000
12,000 Wiley (John) & Sons Inc.,
Cl. B ............................ 46,500 458,460
------------ ------------
12,943,684 24,040,084
------------ ------------
REAL ESTATE -- 1.1%
190 Case Pomeroy & Co. Inc., Cl. A .... 222,300 314,450
170,000 Griffin Land & Nurseries Inc.+ .... 2,202,170 5,270,000
9,000 Gyrodyne Company of
America Inc.+ .................... 135,071 405,000
20,000 Malan Realty Investors
Inc.+ (b) ........................ 75,279 18,800
110,000 Morguard Corp. .................... 1,392,683 3,211,885
------------ ------------
4,027,503 9,220,135
------------ ------------
RETAIL -- 2.2%
9,000 Aaron Rents Inc. .................. 80,500 244,530
145,000 Aaron Rents Inc., Cl. A ........... 522,819 3,552,500
35,000 Big 5 Sporting Goods Corp. ........ 657,716 685,300
90,000 Burlington Coat Factory
Warehouse Corp. .................. 969,958 4,090,500
8,000 Casey's General Stores Inc. ....... 124,503 182,960
68,000 Coldwater Creek Inc.+ ............. 140,633 1,890,400
20,000 CoolBrands International Inc.+ .... 81,374 44,526
95,000 CSK Auto Corp.+ ................... 1,565,131 1,317,650
3,000 Gander Mountain Co.+ .............. 27,860 28,260
175,000 Ingles Markets Inc., Cl. A ........ 2,176,507 3,118,500
35,000 Movado Group Inc. ................. 515,027 807,800
1,500 The Sports Authority Inc.+ ........ 9,198 55,350
40,000 Weis Markets Inc. ................. 1,174,744 1,782,800
------------ ------------
8,045,970 17,801,076
------------ ------------
SATELLITE -- 0.2%
27,000 Pegasus Communications Corp.,
Cl. A+ ........................... 228,644 74,250
200,000 Sirius Satellite Radio Inc.+ ...... 981,915 1,016,000
35,000 XM Satellite Radio Holdings Inc.,
Cl. A+ ........................... 302,980 779,450
------------ ------------
1,513,539 1,869,700
------------ ------------
SPECIALTY CHEMICALS -- 4.5%
28,000 Airgas Inc. ....................... 172,551 1,094,520
47,000 Albemarle Corp. ................... 1,274,676 2,131,450
40,000 Arch Chemicals Inc. ............... 866,559 1,216,000
65,000 Chemtura Corp. .................... 714,772 765,700
10,000 Cytec Industries Inc. ............. 278,296 600,100
See accompanying notes to financial statements.
9
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
SPECIALTY CHEMICALS (CONTINUED)
7,000 Dionex Corp.+ .....................$ 210,000 $ 430,360
180,000 Ferro Corp. ....................... 3,999,568 3,600,000
125,000 H.B. Fuller Co. ................... 2,208,515 6,417,500
24,900 Hawkins Inc. ...................... 338,014 350,343
430,000 Hercules Inc.+ .................... 4,166,174 5,934,000
145,000 MacDermid Inc. .................... 2,527,513 4,661,750
162,600 Material Sciences Corp.+ .......... 1,513,911 1,964,208
155,700 Omnova Solutions Inc.+ ............ 964,315 952,884
50,000 Penford Corp. ..................... 539,601 804,000
10,000 Quaker Chemical Corp. ............. 181,137 217,500
20,000 Schulman (A.) Inc. ................ 240,000 495,000
273,000 Sensient Technologies Corp. ....... 5,506,095 4,927,650
------------ ------------
25,701,697 36,562,965
------------ ------------
TELECOMMUNICATIONS -- 1.3%
29,425 ALLTEL Corp. ...................... 178,507 1,905,269
9,200 Atlantic Tele-Network Inc. ........ 92,644 524,400
200,000 Cincinnati Bell Inc.+ ............. 517,183 904,000
80,000 Commonwealth Telephone
Enterprises Inc. ................. 1,919,652 2,756,000
6,795 Community Service
Communications Inc.+ ............. 0 22,152
46,950 D&E Communications Inc. ........... 605,207 527,718
870 NTL Inc.+ ......................... 13,291 25,325
80,525 Rogers Communications Inc.,
Cl. B ............................ 762,545 3,072,029
20,000 Shenandoah
Telecommunications Co. ........... 296,543 899,800
10,000 Stratos International Inc.+ ....... 46,334 80,900
53,000 Winstar Communications Inc.+ ...... 133 53
------------ ------------
4,432,039 10,717,646
------------ ------------
TRANSPORTATION -- 0.9%
130,000 GATX Corp. ........................ 3,650,103 5,367,700
125,000 Grupo TMM SA, Cl. A, ADR+ ......... 946,399 615,000
2,000 Irish Continental Group plc+ ...... 17,829 29,981
50,000 OMI Corp. ......................... 313,120 901,000
5,100 Providence & Worcester
Railroad Co. ..................... 42,979 82,875
------------ ------------
4,970,430 6,996,556
------------ ------------
WIRELESS COMMUNICATIONS -- 1.1%
45,000 Centennial Communications Corp. ... 246,806 329,850
72,000 Price Communications Corp.+ ....... 905,273 1,273,680
55,000 Rural Cellular Corp., Cl. A+ ...... 374,090 809,050
10,000 SunCom Wireless Holdings Inc.,
Cl. A+ ........................... 69,480 19,300
5,000 UbiquiTel Inc.+ ................... 2,700 50,500
MARKET
SHARES COST VALUE
------ ------- -------
148,000 Vimpel-Communications, ADR+ .......$ 1,261,092 $ 6,365,480
------------ ------------
2,859,441 8,847,860
------------ ------------
TOTAL COMMON STOCKS ............... 412,630,345 751,016,675
------------ ------------
PREFERRED STOCKS -- 0.3%
BROADCASTING -- 0.2%
1,063 Granite Broadcasting Corp.,
12.750% Pfd.+ .................... 439,682 103,642
100 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (b)(d)(e) ................. 1,000,000 1,000,000
1,103 PTV Inc., 10.000% Pfd.,
Ser. A+ .......................... 0 2,675
------------ ------------
1,439,682 1,106,317
------------ ------------
BUSINESS SERVICES -- 0.1%
22,483 Interep National Radio Sales Inc.,
4.000% Cv. Pfd.,
Ser. A+ (b)(d)(e) ................ 2,163,147 786,901
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.0%
151 Foster Wheeler Ltd.,Pfd.,
Ser. B+ .......................... 38,060 120,800
------------ ------------
TOTAL PREFERRED STOCKS ............ 3,640,889 2,014,018
------------ ------------
WARRANTS -- 0.1%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
1,213 Exide Technologies,
expire 05/05/11+ ................. 2,247 400
------------ ------------
BUSINESS SERVICES -- 0.1%
261,431 GP Strategies Corp.,
expire 08/14/08+ (b)(e) .......... 634,637 583,404
125,000 Interep National Radio Sales Inc.,
expire 05/06/07+ (b)(d)(e) ....... 0 0
------------ ------------
634,637 583,404
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
430 Anacomp Inc., Cl. B,
expire 12/10/06+ ................. 0 9
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.0%
379,703 National Patent Development Corp.,
expire 08/14/08+ (b)(e) .......... 0 100,015
13,217 WHX Corp., expire 02/28/08+ ....... 52,373 13,878
------------ ------------
52,373 113,893
------------ ------------
HEALTH CARE -- 0.0%
14,424 Del Global Technologies Corp.,
expire 03/28/08+ ................. 24,809 18,174
------------ ------------
See accompanying notes to financial statements.
10
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
WARRANTS (CONTINUED)
TELECOMMUNICATIONS -- 0.0%
86 NTL Inc., expire 01/13/11+ ........$ 124 $ 4
------------ ------------
TOTAL WARRANTS .................... 714,190 715,884
------------ ------------
PRINCIPAL
AMOUNT
------
CORPORATE BONDS -- 0.2%
AVIATION: PARTS AND SERVICES -- 0.0%
$ 300,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ................. 291,794 338,250
------------ ------------
BUSINESS SERVICES -- 0.2%
2,000,000 GP Strategies Corp., Sub. Deb.,
6.000%, 08/14/08 (b)(e) .......... 1,597,526 1,325,397
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
300,000 Exodus Communications Inc.,
Sub. Deb. Cv.,5.250%,
02/15/08+ (b)(c) ................. 1,185 0
------------ ------------
HEALTH CARE -- 0.0%
28,848 Del Global Technologies Corp.,
6.000%, 03/28/07 (b) ............. 28,848 21,636
------------ ------------
TOTAL CORPORATE BONDS ............. 1,919,353 1,685,283
------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 5.9%
47,832,000 U.S. Treasury Bills,
4.334% to 4.676%++,
04/06/06 to 06/15/06 ............. 47,695,425 47,695,419
------------ ------------
TOTAL INVESTMENTS -- 99.7% ........$466,600,202 803,127,279
============
OTHER ASSETS AND
LIABILITIES (NET) -- 0.3% ....................... 2,378,159
------------
NET ASSETS -- 100.0% .............................$805,505,438
============
- ----------------
(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. At March 31, 2006, the
market value of fair valued securities amounted to $4,157,145 or 0.52% of
total 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,
2006, the market value of Rule 144A securities amounted to $1,786,901 or
0.22% of total net assets.
(e) At March 31, 2006, the Fund held restricted and illiquid securities
amounting to $3,795,717 or 0.47% of net assets, which were valued under
methods approved by the Board, as follows:
ACQUISITION 03/31/06
SHARES/ CARRYING
PRINCIPAL ACQUISITION ACQUISITION VALUE
AMOUNT ISSUER DATE COST PER UNIT
-------- ------ ----------- ----------- --------
$2,000,000 GP Strategies Corp.,
Sub. Deb.,
6.000%, 08/14/08 ........... 08/08/03 $1,362,935 $ 66.2699
261,431 GP Strategies Corp.
warrants expire 08/14/08 ... 08/08/03 634,637 2.2316
100 Gray Television Inc.,
8.000% Cv. Pfd., Ser. C .... 04/22/02 1,000,000 10,000.0000
22,483 Interep National Radio
Sales Inc.,
4.000% Cv. Pfd., Ser. A .... 05/03/02 2,163,147 34.9998
125,000 Interep National Radio
Sales Inc.
warrants expire 05/06/07 ... 05/03/02 0.00 0.0000
379,703 National Patent Development
Corp. warrants expire
08/14/08 ................... 11/24/04 0.00 0.2634
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
See accompanying notes to financial statements.
11
THE GABELLI SMALL CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2006 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $465,776,241) ............ $802,470,009
Investments in affiliate, at value (cost $823,961) ... 657,270
Cash ................................................. 1,090
Receivable for investments sold ...................... 3,299,588
Receivable for Fund shares sold ...................... 639,711
Dividends and interest receivable .................... 538,420
Other assets ......................................... 19,821
------------
TOTAL ASSETS ......................................... 807,625,909
------------
LIABILITIES:
Payable for investment advisory fees ................. 708,899
Payable for investments purchased .................... 584,980
Payable for Fund shares redeemed ..................... 368,725
Payable for distribution fees ........................ 178,834
Payable for shareholder services fees ................ 120,366
Payable for shareholder communications expenses ...... 111,528
Other accrued expenses ............................... 47,139
------------
TOTAL LIABILITIES .................................... 2,120,471
------------
NET ASSETS applicable to 25,869,207 shares outstanding $805,505,438
============
NET ASSETS CONSIST OF:
Capital stock, each class at $0.001 par value ........ $ 25,869
Additional paid-in capital ........................... 450,252,985
Accumulated net investment loss ...................... (551,155)
Accumulated net realized gain on investments
and foreign currency transactions .................. 19,260,482
Net unrealized appreciation on investments ........... 336,527,077
Net unrealized depreciation on foreign
currency translations .............................. (9,820)
------------
NET ASSETS ........................................... $805,505,438
============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($800,870,100 / 25,718,942 shares
outstanding; 150,000,000 shares authorized) ........ $31.14
======
CLASS A:
Net Asset Value and redemption price per share
($2,179,196 / 69,959 shares outstanding;
50,000,000 shares authorized) ...................... $31.15
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ............................. $33.05
======
CLASS B:
Net Asset Value and offering price per share
($121,257 / 3,964 shares outstanding;
50,000,000 shares authorized) ...................... $30.59(a)
======
CLASS C:
Net Asset Value and offering price per share
($2,334,885 / 76,342 shares outstanding;
50,000,000 shares authorized) ...................... $30.58(a)
======
- ---------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2006 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $28,831) $ 3,920,410
Dividends from affiliate .................. 7,000
Interest .................................. 940,598
------------
TOTAL INVESTMENT INCOME ................... 4,868,008
------------
EXPENSES:
Investment advisory fees .................. 3,784,934
Distribution fees -- Class AAA ............ 941,065
Distribution fees -- Class A .............. 2,333
Distribution fees -- Class B .............. 697
Distribution fees -- Class C .............. 9,325
Shareholder services fees ................. 356,183
Shareholder communications expenses ....... 108,669
Custodian fees ............................ 58,018
Legal and audit fees ...................... 30,074
Registration fees ......................... 21,779
Directors' fees ........................... 16,904
Miscellaneous expenses .................... 61,534
------------
TOTAL EXPENSES ............................ 5,391,515
Less: Custodian fee credits ............... (3,873)
------------
NET EXPENSES .............................. 5,387,642
------------
NET INVESTMENT LOSS ....................... (519,634)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments .......... 31,558,574
Net realized loss on foreign
currency transactions .................. (4,522)
------------
Net realized gain on investments and
loss on foreign currency transactions ... 31,554,052
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations ................... 52,409,758
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ..... 83,963,810
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 83,444,176
============
See accompanying notes to financial statements.
12
THE GABELLI SMALL CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
SIX MONTHS ENDED
MARCH 31, 2006 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2005
---------------- ------------------
OPERATIONS:
Net investment loss .............................................. $ (519,634) $ (237,209)
Net realized gain on investments and foreign currency transactions 31,554,052 42,629,890
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations .............................. 52,409,758 83,565,118
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. 83,444,176 125,957,799
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments
Class AAA ...................................................... (50,200,675) (27,271,963)
Class A ........................................................ (124,280) (6,636)
Class B ........................................................ (9,605) (5,930)
Class C ........................................................ (119,963) (5,584)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............................ (50,454,523) (27,290,113)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ...................................................... 35,113,787 14,081,158
Class A ........................................................ 566,612 1,389,944
Class B ........................................................ (21,818) 69,962
Class C ........................................................ 738,132 1,402,027
------------- -------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ..... 36,396,713 16,943,091
------------- -------------
REDEMPTION FEES .................................................. 2,261 35,284
------------- -------------
NET INCREASE IN NET ASSETS ....................................... 69,388,627 115,646,061
NET ASSETS:
Beginning of period .............................................. 736,116,811 620,470,750
------------- -------------
End of period (including undistributed net investment
income of $0 and $0, respectively) ............................. $ 805,505,438 $ 736,116,811
============= =============
See accompanying notes to financial statements.
13
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 outstanding 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 U.S. generally accepted accounting principles 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. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be valued at their fair value as determined by the
Board. Debt instruments having a maturity greater than 60 days for which market
quotations are readily available are valued at the average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
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. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
14
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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. 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 commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At March
31, 2006, there were no open 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.
There are several risks in connection with the use of futures contracts as a
hedging instrument. 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. At March 31, 2006, there were no open
futures contracts.
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 translations. 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.
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. At March 31, 2006, there were no open forward foreign exchange
contracts.
15
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
FOREIGN CURRENCY TRANSLATIONS. 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 current exchange
rates. Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable, based upon its current
interpretation of tax rules and regulations that exist in the markets in which
it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its net
assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely salable among qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission (the "SEC") may be treated as liquid if they satisfy
liquidity standards established by the Board. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and
accordingly the Board will monitor their liquidity.
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 on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
In calculating the net asset value ("NAV") per share of each class, investment
income, realized and unrealized gains and losses, redemption fees, and expenses
other than class specific expenses, are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day. Distribution expenses are borne solely by the class incurring the expense.
16
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset, if any, shown
as "custodian fee credits".
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate equity accounts in the period when the
differences arise. These reclassifications have no impact on the NAV of the Fund
and the calculation of net investment income per share in the Financial
Highlights excludes these adjustments. For the fiscal year ended September 30,
2005, reclassifications were made to decrease accumulated net investment loss by
$311,517 and decrease accumulated net realized gain on investments by $311,517.
The tax character of distributions paid during the fiscal year ended September
30, 2005 was net long-term capital gains as follows:
DISTRIBUTIONS PAID FROM:
Net long-term capital gains ............... $27,290,113
-----------
Total distributions paid .................. $27,290,113
===========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
At September 30, 2005, 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 and tax
adjustments due to a partnership security.
At September 30, 2005, the difference between book and tax basis unrealized
appreciation is primarily due to deferral of losses from wash sales for tax
purposes.
As of September 30, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed ordinary income (inclusive of
short-term capital gains) ........................ $ 648,028
Undistributed long-term capital gains .............. 40,034,261
Post-October losses ................................ (2,880)
Net unrealized appreciation ........................ 281,589,154
Other temporary differences ........................ (31,632)
------------
Total accumulated earnings ....................... $322,236,931
============
17
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
Under the current tax law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end may
be treated as occurring on the first day of the following year. For the fiscal
year ended September 30, 2005, the Fund deferred capital losses of $2,880.
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at March 31, 2006:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ ------------ ------------
Investments ................. $468,241,823 $365,370,468 $(31,142,282) $334,228,186
Investments in affiliates ... 823,961 -- (166,691) (166,691)
------------ ------------ ------------ ------------
$469,065,784 $365,370,468 $(31,308,973) $334,061,495
============ ============ ============ ============
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 its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended March 31, 2006, other than short-term securities,
aggregated $17,826,250 and $15,952,842, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2006, the
Fund paid brokerage commissions of $44,143 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $3,642 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the six months
ended March 31, 2006, the Fund reimbursed the Adviser $22,500 in connection with
the cost of computing the Fund's NAV, which is included in miscellaneous
expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of 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. During the six months ended March 31, 2006, there were no
borrowings from the line of credit.
8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares
- -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class
AAA Shares are offered only to investors who acquire
18
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
them directly from Gabelli & Company, or through selected broker/dealers, or the
transfer agent without a sales charge. Class A Shares are subject to a maximum
front-end sales charge of 5.75%. Class B Shares are subject to a contingent
deferred sales charge ("CDSC") upon redemption within six years of purchase and
automatically convert to Class A Shares approximately eight years after the
original purchase. The applicable CDSC is equal to a declining percentage of the
lesser of the NAV per share at the date of the original purchase or at the date
of redemption, based on the length of time held. Class C Shares are subject to a
1% CDSC for one year after purchase. Class B Shares are available only through
exchange of Class B Shares of other funds distributed by Gabelli & Company. The
Board has approved Class I Shares which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged on or before the sixtieth day after the date of a purchase.) The
redemption fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the six months ended March 31, 2006 and the fiscal year ended
September 30, 2005 amounted to $2,261 and $35,284, respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED
MARCH 31, 2006 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 2,111,390 $ 62,557,646 5,199,909 $ 147,867,554
Shares issued upon reinvestment of dividends ....... 1,699,003 47,843,932 930,960 25,964,511
Shares redeemed .................................... (2,550,277) (75,287,791) (5,645,493) (159,750,907)
---------- ------------ ---------- -------------
Net increase ..................................... 1,260,116 $ 35,113,787 485,376 $ 14,081,158
========== ============ ========== =============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 24,903 $ 737,153 49,475 $ 1,424,869
Shares issued upon reinvestment of dividends ....... 4,237 119,349 233 6,514
Shares redeemed .................................... (9,732) (289,890) (1,399) (41,439)
---------- ------------ ---------- -------------
Net increase ..................................... 19,408 $ 566,612 48,309 $ 1,389,944
========== ============ ========== =============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ........................................ -- -- 3,028 $ 85,010
Shares issued upon reinvestment of dividends ....... 346 $ 9,605 214 5,930
Shares redeemed .................................... (1,053) (31,423) (700) (20,978)
---------- ------------ ---------- -------------
Net increase / (decrease) ........................ (707) $ (21,818) 2,542 $ 69,962
========== ============ ========== =============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 25,631 $ 744,171 50,553 $ 1,426,256
Shares issued upon reinvestment of dividends ....... 4,190 116,097 164 4,526
Shares redeemed .................................... (4,144) (122,136) (989) (28,755)
---------- ------------ ---------- -------------
Net increase ..................................... 25,677 $ 738,132 49,728 $ 1,402,027
========== ============ ========== =============
19
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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, 2006 is set forth below:
NET CHANGE PERCENT
SHARES IN UNREALIZED VALUE AT OWNED
BEGINNING PURCHASED ENDING DIVIDEND APPRECIATION/ MARCH 31, OF SHARES
SHARES (SOLD) SHARES INCOME DEPRECIATION 2006 OUTSTANDING
-------- -------- ------ -------- ------------- --------- -----------
Trans-Lux Corp. ............... 100,000 500 100,500 $7,000 $49,502 $657,270 10.32%
------- --- ------- ------ ------- -------- ------
10. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
11. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the SEC requesting information
on mutual fund trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc., the Adviser's parent company, is responding to these
requests for documents and testimony. On a separate matter, in September 2005,
the Adviser was informed by the staff of the SEC that the staff may recommend to
the Commission that an administrative remedy and a monetary penalty be sought
from the Adviser in connection with the actions of two of seven closed-end funds
managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act.
These provisions require registered investment companies to provide written
statements to shareholders when a dividend is made from a source other than net
investment income. While the two closed-end funds sent annual statements and
provided other materials containing this information, the funds did not send
written statements to shareholders with each distribution in 2002 and 2003. The
Adviser believes that all of the funds are now in compliance. The Adviser
believes that these matters would have no effect on the Fund or any material
adverse effect on the Adviser or its ability to manage the Fund.
20
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 Net Realized and Total Net
Period Value, Investment Unrealized from Net Realized
Ended Beginning Income/ Gain/(Loss) on Investment Investment Gain on Total
September 30 of Period (Loss)(a) Investments Operations Income Investments Distributions
- ------------ ----------- ---------- --------------- ---------- ---------- ----------- -------------
CLASS AAA
2006(b) $29.97 $(0.02) $ 3.25 $ 3.23 -- $(2.06) $(2.06)
2005 25.88 (0.01) 5.25 5.24 -- (1.15) (1.15)
2004 21.48 (0.04) 4.61 4.57 -- (0.17) (0.17)
2003 17.04 (0.05) 4.74 4.69 -- (0.25) (0.25)
2002 17.13 (0.04) 0.31 0.27 $(0.01) (0.35) (0.36)
2001 23.60 0.06 (1.75) (1.69) (0.05) (4.73) (4.78)
CLASS A
2006(b) $29.98 $(0.02) $ 3.25 $ 3.23 -- $(2.06) $(2.06)
2005 25.89 (0.01) 5.25 5.24 -- (1.15) (1.15)
2004(e) 24.49 (0.06) 1.46 1.40 -- -- --
CLASS B
2006(b) $29.58 $(0.13) $ 3.20 $ 3.07 -- $(2.06) $(2.06)
2005 25.74 (0.22) 5.21 4.99 -- (1.15) (1.15)
2004(e) 24.49 (0.19) 1.44 1.25 -- -- --
CLASS C
2006(b) $29.58 $(0.13) $ 3.19 $ 3.06 -- $(2.06) $(2.06)
2005 25.74 (0.23) 5.22 4.99 -- (1.15) (1.15)
2004(e) 24.49 (0.20) 1.45 1.25 -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------
Net Asset Net Assets Net
Period Value, End of Investment Portfolio
Ended Redemption End of Total Period Income/ Operating Turnover
September 30 Fees(a) Period Return+ (in 000's) (Loss) Expenses Rate
- ------------ ----------- ------- ------- ----------- -------- --------- --------
CLASS AAA
2006(b) $0.00(c) $31.14 11.49% $800,870 (0.14)%(d) 1.42%(d) 2%
2005 0.00(c) 29.97 20.58 732,965 (0.03) 1.44 6
2004 -- 25.88 21.34 620,334 (0.15) 1.42 10
2003 -- 21.48 27.84 540,397 (0.22) 1.45 4
2002 -- 17.04 1.39 428,416 (0.22) 1.45 10
2001 -- 17.13 (7.47) 372,865 0.30 1.45 17
CLASS A
2006(b) $0.00(c) $31.15 11.49% $ 2,179 (0.13)%(d) 1.42%(d) 2%
2005 0.00(c) 29.98 20.57 1,515 (0.03) 1.48 6
2004(e) -- 25.89 5.72 58 (0.32)(d) 1.42(d) 10
CLASS B
2006(b) $0.00(c) $30.59 11.09% $ 121 (0.88)%(d) 2.17%(d) 2%
2005 0.00(c) 29.58 19.69 138 (0.79) 2.20 6
2004(e) -- 25.74 5.10 55 (1.02)(d) 2.17(d) 10
CLASS C
2006(b) $0.00(c) $30.58 11.05% $ 2,335 (0.88)%(d) 2.17%(d) 2%
2005 0.00(c) 29.58 19.69 1,499 (0.80) 2.23 6
2004(e) -- 25.74 5.10 24 (1.07)(d) 2.17(d) 10
- -------------------------
+ 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 and does not reflect applicable sales
charges. Total return for the period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) For the period ended March 31, 2006, unaudited.
(c) Amount represents less than $0.005 per share.
(d) Annualized.
(e) From the commencement of offering Class A, Class B and Class C Shares on
December 31, 2003.
See accompanying notes to financial statements.
21
THE GABELLI SMALL CAP GROWTH FUND
BOARD CONSIDERATION AND RE-APPROVAL OF ADVISORY AGREEMENT (UNAUDITED)
During the six months ended March 31, 2006, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The independent
directors noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The independent directors reviewed the short, medium,
and long-term performance of the Fund against a peer group of small cap value
and small cap core funds chosen by Lipper as being comparable. The directors
noted that the Fund's performance was above average for the ten year period,
approximately average for the five year period, and below average for the three
and one year periods.
PROFITABILITY. The independent directors reviewed summary data regarding the
profitability of the Fund to the Adviser both with an administrative overhead
charge and without such a charge. The directors also noted that a substantial
portion of the Fund's portfolio transactions were executed by an affiliated
broker and that the affiliated broker received distribution fees and minor
amounts of sales commissions.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale.
SHARING OF ECONOMIES OF SCALE. The independent directors noted that the
investment management fee schedule for the Fund does not take into account any
potential economies of scale that may develop.
SERVICE AND COST COMPARISONS. The independent directors compared the expense
ratios of the investment management fee, other expenses, and total expenses of
the Fund to similar expense ratios of the peer group of small cap value and
small cap core funds and noted that the Adviser's management fee includes
substantially all administrative services of the Fund as well as investment
advisory services. The directors noted that the Fund's expense ratios were at,
and the Fund's size was above, average within this group. The directors also
noted that the management fee structure was the same as that in effect for most
of the Gabelli funds. The directors did not compare the management fee to the
fee for other types of accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and a good
performance record, particularly over the longer term, but that the fee
structure of the Fund in relation to its peer group should be revisited if both
the long-term and short-term performance record were not strong. The independent
directors also concluded that the Fund's expense ratios and the profitability to
the Adviser of managing the Fund were reasonable in light of the Fund's
performance and that economies of scale were not a significant factor in their
thinking at this time. The directors did not view the potential profitability of
ancillary services as material to their decision. On the basis of the foregoing
and without assigning particular weight to any single conclusion, the
independent directors determined to recommend continuation of the investment
management agreement to the full Board of Directors.
22
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO Funds are investment companies registered with the
Securities and Exchange Commission under the Investment Company Act of
1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc.,
which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. 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. 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 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 Robert J. Morrissey
CHAIRMAN AND CHIEF ATTORNEY-AT-LAW
EXECUTIVE OFFICER MORRISSEY, HAWKINS & LYNCH
GAMCO INVESTORS, 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 CHAIRMAN
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.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER CHIEF COMPLIANCE OFFICER
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.
- --------------------------------------------------------------------------------
GAB443Q405SR
[GRAPHIC OMITTED]
PICTURE OF TRIANGLE
THE
GABELLI
SMALL CAP
GROWTH
FUND
SEMI-ANNUAL REPORT
MARCH 31, 2006
THE GABELLI EQUITY INCOME FUND
SEMI-ANNUAL REPORT (A)
MARCH 31, 2006
TO OUR SHAREHOLDERS,
Higher yielding equities underperformed the broad based market indices for
the six month period ending March 31, 2006. During the same six month period,
the Gabelli Equity Income Fund returned 5.39% while the Standard & Poor's 500
Index ("S&P 500 Index"), the Nasdaq Composite Index, and the Lipper Equity
Income Fund Average rose 6.38%, 8.74%, and 6.09%, respectively.
COMPARATIVE RESULTS
- -------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2006 (A)(B)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (1/2/92)
- ------------------------------------------------------------------------------------------------------------------
GABELLI EQUITY INCOME FUND CLASS AAA ....... 5.54% 12.00% 18.95% 8.79% 11.30% 12.21%
S&P 500 Index .............................. 4.21 11.72 17.21 3.97 8.95 10.41
Nasdaq Composite Index ..................... 6.10 17.03 20.38 4.92 7.83 10.20
Lipper Equity Income Fund Average .......... 4.92 11.48 18.34 5.77 8.73 10.47
Class A .................................... 5.51 11.92 18.90 8.77 11.28 12.20
(0.56)(c) 5.48(c) 16.57(c) 7.47(c) 10.62(c) 11.73(c)
Class B .................................... 5.35 11.14 18.25 8.41 11.10 12.08
0.35(d) 6.14(d) 17.53(d) 8.12(d) 11.10(d) 12.08(d)
Class C .................................... 5.35 11.20 18.31 8.44 11.12 12.09
4.35(d) 10.20(d) 18.31(d) 8.44(d) 11.12(d) 12.09(d)
(a) THE FUND'S FISCAL YEAR ENDS SEPTEMBER 30.
(b) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DISTRIBUTIONS AND ARE NET OF EXPENSES. INVESTMENT RETURNS
AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE
REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED.
VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT
MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS,
CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS
CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ
CAREFULLY BEFORE INVESTING. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE
YEAR ARE 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 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 OF THE
LARGEST U.S. COMPANIES 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. DIVIDENDS ARE CONSIDERED REINVESTED (EXCEPT FOR THE NASDAQ
COMPOSITE INDEX).
(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.
CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The
financial statements and investment portfolio are mailed separately from the
commentary. Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com/funds.
- --------------------------------------------------------------------------------
THE GABELLI EQUITY INCOME FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from October 1, 2005 through March 31, 2006
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case -- because the hypothetical return used is NOT
the Fund's actual return -- the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the six months ended March 31, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
10/01/05 03/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI EQUITY INCOME FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,053.90 1.41% $ 7.22
Class A $1,000.00 $1,054.10 1.41% $ 7.22
Class B $1,000.00 $1,049.70 2.16% $11.04
Class C $1,000.00 $1,050.20 2.16% $11.04
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.90 1.41% $ 7.09
Class A $1,000.00 $1,017.90 1.41% $ 7.09
Class B $1,000.00 $1,014.16 2.16% $10.85
Class C $1,000.00 $1,014.16 2.16% $10.85
*Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of March 31, 2006:
THE GABELLI EQUITY INCOME FUND
Financial Services ................................. 10.9%
Health Care ........................................ 9.2%
Energy and Utilities: Oil .......................... 8.2%
Food and Beverage .................................. 8.1%
Energy and Utilities: Integrated ................... 7.2%
Consumer Products .................................. 6.0%
Telecommunications ................................. 4.1%
Diversified Industrial ............................. 3.9%
Communications Equipment ........................... 3.2%
Energy and Utilities: Electric ..................... 2.6%
U.S. Government Obligations ........................ 2.6%
Automotive: Parts and Accessories .................. 2.4%
Retail ............................................. 2.2%
Specialty Chemicals ................................ 1.9%
Entertainment ...................................... 1.9%
Aerospace .......................................... 1.9%
Publishing ......................................... 1.9%
Hotels and Gaming .................................. 1.9%
Equipment and Supplies ............................. 1.8%
Energy and Utilities: Natural Gas .................. 1.8%
Metals and Mining .................................. 1.7%
Computer Software and Services ..................... 1.7%
Wireless Communications ............................ 1.5%
Computer Hardware .................................. 1.5%
Electronics ........................................ 1.3%
Aviation: Parts and Services ....................... 1.2%
Cable and Satellite ................................ 1.1%
Broadcasting ....................................... 0.9%
Real Estate ........................................ 0.9%
Environmental Services ............................. 0.5%
Energy and Utilities: Services ..................... 0.5%
Machinery .......................................... 0.4%
Business Services .................................. 0.4%
Manufactured Housing ............................... 0.3%
Transportation ..................................... 0.2%
Consumer Services .................................. 0.2%
Energy and Utilities: Water ........................ 0.1%
Agriculture ........................................ 0.1%
Automotive ......................................... 0.0%
Other Assets and Liabilities (Net) ................. 1.8%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED DECEMBER 31, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
3
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS -- 91.5%
AEROSPACE -- 1.9%
32,000 Boeing Co. .......................$ 1,082,148 $ 2,493,760
2,000 Lockheed Martin Corp. ............ 47,350 150,260
4,000 Northrop Grumman Corp. ........... 139,100 273,160
10,000 Raytheon Co. ..................... 279,250 458,400
2,000 Rockwell Automation Inc. ......... 25,686 143,820
2,000 Rockwell Collins Inc. ............ 15,843 112,700
1,260,000 Rolls-Royce Group plc+ ........... 8,984,010 10,026,234
67,788,000 Rolls-Royce Group plc,
Cl. B ........................... 69,483 120,131
------------ ------------
10,642,870 13,778,465
------------ ------------
AGRICULTURE -- 0.1%
30,000 Mosaic Co.+ ...................... 431,943 430,500
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.8%
1,000 ArvinMeritor Inc. ................ 10,488 14,910
200,000 Dana Corp. ....................... 1,173,049 302,000
245,000 Genuine Parts Co. ................ 8,762,074 10,738,350
4,000 Johnson Controls Inc. ............ 101,475 303,720
45,000 Modine Manufacturing Co. ......... 693,569 1,327,500
40,000 Pep Boys - Manny, Moe & Jack ..... 530,982 604,400
14,140 Proliance International Inc.+ .... 47,310 77,204
------------ ------------
11,318,947 13,368,084
------------ ------------
AVIATION: PARTS AND SERVICES -- 0.5%
4,000 Barnes Group Inc. ................ 76,187 162,000
23,096 Curtiss-Wright Corp. ............. 349,652 1,528,955
35,000 GenCorp Inc.+ .................... 299,658 719,250
16,000 United Technologies Corp. ........ 281,946 927,520
------------ ------------
1,007,443 3,337,725
------------ ------------
BROADCASTING -- 0.5%
120,000 CBS Corp., Cl. A ................. 3,059,470 2,892,000
20,000 CBS Corp., Cl. B ................. 528,400 479,600
26,000 Granite Broadcasting Corp.+ ...... 10,805 3,120
------------ ------------
3,598,675 3,374,720
------------ ------------
BUSINESS SERVICES -- 0.1%
4,000 Automatic Data Processing Inc. ... 126,808 182,720
3,000 R.H. Donnelley Corp.+ ............ 33,450 174,690
500 Imation Corp. .................... 7,150 21,455
4,000 Landauer Inc. .................... 134,546 200,880
------------ ------------
301,954 579,745
------------ ------------
CABLE AND SATELLITE -- 1.1%
210,002 Cablevision Systems Corp.,
Cl. A+ .......................... 4,765,082 5,607,053
36,000 DIRECTV Group Inc.+ .............. 429,789 590,400
70,000 EchoStar Communications
Corp., Cl. A+ ................... 2,105,798 2,090,900
------------ ------------
7,300,669 8,288,353
------------ ------------
MARKET
SHARES COST VALUE
------ ------- -------
COMMUNICATIONS EQUIPMENT -- 1.5%
175,000 Corning Inc.+ ....................$ 2,000,662 $ 4,709,250
110,000 Motorola Inc. .................... 990,474 2,520,100
70,000 Thomas & Betts Corp.+ ............ 1,533,023 3,596,600
------------ ------------
4,524,159 10,825,950
------------ ------------
COMPUTER HARDWARE -- 1.5%
110,000 International Business
Machines Corp. .................. 8,677,640 9,071,700
112,500 Xerox Corp.+ ..................... 1,568,528 1,710,000
------------ ------------
10,246,168 10,781,700
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 1.7%
2,000 EMC Corp.+ ....................... 19,360 27,260
340,000 Microsoft Corp. .................. 8,692,171 9,251,400
154 Telecom Italia Media SpA+ ........ 205 83
90,000 Yahoo! Inc.+ ..................... 3,182,854 2,903,400
------------ ------------
11,894,590 12,182,143
------------ ------------
CONSUMER PRODUCTS -- 6.0%
35,000 Altria Group Inc. ................ 1,127,729 2,480,100
240,000 Avon Products Inc. ............... 7,784,470 7,480,800
15,000 Clorox Co. ....................... 823,581 897,750
12,000 Colgate-Palmolive Co. ............ 631,256 685,200
45,000 Eastman Kodak Co. ................ 1,078,017 1,279,800
55,000 Energizer Holdings Inc.+ ......... 1,956,959 2,915,000
94,700 Gallaher Group plc, ADR .......... 2,711,252 5,506,805
19,000 National Presto
Industries Inc. ................. 578,337 934,230
10,000 Pactiv Corp.+ .................... 161,895 245,400
42,000 Procter & Gamble Co. ............. 1,627,217 2,420,040
100,000 Reckitt Benckiser plc ............ 3,154,703 3,519,989
26,000 Rothmans Inc. .................... 237,941 450,828
940,500 Swedish Match AB ................. 9,972,140 12,860,403
26,000 Unilever NV, ADR ................. 1,542,066 1,799,720
10,000 UST Inc. ......................... 364,903 416,000
------------ ------------
33,752,466 43,892,065
------------ ------------
CONSUMER SERVICES -- 0.2%
15,000 IAC/InterActiveCorp+ ............. 402,676 442,050
46,200 Rollins Inc. ..................... 397,779 935,088
------------ ------------
800,455 1,377,138
------------ ------------
DIVERSIFIED INDUSTRIAL -- 3.9%
5,000 3M Co. ........................... 213,645 378,450
18,000 Acuity Brands Inc. ............... 273,342 720,000
57,000 Cooper Industries Ltd.,
Cl. A ........................... 3,230,726 4,953,300
260,000 General Electric Co. ............. 7,952,794 9,042,800
5,000 Harbor Global Co. Ltd.+ .......... 24,173 45,000
170,000 Honeywell International Inc. ..... 4,938,376 7,270,900
20,000 ITT Industries Inc. .............. 1,001,005 1,124,400
4,000 Trinity Industries Inc. .......... 82,100 217,560
150,000 Tyco International Ltd. .......... 4,037,531 4,032,000
2,000 Walter Industries Inc. ........... 107,681 133,240
50,001 WHX Corp.+ ....................... 642,346 507,510
------------ ------------
22,503,719 28,425,160
------------ ------------
See accompanying notes to financial statements.
4
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
ELECTRONICS -- 1.3%
10,000 Freescale Semiconductor Inc.,
Cl. B+ ..........................$ 81,750 $ 277,700
130,000 Intel Corp. ...................... 2,817,841 2,515,500
185,000 Texas Instruments Inc. ........... 4,117,769 6,006,950
15,000 Thermo Electron Corp.+ ........... 325,333 556,350
------------ ------------
7,342,693 9,356,500
------------ ------------
ENERGY AND UTILITIES: ELECTRIC -- 2.6%
80,000 AES Corp.+ ....................... 268,400 1,364,800
22,000 American Electric Power
Co. Inc. ........................ 653,980 748,440
100,000 Cinergy Corp. .................... 3,272,016 4,541,000
16,000 DTE Energy Co. ................... 695,800 641,440
95,000 El Paso Electric Co.+ ............ 746,352 1,808,800
80,000 FPL Group Inc. ................... 2,803,387 3,211,200
45,000 Great Plains Energy Inc. ......... 1,055,160 1,266,750
50,000 Korea Electric Power Corp.,
ADR ............................. 787,043 1,080,000
54,824 Mirant Corp.+ .................... 886,914 1,370,600
120,000 Northeast Utilities .............. 2,261,119 2,343,600
8,000 UIL Holdings Corp. ............... 293,794 418,800
------------ ------------
13,723,965 18,795,430
------------ ------------
ENERGY AND UTILITIES: INTEGRATED -- 7.2%
43,000 Allegheny Energy Inc.+ ........... 422,685 1,455,550
250,000 Aquila Inc.+ ..................... 731,171 997,500
44,000 BP plc, ADR ...................... 1,030,210 3,033,360
100,000 Burlington Resources Inc. ........ 2,954,092 9,191,000
44,000 CH Energy Group Inc. ............. 1,809,289 2,112,000
85,000 Constellation Energy Group ....... 2,543,053 4,650,350
1,000 Dominion Resources Inc. .......... 48,852 69,030
50,000 DPL Inc. ......................... 1,296,245 1,350,000
80,000 Duke Energy Corp. ................ 1,421,650 2,332,000
190,000 Duquesne Light Holdings Inc. ..... 3,043,692 3,135,000
220,000 El Paso Corp. .................... 2,242,718 2,651,000
50,000 Endesa SA ........................ 1,309,634 1,614,193
150,000 Energy East Corp. ................ 3,071,332 3,645,000
29,000 Eni SpA .......................... 304,221 825,178
80,000 NSTAR ............................ 1,282,183 2,288,800
75,000 OGE Energy Corp. ................. 2,043,450 2,175,000
80,000 Progress Energy Inc. ............. 3,424,284 3,518,400
15,000 Progress Energy Inc., CVO+ ....... 7,800 4,950
6,000 Public Service Enterprise
Group Inc. ...................... 235,600 384,240
12,000 Scottish Power plc, ADR .......... 314,381 483,480
20,000 Suncor Energy Inc. ............... 1,043,936 1,540,400
55,000 TECO Energy Inc. ................. 740,886 886,600
30,000 TXU Corp. ........................ 330,664 1,342,800
130,000 Westar Energy Inc. ............... 2,164,365 2,705,300
------------ ------------
33,816,393 52,391,131
------------ ------------
MARKET
SHARES COST VALUE
------ ------- -------
ENERGY AND UTILITIES: NATURAL GAS -- 1.8%
20,000 AGL Resources Inc. ...............$ 388,379 $ 721,000
50,000 Atmos Energy Corp. ............... 1,233,167 1,316,500
43,100 KeySpan Corp. .................... 1,750,666 1,761,497
25,000 National Fuel Gas Co. ............ 519,678 818,000
70,000 ONEOK Inc. ....................... 1,559,551 2,257,500
5,000 Peoples Energy Corp. ............. 185,825 178,200
24,000 Piedmont Natural
Gas Co. Inc. .................... 394,017 575,760
40,000 SEMCO Energy Inc.+ ............... 282,604 221,600
100,000 Southern Union Co. ............... 1,627,212 2,483,000
100,000 Southwest Gas Corp. .............. 1,777,547 2,795,000
------------ ------------
9,718,646 13,128,057
------------ ------------
ENERGY AND UTILITIES: OIL -- 8.2%
7,000 Anadarko Petroleum Corp. ......... 531,926 707,070
192,873 Chevron Corp. .................... 8,842,102 11,180,848
116,000 ConocoPhillips ................... 3,187,718 7,325,400
28,000 Cooper Cameron Corp.+ ............ 804,246 1,234,240
30,000 Devon Energy Corp. ............... 692,247 1,835,100
150,000 Exxon Mobil Corp. ................ 4,749,795 9,129,000
12,608 Kerr-McGee Corp. ................. 540,378 1,203,812
10,000 Murphy Oil Corp. ................. 471,553 498,200
50,000 Occidental Petroleum
Corp. ........................... 3,867,861 4,632,500
10,000 Oceaneering
International Inc.+ ............. 528,924 573,000
11,000 PetroChina Co. Ltd., ADR ......... 747,751 1,154,450
104,000 Remington Oil & Gas Corp.+ ....... 4,590,221 4,494,880
30,000 Repsol YPF SA, ADR ............... 631,290 855,000
118,000 Royal Dutch Shell plc,
Cl. A, ADR ...................... 5,402,372 7,346,680
25,000 Statoil ASA, ADR ................. 327,939 712,000
8,759 Total SA, ADR .................... 299,550 1,153,823
65,000 Transocean Inc.+ ................. 3,660,082 5,219,500
3,000 Weatherford International
Ltd.+ ........................... 115,674 137,250
------------ ------------
39,991,629 59,392,753
------------ ------------
ENERGY AND UTILITIES: SERVICES -- 0.5%
14,000 Halliburton Co. .................. 158,327 1,022,280
20,000 Schlumberger Ltd. ................ 1,275,020 2,531,400
------------ ------------
1,433,347 3,553,680
------------ ------------
ENERGY AND UTILITIES: WATER -- 0.1%
24,000 Aqua America Inc. ................ 221,672 667,680
40,000 Suez SA, Strips+ ................. 0 485
------------ ------------
221,672 668,165
------------ ------------
ENTERTAINMENT -- 1.9%
500,000 Rank Group plc ................... 2,545,364 1,958,927
140,000 The Walt Disney Co. .............. 2,635,231 3,904,600
200,000 Time Warner Inc. ................. 3,280,052 3,358,000
30,000 Viacom Inc., Cl. A+ .............. 1,212,938 1,162,800
100,000 Vivendi Universal SA, ADR ........ 3,100,404 3,420,000
------------ ------------
12,773,989 13,804,327
------------ ------------
See accompanying notes to financial statements.
5
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
ENVIRONMENTAL SERVICES -- 0.5%
110,000 Waste Management Inc. ............$ 2,905,050 $ 3,883,000
------------ ------------
EQUIPMENT AND SUPPLIES -- 1.8%
76,000 Flowserve Corp.+ ................. 1,983,884 4,433,840
6,000 Ingersoll-Rand Co. Ltd., Cl. A ... 125,173 250,740
1,500 Minerals Technologies Inc. ....... 37,937 87,615
30,000 Mueller Industries Inc. .......... 1,320,222 1,070,700
8,000 Parker Hannifin Corp. ............ 459,607 644,880
13,000 Smith A.O. Corp. ................. 275,717 686,400
1,052,000 Tomkins plc ...................... 5,109,041 6,145,820
------------ ------------
9,311,581 13,319,995
------------ ------------
FINANCIAL SERVICES -- 10.9%
6,528 Alleghany Corp.+ ................. 1,116,610 1,889,856
165,000 American Express Co. ............. 6,569,219 8,670,750
40,000 American International
Group Inc. ...................... 2,553,571 2,643,600
70,000 Ameriprise Financial Inc. ........ 2,369,773 3,154,200
37,000 Argonaut Group Inc.+ ............. 741,824 1,315,350
25,000 Banco Popular Espanol SA ......... 185,939 368,405
18,000 Banco Santander Central
Hispano SA, ADR ................. 64,963 262,980
2,000 Banco Santander Chile SA, ADR .... 29,250 87,200
135,000 Bank of America Corp. ............ 4,153,381 6,147,900
44,000 Bank of New York Co. Inc. ........ 1,423,658 1,585,760
30,000 Bankgesellschaft Berlin AG+ ...... 201,349 179,961
8,825 Banque Nationale de Paris SA ..... 362,345 819,744
3,000 Bear Stearns Companies Inc. ...... 227,630 416,100
310,000 Citigroup Inc. ................... 14,547,412 14,641,300
40,000 Commerzbank AG, ADR .............. 855,073 1,589,660
35,000 Deutsche Bank AG ................. 1,966,016 3,998,400
2,000 Dun and Bradstreet Corp.+ ........ 20,476 153,360
3,000 Fannie Mae ....................... 153,815 154,200
16,000 Fidelity Southern Corp. .......... 153,870 284,800
138,000 H&R Block Inc. ................... 3,281,934 2,987,700
25,000 Huntington Bancshares Inc. ....... 407,250 603,250
82,080 JPMorgan Chase & Co. ............. 2,489,151 3,417,811
1,000 KeyCorp .......................... 30,270 36,800
16,000 Leucadia National Corp. .......... 349,910 954,560
1,000 Manulife Financial Corp. ......... 24,694 62,770
55,000 Mellon Financial Corp. ........... 1,528,208 1,958,000
13,000 Merrill Lynch & Co. Inc. ......... 525,900 1,023,880
8,000 Moody's Corp. .................... 64,841 571,680
20,000 Morgan Stanley ................... 1,087,886 1,256,400
3,000 Municipal Mortgage &
Equity, LLC ..................... 60,488 79,500
6,000 Northern Trust Corp. ............. 60,300 315,000
50,000 Phoenix Companies Inc. ........... 650,511 815,000
45,000 PNC Financial Services
Group Inc. ...................... 1,905,739 3,028,950
MARKET
SHARES COST VALUE
------ ------- -------
50,000 Popular Inc. .....................$ 1,225,007 $ 1,038,000
500 Raiffeisen International
Bank Holding AG+ ................ 28,874 42,657
36,000 St. Paul Travelers
Companies Inc. .................. 1,429,504 1,504,440
113,400 Sterling Bancorp ................. 1,456,020 2,336,040
12,000 SunTrust Banks Inc. .............. 251,737 873,120
20,000 T. Rowe Price Group Inc. ......... 896,910 1,564,200
1,000 The Allstate Corp. ............... 33,300 52,110
5,000 The Charles Schwab Corp. ......... 77,500 86,050
40,000 Unitrin Inc. ..................... 1,156,156 1,860,400
12,000 Wachovia Corp. ................... 407,292 672,600
60,000 Waddell & Reed Financial
Inc., Cl. A ..................... 1,151,502 1,386,000
55,000 Wilmington Trust Corp. ........... 1,712,407 2,384,250
------------ ------------
59,989,465 79,274,694
------------ ------------
FOOD AND BEVERAGE -- 8.1%
65,000 Anheuser-Busch Companies Inc. .... 2,817,765 2,780,050
25,500 Brown-Forman Corp., Cl. A ........ 1,483,296 1,995,375
110,000 Cadbury Schweppes plc, ADR ....... 3,776,006 4,400,000
70,000 Campbell Soup Co. ................ 1,844,540 2,268,000
40,000 Coca-Cola Amatil Ltd., ADR ....... 246,845 412,428
192,000 Coca-Cola Co. .................... 8,426,914 8,039,040
15,000 Coca-Cola Femsa SA de
CV, ADR ......................... 388,903 498,000
16,000 Corn Products International
Inc. ............................ 197,588 473,120
60,000 Del Monte Foods Co. .............. 555,763 711,600
56,000 Diageo plc, ADR .................. 2,330,906 3,552,080
35,000 Fomento Economico Mexicano
SA de CV, ADR ................... 1,594,434 3,208,100
155,800 General Mills Inc. ............... 7,586,402 7,895,944
70,000 Groupe Danone .................... 7,584,576 8,576,311
600,000 Grupo Bimbo SA de CV,
Cl. A ........................... 1,781,670 1,971,742
35,000 Heineken NV ...................... 1,189,363 1,328,437
120,000 H.J. Heinz Co. ................... 4,229,263 4,550,400
5,000 Kellogg Co. ...................... 149,740 220,200
10,000 Nestle SA ........................ 2,083,075 2,968,588
24,016 Pernod-Ricard SA, ADR ............ 1,018,278 1,141,000
20,000 The Hershey Co. .................. 967,855 1,044,600
20,600 Tootsie Roll
Industries Inc. ................. 555,088 602,962
3,000 Wm. Wrigley Jr. Co. .............. 199,198 192,000
------------ ------------
51,007,468 58,829,977
------------ ------------
HEALTH CARE -- 9.2%
15,000 Abbott Laboratories .............. 577,284 637,050
65,000 Baxter International Inc. ........ 2,009,859 2,522,650
36,000 Becton, Dickinson & Co. .......... 1,728,626 2,216,880
500 Bio-Rad Laboratories Inc.,
Cl. B+ .......................... 20,960 31,015
15,000 Biosite Inc.+ .................... 757,041 778,950
See accompanying notes to financial statements.
6
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
100,000 Bristol-Myers Squibb Co. .........$ 2,590,402 $ 2,461,000
230,000 Chiron Corp.+ .................... 10,193,918 10,536,300
144,000 Eli Lilly & Co. .................. 8,133,545 7,963,200
11,276 GlaxoSmithKline plc, ADR ......... 515,984 589,847
25,000 Henry Schein Inc.+ ............... 631,852 1,196,500
60,000 Hospira Inc.+ .................... 2,115,574 2,367,600
100,000 Johnson & Johnson ................ 5,743,582 5,922,000
60,000 Medco Health
Solutions Inc.+ ................. 2,808,270 3,433,200
122,000 Merck & Co. Inc. ................. 4,147,718 4,298,060
1,000 Nobel Biocare Holding AG ......... 139,480 222,644
60,000 Novartis AG, ADR ................. 3,260,573 3,326,400
7,000 Orthofix International NV+ ....... 247,804 278,740
431,000 Pfizer Inc. ...................... 12,648,699 10,740,520
150,000 Schering-Plough Corp. ............ 2,779,186 2,848,500
165,000 Tenet Healthcare Corp.+ .......... 1,602,873 1,217,700
20,000 William Demant Holding A/S+ ...... 983,839 1,325,149
33,000 Zimmer Holdings Inc.+ ............ 2,162,009 2,230,800
------------ ------------
65,799,078 67,144,705
------------ ------------
HOTELS AND GAMING -- 1.9%
40,000 Hilton Hotels Corp. .............. 693,960 1,018,400
20,000 International Game
Technology ...................... 608,024 704,400
1,500,000 Ladbrokes plc .................... 7,677,943 10,137,776
25,000 Starwood Hotels &
Resorts Worldwide Inc. .......... 643,483 1,693,250
------------ ------------
9,623,410 13,553,826
------------ ------------
MACHINERY -- 0.4%
6,000 Caterpillar Inc. ................. 35,181 430,860
31,000 Deere & Co. ...................... 752,487 2,450,550
------------ ------------
787,668 2,881,410
------------ ------------
MANUFACTURED HOUSING -- 0.3%
140,000 Champion Enterprises Inc.+ ....... 1,407,727 2,094,400
------------ ------------
METALS AND MINING -- 1.5%
5,300 Carpenter Technology Corp. ....... 466,486 500,956
27,000 Fording Canadian Coal
Trust (Toronto) ................. 179,580 1,023,034
55,875 Freeport-McMoRan Copper &
Gold Inc., Cl. B ................ 1,202,109 3,339,649
25,000 Inco Ltd. ........................ 940,875 1,247,250
95,000 Newmont Mining Corp. ............. 3,717,824 4,929,550
------------ ------------
6,506,874 11,040,439
------------ ------------
PUBLISHING -- 1.9%
95,000 Dow Jones & Co. Inc. ............. 3,643,999 3,733,500
10,000 Knight-Ridder Inc. ............... 647,195 632,100
6,000 McClatchy Co., Cl. A ............. 403,609 293,100
25,000 McGraw-Hill Companies Inc. ....... 755,341 1,440,500
15,000 New York Times Co., Cl. A ........ 455,959 379,650
45,000 News Corp., Cl. A ................ 532,836 747,450
MARKET
SHARES COST VALUE
------ ------- -------
6,016 News Corp., Cl. B ................$ 70,881 $ 105,641
100,000 Reader's Digest Association Inc. . 1,360,932 1,475,000
406 Seat Pagine Gialle SpA+ .......... 1,350 194
10,000 The E.W. Scripps Co., Cl. A ...... 464,345 447,100
125,000 Tribune Co. ...................... 4,850,276 3,428,750
1,200 Washington Post Co., Cl. B ....... 700,030 932,100
------------ ------------
13,886,753 13,615,085
------------ ------------
REAL ESTATE -- 0.9%
150,000 Arden Realty Inc. ................ 6,777,825 6,769,500
5,000 Griffin Land &
Nurseries Inc.+ ................. 71,716 155,000
------------ ------------
6,849,541 6,924,500
------------ ------------
RETAIL -- 2.2%
230,000 Albertson's Inc. ................. 5,375,178 5,904,100
40,000 Costco Wholesale Corp. ........... 1,850,972 2,166,400
5,000 Ingles Markets Inc., Cl. A ....... 64,548 89,100
150,000 Safeway Inc. ..................... 3,114,997 3,768,000
500 Sears Holdings Corp.+ ............ 40,732 66,120
6,000 The Home Depot Inc. .............. 127,998 253,800
75,000 Wal-Mart Stores Inc. ............. 3,598,616 3,543,000
10,000 Weis Markets Inc. ................ 300,480 445,700
------------ ------------
14,473,521 16,236,220
------------ ------------
SPECIALTY CHEMICALS -- 1.9%
20,000 Albemarle Corp. .................. 434,626 907,000
15,000 Ashland Inc. ..................... 882,910 1,066,200
15,000 Chemtura Corp. ................... 153,099 176,700
10,000 Dow Chemical Co. ................. 360,656 406,000
20,000 E.I. du Pont de Nemours
and Co. ......................... 945,400 844,200
92,000 Ferro Corp. ...................... 1,837,998 1,840,000
100,000 Hercules Inc.+ ................... 1,164,286 1,380,000
65,000 Monsanto Co. ..................... 1,101,588 5,508,750
6,000 NewMarket Corp. .................. 23,156 285,540
50,000 Omnova Solutions Inc.+ ........... 339,908 306,000
4,000 Quaker Chemical Corp. ............ 79,615 87,000
65,000 Sensient Technologies Corp. ...... 1,345,215 1,173,250
2,542 Tronox Inc., Cl. B+ .............. 22,516 43,193
------------ ------------
8,690,973 14,023,833
------------ ------------
TELECOMMUNICATIONS -- 3.9%
6,000 ALLTEL Corp. ..................... 307,225 388,500
310,000 AT&T Inc. ........................ 8,194,933 8,382,400
65,000 BCE Inc. ......................... 1,376,792 1,563,900
50,000 BellSouth Corp. .................. 1,334,747 1,732,500
200,000 BT Group plc ..................... 825,179 771,409
30,000 BT Group plc, ADR ................ 1,006,938 1,164,600
140,000 Cable & Wireless plc ............. 273,765 265,737
250,000 Cincinnati Bell Inc.+ ............ 1,473,056 1,130,000
15,000 Citizens Communications Co. ...... 202,050 199,050
60,000 Deutsche Telekom AG, ADR ......... 1,075,041 1,009,200
15,000 France Telecom SA, ADR ........... 436,434 337,200
See accompanying notes to financial statements.
7
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
330,000 Qwest Communications
International Inc.+ .............$ 1,122,915 $ 2,244,000
150,000 Sprint Nextel Corp. .............. 3,006,924 3,876,000
3,300 Telecom Italia SpA, ADR .......... 31,072 96,360
8,195 Telefonica SA, ADR ............... 80,699 384,919
12,000 TELUS Corp. ...................... 185,454 470,814
125,000 Verizon Communications Inc. ...... 4,558,920 4,257,500
------------ ------------
25,492,144 28,274,089
------------ ------------
TRANSPORTATION -- 0.2%
40,000 GATX Corp. ....................... 1,077,124 1,651,600
------------ ------------
WIRELESS COMMUNICATIONS -- 1.5%
400,000 Nextel Partners Inc., Cl. A+ ..... 11,219,280 11,328,000
------------ ------------
TOTAL COMMON STOCKS .............. 526,374,049 665,807,564
------------ ------------
PREFERRED STOCKS -- 1.0%
AUTOMOTIVE -- 0.0%
1,000 Ford Motor Co. Capital Trust II,
6.500% Cv. Pfd. ................. 45,215 30,050
------------ ------------
AVIATION: PARTS AND SERVICES -- 0.5%
25,200 Sequa Corp.,$5.00 Cv. Pfd. ....... 2,148,377 3,244,500
------------ ------------
BROADCASTING -- 0.1%
100 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (b)(c)(d) ................ 1,000,000 1,000,000
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.2%
1,100 Lucent Technologies Capital
Trust I, 7.750% Cv. Pfd. ........ 759,000 1,113,200
------------ ------------
ENERGY AND UTILITIES: INTEGRATED -- 0.0%
300 El Paso Corp.,
4.990% Cv. Pfd. (b) ............. 293,192 327,521
------------ ------------
ENTERTAINMENT -- 0.0%
3,000 Metromedia International
Group Inc.,
7.250% Cv. Pfd.+ ................ 5,310 118,500
------------ ------------
TELECOMMUNICATIONS -- 0.2%
33,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ......... 918,893 1,427,250
------------ ------------
TOTAL PREFERRED STOCKS ........... 5,169,987 7,261,021
------------ ------------
WARRANTS -- 0.1%
BUSINESS SERVICES -- 0.1%
262,431 GP Strategies Corp.,
expire 08/14/08+ (c)(d) ......... 637,065 585,636
------------ ------------
MARKET
SHARES COST VALUE
------ ------- -------
DIVERSIFIED INDUSTRIAL -- 0.0%
379,703 National Patent Development
Corp., expire 08/14/08+ (c)(d) ..$ 0 $ 100,015
3,625 WHX Corp., expire 02/28/08+ 14,170 3,806
------------ ------------
14,170 103,821
------------ ------------
TOTAL WARRANTS ................... 651,235 689,457
------------ ------------
PRINCIPAL
AMOUNT
------
CORPORATE BONDS -- 3.0%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.6%
$ 4,000,000 Pep Boys - Manny, Moe & Jack, Cv.,
4.250%, 06/01/07 ................ 3,963,305 3,925,000
800,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ................ 692,851 680,000
------------ ------------
4,656,156 4,605,000
------------ ------------
AVIATION: PARTS AND SERVICES -- 0.2%
1,400,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ................ 1,372,967 1,578,500
------------ ------------
BROADCASTING -- 0.3%
Sinclair Broadcast Group Inc.,
Sub. Deb. Cv.,
2,550,000 6.000%, 09/15/12 ............... 2,102,045 2,253,562
350,000 4.875%, 07/15/18 ............... 311,444 309,313
------------ ------------
2,413,489 2,562,875
------------ ------------
BUSINESS SERVICES -- 0.2%
100,000 BBN Corp., Sub. Deb. Cv.,
6.000%, 04/01/12+ (a)(c) ........ 97,500 0
2,000,000 GP Strategies Corp.,
Sub. Deb.,
6.000%, 08/14/08 (c)(d) ......... 1,597,526 1,325,397
------------ ------------
1,695,026 1,325,397
------------ ------------
COMMUNICATIONS EQUIPMENT -- 1.5%
4,000,000 Agere Systems Inc., Sub. Deb. Cv.,
6.500%, 12/15/09 ................ 3,920,317 3,960,000
7,000,000 Nortel Networks Corp.,
Cv., 4.250%, 09/01/08 ........... 6,718,147 6,641,250
------------ ------------
10,638,464 10,601,250
------------ ------------
METALS AND MINING -- 0.2%
1,000,000 Inco Ltd., Cv.,
Zero Coupon, 03/29/21 ........... 997,640 1,327,500
------------ ------------
TOTAL CORPORATE BONDS ............ 21,773,742 22,000,522
------------ ------------
See accompanying notes to financial statements.
8
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2006 (UNAUDITED)
================================================================================
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ------- -------
U.S. GOVERNMENT OBLIGATIONS -- 2.6%
$18,866,000 U.S. Treasury Bills,
4.452% to 4.756%++,
04/13/06 to 09/07/06 (e) ........$ 18,712,002 $ 18,711,862
------------ ------------
TOTAL INVESTMENTS -- 98.2% .......$572,681,015 714,470,426
============
OTHER ASSETS AND LIABILITIES
(NET) -- 1.8% .................................. 13,321,369
------------
NET ASSETS -- 100.0% ............................$727,791,795
============
SHARES PROCEEDS
------ --------
SECURITIES SOLD SHORT -- (0.0)%
AVIATION: PARTS AND SERVICES -- (0.0)%
(1,200) Sequa Corp., Cl. A+ .............$ (117,576) $ (117,360)
============ ============
- ----------------
(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,
2006, the market value of Rule 144A securities amounted to $1,327,521 or
0.18% of total net assets. Except as noted in (d), these securities are
liquid.
(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. At March 31, 2006, the
market value of fair valued securities amounted to $3,011,048 or 0.41% of
total net assets.
(d) At March 31, 2006, the Fund held investments in restricted and illiquid
securities amounting to $3,011,048 or 0.41% of net assets, which were
valued under methods approved by the Board, as follows:
ACQUISITION 03/31/06
SHARES/ CARRYING
PRINCIPAL ACQUISITION ACQUISITION VALUE
AMOUNT ISSUER DATE COST PER UNIT
-------- ------ ----------- ----------- --------
$2,000,000 GP Strategies Corp.,
Sub. Deb.,
6.00%, 08/14/08 ............ 08/08/03 $1,362,935 $ 66.2699
262,431 GP Strategies Corp.,
Warrants, expire
08/14/08 ................... 08/08/03 637,065 2.2316
100 Gray Television Inc.,
8.000%
Cv. Pfd., Ser. C ........... 04/22/02 1,000,000 10,000.0000
379,703 National Patent Development
Corp., Warrants,
expire 08/14/08 ............ 11/24/04 0.00 0.2634
(e) At March 31, 2006, $1,000,000 of the principal amount was pledged as
collateral for securities sold short.
+ 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.
9
THE GABELLI EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2006 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $572,681,015) $ 714,470,426
Cash .................................... 1,462
Receivable for investments sold ......... 11,817,576
Receivable for Fund shares sold ......... 2,783,211
Dividends and interest receivable ....... 1,433,768
Other assets ............................ 16,858
-------------
TOTAL ASSETS ............................ 730,523,301
-------------
LIABILITIES:
Securities sold short (proceeds $117,576) 117,360
Payable for investments purchased ....... 1,357,217
Payable for investment advisory fees .... 652,934
Payable for Fund shares redeemed ........ 317,288
Payable for distribution fees ........... 167,597
Other accrued expenses .................. 119,110
-------------
TOTAL LIABILITIES ....................... 2,731,506
-------------
NET ASSETS applicable to 37,635,050
shares outstanding .................... $ 727,791,795
=============
NET ASSETS CONSIST OF:
Capital stock, each class at
$0.001 par value ...................... $ 37,635
Additional paid-in capital .............. 585,846,565
Accumulated distributions in excess of
net investment income ................. (3,290,006)
Accumulated net realized gain on
investments and foreign currency
transactions .......................... 3,409,363
Net unrealized appreciation on
investments ........................... 141,789,411
Net unrealized appreciation on
securities sold short ................. 216
Net unrealized depreciation on
foreign currency translations ......... (1,389)
-------------
NET ASSETS .............................. $ 727,791,795
=============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption
price per share ($714,053,947 /
36,917,806 shares outstanding;
150,000,000 shares authorized) ........ $19.34
======
CLASS A:
Net Asset Value and redemption price per share
($7,310,663 / 379,145 shares outstanding;
50,000,000 shares authorized) ......... $19.28
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ................ $20.46
======
CLASS B:
Net Asset Value and offering price per share
($112,317 / 5,907 shares outstanding;
50,000,000 shares authorized) ......... $19.01(a)
======
CLASS C:
Net Asset Value and offering price per share
($6,314,868 / 332,192 shares outstanding;
50,000,000 shares authorized) ......... $19.01(a)
======
- ---------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2006 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $70,456) $ 6,665,262
Interest ................................... 1,226,188
------------
TOTAL INVESTMENT INCOME .................... 7,891,450
------------
EXPENSES:
Investment advisory fees ................... 3,323,081
Distribution fees -- Class AAA ............. 816,703
Distribution fees -- Class A ............... 7,226
Distribution fees -- Class B ............... 337
Distribution fees -- Class C ............... 27,030
Shareholder services fees .................. 276,656
Shareholder communications expenses ........ 93,010
Custodian fees ............................. 56,727
Registration fees .......................... 28,610
Legal and audit fees ....................... 27,699
Directors' fees ............................ 14,161
Miscellaneous expenses ..................... 52,586
------------
TOTAL EXPENSES ............................. 4,723,826
Less: Custodian fee credits ................ (11,164)
------------
NET EXPENSES ............................... 4,712,662
------------
NET INVESTMENT INCOME ...................... 3,178,788
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ........... 4,830,816
Net realized loss on foreign
currency transactions .................... (17,351)
------------
Net realized gain on investments and loss on
foreign currency transactions ........... 4,813,465
Net change in unrealized appreciation/
depreciation on investments, securities
sold short, and foreign
currency translations .................... 29,390,019
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ......... 34,203,484
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................ $ 37,382,272
============
See accompanying notes to financial statements.
10
THE GABELLI EQUITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
SIX MONTHS ENDED
MARCH 31, 2006 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2005
------------- ------------------
OPERATIONS:
Net investment income ............................................ $ 3,178,788 $ 6,041,330
Net realized gain on investments and foreign currency transactions 4,813,465 10,284,275
Net change in unrealized appreciation/depreciation on investments,
securities sold short, and foreign currency translations ....... 29,390,019 48,815,905
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. 37,382,272 65,141,510
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ...................................................... (6,295,251) (6,076,053)
Class A ........................................................ (57,549) (14,675)
Class B ........................................................ (717) (137)
Class C ........................................................ (54,122) (15,344)
------------- -------------
(6,407,639) (6,106,209)
------------- -------------
Net realized gain on investments
Class AAA ...................................................... (6,315,010) (9,683,440)
Class A ........................................................ (51,353) (13,842)
Class B ........................................................ (532) (107)
Class C ........................................................ (52,102) (14,192)
------------- -------------
(6,418,997) (9,711,581)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .............................. (12,826,636) (15,817,790)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ...................................................... 109,931,787 175,602,480
Class A ........................................................ 3,397,332 3,406,570
Class B ........................................................ 78,098 29,210
Class C ........................................................ 2,694,741 3,196,846
------------- -------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ....... 116,101,958 182,235,106
------------- -------------
REDEMPTION FEES .................................................. 3,446 46,462
------------- -------------
NET INCREASE IN NET ASSETS ....................................... 140,661,040 231,605,288
NET ASSETS:
Beginning of period .............................................. 587,130,755 355,525,467
------------- -------------
End of period (including undistributed net investment income of
$0 and $0, respectively) ....................................... $ 727,791,795 $ 587,130,755
============= =============
See accompanying notes to financial statements.
11
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 outstanding 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 U.S. generally accepted accounting principles 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. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be valued at their fair value as determined by the
Board. Debt instruments having a maturity greater than 60 days for which market
quotations are readily available are valued at the average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
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. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
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. 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,
12
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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 commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At March
31, 2006, there were no open 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.
There are several risks in connection with the use of futures contracts as a
hedging instrument. 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. At March 31, 2006, there were no open
future contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions. A short
sale involves selling a security which the Fund does not own. The proceeds
received for short sales are recorded as liabilities and the Fund records an
unrealized gain or loss to the extent of the difference between the proceeds
received and the value of the open short position on the day of determination.
The Fund records a realized gain or loss when the short position is closed out.
By entering into a short sale, the Fund bears the market risk of an unfavorable
change in the price of the security sold short. Dividends on short sales are
recorded as an expense by the Fund on the ex-dividend date and interest expense
is recorded on the accrual basis. Securities sold short at March 31, 2006 are
reflected in the Schedule of Investments.
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 translations. 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.
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. At March 31, 2006, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. 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
13
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
current exchange rates. Purchases and sales of investment securities, income,
and expenses are translated at the exchange rate prevailing on the respective
dates of such transactions. Unrealized gains and losses that result from changes
in foreign exchange rates and/or changes in market prices of securities have
been included in unrealized appreciation/depreciation on investments and foreign
currency translations. Net realized foreign currency gains and losses resulting
from changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its net
assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely salable among qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission (the "SEC") may be treated as liquid if they satisfy
liquidity standards established by the Board. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and
accordingly the Board will monitor their liquidity.
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 on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
In calculating the net asset value ("NAV") per share of each class, investment
income, realized and unrealized gains and losses, redemption fees, and expenses
other than class specific expenses, are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day. Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset, if any, shown
as "custodian fee credits".
14
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate equity accounts in the period when the
differences arise. These reclassifications have no impact on the NAV of the Fund
and the calculation of net investment income per share in the Financial
Highlights excludes these adjustments. For the fiscal year ended September 30,
2005 reclassifications were made to increase accumulated net investment income
by $20,356 and decrease accumulated net realized gain on investments by $20,356.
The tax character of distributions paid during the fiscal year ended September
30, 2005 was ordinary income and net long-term capital gains as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) .......... $ 9,358,636
Net long-term capital gains ........................ 6,459,154
-----------
Total distributions paid ......................... $15,817,790
===========
The Fund has a fixed distribution policy. Under the policy, the Fund declares
and pays monthly distributions from net investment income and capital gains. The
actual source of the distributions are determined after the end of the year. The
Fund continues to evaluate its distribution policy in light of ongoing economic
and market conditions and may change the amount of the monthly distributions in
the future. The Fund currently intends to pay $0.03 per share on a monthly
basis.
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
At September 30, 2005, the difference between book and tax basis unrealized
appreciation is primarily due to deferral of losses from wash sales for tax
purposes.
As of September 30, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed long-term capital gains ....... $ 6,073,274
Net unrealized appreciation ................. 111,341,422
Other temporary differences ................. (62,737)
------------
Total accumulated earnings ................ $117,351,959
============
Under the current tax law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end may
be treated as occurring on the first day of the following year. For the fiscal
year ended September 30, 2005, the Fund had no capital losses to defer.
15
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
The following summarizes the tax cost of investments, short sales, and related
unrealized appreciation/depreciation at March 31, 2006:
GROSS GROSS NET UNREALIZED
COST/ UNREALIZED UNREALIZED APPRECIATION/
(PROCEEDS) APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ ------------ ------------
Investments ................. $574,613,664 $152,026,703 $(12,169,941) $139,856,762
Short sales ................. (117,576) 216 -- 216
------------ ------------ ------------ ------------
$574,496,088 $152,026,919 $(12,169,941) $139,856,978
============ ============ ============ ============
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 its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended March 31, 2006, other than short-term securities,
aggregated $224,971,177 and $61,060,311, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2006, the
Fund paid brokerage commissions of $189,722 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $24,880 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the six months
ended March 31, 2006, the Fund reimbursed the Adviser $22,500 in connection with
the cost of computing the Fund's NAV, which is included in miscellaneous
expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of 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. During the six months ended March 31, 2006, there were no
borrowings from the line of credit.
8. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of shares
- -- Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares. Class
AAA Shares are offered only to investors who acquire them directly from Gabelli
& Company, or through selected broker/dealers, or the transfer agent without a
sales charge. Class A Shares are subject to a maximum front-end sales charge of
5.75%. Class B Shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption within six years of purchase and automatically convert to Class
A Shares approximately eight years after the original purchase. The applicable
CDSC is equal to a declining percentage of the lesser of the NAV per share at
the date of the original purchase or at the date of redemption, based on the
length of time held. Class C Shares are subject to a 1% CDSC for one year after
purchase. Class B Shares are available only through exchange of Class B Shares
of other funds distributed by Gabelli & Company. The Board has approved Class I
Shares which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the
16
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
date of a purchase. (Prior to June 15, 2005, the Fund imposed a redemption fee
on shares that were redeemed or exchanged on or before the sixtieth day after
the date of a purchase.) The redemption fee is deducted from the proceeds
otherwise payable to the redeeming shareholders and is retained by the Fund. The
redemption fees retained by the Fund during the six months ended March 31, 2006
and the fiscal year ended September 30, 2005 amounted to $3,446 and $46,462,
respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED
MARCH 31, 2006 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 9,719,034 $181,188,464 14,143,848 $254,681,597
Shares issued upon reinvestment of dividends ....... 633,263 11,737,764 812,370 14,527,787
Shares redeemed .................................... (4,419,564) (82,994,441) (5,214,853) (93,606,904)
---------- ------------ ---------- ------------
Net increase ..................................... 5,932,733 $109,931,787 9,741,365 $175,602,480
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 214,105 $ 3,968,682 198,451 $ 3,597,003
Shares issued upon reinvestment of dividends ....... 4,513 83,614 1,332 24,074
Shares redeemed .................................... (34,736) (654,964) (11,920) (214,507)
---------- ------------ ---------- ------------
Net increase ..................................... 183,882 $ 3,397,332 187,863 $ 3,406,570
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ........................................ 4,130 $ 76,849 1,633 $ 28,966
Shares issued upon reinvestment of dividends ....... 68 1,249 14 244
Shares redeemed .................................... -- -- -- --
---------- ------------ ---------- ------------
Net increase ..................................... 4,198 $ 78,098 1,647 $ 29,210
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 234,724 $ 4,278,558 179,380 $ 3,223,463
Shares issued upon reinvestment of dividends ....... 5,171 94,548 1,487 26,658
Shares redeemed .................................... (90,336) (1,678,365) (2,987) (53,275)
---------- ------------ ---------- ------------
Net increase ..................................... 149,559 $ 2,694,741 177,880 $ 3,196,846
========== ============ ========== ============
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the SEC requesting information
on mutual fund trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc., the Adviser's parent company, is responding to these
requests for documents and testimony. On a separate matter, in September 2005,
the Adviser was informed by the staff of the SEC that the staff may recommend to
the Commission that an administrative remedy and a monetary penalty be sought
from the Adviser in connection with the actions of two of seven closed-end funds
managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act.
These provisions require registered investment companies to provide written
statements to shareholders when a dividend is made from a source other than net
investment income. While the two closed-end funds sent annual statements and
provided other materials containing this information, the funds did not send
written statements to shareholders with each distribution in 2002 and 2003. The
Adviser believes that all of the funds are now in compliance. The Adviser
believes that these matters would have no effect on the Fund or any material
adverse effect on the Adviser or its ability to manage the Fund.
17
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
Period Value, Net Unrealized from Net Realized
Ended Beginning Investment Gain/(Loss) on Investment Investment Gain on Total
September 30 of Period Income(a) Investments Operations Income Investments Distributions
- ------------ --------- ---------- -------------- ---------- ---------- ----------- -------------
CLASS AAA
2006(b) $18.72 $0.09 $ 0.90 $ 0.99 $(0.18) $(0.19) $(0.37)
2005 16.73 0.24 2.41 2.65 (0.24) (0.42) (0.66)
2004 14.60 0.23 2.26 2.49 (0.27) (0.09) (0.36)
2003 11.93 0.28 2.64 2.92 (0.25) -- (0.25)
2002 13.88 0.23 (1.79) (1.56) (0.23) (0.16) (0.39)
2001 16.35 0.25 (0.28) (0.03) (0.36) (2.08) (2.44)
CLASS A
2006(b) $18.66 $0.09 $ 0.90 $ 0.99 $(0.18) $(0.19) $(0.37)
2005 16.72 0.20 2.43 2.63 (0.27) (0.42) (0.69)
2004(f) 16.40 0.16 0.43 0.59 (0.20) (0.07) (0.27)
CLASS B
2006(b) $18.48 $0.02 $ 0.88 $ 0.90 $(0.18) $(0.19) $(0.37)
2005 16.62 0.04 2.46 2.50 (0.22) (0.42) (0.64)
2004(f) 16.40 0.07 0.42 0.49 (0.20) (0.07) (0.27)
CLASS C
2006(b) $18.47 $0.02 $ 0.89 $ 0.91 $(0.18) $(0.19) $(0.37)
2005 16.64 0.07 2.43 2.50 (0.25) (0.42) (0.67)
2004(f) 16.40 0.08 0.43 0.51 (0.20) (0.07) (0.27)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------
Net Asset Net Assets
Period Value, End of Net Portfolio
Ended Redemption End of Total Period Investment Operating Turnover
September 30 Fees(a) Period Return+ (in 000's) Income Expenses Rate
- ------------ ---------- -------- -------- ---------- --------- --------- ---------
CLASS AAA
2006(b) $0.00(c) $19.34 5.39% $714,054 0.96%(d) 1.42%(d)(e) 10%
2005 0.00(c) 18.72 16.09 580,081 1.33 1.46 11
2004 -- 16.73 17.13 355,321 1.42 1.49 12
2003 -- 14.60 24.59 261,777 2.09 1.49 27
2002 -- 11.93 (11.58) 162,938 1.75 1.50 12
2001 -- 13.88 (0.43) 121,499 1.65 1.55 41
CLASS A
2006(b) $0.00(c) $19.28 5.41% $ 7,311 0.96%(d) 1.42%(d)(e) 10%
2005 0.00(c) 18.66 15.99 3,644 1.08 1.50 11
2004(f) -- 16.72 3.62 124 1.33(d) 1.49(d) 12
CLASS B
2006(b) $0.00(c) $19.01 4.97% $ 112 0.19%(d) 2.17%(d)(e) 10%
2005 0.00(c) 18.48 15.28 32 0.20 2.22 11
2004(f) -- 16.62 3.00 1 0.56(d) 2.24(d) 12
CLASS C
2006(b) $0.00(c) $19.01 5.02% $ 6,315 0.21%(d) 2.17%(d)(e) 10%
2005 0.00(c) 18.47 15.24 3,374 0.37 2.24 11
2004(f) -- 16.64 3.13 79 0.62(d) 2.24(d) 12
- ---------------
+ 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 and does not reflect applicable sales
charges. Total return for the period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) For the period ended March 31, 2006, unaudited.
(c) Amount represents less than $0.005 per share.
(d) Annualized.
(e) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian fee
credits, the expense ratios for the six months ended March 31, 2006 would
have been 1.41%, 1.41%, 2.16%, and 2.16% for Class AAA, Class A, Class B,
and Class C Shares, respectively.
(f) From the commencement of offering Class A, Class B, and Class C Shares on
December 31, 2003.
See accompanying notes to financial statements.
18
THE GABELLI EQUITY INCOME FUND
BOARD CONSIDERATION AND RE-APPROVAL OF ADVISORY AGREEMENT (UNAUDITED)
During the six months ended March 31, 2006, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The independent
directors noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The independent directors reviewed the short, medium,
and long-term performance of the Fund against a peer group of equity income
funds. The directors noted that the Fund's performance was in the top one-third
of the funds in its category for all relevant periods.
PROFITABILITY. The independent directors reviewed summary data regarding the
profitability of the Fund to the Adviser both with an administrative overhead
charge and without such a charge. The directors also noted that a substantial
portion of the Fund's portfolio transactions were executed by an affiliated
broker, that the affiliated broker received distribution fees and minor amounts
of sales commissions, and that the Adviser received a moderate level of soft
dollar research benefits through the Fund's portfolio brokerage.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale.
SHARING OF ECONOMIES OF SCALE. The independent directors noted that the
investment management fee schedule for the Fund does not take into account any
potential economies of scale that may develop.
SERVICE AND COST COMPARISONS. The independent directors compared the expense
ratios of the investment management fee, other expenses, and total expenses of
the Fund to similar expense ratios of the peer group of equity income funds and
noted that the Adviser's management fee includes substantially all
administrative services of the Fund as well as investment advisory services. The
directors noted that the Fund's expense ratios and the Fund's size were above
average within this group. The directors also noted that the management fee
structure was the same as that in effect for most of the Gabelli funds. The
directors did not compare the management fee to the fee for other types of
accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and an
excellent performance record. The independent directors also concluded that the
Fund's expense ratios and the profitability to the Adviser of managing the Fund
were reasonable, particularly in light of the Fund's performance, and that
economies of scale were not a significant factor in their thinking at this time.
The directors did not view the potential profitability of ancillary services as
material to their decision. On the basis of the foregoing and without assigning
particular weight to any single conclusion, the independent directors determined
to recommend continuation of the investment management agreement to the full
Board of Directors.
19
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 Robert J. Morrissey
CHAIRMAN AND CHIEF ATTORNEY-AT-LAW
EXECUTIVE OFFICER MORRISSEY, HAWKINS & LYNCH
GAMCO INVESTORS, 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 CHAIRMAN
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.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER CHIEF COMPLIANCE OFFICER
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.
- --------------------------------------------------------------------------------
GAB444Q106SR
[GRAPHIC OMITTED]
PICTURE OF TRIANGLE
THE
GABELLI
EQUITY
INCOME
FUND
SEMI-ANNUAL REPORT
MARCH 31, 2006
THE GABELLI WOODLAND SMALL CAP VALUE FUND
SEMI-ANNUAL REPORT (A)
MARCH 31, 2006
TO OUR SHAREHOLDERS,
The Gabelli Woodland Small Cap Value Fund underperformed its small cap
benchmark, the Russell 2000 Index but outperformed the Standard & Poor's 500
Index ("S&P 500 Index") for the six month period ending March 31, 2006. During
this period, the Fund rose 7.56% versus gains of 15.23% for the Russell 2000
Index, 6.38% for the S&P 500 Index and 11.49% for the Value Line Composite
Index.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2006 (A)(B)
----------------------------------------------------
Since Inception
Quarter 1 Year 3 Year (12/31/02)*
- ---------------------------------------------------------------------------------------------------
GABELLI WOODLAND SMALL CAP VALUE FUND CLASS AAA .... 7.54% 16.13% 21.86% 17.01%
Russell 2000 Index ................................. 13.94 25.85 29.53 25.20
S&P 500 Index ...................................... 4.21 11.72 17.21 14.65
Value Line Composite Index ......................... 9.31 20.72 28.86 24.28
Class A ............................................ 7.61 16.36 21.91 17.04
1.42(c) 9.67(c) 19.53(c) 14.92(c)
Class B ............................................ 7.08 14.44 22.06 17.17
2.08(d) 9.44(d) 21.38(d) 16.52(d)
Class C ............................................ 7.39 15.45 21.05 16.27
6.39(d) 14.45(d) 21.05(d) 16.27(d)
(a) THE FUND'S FISCAL YEAR ENDS SEPTEMBER 30.
(b) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DISTRIBUTIONS AND ARE NET OF EXPENSES. INVESTMENT RETURNS
AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE
REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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, CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE
PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD
BE READ CAREFULLY BEFORE INVESTING.
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. THE RUSSELL
2000 INDEX OF SMALL U.S. COMPANIES, THE S&P 500 INDEX OF THE LARGEST U.S.
COMPANIES, AND THE VALUE LINE COMPOSITE INDEX ARE UNMANAGED INDICATORS OF
STOCK MARKET PERFORMANCE.
(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.
CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
* PERFORMANCE IS CALCULATED SINCE INCEPTION OF CLASS AAA SHARES ON DECEMBER
31, 2002.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The
financial statements and investment portfolio are mailed separately from the
commentary. Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com/funds.
- --------------------------------------------------------------------------------
THE GABELLI WOODLAND SMALL CAP VALUE FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from October 1, 2005 through March 31, 2006
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case -- because the hypothetical return used is NOT
the Fund's actual return -- the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the six months ended March 31, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
10/01/05 03/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI WOODLAND SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,075.60 2.01% $10.40
Class A $1,000.00 $1,076.20 2.01% $10.40
Class B $1,000.00 $1,072.40 2.76% $14.26
Class C $1,000.00 $1,071.80 2.76% $14.26
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,014.91 2.01% $10.10
Class A $1,000.00 $1,014.91 2.01% $10.10
Class B $1,000.00 $1,011.17 2.76% $13.84
Class C $1,000.00 $1,011.17 2.76% $13.84
*Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of March 31, 2006:
THE GABELLI WOODLAND SMALL CAP VALUE FUND
Health Care ....................................... 15.1%
Diversified Industrial ............................ 13.8%
Consumer Products ................................. 9.6%
Food and Beverage ................................. 7.9%
Financial Services ................................ 7.4%
Business Services ................................. 7.3%
Equipment and Supplies ............................ 5.4%
Hotels and Gaming ................................. 4.9%
Manufactured Housing and Recreational Vehicles .... 4.0%
Automotive: Parts and Accessories ................. 3.8%
Entertainment ..................................... 3.3%
U.S. Government Obligations ....................... 2.8%
Energy and Utilities .............................. 2.7%
Aviation: Parts and Services ...................... 2.7%
Computer Software and Services .................... 2.6%
Retail ............................................ 2.6%
Automotive ........................................ 2.2%
Publishing ........................................ 1.8%
Aerospace ......................................... 1.7%
Other Assets and Liabilities (Net) ................ (1.6)%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDED DECEMBER 31, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities are available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
3
THE GABELLI WOODLAND SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ------- -------
COMMON STOCKS -- 98.8%
AEROSPACE -- 1.7%
2,595 Alliant Techsystems Inc.+ ........$ 89,542 $ 200,256
------------ ------------
AUTOMOTIVE -- 2.2%
9,370 Adesa Inc. ....................... 135,818 250,554
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.8%
3,300 CLARCOR Inc. ..................... 86,825 117,480
14,620 Midas Inc.+ ...................... 290,352 319,740
------------ ------------
377,177 437,220
------------ ------------
AVIATION: PARTS AND SERVICES -- 2.7%
10,025 EDO Corp. ........................ 275,813 309,271
------------ ------------
BUSINESS SERVICES -- 7.3%
38,000 AMICAS Inc.+ ..................... 174,898 179,360
11,080 Bowne & Co. Inc. ................. 135,121 184,704
4,830 Fair Isaac Corp. ................. 147,687 191,364
5,700 The Brink's Co. .................. 115,840 289,332
------------ ------------
573,546 844,760
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 2.6%
3,330 Harland Co., John H. ............. 100,972 130,869
14,345 Stellent Inc.+ ................... 110,455 170,132
------------ ------------
211,427 301,001
------------ ------------
CONSUMER PRODUCTS -- 9.6%
5,450 Alberto-Culver Co. ............... 156,402 241,054
10,200 Callaway Golf Co. ................ 162,765 175,440
4,575 Church & Dwight Co. Inc. ......... 99,424 168,909
8,000 CNS Inc. ......................... 175,587 172,320
5,305 Jarden Corp.+ .................... 128,613 174,269
11,650 Kimball International Inc.,
Cl. B ........................... 157,190 175,216
------------ ------------
879,981 1,107,208
------------ ------------
DIVERSIFIED INDUSTRIAL -- 13.8%
12,890 Apogee Enterprises Inc. .......... 137,524 217,583
2,370 Carlisle Companies Inc. .......... 120,997 193,866
7,680 EnPro Industries Inc.+ ........... 212,609 263,424
9,420 Griffon Corp.+ ................... 195,280 233,993
5,190 Pentair Inc. ..................... 117,236 211,493
2,970 Texas Industries Inc. ............ 59,342 179,655
4,500 Walter Industries Inc. ........... 258,381 299,790
------------ ------------
1,101,369 1,599,804
------------ ------------
ENERGY AND UTILITIES -- 2.7%
2,969 ALLETE Inc. ...................... 85,248 138,355
6,040 Comstock Resources Inc.+ ......... 171,399 179,328
------------ ------------
256,647 317,683
------------ ------------
ENTERTAINMENT -- 3.3%
10,452 Alloy Inc.+ ...................... 111,150 140,161
16,250 Discovery Holding Co.,
Cl. A+ .......................... 252,117 243,750
------------ ------------
363,267 383,911
------------ ------------
EQUIPMENT AND SUPPLIES -- 5.4%
5,860 Tennant Co. ...................... 220,375 306,595
6,580 Toro Co. ......................... 168,418 314,195
------------ ------------
388,793 620,790
------------ ------------
MARKET
SHARES COST VALUE
------ ------- -------
FINANCIAL SERVICES -- 7.4%
16,180 BISYS Group Inc.+ ................$ 235,111 $ 218,106
10,000 Franklin Bank Corp.+ ............. 165,289 192,300
15,160 NewAlliance Bancshares Inc. ...... 225,121 218,759
13,800 USI Holdings Corp.+ .............. 173,397 222,594
------------ ------------
798,918 851,759
------------ ------------
FOOD AND BEVERAGE -- 7.9%
6,540 H.J. Heinz Co. ................... 250,740 247,997
4,770 PepsiAmericas Inc. ............... 74,664 116,627
12,070 Triarc Companies Inc., Cl. A ..... 126,943 220,036
19,140 Triarc Companies Inc., Cl. B ..... 179,430 334,567
------------ ------------
631,777 919,227
------------ ------------
HEALTH CARE -- 15.1%
13,100 AnorMED Inc.+ .................... 88,294 86,460
8,649 Immucor Inc.+ .................... 222,760 248,140
4,120 Laboratory Corporation of
America Holdings+ ............... 133,286 240,937
20,262 Lifecore Biomedical Inc.+ ........ 204,745 237,065
6,080 PolyMedica Corp. ................. 186,056 257,549
10,916 SurModics Inc.+ .................. 301,048 385,990
8,500 West Pharmaceutical
Services Inc. ................... 219,704 295,120
------------ ------------
1,355,893 1,751,261
------------ ------------
HOTELS AND GAMING -- 4.9%
6,250 Gaylord Entertainment Co.+ ....... 156,244 283,625
6,300 Trump Entertainment
Resorts Inc.+ ................... 116,854 116,676
4,510 Vail Resorts Inc.+ ............... 101,726 172,372
------------ ------------
374,824 572,673
------------ ------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 4.0%
14,260 Champion Enterprises Inc.+ ....... 151,400 213,330
4,540 Polaris Industries Inc. .......... 216,765 247,702
------------ ------------
368,165 461,032
------------ ------------
PUBLISHING -- 1.8%
24,380 Hollinger International Inc.,
Cl. A ........................... 229,323 204,305
------------ ------------
RETAIL -- 2.6%
31,603 dELiA*s Inc.+ .................... 239,582 295,172
------------ ------------
TOTAL COMMON STOCKS .............. 8,651,862 11,427,887
------------ ------------
PRINCIPAL
AMOUNT
-------
U.S. GOVERNMENT OBLIGATIONS -- 2.8%
$327,000 U.S. Treasury Bill,
4.676%++, 04/27/06 ............. 325,998 325,998
------------ ------------
TOTAL INVESTMENTS -- 101.6% ......$ 8,977,860 11,753,885
============
OTHER ASSETS AND LIABILITIES
(NET) -- (1.6)% ................................ (184,484)
------------
NET ASSETS -- 100.0% ............................$ 11,569,401
============
- ----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
See accompanying notes to financial statements.
4
THE GABELLI WOODLAND SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2006 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $8,977,860) .......... $ 11,753,885
Receivable for investments sold .................. 101,854
Dividends receivable ............................. 7,248
Other assets ..................................... 1,279
------------
TOTAL ASSETS ..................................... 11,864,266
------------
LIABILITIES:
Payable for investments purchased ................ 249,212
Payable for legal and audit fees ................. 26,599
Payable for investment advisory fees ............. 5,966
Payable for distribution fees .................... 2,827
Payable to custodian ............................. 666
Other accrued expenses ........................... 9,595
------------
TOTAL LIABILITIES ................................ 294,865
------------
NET ASSETS applicable to 803,464
shares outstanding .............................. $ 11,569,401
============
NET ASSETS CONSIST OF:
Capital stock, each class at $0.001 par value .... $ 803
Additional paid-in capital ....................... 7,616,668
Accumulated net investment loss .................. (48,921)
Accumulated net realized gain on investments ..... 1,224,826
Net unrealized appreciation on investments ....... 2,776,025
------------
NET ASSETS ....................................... $ 11,569,401
============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price per
share ($11,058,269 / 767,361 shares outstanding;
100,000,000 shares authorized) ................. $14.41
======
CLASS A:
Net Asset Value and redemption price per share
($104,973 / 7,276 shares outstanding;
50,000,000 shares authorized) .................. $14.43
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ......................... $15.31
======
CLASS B:
Net Asset Value and offering price per share
($167 / 11.51 shares outstanding;
50,000,000 shares authorized) .................. $14.51(a)
======
CLASS C:
Net Asset Value and offering price per share
($405,992 / 28,815 shares outstanding;
50,000,000 shares authorized) .................. $14.09(a)
======
- -----------------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2006 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends ............................ $ 58,048
Interest ............................. 10,919
-----------
TOTAL INVESTMENT INCOME .............. 68,967
-----------
EXPENSES:
Investment advisory fees ............. 58,117
Distribution fees -- Class AAA ....... 14,025
Distribution fees -- Class A ......... 131
Distribution fees -- Class B ......... 1
Distribution fees -- Class C ......... 1,461
Registration fees .................... 18,132
Legal and audit fees ................. 17,778
Shareholder communications expenses .. 11,671
Shareholder services fees ............ 7,130
Custodian fees ....................... 5,258
Interest expense ..................... 619
Directors' fees ...................... 270
Miscellaneous expenses ............... 4,102
-----------
TOTAL EXPENSES BEFORE FEES WAIVED AND
EXPENSES REIMBURSED BY ADVISER ..... 138,695
-----------
Less:
Fees waived and expenses reimbursed
by Adviser ....................... (20,677)
Custodian fee credits .............. (130)
-----------
TOTAL EXPENSES -- NET ................ 117,888
-----------
NET INVESTMENT LOSS .................. (48,921)
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments ..... 1,454,478
Net change in unrealized appreciation/
depreciation on investments ........ (581,008)
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .............. 873,470
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......... $ 824,549
===========
See accompanying notes to financial statements.
5
THE GABELLI WOODLAND SMALL CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
SIX MONTHS ENDED
MARCH 31, 2006 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2005
------------- -----------------
OPERATIONS:
Net investment loss ................................................. $ (48,921) $ (48,633)
Net realized gain on investments .................................... 1,454,478 837,195
Net change in unrealized appreciation/depreciation on investments ... (581,008) 284,720
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ 824,549 1,073,282
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments
Class AAA ......................................................... (973,344) (216,521)
Class A ........................................................... (9,260) (3,450)
Class B ........................................................... (13) (7)
Class C ........................................................... (24,565) (2,367)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................. (1,007,182) (222,345)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ......................................................... (599,900) 7,618,024
Class A ........................................................... (1,116) 50,032
Class B ........................................................... 13 8
Class C ........................................................... 217,200 140,546
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (383,803) 7,808,610
------------ ------------
REDEMPTION FEES ..................................................... -- 60
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ............................... (566,436) 8,659,607
NET ASSETS:
Beginning of period ................................................. 12,135,837 3,476,230
------------ ------------
End of period (including undistributed net investment income
of $0 and $0, respectively) ....................................... $ 11,569,401 $ 12,135,837
============ ============
See accompanying notes to financial statements.
6
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
non-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 outstanding 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 U.S. generally accepted accounting principles 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. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be valued at their fair value as determined by the
Board. Debt instruments having a maturity greater than 60 days for which market
quotations are readily available are valued at the average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
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. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
7
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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. 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 commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At March
31, 2006, there were no open repurchase agreements.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
DETERMINATION OF NET ASSET VALUE AND CALCULATION OF EXPENSES. Certain
administrative expenses are common to, and allocated among, various affiliated
funds. Such allocations are made on the basis of each Fund's average net assets
or other criteria directly affecting the expenses as determined by the Adviser
pursuant to procedures established by the Board.
In calculating the net asset value ("NAV") per share of each class, investment
income, realized and unrealized gains and losses, redemption fees, and expenses
other than class specific expenses, are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day. Distribution expenses are borne solely by the class incurring the expense.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset, if any, shown
as "custodian fee credits".
8
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities held by the Fund, timing differences, and
differing characterizations of distributions made by the Fund. These book/tax
differences are either temporary or permanent in nature. To the extent these
differences are permanent, adjustments are made to the appropriate equity
accounts in the period when the differences arise. These reclassifications have
no impact on the NAV of the Fund and the calculation of net investment income
per share in the Financial Highlights excludes these adjustments. For the fiscal
year ended September 30, 2005, reclassifications were made to decrease
accumulated net investment loss by $48,633 and decrease accumulated net realized
gain on investments by $38,448, with an offsetting adjustment to additional
paid-in capital.
The tax character of distributions paid during the fiscal year ended September
30, 2005 was ordinary income and net long-term capital gains as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ..... $188,894
Net long-term capital gains ................... 33,451
--------
Total distributions paid ...................... $222,345
========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
At September 30, 2005, the difference between book and tax basis unrealized
appreciation is primarily due to deferral of losses from wash sales for tax
purposes.
As of September 30, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed long-term capital gains .......... $ 813,020
Net unrealized appreciation .................... 3,321,543
----------
Total accumulated earnings ................... $4,134,563
==========
Under the current tax law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end may
be treated as occurring on the first day of the following year. For the fiscal
year ended September 30, 2005, the Fund had no capital losses to defer.
9
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at March 31, 2006:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---------- ------------ ------------ --------------
Investments ..... $8,983,189 $2,840,799 $(70,103) $2,770,696
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 its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs, and pays the compensation of all
Officers and Directors of the Fund who are affiliated persons of the Adviser.
The Adviser has 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 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,
2006, the Adviser reimbursed the Fund in the amount of $20,677. 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%, 2.00%, 2.75%, and 2.75% on an
annualized basis of average daily net assets for Class AAA, Class A, Class B,
and Class C, respectively. The cumulative amount for which the Fund may repay
the Adviser is $196,893.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B, and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00%, and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended March 31, 2006, other than short-term securities,
aggregated $3,864,180 and $4,291,532, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2006, the
Fund paid brokerage commissions of $55 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $632 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of 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. At March 31, 2006, there were no borrowings outstanding
from the line of credit.
The average daily amount of borrowings outstanding from the line of credit
within the six months ended March 31, 2006 was $24,929 with a weighted average
interest rate of 4.91%. The maximum amount borrowed at any time during the six
months ended March 31, 2006 was $597,000.
10
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
8. REORGANIZATION. On June 30, 2005, the Fund acquired all of the net assets of
the FMI Woodland Small Capitalization Value Fund pursuant to a Plan of
Reorganization approved by the FMI Woodland Small Capitalization Value Fund on
June 28, 2005. The acquisition was accomplished by a tax-free exchange of
507,152 Class AAA Shares of the Fund valued at $7,153,355 for the net assets of
the FMI Woodland Small Capitalization Value Fund on June 29, 2005. FMI Woodland
Small Capitalization Value Fund's net assets of $7,153,355, including $2,609,903
of unrealized appreciation, were combined with those of the Fund on June 30,
2005. The net assets of the Fund immediately before the acquisition were
$4,888,669.
9. CAPITAL STOCK TRANSACTIONS. The Fund currently offers four classes of
shares--Class AAA Shares, Class A Shares, Class B Shares, and Class C Shares.
Class AAA Shares are offered only to investors who acquire them directly from
Gabelli & Company, or through selected broker/dealers, or the transfer agent
without a sales charge. Class A Shares are subject to a maximum front-end sales
charge of 5.75%. Class B Shares are subject to a contingent deferred sales
charge ("CDSC") upon redemption within six years of purchase and automatically
convert to Class A Shares approximately eight years after the original purchase.
The applicable CDSC is equal to a declining percentage of the lesser of the NAV
per share at the date of the original purchase or at the date of redemption,
based on the length of time held. Class C Shares are subject to a 1% CDSC for
one year after purchase. Class B Shares are available only through exchange of
Class B Shares of other funds distributed by Gabelli & Company. The Board has
approved Class I Shares which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class AAA
Shares, Class A Shares, Class B Shares, and Class C Shares that are redeemed or
exchanged on or before the seventh day after the date of a purchase. (Prior to
June 15, 2005, the Fund imposed a redemption fee on shares that were redeemed or
exchanged on or before the sixtieth day after the date of a purchase.) The
redemption fee is deducted from the proceeds otherwise payable to the redeeming
shareholders and is retained by the Fund. The redemption fees retained by the
Fund during the six months ended March 31, 2006 and the fiscal year ended
September 30, 2005 amounted to $0 and $60, respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
11
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED
MARCH 31, 2006 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2005
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ......................................... 47,004 $ 665,881 171,431 $ 2,401,287
Shares issued in connection with reorganization of
FMI Woodland Small Capitalization Value Fund ...... -- -- 507,152 7,153,355
Shares issued upon reinvestment of dividends ........ 69,511 930,753 15,770 212,423
Shares redeemed ..................................... (157,961) (2,196,534) (150,391) (2,149,041)
-------- ----------- -------- -----------
Net increase/(decrease) ........................... (41,446) $ (599,900) 543,962 $ 7,618,024
======== =========== ======== ===========
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ......................................... 844 $ 11,964 3,409 $ 46,582
Shares issued upon reinvestment of dividends ........ 690 9,260 256 3,450
Shares redeemed ..................................... (1,606) (22,340) -- --
-------- ----------- -------- -----------
Net increase/(decrease) ........................... (72) $ (1,116) 3,665 $ 50,032
======== =========== ======== ===========
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ......................................... -- -- -- --
Shares issued upon reinvestment of dividends ........ 1 $ 13 0* $ 8
Shares redeemed ..................................... -- -- -- --
-------- ----------- -------- -----------
Net increase ...................................... 1 $ 13 0 $ 8
======== =========== ======== ===========
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ......................................... 14,195 $ 197,659 9,708 $ 138,179
Shares issued upon reinvestment of dividends ........ 1,872 24,564 178 2,367
Shares redeemed ..................................... (378) (5,023) -- --
-------- ----------- -------- -----------
Net increase ...................................... 15,689 $ 217,200 9,886 $ 140,546
======== =========== ======== ===========
- ---------------
* Share rounded to less than 1.0 shares.
10. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
11. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from
the Attorney General of the State of New York and the Securities and Exchange
Commission (the "SEC") requesting information on mutual fund trading practices
involving certain funds managed by the Adviser. GAMCO Investors, Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. On a separate matter, in September 2005, the Adviser was informed by
the staff of the SEC that the staff may recommend to the Commission that an
administrative remedy and a monetary penalty be sought from the Adviser in
connection with the actions of two of seven closed-end funds managed by the
Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act. These
provisions require registered investment companies to provide written statements
to shareholders when a dividend is made from a source other than net investment
income. While the two closed-end funds sent annual statements and provided other
materials containing this information, the funds did not send written statements
to shareholders with each distribution in 2002 and 2003. The Adviser believes
that all of the funds are now in compliance. The Adviser believes that these
matters would have no effect on the Fund or any material adverse effect on the
Adviser or its ability to manage the Fund.
12
THE GABELLI WOODLAND SMALLCAP VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
--------------------------------------------------- --------------------------
Net
Net Asset Net Realized and Total Net
Period Value, Investment Unrealized from Realized
Ended Beginning Income/ Gain/(Loss) on Investment Gain on Total Redemption
September 30 of Period (Loss)(a) Investments Operations Investments Distributions Fees(a)
------------ --------- ---------- ------------- ---------- ----------- ------------- ----------
CLASS AAA
2006(d) $14.64 $(0.06) $1.07 $1.01 $(1.24) $(1.24) --
2005 12.79 (0.11) 2.69 2.58 (0.73) (0.73) $0.00(f)
2004 10.58 (0.14) 2.38 2.24 (0.03) (0.03) --
2003(h) 10.00 (0.07) 0.65 0.58 -- -- --
CLASS A
2006(d) $14.65 $(0.06) $1.08 $1.02 $(1.24) $(1.24) --
2005 12.79 (0.09) 2.68 2.59 (0.73) (0.73) $0.00(f)
2004 10.57 (0.14) 2.39 2.25 (0.03) (0.03) --
2003(h) 10.00 (0.07) 0.64 0.57 -- -- --
CLASS B
2006(d) $14.77 $(0.12) $1.10 $0.98 $(1.24) $(1.24) --
2005 12.98 (0.21) 2.73 2.52 (0.73) (0.73) $0.00(f)
2004 10.59 0.02 2.40 2.42 (0.03) (0.03) --
2003(h) 10.00 (0.12) 0.71 0.59 -- -- --
CLASS C
2006(d) $14.39 $(0.11) $1.05 $0.94 $(1.24) $(1.24) --
2005 12.66 (0.20) 2.66 2.46 (0.73) (0.73) $0.00(f)
2004 10.55 (0.23) 2.37 2.14 (0.03) (0.03) --
2003(h) 10.00 (0.11) 0.66 0.55 -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------------------
Expenses Expenses
Net Asset Net Assets Net of Before
Period Value, End of Net Waivers/ Waivers/ Portfolio
Ended End of Total Period Investment Reimburse- Reimburse- Turnover
September 30 Period Return+ (in 000's) Income/(Loss) ments(b) ments(c) Rate
------------ ------- ------- -------- ------------- --------- --------- ---------
CLASS AAA
2006(d) $14.41 7.56% $11,058 (0.82)%(e) 2.01%(e) 2.37%(e) 35%
2005 14.64 20.67 11,839 (0.78) 2.01(g) 2.99 35
2004 12.79 21.22 3,388 (1.14) 2.00 5.94 45
2003(h) 10.58 5.80 2,323 (0.97)(e) 2.00(e) 15.05(e) 39
CLASS A
2006(d) $14.43 7.62% $ 105 (0.83)%(e) 2.01%(e) 2.37%(e) 35%
2005 14.65 20.76 108 (0.68) 2.01(g) 3.17 35
2004 12.79 21.34 47 (1.16) 2.00 5.94 45
2003(h) 10.57 5.70 3 (0.97)(e) 2.00(e) 15.05(e) 39
CLASS B
2006(d) $14.51 7.24% $ 0.1 (1.73)%(e) 2.76%(e) 3.12%(e) 35%
2005 14.77 19.86 0.1 (1.50) 2.75(g) 3.87 35
2004 12.98 22.91 0.1 0.18 2.75 6.69 45
2003(h) 10.59 5.90 0.1 (1.72)(e) 2.75(e) 15.80(e) 39
CLASS C
2006(d) $14.09 7.18% $ 406 (1.56)%(e) 2.76%(e) 3.12%(e) 35%
2005 14.39 19.91 189 (1.46) 2.76(g) 3.87 35
2004 12.66 20.33 41 (1.88) 2.75 6.69 45
2003(h) 10.55 5.50 118 (1.72)(e) 2.75(e) 15.80(e) 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 and does not reflect applicable sales
charges. Total return for the period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The Fund incurred interest expense during the six months ended March 31,
2006. If interest expense had not been incurred, the ratios of operating
expenses to average net assets would have been 2.00%, 2.00%, 2.75%, and
2.75% for Class AAA, Class A, Class B, and Class C, respectively.
(c) During the period, expenses 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 ended March 31, 2006, unaudited.
(e) Annualized.
(f) Amount represents less than $0.005 per share.
(g) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian fee
credits, the expense ratios for the fiscal year ended September 30, 2005
would have been 2.00%, 2.00%, 2.75% and 2.75% for Class AAA, Class A, Class
B, and Class C, respectively.
(h) From commencement of investment operations on December 31, 2002 through
September 30, 2003.
See accompanying notes to financial statements.
13
THE GABELLI WOODLAND SMALL CAP VALUE FUND
BOARD CONSIDERATION AND RE-APPROVAL OF ADVISORY AGREEMENT (UNAUDITED)
During the six months ended March 31, 2006, the Board of Directors of the
Corporation approved the continuation of the investment advisory agreement with
the Adviser for the Fund on the basis of the recommendation by the directors
(the "independent directors") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent directors as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent directors considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The independent
directors noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The independent directors reviewed the one and three
year performance of the Fund since inception against a peer group of small cap
value and core funds. The directors noted that the Fund's performance was below
average for the three year period and approximately average for the one year
period. The directors also noted the relative youth of the Fund and that the
Fund's performance improved relative to its peers as it passed out of its
ramp-up phase.
PROFITABILITY. The independent directors reviewed summary data regarding the
lack of profitability of the Fund to the Adviser both with an administrative
overhead charge and without such a charge. The directors also noted that an
affiliated broker of the Adviser received distribution fees and minor amounts of
sales commissions and that the Adviser received a moderate level of soft dollar
research benefits through the Fund's portfolio brokerage.
ECONOMIES OF SCALE. The independent directors discussed the major elements of
the Adviser's cost structure and the relationship of those elements to potential
economies of scale. The independent directors agreed that economies of scale
were not an issue for this small and slow-growing Fund that has been
unprofitable to the Adviser.
SHARING OF ECONOMIES OF SCALE. The independent directors noted that the
investment management fee schedule for the Fund does not take into account any
potential economies of scale that may develop or any losses or diminished
profitability to the Adviser in prior years.
SERVICE AND COST COMPARISONS. The independent directors compared the expense
ratios of the investment management fee, other expenses, and total expenses of
the Fund to similar expense ratios of the peer group of small cap value and core
funds and noted that the Adviser's management fee includes substantially all
administrative services of the Fund as well as investment advisory services. The
directors noted that the Fund's expense ratios after waivers were above, and the
Fund's size was far below, average within this group and that the Adviser had
been waiving substantial portions of its fees in order to make the Fund a more
attractive investment. The directors also noted that the management fee
structure before waivers was the same as that in effect for most of the Gabelli
funds. The directors did not compare the management fee to the fee for other
types of accounts managed by the Adviser.
CONCLUSIONS. The independent directors concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services, and an
improving performance record during its limited life. The independent directors
also concluded that the Fund's expense ratios were reasonable in light of the
lack of profitability to the Adviser of managing the Fund, and that economies of
scale were not a factor in their thinking at this time. The directors did not
view the potential profitability of ancillary services as material to their
decision. On the basis of the foregoing and without assigning particular weight
to any single conclusion, the independent directors determined to recommend
continuation of the investment management agreement to the full Board of
Directors.
14
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO Funds are investment companies registered with the
Securities and Exchange Commission under the Investment Company Act of
1940. We are managed by Gabelli Funds, LLC and Gabelli Advisers, Inc.,
which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. 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. 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 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 Robert J. Morrissey
CHAIRMAN AND CHIEF ATTORNEY-AT-LAW
EXECUTIVE OFFICER MORRISSEY, HAWKINS & LYNCH
GAMCO INVESTORS, 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 CHAIRMAN
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.
OFFICERS AND PORTFOLIO MANAGER
Elizabeth M. Lilly, CFA Bruce N. Alpert
PORTFOLIO MANAGER PRESIDENT
James E. McKee Peter D. Goldstein
SECRETARY CHIEF COMPLIANCE OFFICER
Agnes Mullady
TREASURER
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.
- --------------------------------------------------------------------------------
GAB840Q106SR
[GRAPHIC OMITTED]
PICTURE OF TRIANGLE
THE
GABELLI
WOODLAND
SMALL CAP
VALUE
FUND
SEMI-ANNUAL REPORT
MARCH 31, 2006
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. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. 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 applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Gabelli Equity Series Funds, Inc.
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date June 8, 2006
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date June 8, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date June 7, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.