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, 2007
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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, 2007
TO OUR SHAREHOLDERS,
For the six month period ended March 31, 2007, The Gabelli Small Cap
Growth Fund's Class AAA Shares gained 15.35%, outperforming the Russell 2000
Index return of 11.02%, the Standard & Poor's 500 Index return of 7.38%, and the
Dow Jones Industrial Average return of 7.01%.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2007 (A)(B)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year (10/22/91)
------- ------ ------ ------ ------- ---------
GABELLI SMALL CAP GROWTH FUND
CLASS AAA ............................... 4.20% 12.65% 15.01% 13.86% 13.88% 15.57%
Russell 2000 Index ........................ 1.95 5.91 12.00 10.95 10.23 11.64
Value Line Composite Index ................ 3.76 9.77 12.59 11.92 12.89 13.71
Class A ................................... 4.17 12.58 14.99 13.85 13.88 15.57
(1.82)(c) 6.10(c) 12.74(c) 12.51(c) 13.20(c) 15.12(c)
Class B ................................... 4.01 11.81 14.16 13.31 13.61 15.39
(0.99)(d) 6.81(d) 13.39(d) 13.07(d) 13.61(d) 15.39(d)
Class C ................................... 3.94 11.78 14.14 13.30 13.60 15.39
2.94(e) 10.78(e) 14.14 13.30 13.60 15.39
THE CURRENT EXPENSE RATIO FOR CLASS AAA, A, B, AND C SHARES IS 1.44%, 1.44%,
2.19%, AND 2.19%, RESPECTIVELY. CLASS AAA SHARES DO NOT HAVE A SALES CHARGE.
THE MAXIMUM SALES CHARGE FOR CLASS A, B, AND C SHARES IS 5.75%, 5.00%, AND
1.00%, RESPECTIVELY.
(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 CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND 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. INVESTING IN
SMALL CAPITALIZATION SECURITIES INVOLVES SPECIAL RISKS BECAUSE THESE
SECURITIES MAY TRADE LESS FREQUENTLY AND EXPERIENCE MORE ABRUPT PRICE
MOVEMENTS THAN LARGE CAPITALIZATION SECURITIES. THE RUSSELL 2000 INDEX OF
SMALL U.S. COMPANIES AND THE VALUE LINE COMPOSITE INDEX (COMPOSED OF
EQUALLY WEIGHTED POSITIONS IN EVERY STOCK COVERED IN THE VALUE LINE
INVESTMENT SURVEY) ARE UNMANAGED INDICATORS OF STOCK MARKET PERFORMANCE.
DIVIDENDS ARE CONSIDERED REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN
INDEX.
(c) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR,
FIVE YEAR, TEN YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%, 3%, 2%, 0%, AND
0%, RESPECTIVELY, OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE,
WHICHEVER IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(e) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGE FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER AND ONE YEAR PERIODS OF 1%
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
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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.
- --------------------------------------------------------------------------------
THE GABELLI SMALL CAP GROWTH FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from October 1, 2006 through March 31, 2007
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case - because the hypothetical return used is NOT the
Fund's actual return - the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
10/01/06 03/31/07 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,153.50 1.43% $ 7.72
Class A $1,000.00 $1,153.20 1.43% $ 7.72
Class B $1,000.00 $1,148.90 2.18% $11.74
Class C $1,000.00 $1,148.60 2.18% $11.74
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.90 1.43% $ 7.23
Class A $1,000.00 $1,017.90 1.43% $ 7.23
Class B $1,000.00 $1,014.14 2.18% $11.01
Class C $1,000.00 $1,014.14 2.18% $11.01
*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, 2007:
THE GABELLI SMALL CAP GROWTH FUND
Equipment and Supplies .......................... 13.6%
Diversified Industrial .......................... 9.1%
Health Care ..................................... 8.3%
U.S. Government Obligations ..................... 6.2%
Energy and Utilities ............................ 6.1%
Specialty Chemicals ............................. 5.4%
Food and Beverage ............................... 4.7%
Financial Services .............................. 4.2%
Aviation: Parts and Services .................... 3.4%
Business Services ............................... 3.3%
Automotive: Parts and Accessories ............... 3.1%
Hotels and Gaming ............................... 3.1%
Consumer Products ............................... 2.7%
Retail .......................................... 2.3%
Entertainment ................................... 2.2%
Cable ........................................... 2.1%
Publishing ...................................... 2.0%
Communications Equipment ........................ 1.9%
Wireless Communications ......................... 1.9%
Broadcasting .................................... 1.8%
Manufactured Housing and
Recreational Vehicles ........................ 1.5%
Real Estate ..................................... 1.3%
Electronics ..................................... 1.3%
Telecommunications .............................. 1.2%
Consumer Services ............................... 1.2%
Environmental Services .......................... 1.2%
Computer Software and Services .................. 1.1%
Transportation .................................. 1.1%
Metals and Mining ............................... 0.8%
Automotive ...................................... 0.7%
Closed-End Funds ................................ 0.7%
Building and Construction ....................... 0.2%
Aerospace ....................................... 0.2%
Paper and Forest Products ....................... 0.1%
Satellite ....................................... 0.1%
Educational Services ............................ 0.1%
Agriculture ..................................... 0.1%
Home Furnishings ................................ 0.1%
Other Assets and Liabilities (Net) .............. (0.4)%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED DECEMBER 31,
2006. 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 SEC'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 is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
3
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- 93.6%
AEROSPACE -- 0.2%
100,000 Herley Industries Inc.+ ...........$ 1,746,383 $ 1,562,000
------------ ------------
AGRICULTURE -- 0.1%
1,200 Cadiz Inc.+ ....................... 4,500 30,528
29,000 The Mosaic Co.+ ................... 441,978 773,140
------------ ------------
446,478 803,668
------------ ------------
AUTOMOTIVE -- 0.7%
200,000 ADESA, Inc. ....................... 4,650,316 5,526,000
6,000 Oshkosh Truck Corp. ............... 89,796 318,000
------------ ------------
4,740,112 5,844,000
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.1%
3,816 Aftermarket Technology
Corp.+ .......................... 47,013 92,652
75,000 BorgWarner Inc. ................... 1,609,839 5,656,500
300,000 Dana Corp.+ ....................... 1,161,925 262,500
240,900 Earl Scheib Inc.+ ................. 1,475,236 903,375
60,000 Federal-Mogul Corp.+ .............. 87,700 46,200
208,000 Midas Inc.+ ....................... 2,692,351 4,486,560
190,000 Modine Manufacturing Co. .......... 4,566,286 4,351,000
7,875 Monro Muffler Brake Inc. .......... 52,860 276,413
199,000 Proliance International Inc.+ ..... 1,480,526 752,220
2,000 Puradyn Filter
Technologies Inc.+ .............. 2,750 1,160
50,000 SORL Auto Parts Inc.+ ............. 362,500 429,500
50,250 Spartan Motors Inc. ............... 365,562 1,166,302
170,000 Standard Motor Products Inc. ...... 2,539,350 2,901,900
27,000 Strattec Security Corp.+ .......... 1,058,830 1,200,960
10,000 Superior Industries
International Inc. .............. 241,845 208,300
10,000 Tenneco Inc.+ ..................... 20,900 254,600
120,000 The Pep Boys - Manny,
Moe & Jack ...................... 1,628,358 2,290,800
27,000 Thor Industries Inc. .............. 250,194 1,063,530
------------ ------------
19,644,025 26,344,472
------------ ------------
AVIATION: PARTS AND SERVICES -- 5.0%
25,000 AAR Corp.+ ........................ 302,990 689,000
10,000 Astronics Corp.+ .................. 48,990 176,000
14,000 Barnes Group Inc. ................. 119,438 322,140
122,000 Curtiss-Wright Corp. .............. 1,495,053 4,701,880
7,500 Ducommun Inc.+ .................... 80,125 192,975
20,000 EDO Corp. ......................... 441,767 524,000
30,000 Embraer-Empresa Brasileira
de Aeronautica SA, ADR .......... 508,773 1,375,800
24,000 Gamesa Corp. Tecnologica SA ....... 146,892 868,833
280,000 GenCorp Inc.+ ..................... 2,915,852 3,875,200
445,000 Kaman Corp. ....................... 7,044,098 10,372,950
86,000 Moog Inc., Cl. A+ ................. 555,983 3,581,900
33,000 Sequa Corp., Cl. A+ ............... 1,223,442 3,952,410
MARKET
SHARES COST VALUE
------ ---- -------
80,000 Sequa Corp., Cl. B+ ...............$ 3,631,577 $ 9,680,000
280,000 The Fairchild Corp., Cl. A+ ....... 1,398,908 565,600
33,500 Woodward Governor Co. ............. 657,315 1,379,195
------------ ------------
20,571,203 42,257,883
------------ ------------
BROADCASTING -- 1.7%
120,000 Acme Communications Inc. .......... 919,240 684,000
32,000 Beasley Broadcast Group
Inc., Cl. A ..................... 333,159 271,040
2,000 Cogeco Inc. ....................... 39,014 65,396
300,000 Crown Media Holdings Inc.,
Cl. A+ .......................... 1,914,803 1,599,000
3,333 CTN Media Group Inc.+ (c) ......... 16,800 3
2,000 Global Traffic Network Inc.+ ...... 11,904 10,660
270,000 Granite Broadcasting Corp.+ ....... 383,116 18,900
420,000 Gray Television Inc. .............. 3,765,759 4,376,400
40,000 Gray Television Inc., Cl. A ....... 503,408 418,000
48,000 Hearst-Argyle Television Inc. ..... 425,523 1,305,120
300,000 ION Media Networks Inc.+ .......... 677,304 399,000
250 Liberty Media Corp. -
Capital, Cl. A+ ................. 15,724 27,648
20,000 Nexstar Broadcasting
Group Inc., Cl. A+ .............. 187,302 192,200
99,650 Salem Communications
Corp., Cl. A .................... 1,483,549 1,245,625
190,000 Sinclair Broadcast Group
Inc., Cl. A ..................... 2,054,325 2,935,500
55,000 Spanish Broadcasting
System Inc., Cl. A+ ............. 480,891 220,000
230,000 Young Broadcasting Inc.,
Cl. A+ ......................... 2,235,627 929,200
------------ ------------
15,447,448 14,697,692
------------ ------------
BUILDING AND CONSTRUCTION -- 0.2%
16,500 Florida Rock Industries Inc. ...... 96,939 1,110,285
25,000 Huttig Building Products
Inc.+ ........................... 90,165 151,250
1,000 Insituform Technologies Inc.,
Cl. A ........................... 20,344 20,790
4,000 The Genlyte Group Inc.+ ........... 8,580 282,200
1,000 Universal Forest Products Inc. .... 12,125 49,550
------------ ------------
228,153 1,614,075
------------ ------------
BUSINESS SERVICES -- 2.9%
5,000 ACCO Brands Corp.+ ................ 123,890 120,450
240,000 AMICAS Inc.+ ...................... 1,041,111 681,600
11,000 aQuantive Inc.+ ................... 292,754 307,010
6,000 BB Holdings Ltd.+ ................. 23,159 23,850
5,000 BrandPartners Group Inc.+ ......... 4,850 500
2,400 Carlisle Group Ltd.+ .............. 3,630 5,101
1,000 CheckFree Corp.+ .................. 9,040 37,090
260,000 Edgewater Technology Inc.+ ........ 1,125,922 2,194,400
22,589 GSE Systems Inc.+ ................. 31,625 143,440
See accompanying notes to financial statements.
4
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- (CONTINUED)
BUSINESS SERVICES -- (CONTINUED)
500 GSI Commerce Inc.+ ................$ 8,649 $ 11,295
80,000 Industrial Distribution
Group Inc.+ ..................... 224,062 999,200
60,000 Interactive Data Corp. ............ 534,171 1,485,000
160,000 Intermec Inc.+ .................... 3,133,816 3,574,400
13,000 Landauer Inc. ..................... 234,859 656,240
4,000 MDC Partners Inc., Cl. A+ ......... 12,360 30,920
166,000 Nashua Corp.+ ..................... 1,597,567 1,477,400
375 OneSource Services Inc.+ .......... 3,461 4,741
120,000 Paxar Corp.+ ...................... 1,649,792 3,444,000
20,000 R. H. Donnelley Corp.+ ............ 269,035 1,417,800
68,000 Sohgo Security Services
Co. Ltd. ........................ 864,949 1,246,436
20,000 Stamps.com Inc.+ .................. 109,872 287,400
4,000 StarTek Inc. ...................... 62,677 39,160
80,000 The Brink's Co. ................... 1,986,050 5,076,000
147,265 Trans-Lux Corp. (a) ............... 1,135,175 1,082,398
------------ ------------
14,482,476 24,345,831
------------ ------------
CABLE -- 2.1%
230,000 Adelphia Communications
Corp., Cl. A+ ................... 29,650 4,600
230,000 Adelphia Communications
Corp., Cl. A CVV+ ............... 0 0
230,000 Adelphia Communications
Corp., Cl. A Escrow+ ............ 0 0
510,000 Cablevision Systems Corp.,
Cl. A+ .......................... 0 15,519,300
9,329 Liberty Global Inc., Cl. A+ ....... 249,972 307,204
9,329 Liberty Global Inc., Cl. C+ ....... 240,169 285,841
105,000 Lin TV Corp., Cl. A+ .............. 1,789,529 1,669,500
4,000 Outdoor Channel
Holdings Inc.+ .................. 44,765 40,880
------------ ------------
2,354,085 17,827,325
------------ ------------
CLOSED-END FUNDS -- 0.7%
86,000 The Central Europe and
Russia Fund Inc. ................ 1,997,126 4,330,100
36,700 The European Equity
Fund Inc. ....................... 386,832 444,804
54,000 The New Germany Fund Inc. ......... 635,491 889,920
11,000 The Spain Fund Inc. ............... 103,029 171,270
------------ ------------
3,122,478 5,836,094
------------ ------------
COMMUNICATIONS EQUIPMENT -- 1.9%
60,000 Andrew Corp.+ ..................... 243,556 635,400
150,000 Communications
Systems Inc. .................... 1,040,821 1,557,000
260,900 Sycamore Networks Inc.+ ........... 778,040 975,766
276,000 Thomas & Betts Corp.+ ............. 5,071,984 13,474,320
------------ ------------
7,134,401 16,642,486
------------ ------------
MARKET
SHARES COST VALUE
------ ---- -------
COMPUTER SOFTWARE AND SERVICES -- 1.1%
73,000 Borland Software Corp.+ ...........$ 612,810 $ 384,710
90,000 FalconStor Software Inc.+ ......... 636,867 937,800
33,099 Global Sources Ltd.+ .............. 444,668 463,055
50,000 Jupitermedia Corp.+ ............... 435,800 331,000
20,187 MKS Instruments Inc.+ ............. 367,981 515,172
15,000 NAVTEQ Corp.+ ..................... 587,434 517,500
200,000 Net Perceptions Inc.+ ............. 124,295 500,000
160,000 OpenTV Corp., Cl. A+ .............. 860,410 392,000
8,000 Phoenix Technologies Ltd.+ ........ 55,158 50,000
800,000 StorageNetworks Inc.
Escrow+ (c) ..................... 0 24,000
295,000 Tyler Technologies Inc.+ .......... 1,113,084 3,746,500
290,000 Xanser Corp.+ ..................... 1,059,514 1,595,000
------------ ------------
6,298,021 9,456,737
------------ ------------
CONSUMER PRODUCTS -- 2.7%
27,000 Adams Golf Inc.+ .................. 71,200 51,030
5,250 Alberto-Culver Co. ................ 123,588 120,120
16,000 Ashworth Inc.+ .................... 69,906 121,120
33,500 Chofu Seisakusho Co. Ltd. ......... 484,644 717,817
37,500 Church & Dwight Co. Inc. .......... 354,732 1,888,125
35,000 Coachmen Industries Inc. .......... 436,787 368,550
6,000 Elizabeth Arden Inc.+ ............. 82,125 130,920
50,000 Escada AG+ ........................ 1,708,416 2,382,479
2,000 Harley-Davidson Inc. .............. 4,712 117,500
200,000 Hartmarx Corp.+ ................... 1,011,455 1,480,000
100,000 Lenox Group Inc.+ ................. 1,160,557 658,000
5,000 Levcor International Inc.+ ........ 7,650 2,000
290,000 Marine Products Corp. ............. 193,214 2,775,300
34,000 National Presto
Industries Inc. ................. 1,079,778 2,095,760
95,000 Revlon Inc., Cl. A+ ............... 314,830 101,650
75,250 Sally Beauty Holdings Inc.+ ....... 588,091 691,547
699,100 Schiff Nutrition
International Inc.+ ............. 1,873,361 4,802,817
110,000 Spectrum Brands Inc.+ ............. 1,246,558 696,300
6,000 Steven Madden Ltd. ................ 30,540 175,200
14,000 Stewart Enterprises Inc.,
Cl. A ........................... 65,467 112,840
87,425 Syratech Corp.+ ................... 17,426 7,431
4,000 The Scotts Miracle-Gro Co.,
Cl. A ........................... 45,880 176,120
17,000 WD-40 Co. ......................... 470,278 539,070
85,000 Wolverine World Wide Inc. ......... 827,407 2,428,450
------------ ------------
12,268,602 22,640,146
------------ ------------
CONSUMER SERVICES -- 1.2%
30,500 Bowlin Travel Centers Inc.+ ....... 23,611 54,138
50,000 Central Parking Corp. ............. 762,283 1,109,000
2,500 Collectors Universe Inc. .......... 8,720 35,025
10,000 eLong Inc., ADR+ .................. 113,711 99,200
See accompanying notes to financial statements.
5
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- (CONTINUED)
CONSUMER SERVICES -- (CONTINUED)
5,000 Expedia Inc.+ .....................$ 49,571 $ 115,900
40,000 IAC/InterActiveCorp+ .............. 471,795 1,508,400
16,000 Martha Stewart Living
Omnimedia Inc., Cl. A ........... 167,206 272,160
20,000 Response USA Inc.+ ................ 16,500 2
305,000 Rollins Inc. ...................... 2,632,358 7,018,050
10,000 TiVo Inc.+ ........................ 74,563 63,500
------------ ------------
4,320,318 10,275,375
------------ ------------
DIVERSIFIED INDUSTRIAL -- 9.0%
45,000 Acuity Brands Inc. ................ 530,382 2,449,800
2,000 Albany International Corp.,
Cl. A .......................... 71,251 71,880
90,000 Ampco-Pittsburgh Corp. ............ 905,431 2,600,100
6,000 Anixter International Inc.+ ....... 57,120 395,640
290,000 Baldor Electric Co. ............... 7,881,723 10,944,600
150,000 Crane Co. ......................... 3,282,255 6,063,000
100,000 Delta plc ......................... 212,289 268,611
4,000 ESCO Technologies Inc.+ ........... 66,552 179,280
803 Foster Wheeler Ltd.+ .............. 3,183 46,887
12,000 Gardner Denver Inc.+ .............. 103,046 418,200
110,000 Greif Inc., Cl. A ................. 2,212,806 12,222,100
13,000 Greif Inc., Cl. B ................. 948,864 1,336,660
140,000 Griffon Corp.+ .................... 3,491,183 3,465,000
10,000 Insteel Industries Inc. ........... 4,250 167,900
72,000 Katy Industries Inc.+ ............. 567,476 158,400
73,000 Lindsay Corp. ..................... 781,892 2,320,670
158,000 Magnetek Inc.+ .................... 1,032,088 796,320
37,000 Matthews International
Corp., Cl. A .................... 861,644 1,505,900
275,000 Myers Industries Inc. ............. 2,505,876 5,137,000
130,000 National Patent
Development Corp.+ .............. 86,241 360,100
93,750 Oil-Dri Corp. of America .......... 741,688 1,565,625
15,000 Olin Corp. ........................ 232,292 254,100
220,000 Park-Ohio Holdings Corp.+ ......... 1,220,379 4,070,000
87,000 Precision Castparts Corp. ......... 1,581,096 9,052,350
32,000 Roper Industries Inc. ............. 620,029 1,756,160
40,000 Sonoco Products Co. ............... 1,071,920 1,503,200
63,000 Standex International Corp. ....... 1,253,307 1,796,130
98,900 Tech/Ops Sevcon Inc. .............. 647,488 677,465
115,000 The Lamson &
Sessions Co.+ ................... 599,517 3,195,850
65,000 Tredegar Corp. .................... 890,105 1,481,350
73,048 WHX Corp.+ ........................ 1,180,253 620,908
------------ ------------
35,643,626 76,881,186
------------ ------------
EDUCATIONAL SERVICES -- 0.1%
6,000 Career Education Corp.+ ........... 139,615 183,000
8,000 School Specialty Inc.+ ............ 362,067 288,880
MARKET
SHARES COST VALUE
------ ---- -------
25,000 Universal Technical
Institute Inc.+ .................$ 531,376 $ 577,000
------------ ------------
1,033,058 1,048,880
------------ ------------
ELECTRONICS -- 1.3%
32,000 Badger Meter Inc. ................. 651,877 849,600
2,000 Bel Fuse Inc., Cl. A .............. 66,272 75,560
182,000 California Micro Devices
Corp.+ .......................... 1,295,722 851,760
205,000 CTS Corp. ......................... 2,203,343 2,833,100
20,000 Greatbatch Inc.+ .................. 487,480 510,000
18,000 IMAX Corp.+ ....................... 157,361 90,720
200,000 KEMET Corp.+ ...................... 1,645,120 1,530,000
69,300 Methode Electronics Inc. .......... 650,898 1,023,561
95,000 Park Electrochemical Corp. ........ 2,193,420 2,576,400
20,000 Trident Microsystems Inc.+ ........ 119,857 401,200
3,576 Trimble Navigation Ltd.+ .......... 99,306 95,980
20,000 Zoran Corp.+ ...................... 121,523 340,400
------------ ------------
9,692,179 11,178,281
------------ ------------
ENERGY AND UTILITIES -- 6.1%
3,000 AGL Resources Inc. ................ 51,525 128,160
440,000 Aquila Inc.+ ...................... 1,516,877 1,839,200
6,400 BIW Ltd. .......................... 94,563 112,960
95,000 Callon Petroleum Co.+ ............. 939,533 1,289,150
37,000 CH Energy Group Inc. .............. 1,541,083 1,801,530
12,000 Chesapeake Utilities Corp. ........ 236,752 371,280
70,000 CMS Energy Corp. .................. 395,665 1,246,000
23,000 Connecticut Water
Service Inc. .................... 464,832 553,150
3,500 Consolidated Water Co. Ltd. ....... 83,341 82,985
150,000 Covanta Holding Corp.+ ............ 644,530 3,327,000
92,300 Duquesne Light Holdings
Inc. ............................ 1,354,906 1,826,617
145,000 El Paso Electric Co.+ ............. 1,886,797 3,820,750
20,000 Environmental Power Corp.+ ........ 110,000 140,000
126,800 Florida Public Utilities Co. ...... 1,177,900 1,572,320
43,000 Middlesex Water Co. ............... 743,997 790,770
10,000 Nicor Inc. ........................ 221,002 484,200
20,000 Oceaneering International
Inc.+ ........................... 544,313 842,400
2,000 PetroQuest Energy Inc.+ ........... 5,250 23,380
973,500 RPC Inc. .......................... 1,021,292 16,218,510
35,000 SEMCO Energy Inc.+ ................ 218,317 266,700
80,000 SJW Corp. ......................... 1,241,954 3,238,400
52,500 Southern Union Co. ................ 682,575 1,595,475
100,000 Southwest Gas Corp. ............... 1,772,385 3,887,000
10,000 Tesoro Corp. ...................... 140,933 1,004,300
4,000 Toreador Resources Corp.+ ......... 15,250 72,600
10,000 Vestas Wind Systems A/S+ .......... 89,988 560,262
10,000 W-H Energy Services Inc.+ ......... 212,864 467,400
145,000 Westar Energy Inc. ................ 2,240,149 3,990,400
------------ ------------
19,648,573 51,552,899
------------ ------------
See accompanying notes to financial statements.
6
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- (CONTINUED)
ENTERTAINMENT -- 2.2%
100,000 Aruze Corp. .......................$ 2,085,138 $ 3,487,780
42,500 Canterbury Park
Holding Corp. ................... 594,314 601,375
6,048 Chestnut Hill Ventures+ (c) ....... 164,590 171,871
500 Discovery Holding Co., Cl. A+ ..... 6,095 9,565
201,000 Dover Motorsports Inc. ............ 1,104,623 1,055,250
92,600 Fisher Communications Inc.+ ....... 5,191,906 4,500,360
581,466 Gemstar-TV Guide
International Inc.+ ............. 3,218,348 2,436,343
16,000 International Speedway
Corp., Cl. A .................... 515,479 827,200
2,500 International Speedway
Corp., Cl. B .................... 45,000 127,750
10,000 Metromedia International
Group Inc.+ ..................... 6,700 15,100
320,000 Six Flags Inc.+ ................... 1,620,999 1,923,200
200,000 The Topps Co. Inc. ................ 1,626,618 1,944,000
50,030 Triple Crown Media Inc.+ .......... 608,308 419,752
50,000 World Wrestling Entertainment
Inc., Cl. A ..................... 581,121 815,000
35,000 WPT Enterprises Inc.+ ............. 274,988 179,900
------------ ------------
17,644,227 18,514,446
------------ ------------
ENVIRONMENTAL SERVICES -- 1.2%
200,000 Allied Waste
Industries Inc.+ ................ 1,943,361 2,518,000
8,000 Basin Water Inc.+ ................. 72,458 54,960
22,000 Catalytica Energy Systems
Inc.+ ........................... 153,722 31,680
262,500 Republic Services Inc. ............ 2,490,315 7,302,750
------------ ------------
4,659,856 9,907,390
------------ ------------
EQUIPMENT AND SUPPLIES -- 12.0%
15,000 A.O. Smith Corp., Cl. A ........... 336,569 573,300
249,000 AMETEK Inc. ....................... 996,986 8,600,460
425,000 Baldwin Technology Co. Inc.,
Cl. A+ .......................... 1,353,684 2,125,000
26,000 Belden CDT Inc. ................... 290,500 1,393,340
14,000 C&D Technologies Inc. ............. 240,930 70,420
50,000 Capstone Turbine Corp.+ ........... 103,400 53,000
205,000 CIRCOR International Inc. ......... 3,175,395 7,318,500
403,500 CLARCOR Inc. ...................... 2,504,358 12,831,300
200,000 Core Molding Technologies
Inc.+ ........................... 299,389 1,560,000
178,000 Crown Holdings Inc.+ .............. 719,229 4,353,880
2,000 Danaher Corp. ..................... 34,106 142,900
66,000 Donaldson Co. Inc. ................ 761,576 2,382,600
350,000 Enodis plc ........................ 1,147,011 1,417,094
90,000 Entegris Inc.+ .................... 708,040 963,000
440,000 Fedders Corp.+ .................... 1,941,824 396,000
MARKET
SHARES COST VALUE
------ ---- -------
188,000 Flowserve Corp. ...................$ 3,473,080 $ 10,751,720
152,500 Franklin Electric Co. Inc. ........ 1,244,803 7,091,250
10,000 Gehl Co.+ ......................... 266,202 253,800
40,000 General Magnaplate Corp. (c) ...... 83,763 60,000
135,000 Gerber Scientific Inc.+ ........... 1,290,225 1,432,350
84,000 Graco Inc. ........................ 928,834 3,289,440
150,000 GrafTech International Ltd.+ ...... 1,005,827 1,362,000
60,000 IDEX Corp. ........................ 556,738 3,052,800
140,000 Interpump Group SpA ............... 549,846 1,565,343
4,000 Jarden Corp.+ ..................... 11,351 153,200
9,900 K-Tron International Inc.+ ........ 73,883 710,127
65,000 L.S. Starrett Co., Cl. A .......... 1,110,086 1,170,000
29,000 Littelfuse Inc.+ .................. 577,404 1,177,400
107,000 Lufkin Industries Inc. ............ 1,029,240 6,011,260
55,000 Maezawa Kyuso Industries
Co. Ltd. ........................ 359,609 909,666
26,666 Met-Pro Corp. ..................... 192,463 387,457
1,000 Middleby Corp.+ ................... 37,310 131,840
20,800 Mueller Industries Inc. ........... 661,915 626,080
2,000 Northwest Pipe Co.+ ............... 55,888 79,660
10,000 Plantronics Inc. .................. 246,559 236,200
50,000 Robbins & Myers Inc. .............. 1,023,975 1,864,500
95,000 SL Industries Inc.+ ............... 1,114,953 1,429,750
5,000 Teleflex Inc. ..................... 76,167 340,350
190,000 Tennant Co. ....................... 4,026,399 5,983,100
125,000 The Gorman-Rupp Co. ............... 1,952,228 4,003,750
5,000 Valmont Industries Inc. ........... 40,625 289,150
7,875 Watsco Inc., Cl. B ................ 23,627 403,594
85,000 Watts Water Technologies
Inc., Cl. A ..................... 1,642,405 3,232,550
15,000 Wolverine Tube Inc.+ .............. 150,915 34,800
------------ ------------
38,419,317 102,213,931
------------ ------------
FINANCIAL SERVICES -- 4.2%
10,200 Alleghany Corp.+ .................. 1,766,001 3,810,720
39,000 Argonaut Group Inc.+ .............. 844,315 1,262,040
73,000 Bank of Florida Corp.+ ............ 1,095,000 1,379,700
98,000 BKF Capital Group Inc.+ ........... 1,451,908 318,500
360,000 CNA Surety Corp.+ ................. 3,944,587 7,596,000
19,100 Crazy Woman Creek
Bancorp Inc. .................... 285,742 375,888
37,000 Epoch Holding Corp.+ .............. 63,098 489,140
3,000 Federal Agricultural
Mortgage Corp., Cl. C ........... 24,000 81,600
33,000 First Republic Bank ............... 636,067 1,772,100
125,000 Flushing Financial Corp. .......... 1,906,218 2,028,750
233,000 Franklin Bank Corp.+ .............. 4,679,715 4,163,710
1,000 KBW Inc.+ ......................... 21,000 34,760
72,000 LaBranche & Co. Inc.+ ............. 686,494 587,520
1,000 LandAmerica Financial
Group Inc. ...................... 12,175 73,910
See accompanying notes to financial statements.
7
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
66,000 Landesbank Berlin
Holding AG+ .....................$ 1,280,794 $ 608,344
3,000 Leucadia National Corp. ........... 24,354 88,260
50,000 MVC Capital Inc. .................. 461,995 782,500
1,500 NetBank Inc. ...................... 6,000 3,315
100,000 NewAlliance Bancshares Inc. ....... 1,463,358 1,621,000
65,320 Sterling Bancorp .................. 1,155,419 1,182,292
24,000 SWS Group Inc. .................... 266,274 595,440
107,500 The Midland Co. ................... 822,713 4,560,150
50,000 Wilmington Trust Corp. ............ 1,574,410 2,108,500
------------ ------------
24,471,637 35,524,139
------------ ------------
FOOD AND BEVERAGE -- 4.7%
30,000 Boston Beer Co. Inc., Cl. A+ ...... 468,757 1,000,500
25,000 Brown-Forman Corp., Cl. A ......... 738,455 1,727,000
100 Compania Cervecerias
Unidas SA, ADR .................. 2,455 3,142
34,000 Corn Products International
Inc. ............................ 548,897 1,210,060
20,000 Davide Campari-Milano SpA ......... 200,946 196,904
100,000 Del Monte Foods Co. ............... 997,536 1,148,000
85,000 Denny's Corp.+ .................... 132,581 416,500
600,000 Dynasty Fine Wines
Group Ltd. ...................... 219,286 254,943
100 Embotelladora Andina SA,
Cl. A, ADR ...................... 1,295 1,789
25,000 Farmer Brothers Co. ............... 389,323 567,500
222,000 Flowers Foods Inc. ................ 1,836,934 6,697,740
500 Genesee Corp., Cl. A+ ............. 0 1,112
21,500 Genesee Corp., Cl. B+ ............. 32,823 52,245
701,500 Grupo Continental SA .............. 1,058,724 1,515,709
10,000 Hain Celestial Group Inc.+ ........ 184,774 300,700
70,000 ITO EN Ltd. ....................... 2,176,734 2,281,059
20,000 J & J Snack Foods Corp. ........... 441,518 789,800
298,000 Kikkoman Corp. .................... 2,382,970 3,818,568
30,000 Lifeway Foods Inc.+ ............... 174,542 270,300
20,000 Meiji Seika Kaisha Ltd. ........... 87,470 92,838
35,000 MGP Ingredients Inc. .............. 243,900 712,950
12,000 Nathan's Famous Inc.+ ............. 111,561 180,000
5,850 Nissin Food Products
Co. Ltd. ........................ 184,636 214,460
4,000 Omni Nutraceuticals Inc.+ ......... 13,563 4
20,000 PepsiAmericas Inc. ................ 286,588 446,400
53,000 Ralcorp Holdings Inc.+ ............ 794,081 3,407,900
12,250 The Cheesecake Factory Inc.+ ...... 63,971 326,462
66,000 The J.M. Smucker Co. .............. 1,599,230 3,519,120
120,000 The Steak n Shake Co.+ ............ 1,434,720 2,012,400
66,673 Tootsie Roll Industries Inc. ...... 1,301,712 1,998,180
49,000 Triarc Cos. Inc., Cl. A ........... 348,372 917,770
119,000 Triarc Cos. Inc., Cl. B ........... 1,016,318 2,045,610
MARKET
SHARES COST VALUE
------ ---- -------
2,000 Vina Concha Y Toro SA, ADR ........$ 54,957 $ 66,280
1,000 Willamette Valley
Vineyards Inc.+ ................. 3,994 6,970
60,000 YAKULT HONSHA Co. Ltd. ............ 1,619,327 1,532,587
------------ ------------
21,152,950 39,733,502
------------ ------------
HEALTH CARE -- 8.3%
50,000 Align Technology Inc.+ ............ 444,171 793,000
50,000 Allergan Inc. ..................... 1,964,408 5,541,000
90,000 Alpharma Inc., Cl. A .............. 2,055,985 2,167,200
130,000 AngioDynamics Inc.+ ............... 2,692,278 2,195,700
5,000 Anika Therapeutics Inc.+ .......... 64,475 61,750
117,500 Animal Health
International Inc.+ ............. 1,292,500 1,420,575
41,000 ArthroCare Corp.+ ................. 856,241 1,477,640
7,800 Bio-Rad Laboratories
Inc., Cl. A+ ................... 309,943 544,752
1,000 Biomet Inc. ....................... 30,350 42,490
90,000 Biosite Inc.+ ..................... 4,818,333 7,557,300
9,000 Bruker BioSciences Corp.+ ......... 34,729 94,680
145,000 Chemed Corp. ...................... 2,348,215 7,099,200
74,000 CONMED Corp.+ ..................... 1,945,384 2,163,020
40,000 Crucell NV, ADR+ .................. 753,937 1,010,800
82,000 Del Global Technologies
Corp.+ .......................... 178,596 168,100
60,000 DexCom Inc.+ ...................... 934,286 471,600
1,000 Digene Corp.+ ..................... 8,000 42,410
90,000 Edwards Lifesciences Corp.+ ....... 3,180,397 4,563,000
1,102 Enzo Biochem Inc.+ ................ 13,091 16,618
65,000 Exactech Inc.+ .................... 920,376 1,032,850
47,000 Henry Schein Inc.+ ................ 827,131 2,593,460
32,000 ICU Medical Inc.+ ................. 940,126 1,254,400
15,000 IMS Health Inc. ................... 412,500 444,900
2,000 Integra LifeSciences
Holdings Corp.+ ................. 43,600 91,160
109,800 IntraLase Corp.+ .................. 2,513,704 2,742,804
2,000 Invacare Corp. .................... 55,370 34,880
30,000 Inverness Medical
Innovations Inc.+ ............... 554,733 1,313,400
26,000 Invitrogen Corp.+ ................. 1,338,072 1,654,900
100,000 Lifecore Biomedical Inc.+ ......... 958,195 1,877,000
40,000 MWI Veterinary Supply
Inc.+ ........................... 972,736 1,320,000
15,000 Nabi Biopharmaceuticals+ .......... 105,625 79,650
3,000 NeoPharm Inc.+ .................... 29,760 5,100
5,000 NeuroMetrix Inc.+ ................. 132,176 48,550
1,300 Nobel Biocare Holding AG .......... 100,171 473,933
33,000 Orthofix International NV+ ........ 1,104,139 1,684,650
2,000 OrthoLogic Corp.+ ................. 6,750 3,120
35,000 Owens & Minor Inc. ................ 692,324 1,285,550
100,000 Penwest Pharmaceuticals Co.+ ...... 1,185,995 1,008,000
18,900 Possis Medical Inc.+ .............. 194,460 245,889
See accompanying notes to financial statements.
8
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
30,000 PSS World Medical Inc.+ ...........$ 367,273 $ 634,200
155,000 Quidel Corp.+ ..................... 1,009,388 1,860,000
100,000 Regeneration
Technologies Inc.+ .............. 1,003,406 725,000
18,000 Sirona Dental Systems Inc. ........ 172,763 620,280
590,000 SNIA SpA+ ......................... 133,755 132,803
130,000 Sonic Innovations Inc.+ ........... 601,533 1,098,500
1,650,000 Sorin SpA+ ........................ 5,670,626 3,639,041
300,000 SSL International plc ............. 1,916,573 2,362,890
2,500 Straumann Holding AG .............. 224,697 716,990
4,200 Stryker Corp. ..................... 162,570 278,544
40,000 Thoratec Corp.+ ................... 478,455 836,000
23,400 United-Guardian Inc. .............. 204,923 218,088
45,000 Vascular Solutions Inc.+ .......... 386,334 442,800
1,000 Wright Medical Group Inc.+ ........ 16,460 22,290
5,100 Young Innovations Inc. ............ 128,516 138,822
------------ ------------
49,490,534 70,351,279
------------ ------------
HOME FURNISHINGS -- 0.1%
13,000 Bassett Furniture
Industries Inc. ................. 215,616 191,360
4,000 Bed Bath & Beyond Inc.+ ........... 11,125 160,680
1,000 Foamex International Inc.+ ........ 5,805 5,300
27,000 La-Z-Boy Inc. ..................... 226,525 334,260
------------ ------------
459,071 691,600
------------ ------------
HOTELS AND GAMING -- 3.1%
12,000 Boyd Gaming Corp. ................. 90,225 571,680
70,000 Churchill Downs Inc. .............. 2,235,482 3,177,300
100,000 Dover Downs Gaming &
Entertainment Inc. .............. 666,063 1,288,000
160,000 Gaylord Entertainment Co.+ ........ 4,728,162 8,459,200
10,002 Harrah's Entertainment Inc. ....... 498,147 844,669
4,000 Home Inns & Hotels
Management Inc., ADR+ ........... 115,011 145,360
140,000 Lakes Entertainment Inc.+ ......... 717,933 1,561,000
1,200 Las Vegas Sands Corp.+ ............ 34,800 103,932
405,000 Magna Entertainment
Corp., Cl. A+ ................... 2,672,344 1,474,200
20,000 Marcus Corp. ...................... 377,480 465,200
82,000 Penn National Gaming Inc.+ ........ 186,907 3,478,440
90,000 Pinnacle Entertainment Inc.+ ...... 787,681 2,616,300
3,000 Station Casinos Inc. .............. 11,670 259,710
16,000 Wynn Resorts Ltd. ................. 231,002 1,517,760
20,000 Youbet.com Inc.+ .................. 51,494 60,000
------------ ------------
13,404,401 26,022,751
------------ ------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 1.5%
58,000 Cavco Industries Inc.+ ............ 1,127,032 2,027,100
335,000 Champion Enterprises Inc.+ ........ 3,495,127 2,948,000
17,000 Drew Industries Inc.+ ............. 296,303 487,560
MARKET
SHARES COST VALUE
------ ---- -------
200,000 Fleetwood Enterprises Inc.+ .......$ 2,557,248 $ 1,582,000
68,000 Monaco Coach Corp. ................ 1,493,022 1,083,240
135,000 Skyline Corp. ..................... 4,382,320 4,554,900
------------ ------------
13,351,052 12,682,800
------------ ------------
METALS AND MINING -- 0.8%
60,000 Arizona Star Resource Corp.+ ...... 248,020 711,996
52,003 Barrick Gold Corp. ................ 1,522,648 1,484,686
10,000 Inmet Mining Corp. ................ 325,911 550,022
15,000 Ivanhoe Mines Ltd.+ ............... 111,730 172,200
142,115 Kinross Gold Corp.+ ............... 984,488 1,959,766
10,000 Meridian Gold Inc.+ ............... 75,630 255,300
22,000 Novelis Inc. ...................... 470,548 970,420
190,000 Royal Oak Mines Inc.+ ............. 322,487 0
30,148 Stillwater Mining Co.+ ............ 389,561 382,578
52,000 Uranium Resources Inc.+ ........... 287,136 423,800
------------ ------------
4,738,159 6,910,768
------------ ------------
PAPER AND FOREST PRODUCTS -- 0.1%
68,000 Pope & Talbot Inc.+ ............... 1,058,235 459,000
18,000 Schweitzer-Mauduit
International Inc. .............. 424,690 447,300
22,000 Wausau Paper Corp. ................ 255,362 315,920
------------ ------------
1,738,287 1,222,220
------------ ------------
PUBLISHING -- 2.0%
307,237 Independent News &
Media plc ....................... 431,671 1,395,431
12,000 John Wiley & Sons Inc.,
Cl. B ........................... 46,500 454,500
80,000 Journal Communications
Inc., Cl. A ..................... 1,263,658 1,048,800
125,000 Journal Register Co. .............. 1,709,668 745,000
11,000 Lee Enterprises Inc. .............. 261,685 330,550
53,000 McClatchy Co., Cl. A .............. 1,581,315 1,675,330
66,500 Media General Inc., Cl. A ......... 1,928,333 2,537,640
23,000 Meredith Corp. .................... 429,183 1,319,970
260,000 News Corp., Cl. A ................. 765,310 6,011,200
380,000 PRIMEDIA Inc.+ .................... 1,161,316 1,010,800
4,500 Value Line Inc. ................... 183,817 215,100
------------ ------------
9,762,456 16,744,321
------------ ------------
REAL ESTATE -- 1.3%
190 Case Pomeroy &
Co. Inc., Cl. A (c) ............. 222,300 352,450
170,000 Griffin Land &
Nurseries Inc.+ ................. 2,202,169 6,035,000
9,000 Gyrodyne Co. of
America Inc. .................... 135,071 531,000
20,000 Malan Realty
Investors Inc.+ (c) ............. 72,279 14,800
107,000 Morguard Corp. .................... 1,356,840 4,448,679
------------ ------------
3,988,659 11,381,929
------------ ------------
See accompanying notes to financial statements.
9
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- (CONTINUED)
RETAIL -- 2.3%
144,000 Aaron Rents Inc., Cl. A ...........$ 521,690 $ 3,467,520
35,000 Big 5 Sporting Goods Corp. ........ 657,716 907,200
8,000 Casey's General Stores Inc. ....... 124,503 200,080
62,000 Coldwater Creek Inc.+ ............. 127,466 1,257,360
20,000 CoolBrands
International Inc.+ ............. 81,374 19,922
60,000 Copart Inc.+ ...................... 1,823,440 1,680,600
100,000 CSK Auto Corp.+ ................... 1,630,081 1,720,000
3,000 Gander Mountain Co.+ .............. 27,860 33,480
158,000 Ingles Markets Inc., Cl. A ........ 1,967,632 6,452,720
35,000 Movado Group Inc. ................. 515,027 1,030,750
30,000 Pier 1 Imports Inc. ............... 202,215 207,300
14,000 Tractor Supply Co.+ ............... 655,631 721,000
40,000 Weis Markets Inc. ................. 1,174,744 1,788,000
------------ ------------
9,509,379 19,485,932
------------ ------------
SATELLITE -- 0.1%
200,000 Sirius Satellite Radio Inc.+ ...... 981,915 640,000
35,000 XM Satellite Radio
Holdings Inc., Cl. A+ ........... 302,980 452,200
------------ ------------
1,284,895 1,092,200
------------ ------------
SPECIALTY CHEMICALS -- 5.4%
40,000 A. Schulman Inc. .................. 739,148 942,400
24,000 Airgas Inc. ....................... 150,350 1,011,600
80,000 Albemarle Corp. ................... 1,125,964 3,307,200
35,000 Arch Chemicals Inc. ............... 766,922 1,092,700
400,000 Chemtura Corp. .................... 4,238,263 4,372,000
10,000 Cytec Industries Inc. ............. 278,296 562,400
6,000 Dionex Corp.+ ..................... 180,000 408,660
180,400 Ferro Corp. ....................... 4,048,878 3,898,444
236,000 H.B. Fuller Co. ................... 2,083,971 6,435,720
65,000 Hawkins Inc. ...................... 897,763 962,000
390,000 Hercules Inc.+ .................... 3,763,087 7,620,600
140,000 MacDermid Inc. .................... 2,431,741 4,881,800
140,000 Material Sciences Corp.+ .......... 1,300,684 1,397,200
155,000 Omnova Solutions Inc.+ ............ 948,026 846,300
50,000 Penford Corp. ..................... 539,601 1,007,000
10,000 Quaker Chemical Corp. ............. 181,137 238,100
273,000 Sensient Technologies Corp. ....... 5,506,095 7,037,940
------------ ------------
29,179,926 46,022,064
------------ ------------
TELECOMMUNICATIONS -- 1.2%
29,425 Alltel Corp. ...................... 146,376 1,824,350
23,000 Atlantic Tele-Network Inc. ........ 92,644 600,990
200,000 Cincinnati Bell Inc.+ ............. 517,183 940,000
57,600 Citizens Communications Co ........ 845,568 861,120
6,795 Community Service
Communications Inc.+ ............ 0 21,744
46,000 D&E Communications Inc. ........... 592,050 612,720
120,000 Rogers Communications
Inc., Cl. B ..................... 579,562 3,931,200
MARKET
SHARES COST VALUE
------ ---- -------
20,000 Shenandoah
Telecommunications Co. ..........$ 296,543 $ 941,800
30,000 Stratos International Inc.+ ....... 182,534 222,600
870 Virgin Media Inc. ................. 13,291 21,967
24,000 Windstream Corp. .................. 25,072 352,560
53,000 Winstar Communications
Inc.+ (c) ....................... 132 53
------------ ------------
3,290,955 10,331,104
------------ ------------
TRANSPORTATION -- 1.1%
150,000 GATX Corp. ........................ 4,610,044 7,170,000
125,000 Grupo TMM SA, Cl. A,
ADR+ ............................ 946,399 351,250
2,000 Irish Continental Group plc+ ...... 17,409 53,113
50,000 OMI Corp. ......................... 313,120 1,343,000
5,100 Providence and Worcester
Railroad Co. .................... 42,979 90,270
------------ ------------
5,929,951 9,007,633
------------ ------------
WIRELESS COMMUNICATIONS -- 1.9%
45,000 Centennial Communications
Corp.+ .......................... 246,806 370,350
25,000 Nextwave Wireless Inc.+ ........... 308,546 250,000
72,000 Price Communications Corp. ........ 905,273 1,440,000
55,000 Rural Cellular Corp., Cl. A+ ...... 374,090 657,800
10,000 SunCom Wireless Holdings
Inc., Cl. A+ ................... 69,480 16,800
143,000 Vimpel-Communications, ADR+ ....... 1,216,061 13,562,120
180 Xanadoo Co.+ ...................... 131,915 44,550
------------ ------------
3,252,171 16,341,620
------------ ------------
TOTAL COMMON STOCKS ............... 434,549,502 794,990,659
------------ ------------
PREFERRED STOCKS -- 0.3%
BROADCASTING -- 0.1%
1,063 Granite Broadcasting Corp.,
12.750% Pfd.+ ................... 439,683 77,068
100 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (c)(d)(e) ................ 1,000,000 1,000,000
1,103 PTV Inc., 10.000% Pfd.,
Ser. A .......................... 0 4,798
------------ ------------
1,439,683 1,081,866
------------ ------------
BUSINESS SERVICES -- 0.1%
23,382 Interep National Radio Sales Inc.,
4.000% Cv. Pfd.,
Ser. A+ (c)(d)(e) ............... 2,163,146 818,376
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.1%
151 Foster Wheeler Ltd.,
Pfd., Ser. B+ ................... 38,060 302,000
------------ ------------
TOTAL PREFERRED STOCKS ............ 3,640,889 2,202,242
------------ ------------
See accompanying notes to financial statements.
10
THE GABELLI SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
RIGHTS -- 0.0%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
800,000 Exide Technologies,
Escrow+ .........................$ 0 $ 0
------------ ------------
HEALTH CARE -- 0.0%
82,000 Del Global Technologies
Corp.+ .......................... 72,948 16,400
------------ ------------
HOME FURNISHINGS -- 0.0%
1,000 Foamex International Inc.+ ........ 2,257 3,050
------------ ------------
TELECOMMUNICATIONS -- 0.0%
3,940 Granite Broadcasting Corp.+ ....... 0 0
------------ ------------
TOTAL RIGHTS ...................... 75,205 19,450
------------ ------------
WARRANTS -- 0.1%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
1,213 Exide Technologies,
expire 05/05/11+ ................ 2,247 970
------------ ------------
BUSINESS SERVICES -- 0.1%
261,431 GP Strategies Corp.,
expire 08/14/08+ (c)(e) ......... 634,637 955,302
125,000 Interep National Radio
Sales Inc., expire 05/06/07+
(c)(d)(e) ....................... 0 0
------------ ------------
634,637 955,302
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.0%
379,703 National Patent
Development Corp.,
expire 08/14/08+ (c)(e) ......... 0 234,381
13,217 WHX Corp.,
expire 02/28/08+ ................ 52,373 4,957
------------ ------------
52,373 239,338
------------ ------------
HEALTH CARE -- 0.0%
14,424 Del Global Technologies Corp.,
expire 03/28/08+ ................ 24,809 2,885
------------ ------------
TELECOMMUNICATIONS -- 0.0%
86 NTL Inc., expire 01/13/11+ ........ 124 55
------------ ------------
TOTAL WARRANTS .................... 714,190 1,198,550
------------ ------------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.2%
AVIATION: PARTS AND SERVICES -- 0.0%
$ 300,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ................ 299,709 310,500
------------ ------------
BUSINESS SERVICES -- 0.2%
2,000,000 GP Strategies Corp., Sub. Deb.,
6.000%, 08/14/08 (c)(e) ......... 1,686,198 1,346,204
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
$ 300,000 Exodus Communications Inc.,
Sub. Deb. Cv.,
5.250%, 02/15/08+ (b)(c) ........$ 1,185 $ 0
------------ ------------
TELECOMMUNICATIONS -- 0.0%
400,000 Williams Communications
Group Inc., Escrow,
10.875%, 10/01/09+ (b)(c) ....... 0 0
------------ ------------
TOTAL CORPORATE BONDS ............. 1,987,092 1,656,704
------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 6.2%
53,019,000 U.S. Treasury Bills,
5.030% to 5.193%++,
04/05/07 to 09/06/07 ............ 52,793,829 52,794,672
------------ ------------
TOTAL
INVESTMENTS -- 100.4% ...........$493,760,707 852,862,277
============
OTHER ASSETS AND LIABILITIES (NET) -- (0.4)% .... (3,497,822)
------------
NET ASSETS -- 100.0% ............................$849,364,455
============
- ----------------
(a) Security considered an affiliated holding because the Fund owns at least 5%
of the outstanding shares.
(b) Security is in default.
(c) 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, 2007, the
market value of fair valued securities amounted to $4,977,440 or 0.59% of
total net assets.
(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,
2007, the market value of Rule 144A securities amounted to $1,818,376 or
0.21% of total net assets.
(e) At March 31,2007, the Fund held restricted and illiquid securities
amounting to $4,354,263 or 0.51% of total net assets, which were valued
under methods approved by the Board, as follows:
ACQUISITION 03/31/07
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 $ 67.3102
261,431 GP Strategies Corp.
warrants
expire 08/14/08 ................ 08/08/03 634,637 3.6541
100 Gray Television Inc., 8.000%
Cv. Pfd., Ser. C ............... 04/22/02 1,000,000 10,000.0000
23,382 Interep National
Radio Sales Inc.,
4.000% Cv. Pfd., Ser. A ........ 05/03/02 2,163,146 35.0003
125,000 Interep National Radio Sales Inc.
warrants expire 05/06/07 ....... 05/03/02 0.00 --
379,703 National Patent Development Corp.
warrants expire 08/14/08 ....... 11/24/04 0.00 0.6173
ADR American Depository Receipt
CVV Contingent Value Vehicle
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
See accompanying notes to financial statements.
11
THE GABELLI SMALL CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2007 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $492,625,532) ................. $ 851,779,879
Investments in affiliate, at value (cost $1,135,175) ...... 1,082,398
Cash ...................................................... 513
Foreign currency, at value (cost $8) ...................... 8
Receivable for Fund shares sold ........................... 2,967,106
Dividends and interest receivable ......................... 795,192
Receivable for investments sold ........................... 292,311
Prepaid expense ........................................... 18,669
-------------
TOTAL ASSETS .............................................. 856,936,076
-------------
LIABILITIES:
Payable for investments purchased ......................... 3,176,464
Payable for Fund shares redeemed .......................... 3,096,046
Payable for investment advisory fees ...................... 723,193
Payable for distribution fees ............................. 183,541
Payable for accounting fees ............................... 11,376
Payable for Directors' fees ............................... 480
Other accrued expenses .................................... 380,521
-------------
TOTAL LIABILITIES ......................................... 7,571,621
-------------
NET ASSETS applicable to 26,133,710
shares outstanding ...................................... $ 849,364,455
=============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ........... $ 460,856,519
Accumulated net investment loss ........................... (912,341)
Accumulated net realized gain on investments
and foreign currency transactions ....................... 30,318,476
Net unrealized appreciation on investments ................ 359,101,570
Net unrealized appreciation on foreign
currency translations ................................... 231
-------------
NET ASSETS ................................................ $ 849,364,455
=============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price per
share ($840,845,902 / 25,867,731 shares
outstanding; 150,000,000 shares authorized) ............. $32.51
======
CLASS A:
Net Asset Value and redemption price per share
($3,966,693 / 122,047 shares outstanding;
50,000,000 shares authorized) ........................... $32.50
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75% of
the offering price) ..................................... $34.48
======
CLASS B:
Net Asset Value and offering price per share
($123,856 / 3,915 shares outstanding;
50,000,000 shares authorized) ........................... $31.64(a)
======
CLASS C:
Net Asset Value and offering price per share
($4,428,004 / 140,017 shares outstanding;
50,000,000 shares authorized) ........................... $31.62(a)
======
- ------------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2007 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $13,017) .............. $ 4,127,136
Interest ................................................. 543,388
Interest - affiliated .................................... 5,419
-------------
TOTAL INVESTMENT INCOME .................................. 4,675,943
-------------
EXPENSES:
Investment advisory fees ................................. 3,887,997
Distribution fees - Class AAA ............................ 964,153
Distribution fees - Class A .............................. 3,559
Distribution fees - Class B .............................. 602
Distribution fees - Class C .............................. 16,549
Shareholder services fees ................................ 398,343
Shareholder communications expenses ...................... 101,957
Custodian fees ........................................... 58,527
Legal and audit fees ..................................... 28,215
Accounting fees .......................................... 22,625
Registration expenses .................................... 21,090
Directors' fees .......................................... 14,467
Interest expense ......................................... 7,513
Miscellaneous expenses ................................... 33,315
-------------
TOTAL EXPENSES ........................................... 5,558,912
Less: Custodian fee credits .............................. (2,751)
-------------
TOTAL NET EXPENSES ....................................... 5,556,161
-------------
NET INVESTMENT LOSS ...................................... (880,218)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ......................... 33,897,213
Net realized loss on foreign currency
transactions ........................................... (540)
-------------
Net realized gain on investments and loss on
foreign currency transactions .......................... 33,896,673
-------------
Net change in unrealized appreciation/
depreciation on investments ............................ 75,034,373
Net change in unrealized appreciation/
depreciation on foreign currency translations .......... 343
-------------
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations .................................. 75,034,716
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ...................... 108,931,389
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................................ $ 108,051,171
=============
See accompanying notes to financial statements.
12
THE GABELLI SMALL CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
SIX MONTHS ENDED
MARCH 31, 2007 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2006
--------------- ------------------
OPERATIONS:
Net investment loss .................................................... $ (880,218) $ (714,480)
Net realized gain on investments and foreign currency transactions ..... 33,896,673 64,428,922
Net change in unrealized appreciation/depreciation on
investments and foreign currency translations ........................ 75,034,716 (40,414)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................... 108,051,171 63,674,028
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments
Class AAA ............................................................ (54,810,246) (50,200,421)
Class A .............................................................. (187,774) (124,948)
Class B .............................................................. (8,873) (9,605)
Class C .............................................................. (241,821) (119,963)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................... (55,248,714) (50,454,937)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ............................................................ 60,887,978 (18,592,269)
Class A .............................................................. 1,589,548 639,229
Class B .............................................................. 3,013 (26,318)
Class C .............................................................. 1,592,412 1,122,817
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS .. 64,072,951 (16,856,541)
------------- -------------
REDEMPTION FEES ........................................................ 5,791 3,895
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS .................................. 116,881,199 (3,633,555)
NET ASSETS:
Beginning of period .................................................... 732,483,256 736,116,811
------------- -------------
End of period (including undistributed net investment income
of $0 and $0, respectively) .......................................... $ 849,364,455 $ 732,483,256
============= =============
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. 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 United States ("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 a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
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 fair valued 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
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons 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)
================================================================================
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2007, 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 fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. 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, 2007, there were no open
futures contracts.
15
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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, 2007, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at 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
16
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
than similar securities that are not subject to restrictions on resale.
Securities freely saleable among qualified institutional investors under special
rules adopted by the SEC may be treated as liquid if they satisfy liquidity
standards established by the Board. The continued liquidity of such securities
is not as well assured as that of publicly traded securities, and accordingly
the Board will monitor their liquidity.
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 AND INTEREST EXPENSE. 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". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under 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
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund.
17
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
The tax character of distributions paid during the fiscal year ended September
30, 2006 was as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income (inclusive of short-term
capital gains) ........................... $ 648,028
Net long-term capital gains ................ 49,806,909
-----------
Total distributions paid ................... $50,454,937
===========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
The following summarizes the tax cost of investments and the related unrealized
appreciation/depreciation at March 31, 2007:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ ------------ -------------
Investments ..................$494,243,504 $390,049,045 $(32,512,670) $357,536,375
Investments in affiliates .... 1,135,175 -- (52,777) (52,777)
------------ ------------ ------------ -------------
$495,378,679 $390,049,045 $(32,565,447) $357,483,598
============ ============ ============ =============
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for the Fund no later than its March 31, 2008 NAV, and is to be
applied to all open tax years as of the date of effectiveness. Management is
evaluating the application of the Interpretation to the Fund, and is not in a
position at this time to estimate the significance of its impact, if any, on the
Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser.
The Corporation pays each Director that is not considered to be an affiliated
person an annual retainer of $6,000 plus $1,000 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $500 per meeting attended.
Directors who are directors or employees of the Adviser or an affiliated company
receive no compensation or expense reimbursement from the Fund.
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%,
18
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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, 2007, other than short-term U.S. Government
securities, aggregated $50,926,968 and $56,332,114, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2007, the
Fund paid brokerage commissions of $95,019 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $6,822 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, 2007, the Fund paid or accrued $22,625 to the Adviser in
connection with the cost of computing the Fund's NAV.
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. This amount, if any, is shown as "interest expense" in the
Statement of Operations. At March 31, 2007, 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, 2007 was $241,588 with a weighted average
interest rate of 6.01%. The maximum amount borrowed at any time during the six
months ended March 31, 2007 was $20,353,000.
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 1.00% 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.
The Fund imposes 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. 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, 2007 and fiscal year ended September 30, 2006 amounted to
$5,791 and $3,895, respectively.
The redemption fee will not apply to redemptions of shares where (i) the shares
were purchased through automatic reinvestment of dividends or other
distributions, (ii) the redemption is initiated by the Fund, (iii) the shares
were purchased through programs that collect the redemption fees at the program
level and remit them to the Fund, or (iv)the shares were purchased through
programs that the Adviser determines to have appropriate anti-short-term trading
policies in place or as to which the Adviser has received assurances that
look-through redemption fee procedures or effective anti-short-term trading
policies and procedures are in place.
19
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED
MARCH 31, 2007 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2006
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- -----------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ......................................... 3,563,384 $ 114,143,554 3,275,191 $ 97,982,057
Shares issued upon reinvestment of distributions .... 1,662,686 51,559,995 1,698,995 47,843,699
Shares redeemed .....................................(3,279,712) (104,815,571) (5,511,639) (164,418,025)
---------- ------------- ---------- -------------
Net increase (decrease) ........................... 1,946,358 $ 60,887,978 (537,453) $ (18,592,269)
========== ============= ========== =============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ......................................... 52,434 $ 1,681,319 39,452 $ 1,176,826
Shares issued upon reinvestment of distributions .... 5,752 178,355 4,228 119,107
Shares redeemed ..................................... (8,451) (270,126) (21,919) (656,704)
---------- ------------- ---------- -------------
Net increase ...................................... 49,735 $ 1,589,548 21,761 $ 639,229
========== ============= ========== =============
CLASS B CLASS B
---------------------------- ---------------------------
Shares issued upon reinvestment of distributions .... 294 $ 8,873 346 $ 9,605
Shares redeemed ..................................... (185) (5,860) (1,211) (35,923)
---------- ------------- ---------- -------------
Net increase (decrease) ........................... 109 $ 3,013 (865) $ (26,318)
========== ============= ========== =============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ......................................... 55,182 $ 1,729,243 46,604 $ 1,371,491
Shares issued upon reinvestment of distributions .... 7,732 233,806 4,190 116,097
Shares redeemed ..................................... (11,941) (370,637) (12,415) (364,771)
---------- ------------- ---------- -------------
Net increase ...................................... 50,973 $ 1,592,412 38,379 $ 1,122,817
========== ============= ========== =============
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, 2007 is set forth below:
NET CHANGE PERCENT
SHARES/ SHARES/ ENDING DIVIDEND/ IN UNREALIZED VALUE AT OWNED
BEGINNING PAR PAR SHARES/ INTEREST APPRECIATION/ MARCH 31, OF SHARES
SHARES/PAR PURCHASED SOLD PAR INCOME (DEPRECIATION) 2007 OUTSTANDING
---------- --------- ---- ----- -------- ------------ -------- -----------
Trans-Lux Corp. 116,200 31,065 -- 147,265 -- $170,910 $1,082,398 7.29%
Trans-Lux Corp.,
Sub. Deb. Cv.,
8.250%, 03/01/12 148,000 75,000 (223,000) -- $5,419 (1,795) -- --
20
THE GABELLI SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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. ("GAMCO"), the Adviser's parent company, responded to
these requests for documents and testimony. In June 2006, GAMCO began
discussions with the SEC regarding a possible resolution of their inquiry. In
February 2007, the Adviser made an offer of settlement to the staff of the SEC
for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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.
21
THE GABELLI SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------------------- -------------------------------------
Net
Net Asset Realized and Total Net
Period Value, Net Unrealized from Net Realized
Ended Beginning Investment Gain on Investment Investment Gain on Total
September 30 of Period Loss(a) Investments Operations Income Investments Distributions
- ------------ --------- ---------- ----------- ---------- ---------- ----------- -------------
CLASS AAA
2007(c) $30.41 $(0.04) $4.59 $4.55 -- $(2.45) $(2.45)
2006 29.97 (0.03) 2.53 2.50 -- (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)
CLASS A
2007(c) $30.41 $(0.03) $4.57 $4.54 -- $(2.45) $(2.45)
2006 29.98 (0.02) 2.51 2.49 -- (2.06) (2.06)
2005 25.89 (0.01) 5.25 5.24 -- (1.15) (1.15)
2004(f) 24.49 (0.06) 1.46 1.40 -- -- --
CLASS B
2007(c) $29.77 $(0.15) $4.47 $4.32 -- $(2.45) $(2.45)
2006 29.58 (0.25) 2.50 2.25 -- (2.06) (2.06)
2005 25.74 (0.22) 5.21 4.99 -- (1.15) (1.15)
2004(f) 24.49 (0.19) 1.44 1.25 -- -- --
CLASS C
2007(c) $29.76 $(0.15) $4.46 $4.31 -- $(2.45) $(2.45)
2006 29.58 (0.24) 2.48 2.24 -- (2.06) (2.06)
2005 25.74 (0.23) 5.22 4.99 -- (1.15) (1.15)
2004(f) 24.49 (0.20) 1.45 1.25 -- -- --
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) Loss Expenses(b) Rate
- ------------ --------- ------- ------- -------- --------- ------------ ---------
CLASS AAA
2007(c) $0.00(d) $32.51 15.35% $840,846 (0.22)%(e) 1.43%(e) 7%
2006 0.00(d) 30.41 8.88 727,521 (0.09) 1.44 6
2005 0.00(d) 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
CLASS A
2007(c) $0.00(d) $32.50 15.32% $ 3,966 (0.18)%(e) 1.43%(e) 7%
2006 0.00(d) 30.41 8.84 2,199 (0.08) 1.44 6
2005 0.00(d) 29.98 20.57 1,515 (0.03) 1.48 6
2004(f) -- 25.89 5.72 58 (0.32)(e) 1.42(e) 10
CLASS B
2007(c) $0.00(d) $31.64 14.89% $ 124 (0.98)%(e) 2.18%(e) 7%
2006 0.00(d) 29.77 8.11 113 (0.85) 2.19 6
2005 0.00(d) 29.58 19.69 138 (0.79) 2.20 6
2004(f) -- 25.74 5.10 55 (1.02)(e) 2.17(e) 10
CLASS C
2007(c) $0.00(d) $31.62 14.86% $ 4,428 (0.95)%(e) 2.18%(e) 7%
2006 0.00(d) 29.76 8.08 2,650 (0.83) 2.19 6
2005 0.00(d) 29.58 19.69 1,499 (0.80) 2.23 6
2004(f) -- 25.74 5.10 24 (1.07)(e) 2.17(e) 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 distributions and does not reflect applicable
sales charges. Total return for a period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The Fund incurred interest expense during the period ended March 31, 2007.
If interest had not been incurred, the ratio of operating expenses to
average net assets would have been 1.42%, 1.42%, 2.17%, and 2.17% for Class
AAA, Class A, Class B, and Class C, respectively.
(c) For the period ended March 31, 2007, unaudited.
(d) Amount represents less than $0.005 per share.
(e) Annualized.
(f) From the commencement of offering Class A, Class B and Class C Shares on
December 31, 2003.
22
THE GABELLI SMALL CAP GROWTH FUND
BOARD CONSIDERATION AND RE-APPROVAL OF ADVISORY AGREEMENT (UNAUDITED)
During the six months ended March 31, 2007, 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 independent
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 independent 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 independent directors noted that the Fund's expense
ratios were at and the Fund's size was above average within this group. The
independent directors also noted that the management fee structure was the same
as that in effect for most of the Gabelli funds. The independent 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 independent 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.
23
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 per share 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. ZIZZA & CO., LTD.
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.
- --------------------------------------------------------------------------------
GAB443Q107SR
[GRAPHIC OMITTED] E P
Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GABELLI
SMALL CAP
GROWTH
FUND
SEMI-ANNUAL REPORT
MARCH 31, 2007
THE GABELLI EQUITY INCOME FUND
SEMI-ANNUAL REPORT (A)
MARCH 31, 2007
TO OUR SHAREHOLDERS,
For the six month period ended March 31, 2007, The Gabelli Equity Income
Fund's Class AAA Shares gained 8.98% versus the Standard & Poor's ("S&P") 500
Index return of 7.38%, the Nasdaq Composite Index of 11.15%, and the Lipper
Equity Income Fund Average of 8.65%.
COMPARATIVE RESULTS
- ----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2007 (A)(B)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year 15 Year (1/2/92)
- --------------------------------------------------------------------------------------------------------------------
GABELLI EQUITY INCOME FUND CLASS AAA ..... 1.85% 15.05% 12.39% 10.64% 11.48% 12.43% 12.40%
S&P 500 Index ............................ 0.64 11.82 10.05 6.26 8.20 10.87 10.51
Nasdaq Composite Index ................... 0.26 3.50 6.69 5.59 7.08 9.70 9.75
Lipper Equity Income Fund Average ........ 1.52 14.60 12.02 8.16 8.81 10.70 10.69
Class A .................................. 1.86 15.04 12.36 10.61 11.47 12.42 12.39
(4.00)(c) 8.42(c) 10.16(c) 9.31(c) 10.81(c) 11.98(c) 11.95(c)
Class B .................................. 1.65 14.24 11.56 10.10 11.21 12.25 12.22
(3.35)(d) 9.24(d) 10.75(d) 9.83(d) 11.21(d) 12.25(d) 12.22(d)
Class C .................................. 1.65 14.19 11.57 10.12 11.22 12.26 12.22
0.65(e) 13.19(e) 11.57 10.12 11.22 12.26 12.22
THE CURRENT EXPENSE RATIO FOR CLASS AAA, A, B, AND C SHARES IS 1.45%, 1.45%,
2.20%, AND 2.20%, RESPECTIVELY. CLASS AAA SHARES DO NOT HAVE A SALES CHARGE.
THE MAXIMUM SALES CHARGE FOR CLASS A, B, AND C SHARES IS 5.75%, 5.00%, AND
1.00%, RESPECTIVELY.
(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 CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND 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 S&P 500
INDEX OF THE LARGEST U.S. COMPANIES AND THE NASDAQ COMPOSITE INDEX
(MEASURES ALL NASDAQ DOMESTIC AND INTERNATIONAL COMMON TYPE STOCKS UNDER AN
UNMANAGED MARKET CAPITALIZATION WEIGHTED METHODOLOGY) 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). YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(c) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR,
FIVE YEAR, TEN YEAR, FIFTEEN YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%,
3%, 2%, 0%, 0%, AND 0%, RESPECTIVELY, OF THE FUND'S NAV AT THE TIME OF
PURCHASE OR SALE, WHICHEVER IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR
NEW PURCHASES.
(e) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGE FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, AND ONE YEAR PERIODS OF
1% OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2006 through March 31, 2007
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case - because the hypothetical return used is NOT the
Fund's actual return - the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
10/01/06 03/31/07 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI EQUITY INCOME FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,089.80 1.41% $ 7.39
Class A $1,000.00 $1,089.60 1.41% $ 7.39
Class B $1,000.00 $1,085.60 2.16% $11.29
Class C $1,000.00 $1,085.60 2.16% $11.29
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,018.00 1.41% $ 7.13
Class A $1,000.00 $1,018.00 1.41% $ 7.13
Class B $1,000.00 $1,014.24 2.16% $10.91
Class C $1,000.00 $1,014.24 2.16% $10.91
*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, 2007:
THE GABELLI EQUITY INCOME FUND
Financial Services ................................ 11.8%
Food and Beverage ................................. 9.8%
Health Care ....................................... 9.5%
Energy and Utilities: Oil ......................... 7.8%
Consumer Products ................................. 7.4%
Energy and Utilities: Integrated .................. 5.4%
Diversified Industrial ............................ 4.2%
Energy and Utilities: Natural Gas ................. 4.1%
Telecommunications ................................ 3.9%
Specialty Chemicals ............................... 3.0%
Retail ............................................ 2.9%
Communications Equipment .......................... 2.5%
U.S. Government Obligations ....................... 2.5%
Aerospace ......................................... 2.4%
Automotive: Parts and Accessories ................. 2.2%
Publishing ........................................ 2.0%
Energy and Utilities: Electric .................... 1.9%
Computer Hardware ................................. 1.9%
Electronics ....................................... 1.7%
Metals and Mining ................................. 1.6%
Hotels and Gaming ................................. 1.4%
Equipment and Supplies ............................ 1.3%
Entertainment ..................................... 1.1%
Energy and Utilities: Services .................... 1.0%
Broadcasting ...................................... 0.9%
Aviation: Parts and Services ...................... 0.8%
Cable and Satellite ............................... 0.7%
Automotive ........................................ 0.7%
Environmental Services ............................ 0.7%
Machinery ......................................... 0.6%
Transportation .................................... 0.6%
Agriculture ....................................... 0.5%
Computer Software and Services .................... 0.5%
Business Services ................................. 0.2%
Manufactured Housing .............................. 0.1%
Consumer Services ................................. 0.1%
Energy and Utilities: Water ....................... 0.1%
Real Estate ....................................... 0.0%
Closed-End Funds .................................. 0.0%
Other Assets and Liabilities (Net) ................ 0.2%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED DECEMBER 31,
2006. 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 SEC'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 is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
3
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- 94.8%
AEROSPACE -- 2.4%
32,000 Boeing Co. ........................$ 1,082,148 $ 2,845,120
2,000 Lockheed Martin Corp. ............. 47,350 194,040
3,500 Northrop Grumman Corp. ............ 125,556 259,770
10,000 Raytheon Co. ...................... 279,250 524,600
140,000 Rockwell Automation Inc. .......... 8,790,359 8,381,800
2,000 Rockwell Collins Inc. ............. 15,843 133,860
1,260,000 Rolls-Royce Group plc+ ............ 8,984,010 12,254,853
74,592,000 Rolls-Royce Group plc, Cl. B ...... 146,152 150,455
------------ --------------
19,470,668 24,744,498
------------ --------------
AGRICULTURE -- 0.5%
100,000 Delta & Pine Land Co. ............. 4,087,298 4,120,000
50,000 The Mosaic Co.+ ................... 739,297 1,333,000
------------ --------------
4,826,595 5,453,000
------------ --------------
AUTOMOTIVE -- 0.7%
225,000 General Motors Corp. .............. 6,708,376 6,894,000
7,000 Navistar International Corp.+ ..... 228,260 320,250
------------ --------------
6,936,636 7,214,250
------------ --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.7%
1,000 ArvinMeritor Inc. ................. 10,487 18,250
3,000 Bandag Inc. ....................... 151,770 152,070
30,000 Bandag Inc., Cl. A ................ 1,517,397 1,514,700
180,000 Dana Corp.+ ....................... 719,392 157,500
250,000 Genuine Parts Co. ................. 8,986,399 12,250,000
2,000 Johnson Controls Inc. ............. 50,425 189,240
45,000 Modine Manufacturing Co. .......... 693,569 1,030,500
10,000 Proliance International Inc.+ ..... 27,051 37,800
80,000 The Pep Boys -
Manny, Moe & Jack ............... 1,075,840 1,527,200
------------ --------------
13,232,330 16,877,260
------------ --------------
AVIATION: PARTS AND SERVICES -- 0.7%
6,000 Barnes Group Inc. ................. 57,237 138,060
46,192 Curtiss-Wright Corp. .............. 349,652 1,780,240
35,000 GenCorp Inc.+ ..................... 299,658 484,400
34,000 Sequa Corp., Cl. A+ ............... 2,265,036 4,072,180
16,000 United Technologies Corp. ......... 281,946 1,040,000
------------ --------------
3,253,529 7,514,880
------------ --------------
BROADCASTING -- 0.5%
151,000 CBS Corp., Cl. A .................. 3,876,844 4,622,110
25,000 CBS Corp., Cl. B .................. 651,930 764,750
26,000 Granite Broadcasting Corp.+ ....... 10,806 1,820
------------ --------------
4,539,580 5,388,680
------------ --------------
BUSINESS SERVICES -- 0.2%
4,000 Automatic Data
Processing Inc. ................. 126,808 193,600
4,000 Landauer Inc. ..................... 134,546 201,920
7,500 MasterCard Inc., Cl. A ............ 292,500 796,800
10,000 PHH Corp.+ ........................ 310,761 305,600
SHARES/ MARKET
UNITS COST VALUE
------ ---- -------
3,000 R. H. Donnelley Corp.+ ............$ 33,450 $ 212,670
------------ --------------
898,065 1,710,590
------------ --------------
CABLE AND SATELLITE -- 0.7%
140,000 Cablevision Systems Corp.,
Cl. A+ .......................... 1,769,455 4,260,200
60,000 EchoStar Communications
Corp., Cl. A+ ................... 1,789,420 2,605,800
20,000 The DIRECTV Group Inc.+ ........... 215,856 461,400
------------ --------------
3,774,731 7,327,400
------------ --------------
CLOSED-END FUNDS -- 0.0%
4,495 Bell Aliant Regional
Communications Income
Fund+ (b)(c) .................... 117,429 114,982
------------ --------------
COMMUNICATIONS EQUIPMENT -- 1.3%
160,000 Agere Systems Inc.+ ............... 3,186,718 3,619,200
175,000 Corning Inc.+ ..................... 2,000,662 3,979,500
100,000 Motorola Inc. ..................... 830,109 1,767,000
5,000 Nortel Networks Corp.+ ............ 157,190 120,250
70,000 Thomas & Betts Corp.+ ............. 1,533,023 3,417,400
------------ --------------
7,707,702 12,903,350
------------ --------------
COMPUTER HARDWARE -- 1.9%
176,000 International Business
Machines Corp. .................. 14,186,415 16,589,760
175,000 Xerox Corp.+ ...................... 2,538,722 2,955,750
------------ --------------
16,725,137 19,545,510
------------ --------------
COMPUTER SOFTWARE AND SERVICES -- 0.5%
2,000 EMC Corp.+ ........................ 19,360 27,700
20,000 Microsoft Corp. ................... 537,915 557,400
154 Telecom Italia Media SpA .......... 205 67
148,000 Yahoo! Inc.+ ...................... 4,762,447 4,630,920
------------ --------------
5,319,927 5,216,087
------------ --------------
CONSUMER PRODUCTS -- 7.4%
35,000 Altria Group Inc. ................. 1,127,729 3,073,350
240,000 Avon Products Inc. ................ 7,565,955 8,942,400
15,000 Clorox Co. ........................ 823,581 955,350
40,000 Colgate-Palmolive Co. ............. 2,281,604 2,671,600
50,000 Eastman Kodak Co. ................. 1,175,567 1,128,000
55,000 Energizer Holdings Inc.+ .......... 1,956,959 4,693,150
61,000 Fortune Brands Inc. ............... 4,566,009 4,808,020
94,700 Gallaher Group plc, ADR ........... 2,711,252 8,451,975
5,000 Hanesbrands Inc.+ ................. 108,950 146,950
10,000 National Presto Industries Inc. ... 294,598 616,400
10,000 Pactiv Corp.+ ..................... 161,895 337,400
220,000 Procter & Gamble Co. .............. 12,495,175 13,895,200
100,000 Reckitt Benckiser plc ............. 3,154,703 5,206,918
26,000 Rothmans Inc. ..................... 237,941 462,798
940,500 Swedish Match AB .................. 9,972,140 16,802,339
See accompanying notes to financial statements.
4
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
78,000 Unilever NV, ADR ..................$ 1,542,066 $ 2,279,160
10,000 UST Inc. .......................... 364,903 579,800
------------ --------------
50,541,027 75,050,810
------------ --------------
CONSUMER SERVICES -- 0.1%
45,000 Rollins Inc. ...................... 386,886 1,035,450
------------ --------------
DIVERSIFIED INDUSTRIAL -- 4.2%
5,000 3M Co. ............................ 213,645 382,150
12,000 Acuity Brands Inc. ................ 168,716 653,280
110,000 Cooper Industries Ltd., Cl. A ..... 3,148,666 4,948,900
355,000 General Electric Co. .............. 11,316,347 12,552,800
180,000 Honeywell International Inc. ...... 5,361,035 8,290,800
25,100 ITT Corp. ......................... 1,246,573 1,514,032
6,000 Trinity Industries Inc. ........... 82,101 251,520
450,000 Tyco International Ltd. ........... 13,120,338 14,197,500
2,000 Walter Industries Inc. ............ 46,073 49,500
55,000 WHX Corp.+ ........................ 692,440 467,500
------------ --------------
35,395,934 43,307,982
------------ --------------
ELECTRONICS -- 1.7%
610,000 Intel Corp. ....................... 12,571,210 11,669,300
180,000 Texas Instruments Inc. ............ 3,980,219 5,418,000
5,000 Thermo Fisher Scientific Inc.+ .... 127,325 233,750
------------ --------------
16,678,754 17,321,050
------------ --------------
ENERGY AND UTILITIES: ELECTRIC -- 1.9%
30,000 American Electric
Power Co. Inc. .................. 932,060 1,462,500
16,000 DTE Energy Co. .................... 695,800 766,400
85,000 El Paso Electric Co.+ ............. 670,852 2,239,750
70,000 FPL Group Inc. .................... 2,529,239 4,281,900
45,000 Great Plains Energy Inc. .......... 1,055,160 1,460,250
60,000 Korea Electric Power
Corp., ADR ...................... 977,409 1,200,000
54,824 Mirant Corp.+ ..................... 886,914 2,218,179
1,200,000 Mirant Corp. Escrow+ (c) .......... 0 0
115,000 Northeast Utilities ............... 2,167,977 3,768,550
80,000 The AES Corp.+ .................... 268,400 1,721,600
13,333 UIL Holdings Corp. ................ 293,785 462,655
------------ --------------
10,477,596 19,581,784
------------ --------------
ENERGY AND UTILITIES: INTEGRATED -- 5.4%
42,000 Allegheny Energy Inc.+ ............ 404,378 2,063,880
500,000 Aquila Inc.+ ...................... 1,761,421 2,090,000
44,000 BP plc, ADR ....................... 1,030,210 2,849,000
44,000 CH Energy Group Inc. .............. 1,809,289 2,142,360
55,000 Constellation Energy
Group Inc. ...................... 1,783,439 4,782,250
6,000 Dominion Resources Inc. ........... 478,115 532,620
120,000 DPL Inc. .......................... 3,161,330 3,730,800
220,000 Duke Energy Corp. ................. 2,686,962 4,463,800
MARKET
SHARES COST VALUE
------ ---- -------
120,000 Duquesne Light Holdings Inc. ......$ 1,934,116 $ 2,374,800
220,000 El Paso Corp. ..................... 2,242,718 3,183,400
150,000 Energy East Corp. ................. 3,071,332 3,654,000
29,000 ENI SpA ........................... 304,221 943,694
32,340 Integrys Energy Group Inc. ........ 1,530,679 1,795,194
80,000 NSTAR ............................. 1,282,183 2,809,600
75,000 OGE Energy Corp. .................. 2,043,450 2,910,000
80,000 Progress Energy Inc. .............. 3,424,284 4,035,200
15,000 Progress Energy Inc., CVO+ ........ 7,800 4,800
6,000 Public Service Enterprise
Group Inc. ...................... 235,600 498,240
9,523 Scottish Power plc, ADR ........... 314,346 597,949
20,000 Suncor Energy Inc. ................ 1,043,936 1,527,000
55,000 TECO Energy Inc. .................. 740,886 946,550
50,000 TXU Corp. ......................... 2,144,734 3,205,000
140,000 Westar Energy Inc. ................ 2,333,669 3,852,800
------------ --------------
35,769,098 54,992,937
------------ --------------
ENERGY AND UTILITIES: NATURAL GAS -- 4.1%
20,000 AGL Resources Inc. ................ 388,379 854,400
46,500 Atmos Energy Corp. ................ 1,155,384 1,454,520
140,000 KeySpan Corp. ..................... 5,668,930 5,761,000
170,000 Kinder Morgan Inc. ................ 17,598,070 18,096,500
40,000 National Fuel Gas Co. ............. 1,155,528 1,730,400
70,000 ONEOK Inc. ........................ 1,559,551 3,150,000
24,000 Piedmont Natural
Gas Co. Inc. .................... 394,017 633,120
200,000 SEMCO Energy Inc.+ ................ 1,522,839 1,524,000
110,000 Southern Union Co. ................ 2,047,401 3,342,900
55,000 Southwest Gas Corp. ............... 1,082,022 2,137,850
125,000 Spectra Energy Corp. .............. 2,201,897 3,283,750
------------ --------------
34,774,018 41,968,440
------------ --------------
ENERGY AND UTILITIES: OIL -- 7.8%
46,000 Anadarko Petroleum Corp. .......... 2,010,549 1,977,080
28,000 Cameron International Corp.+ ...... 804,246 1,758,120
192,000 Chevron Corp. ..................... 8,828,069 14,200,320
187,000 ConocoPhillips .................... 5,471,173 12,781,450
49,000 Devon Energy Corp. ................ 2,021,181 3,391,780
150,000 Exxon Mobil Corp. ................. 4,749,795 11,317,500
54,000 Giant Industries Inc.+ ............ 4,404,395 4,085,100
10,000 Helix Energy Solutions
Group Inc.+ ..................... 351,070 372,900
10,000 Hydril Co.+ ....................... 951,049 962,400
2,000 Niko Resources Ltd. ............... 114,911 145,414
98,000 Occidental Petroleum Corp. ........ 3,802,361 4,832,380
22,000 Oceaneering
International Inc.+ ............. 592,204 926,640
11,000 PetroChina Co. Ltd., ADR .......... 747,751 1,287,990
30,000 Repsol YPF SA, ADR ................ 631,290 1,006,200
120,000 Royal Dutch Shell plc,
Cl. A, ADR ...................... 5,536,434 7,956,000
See accompanying notes to financial statements.
5
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: OIL (CONTINUED)
25,000 Statoil ASA, ADR ..................$ 327,939 $ 677,000
17,518 Total SA, ADR ..................... 290,564 1,222,406
75,000 Transocean Inc.+ .................. 4,442,352 6,127,500
95,000 Weatherford
International Ltd.+ ............. 4,138,872 4,284,500
------------ --------------
50,216,205 79,312,680
------------ --------------
ENERGY AND UTILITIES: SERVICES -- 1.0%
30,000 ABB Ltd., ADR ..................... 351,824 515,400
225,000 Halliburton Co. ................... 6,410,524 7,141,500
40,000 Schlumberger Ltd. ................. 1,275,020 2,764,000
------------ --------------
8,037,368 10,420,900
------------ --------------
ENERGY AND UTILITIES: WATER -- 0.1%
24,000 Aqua America Inc. ................. 221,672 538,800
40,000 Suez SA, Strips+ .................. 0 534
------------ --------------
221,672 539,334
------------ --------------
ENTERTAINMENT -- 1.1%
360,000 Rank Group plc .................... 2,545,364 1,446,956
30,000 The Walt Disney Co. ............... 688,285 1,032,900
190,000 Time Warner Inc. .................. 3,093,052 3,746,800
30,000 Viacom Inc., Cl. A+ ............... 1,156,184 1,231,800
95,000 Vivendi ........................... 2,941,676 3,860,458
------------ --------------
10,424,561 11,318,914
------------ --------------
ENVIRONMENTAL SERVICES -- 0.7%
200,000 Waste Management Inc. ............. 6,034,604 6,882,000
------------ --------------
EQUIPMENT AND SUPPLIES -- 1.3%
12,000 A.O. Smith Corp. .................. 253,183 458,640
85,000 Flowserve Corp. ................... 2,437,365 4,861,150
6,000 Ingersoll-Rand Co. Ltd., Cl. A .... 125,173 260,220
1,500 Minerals Technologies Inc. ........ 37,938 93,240
40,000 Mueller Industries Inc. ........... 1,650,585 1,204,000
7,610 Mueller Water Products Inc.,
Cl. B ........................... 111,564 101,895
8,000 Parker Hannifin Corp. ............. 459,607 690,480
1,000,000 Tomkins plc ....................... 4,862,592 5,254,146
------------ --------------
9,938,007 12,923,771
------------ --------------
FINANCIAL SERVICES -- 11.8%
6,426 Alleghany Corp.+ .................. 1,075,493 2,400,754
205,000 American Express Co. .............. 9,237,970 11,562,000
160,000 American International
Group Inc. ...................... 10,605,002 10,755,200
70,000 Ameriprise Financial Inc. ......... 2,369,773 3,999,800
37,000 Argonaut Group Inc.+ .............. 741,823 1,197,320
25,000 Banco Popular Espanol SA .......... 185,939 515,636
18,000 Banco Santander Central
Hispano SA, ADR ................. 64,963 320,940
2,000 Banco Santander
Chile SA, ADR ................... 29,250 99,740
MARKET
SHARES COST VALUE
------ ---- -------
130,000 Bank of America Corp. .............$ 3,918,781 $ 6,632,600
8,825 BNP Paribas ....................... 362,345 921,768
520,000 Citigroup Inc. .................... 25,369,880 26,696,800
40,000 Commerzbank AG, ADR ............... 855,073 1,765,104
35,000 Deutsche Bank AG .................. 1,966,015 4,708,900
3,000 Fannie Mae ........................ 153,815 163,740
20,000 Fidelity Southern Corp. ........... 229,670 380,800
170,000 H&R Block Inc. .................... 3,921,787 3,576,800
25,000 Huntington Bancshares Inc. ........ 407,250 546,250
82,080 JPMorgan Chase & Co. .............. 2,489,151 3,971,030
1,000 KeyCorp ........................... 30,270 37,470
30,000 Landesbank Berlin
Holding AG+ ..................... 201,349 276,520
30,000 Leucadia National Corp. ........... 329,356 882,600
2,000 Manulife Financial Corp. .......... 24,694 68,900
270,000 Marsh & McLennan
Companies Inc. .................. 8,113,524 7,908,300
55,000 Mellon Financial Corp. ............ 1,528,208 2,372,700
13,000 Merrill Lynch & Co. Inc. .......... 525,900 1,061,710
8,000 Moody's Corp. ..................... 64,841 496,480
45,000 Morgan Stanley .................... 2,933,527 3,544,200
3,000 Municipal Mortgage &
Equity, LLC ..................... 60,488 85,500
6,000 Northern Trust Corp. .............. 60,300 360,840
45,000 PNC Financial Services
Group Inc. ...................... 1,905,739 3,238,650
58,000 Popular Inc. ...................... 1,356,598 960,480
500 Raiffeisen International
Bank Holding AG ................. 28,874 70,386
10,000 Sovereign Bancorp Inc. ............ 251,676 254,400
150,000 Sterling Bancorp .................. 2,161,997 2,715,000
12,000 SunTrust Banks Inc. ............... 251,737 996,480
40,000 T. Rowe Price Group Inc. .......... 896,910 1,887,600
1,000 The Allstate Corp. ................ 33,300 60,060
44,000 The Bank of New
York Co. Inc. ................... 1,423,658 1,784,200
5,000 The Bear Stearns
Companies Inc. .................. 507,485 751,750
5,000 The Charles Schwab Corp. .......... 77,500 91,450
2,000 The Dun & Bradstreet Corp. ........ 20,476 182,400
50,000 The Phoenix Companies Inc. ........ 650,511 694,000
36,000 The Travelers Companies Inc. ...... 1,428,424 1,863,720
40,000 Unitrin Inc. ...................... 1,156,156 1,882,800
10,000 Wachovia Corp. .................... 348,442 550,500
120,000 Waddell & Reed Financial Inc.,
Cl. A ........................... 2,632,714 2,798,400
55,000 Wilmington Trust Corp. ............ 1,712,407 2,319,350
------------ --------------
94,701,041 120,412,028
------------ --------------
FOOD AND BEVERAGE -- 9.8%
125,000 Anheuser-Busch
Companies Inc. .................. 5,661,848 6,307,500
See accompanying notes to financial statements.
6
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE (CONTINUED)
50,000 Brown-Forman Corp., Cl. A .........$ 3,151,499 $ 3,454,000
140,000 Cadbury Schweppes plc, ADR ........ 5,006,504 7,191,800
60,000 Campbell Soup Co. ................. 1,626,168 2,337,000
40,000 Coca-Cola Amatil Ltd., ADR ........ 246,844 568,728
15,000 Coca-Cola Femsa SAB
de CV, ADR ...................... 388,903 541,800
16,000 Corn Products
International Inc. .............. 197,588 569,440
60,000 Del Monte Foods Co. ............... 619,820 688,800
60,000 Diageo plc, ADR ................... 2,617,330 4,857,000
46,000 Fomento Economico
Mexicano SAB de CV, ADR ......... 2,683,945 5,077,940
202,000 General Mills Inc. ................ 10,047,128 11,760,440
71,000 Groupe Danone ..................... 7,749,854 11,599,540
1,000,000 Grupo Bimbo SA de CV, Cl. A ....... 3,093,579 5,029,783
105,000 H.J. Heinz Co. .................... 3,702,553 4,947,600
60,000 Heineken NV ....................... 2,385,009 3,138,701
60,000 ITO EN Ltd. ....................... 1,885,893 1,955,194
5,000 Kellogg Co. ....................... 149,740 257,150
10,000 Nestle SA ......................... 2,083,075 3,894,581
100,000 Nissin Food
Products Co. Ltd. ............... 3,543,058 3,665,988
20,000 PepsiCo Inc. ...................... 1,241,224 1,271,200
9,004 Pernod-Ricard SA .................. 1,365,225 1,826,083
5,000 Remy Cointreau SA ................. 355,024 337,434
21,000 Sapporo Holdings Ltd. ............. 155,428 147,734
280,000 The Coca-Cola Co. ................. 12,361,462 13,440,000
22,000 The Hershey Co. ................... 1,071,183 1,202,520
33,063 Tootsie Roll Industries Inc. ...... 867,958 990,898
10,000 Wm. Wrigley Jr. Co. ............... 475,992 509,300
750 Wm. Wrigley Jr. Co., Cl. B ........ 41,831 38,100
100,000 YAKULT HONSHA Co. Ltd. ............ 2,957,656 2,554,311
------------ --------------
77,733,321 100,160,565
------------ --------------
HEALTH CARE -- 9.4%
16,000 Abbott Laboratories ............... 618,814 892,800
30,000 Advanced Medical
Optics Inc.+ .................... 1,101,962 1,116,000
26,000 Aetna Inc. ........................ 926,540 1,138,540
105,000 Baxter International Inc. ......... 3,710,963 5,530,350
92,000 Becton, Dickinson & Co. ........... 5,893,321 7,073,880
500 Bio-Rad Laboratories Inc.,
Cl. B+ .......................... 20,960 35,175
25,100 Biosite Inc.+ ..................... 1,191,265 2,107,647
75,000 Bristol-Myers Squibb Co. .......... 1,844,954 2,082,000
145,000 Eli Lilly & Co. ................... 8,186,674 7,787,950
11,276 GlaxoSmithKline plc, ADR .......... 515,984 623,112
24,000 Henry Schein Inc.+ ................ 609,295 1,324,320
125,000 Hospira Inc.+ ..................... 4,459,810 5,112,500
100,000 Johnson & Johnson ................. 5,918,785 6,026,000
MARKET
SHARES COST VALUE
------ ---- -------
86,000 Medco Health Solutions Inc.+ ......$ 4,198,157 $ 6,237,580
105,000 Merck & Co. Inc. .................. 3,358,120 4,637,850
1,000 Nobel Biocare Holding AG .......... 139,480 364,564
120,000 Novartis AG, ADR .................. 6,613,009 6,555,600
12,000 Patterson Companies Inc.+ ......... 418,546 425,880
620,000 Pfizer Inc. ....................... 17,295,705 15,661,200
150,000 Schering-Plough Corp. ............. 2,779,186 3,826,500
110,000 Tanox Inc.+ ....................... 2,162,214 2,063,600
455,000 Tenet Healthcare Corp.+ ........... 3,815,354 2,925,650
135,000 UnitedHealth Group Inc. ........... 6,686,367 7,150,950
20,000 William Demant Holding A/S+ ....... 983,839 1,774,909
44,000 Zimmer Holdings Inc.+ ............. 2,802,455 3,758,040
------------ --------------
86,251,759 96,232,597
------------ --------------
HOTELS AND GAMING -- 1.4%
175,000 Hilton Hotels Corp. ............... 5,474,888 6,293,000
20,000 International Game
Technology ...................... 608,024 807,600
529,411 Ladbrokes plc ..................... 7,677,932 4,193,240
10,000 Las Vegas Sands Corp.+ ............ 945,234 866,100
25,000 Starwood Hotels & Resorts
Worldwide Inc. .................. 447,533 1,621,250
------------ --------------
15,153,611 13,781,190
------------ --------------
MACHINERY -- 0.6%
50,000 Baldor Electric Co. ............... 1,700,000 1,887,000
6,000 Caterpillar Inc. .................. 35,181 402,180
31,000 Deere & Co. ....................... 752,487 3,367,840
------------ --------------
2,487,668 5,657,020
------------ --------------
MANUFACTURED HOUSING -- 0.1%
140,000 Champion Enterprises Inc.+ ........ 1,407,727 1,232,000
------------ --------------
METALS AND MINING -- 1.6%
95,000 Alcoa Inc. ........................ 3,014,857 3,220,500
6,000 Carpenter Technology Corp. ........ 531,700 724,560
27,000 Fording Canadian Coal Trust ....... 179,580 606,652
50,000 Freeport-McMoRan
Copper & Gold Inc. .............. 1,000,213 3,309,500
110,000 Newmont Mining Corp. .............. 4,485,635 4,618,900
50,000 Novelis Inc. ...................... 2,202,737 2,205,500
30,000 Peabody Energy Corp. .............. 1,165,852 1,207,200
------------ --------------
12,580,574 15,892,812
------------ --------------
PUBLISHING -- 2.0%
105,000 Dow Jones & Co. Inc. .............. 4,005,467 3,619,350
6,500 Idearc Inc. ....................... 188,753 228,150
2,000 Lee Enterprises Inc. .............. 62,824 60,100
10,018 McClatchy Co., Cl. A .............. 459,013 316,669
25,000 New York Times Co., Cl. A ......... 695,769 587,750
10,000 News Corp., Cl. A ................. 137,424 231,200
6,016 News Corp., Cl. B ................. 70,881 147,212
100,000 PagesJaunes Groupe SA ............. 2,774,394 2,182,770
406 Seat Pagine Gialle SpA ............ 1,350 250
See accompanying notes to financial statements.
7
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
PUBLISHING (CONTINUED)
65,000 The E.W. Scripps Co., Cl. A .......$ 3,091,527 $ 2,904,200
25,000 The McGraw-Hill
Companies Inc. .................. 755,341 1,572,000
1,200 The Washington Post Co.,
Cl. B ........................... 700,030 916,200
240,000 Tribune Co. ....................... 7,533,030 7,706,400
1,300 Value Line Inc. ................... 56,478 62,140
------------ --------------
20,532,281 20,534,391
------------ --------------
REAL ESTATE -- 0.0%
5,800 Griffin Land & Nurseries Inc.+ .... 95,484 205,900
------------ --------------
RETAIL -- 2.9%
60,000 Copart Inc.+ ...................... 1,827,705 1,680,600
132,000 Costco Wholesale Corp. ............ 6,552,398 7,106,880
5,000 Ingles Markets Inc., Cl. A ........ 64,548 204,200
150,000 Safeway Inc. ...................... 3,114,997 5,496,000
500 Sears Holdings Corp.+ ............. 40,733 90,080
100,000 SUPERVALU Inc. .................... 2,935,535 3,907,000
100,000 The Home Depot Inc. ............... 3,488,117 3,674,000
20,000 Tractor Supply Co.+ ............... 1,003,626 1,030,000
135,000 Wal-Mart Stores Inc. .............. 6,471,583 6,338,250
10,000 Weis Markets Inc. ................. 300,480 447,000
------------ --------------
25,799,722 29,974,010
------------ --------------
SPECIALTY CHEMICALS -- 3.0%
46,000 Albemarle Corp. ................... 599,272 1,901,640
437 Arkema, ADR+ ...................... 8,969 24,967
36,000 Ashland Inc. ...................... 2,291,689 2,361,600
200,000 Chemtura Corp. .................... 1,886,668 2,186,000
50,000 E.I. du Pont de
Nemours & Co. ................... 2,361,626 2,471,500
120,000 Ferro Corp. ....................... 2,375,006 2,593,200
1,000 FMC Corp. ......................... 64,790 75,430
100,000 Hercules Inc.+ .................... 1,164,286 1,954,000
60,000 International Flavors &
Fragrances Inc. ................. 2,895,442 2,833,200
133,000 Monsanto Co. ...................... 1,227,948 7,309,680
3,500 NewMarket Corp. ................... 13,508 142,345
100,000 Omnova Solutions Inc.+ ............ 667,863 546,000
4,000 Quaker Chemical Corp. ............. 79,615 95,240
60,000 Sensient Technologies Corp. ....... 1,253,015 1,546,800
90,000 The Dow Chemical Co. .............. 3,950,210 4,127,400
2,542 Tronox Inc., Cl. B ................ 22,513 35,537
------------ --------------
20,862,420 30,204,539
------------ --------------
TELECOMMUNICATIONS -- 3.7%
8,000 Alltel Corp. ...................... 367,311 496,000
280,000 AT&T Inc. ......................... 6,551,058 11,040,400
230,000 BCE Inc. .......................... 5,874,669 6,504,400
200,000 BT Group plc ...................... 825,179 1,195,466
30,000 BT Group plc, ADR ................. 1,006,938 1,800,300
MARKET
SHARES COST VALUE
------ ---- -------
140,000 Cable & Wireless plc ..............$ 273,765 $ 458,980
10,000 CenturyTel Inc. ................... 359,546 451,900
300,000 Cincinnati Bell Inc.+ ............. 1,684,531 1,410,000
60,000 Deutsche Telekom AG, ADR .......... 1,075,041 991,800
15,000 Embarq Corp. ...................... 670,500 845,250
15,000 France Telecom SA, ADR ............ 436,434 396,000
170,000 Qwest Communications
International Inc.+ ............. 679,475 1,528,300
250,000 Sprint Nextel Corp. ............... 4,540,676 4,740,000
3,300 Telecom Italia SpA, ADR ........... 31,072 94,578
8,195 Telefonica SA, ADR ................ 80,699 544,148
12,000 TELUS Corp. ....................... 185,454 612,213
130,000 Verizon Communications Inc. ....... 4,530,067 4,929,600
5,000 Windstream Corp. .................. 43,990 73,450
------------ --------------
29,216,405 38,112,785
------------ --------------
TRANSPORTATION -- 0.6%
100,000 GATX Corp. ........................ 3,855,499 4,780,000
25,000 Laidlaw International Inc. ........ 864,427 865,000
------------ --------------
4,719,926 5,645,000
------------ --------------
TOTAL COMMON STOCKS ............... 747,239,998 966,711,376
------------ --------------
CONVERTIBLE PREFERRED STOCKS -- 0.4%
BROADCASTING -- 0.1%
100 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (b)(c)(d) ................ 1,000,000 1,000,000
------------ --------------
COMMUNICATIONS EQUIPMENT -- 0.1%
1,100 Lucent Technologies Capital Trust I,
7.750% Cv. Pfd. ................. 759,000 1,139,325
------------ --------------
ENERGY AND UTILITIES: INTEGRATED -- 0.0%
300 El Paso Corp.,
4.990% Cv. Pfd. (b) ............. 293,192 384,766
------------ --------------
ENTERTAINMENT -- 0.0%
3,000 Metromedia International Group Inc.,
7.250% Cv. Pfd.+ ................ 5,310 142,650
------------ --------------
TELECOMMUNICATIONS -- 0.2%
33,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ......... 918,894 1,542,750
------------ --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ................ 2,976,396 4,209,491
------------ --------------
WARRANTS -- 0.0%
DIVERSIFIED INDUSTRIAL -- 0.0%
379,703 National Patent
Development Corp.,
expire 08/14/08+ (c)(d) ......... 0 234,381
3,625 WHX Corp., expire 02/28/08+ ....... 14,168 1,360
------------ --------------
TOTAL WARRANTS .................... 14,168 235,741
------------ --------------
See accompanying notes to financial statements.
8
THE GABELLI EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- MARCH 31, 2007 (UNAUDITED)
================================================================================
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- ------
CORPORATE BONDS -- 2.1%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.5%
$ 800,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ................$ 720,043 $ 784,000
4,000,000 The Pep Boys -
Manny, Moe & Jack, Cv.,
4.250%, 06/01/07 ................ 3,994,693 4,010,000
------------ --------------
4,714,736 4,794,000
------------ --------------
AVIATION: PARTS AND SERVICES -- 0.1%
1,400,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ................ 1,399,038 1,449,000
------------ --------------
BROADCASTING -- 0.3%
2,200,000 Sinclair Broadcast Group Inc.,
Sub. Deb. Cv.,
6.000%, 09/15/12 ................ 1,853,658 2,153,250
350,000 Sinclair Broadcast Group Inc.,
Sub. Deb. Cv. (STEP),
4.875%, 07/15/18 ................ 318,522 346,063
------------ --------------
2,172,180 2,499,313
------------ --------------
BUSINESS SERVICES -- 0.0%
100,000 BBN Corp., Sub. Deb. Cv.,
6.000%, 04/01/12+ (a)(c) ........ 97,499 0
464,779 GP Strategies Corp., Sub. Deb.,
6.000%, 08/14/08 (c)(d) ......... 391,854 312,843
------------ --------------
489,353 312,843
------------ --------------
COMMUNICATIONS EQUIPMENT -- 1.1%
4,000,000 Agere Systems Inc., Sub. Deb. Cv.,
6.500%, 12/15/09 ................ 3,936,542 4,115,000
7,000,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ................ 6,829,506 6,947,500
------------ --------------
10,766,048 11,062,500
------------ --------------
HEALTH CARE -- 0.1%
1,000,000 ICOS Corp., Sub. Deb. Cv.,
2.000%, 07/01/23 ................ 981,616 996,250
------------ --------------
TELECOMMUNICATIONS -- 0.0%
200,000 Williams Communications
Group Inc., Escrow,
10.875%, 10/01/09+ (a)(c) ....... 0 0
------------ --------------
TOTAL CORPORATE BONDS ............. 20,522,971 21,113,906
------------ --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- ------
GOVERNMENT OBLIGATIONS -- 2.5%
$25,228,000 U.S. Treasury Bills,
4.961% to 5.222%++,
04/05/07 to 09/06/07 ............$ 25,030,683 $ 25,031,589
------------ --------------
TOTAL
INVESTMENTS -- 99.8% ............$795,784,216 1,017,302,103
============
OTHER ASSETS AND LIABILITIES (NET) -- 0.2% ...... 2,088,838
--------------
NET ASSETS -- 100.0% ............................$1,019,390,941
==============
- ----------------
(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,
2007, the market value of Rule 144A securities amounted to $1,499,748 or
0.15% 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, 2007, the
market value of fair valued securities amounted to $1,662,206 or 0.16% of
total net assets.
(d) At March 31, 2007, the Fund held investments in restricted and illiquid
securities amounting to $1,547,224 or 0.15% of net assets, which were
valued under methods approved by the Board, as follows:
ACQUISITION 03/31/07
SHARES/ CARRYING
PRINCIPAL ACQUISITION ACQUISITION VALUE
AMOUNT ISSUER DATE COST PER UNIT
-------- ----- ---- ---- --------
$464,779 GP Strategies Corp.,
Sub. Deb.,
6.00%, 08/14/08 ................. 08/08/03 $ 316,732 $ 67.3101
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 0.6173
+ 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, 2007 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $795,784,216) .................. $1,017,302,103
Cash ....................................................... 419
Foreign currency, at value (cost $167) ..................... 171
Receivable for Fund shares sold ............................ 3,557,627
Dividends and interest receivable .......................... 2,460,515
Prepaid expense ............................................ 21,716
--------------
TOTAL ASSETS ............................................... 1,023,342,551
--------------
LIABILITIES:
Payable for Fund shares redeemed ........................... 2,090,254
Payable for investments purchased .......................... 519,046
Payable for investment advisory fees ....................... 869,875
Payable for distribution fees .............................. 225,164
Payable for accounting fees ................................ 11,375
Payable for Directors' fees ................................ 423
Other accrued expenses ..................................... 235,473
--------------
TOTAL LIABILITIES .......................................... 3,951,610
--------------
NET ASSETS applicable to 47,745,312
shares outstanding ....................................... $1,019,390,941
==============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ............ $ 794,889,126
Accumulated distributions in excess of
net investment income .................................... (2,886,871)
Accumulated net realized gain on investments
and foreign currency transactions ........................ 5,871,857
Net unrealized appreciation on investments ................. 221,517,887
Net unrealized depreciation on foreign
currency translations .................................... (1,058)
--------------
NET ASSETS ................................................. $1,019,390,941
==============
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption price per
share ($996,116,827 / 46,638,896 shares
outstanding; 150,000,000 shares authorized) .............. $21.36
======
CLASS A:
Net Asset Value and redemption price per share
($10,836,645 / 509,000 shares outstanding;
50,000,000 shares authorized) ............................ $21.29
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75% of
the offering price) ...................................... $22.59
======
CLASS B:
Net Asset Value and offering price per share
($340,737 / 16,359 shares outstanding;
50,000,000 shares authorized) ............................ $20.83(a)
======
CLASS C:
Net Asset Value and offering price per share
($12,096,732 / 581,057 shares outstanding;
50,000,000 shares authorized) ............................ $20.82(a)
======
- --------------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2007 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $248,893) .............. $ 11,098,246
Interest .................................................. 1,133,371
------------
TOTAL INVESTMENT INCOME ................................... 12,231,617
------------
EXPENSES:
Investment advisory fees .................................. 4,592,105
Distribution fees - Class AAA ............................. 1,123,111
Distribution fees - Class A ............................... 12,148
Distribution fees - Class B ............................... 1,803
Distribution fees - Class C ............................... 49,269
Shareholder services fees ................................. 404,482
Shareholder communications expenses ....................... 124,383
Custodian fees ............................................ 57,013
Registration expenses ..................................... 32,218
Legal and audit fees ...................................... 26,701
Accounting fees ........................................... 22,625
Directors' fees ........................................... 16,248
Miscellaneous expenses .................................... 32,740
------------
TOTAL EXPENSES ............................................ 6,494,846
Less: Custodian fee credits ............................... (4,534)
------------
NET EXPENSES .............................................. 6,490,312
------------
NET INVESTMENT INCOME ..................................... 5,741,305
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments .......................... 10,413,831
Net realized loss on foreign
currency transactions ................................... (2,753)
------------
Net realized gain on investments and foreign
currency transactions ................................... 10,411,078
------------
Net change in unrealized appreciation/
depreciation on investments ............................. 59,560,903
Net change in unrealized appreciation/
depreciation on foreign currency translations ........... (382)
------------
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations ................................... 59,560,521
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ........................ 69,971,599
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... $ 75,712,904
============
See accompanying notes to financial statements.
10
THE GABELLI EQUITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
SIX MONTHS ENDED
MARCH 31, 2007 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2006
--------------- -------------------
OPERATIONS:
Net investment income ............................................ $ 5,741,305 $ 13,923,606
Net realized gain on investments and foreign currency transactions 10,411,078 15,512,152
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations .............................. 59,560,521 49,558,089
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. 75,712,904 78,993,847
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ...................................................... (8,969,539) (13,070,105)
Class A ........................................................ (97,721) (126,247)
Class B ........................................................ (3,659) (2,901)
Class C ........................................................ (101,180) (118,288)
--------------- ---------------
(9,172,099) (13,317,541)
--------------- ---------------
Net realized gain on investments
Class AAA ...................................................... (18,245,823) (6,315,010)
Class A ........................................................ (197,590) (51,353)
Class B ........................................................ (8,004) (532)
Class C ........................................................ (196,839) (52,102)
--------------- ---------------
(18,648,256) (6,418,997)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .............................. (27,820,355) (19,736,538)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ...................................................... 154,828,445 156,224,106
Class A ........................................................ 1,953,328 4,102,822
Class B ........................................................ (30,250) 305,182
Class C ........................................................ 3,592,875 4,122,904
--------------- ---------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ....... 160,344,398 164,755,014
--------------- ---------------
REDEMPTION FEES .................................................. 3,515 7,401
--------------- ---------------
NET INCREASE IN NET ASSETS ....................................... 208,240,462 224,019,724
NET ASSETS:
Beginning of period .............................................. 811,150,479 587,130,755
--------------- ---------------
End of period (including undistributed net investment income of
$0 and $543,923, respectively) ................................. $ 1,019,390,941 $ 811,150,479
=============== ===============
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. 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 United States ("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 a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
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 fair valued 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
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons 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.
12
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2007, 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 fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. 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, 2007, there were no open
futures contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions. Short
selling involves selling securities that may or may not be owned and, at times,
borrowing the same securities for delivery to the purchaser, with an obligation
to replace such borrowed securities at a later date. The proceeds received from
short sales are recorded as liabilities and the Fund records an unrealized gain
or loss to the extent of the difference between
13
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
the proceeds received and the value of an open short position on the day of
determination. The Fund records a realized gain or loss when the short position
is closed out. By entering into a short sale, the Fund bears the market risk of
an unfavorable change in the price of the security sold short. Dividends on
short sales are recorded as an expense by the Fund on the ex-dividend date and
interest expense is recorded on the accrual basis. The Fund did not hold any
short positions as of March 31, 2007.
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, 2007, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at 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.
14
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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 saleable among qualified
institutional investors under special rules adopted by the SEC may be treated as
liquid if they satisfy liquidity standards established by the Board. The
continued liquidity of such securities is not as well assured as that of
publicly traded securities, and accordingly the Board will monitor their
liquidity.
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 AND INTEREST EXPENSE. 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". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under 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
capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund.
15
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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 sources of the distributions are determined after the end of the calendar
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.
The tax character of distributions paid during the fiscal year ended September
30, 2006 was as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) .....$13,317,541
Net long-term capital gains ................... 6,418,997
-----------
Total distributions paid ......................$19,736,538
===========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at March 31, 2007:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
------------ ------------ ------------- ------------
Investments ......$798,838,966 $236,429,601 $(17,966,464) $218,463,137
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for the Fund no later than its March 31, 2008 NAV, and is to be
applied to all open tax years as of the date of effectiveness. Management is
evaluating the application of the Interpretation to the Fund, and is not in a
position at this time to estimate the significance of its impact, if any, on the
Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser.
The Corporation pays each Director that is not considered to be an affiliated
person an annual retainer of $6,000 plus $1,000 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $500 per meeting attended.
Directors who are directors or employees of the Adviser or an affiliated company
receive no compensation or expense reimbursement from the Fund.
16
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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, 2007, other than short-term U.S. Government
securities, aggregated $171,192,218 and $38,269,537, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2007, the
Fund paid brokerage commissions of $191,434 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $14,814 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, 2007, the Fund paid or accrued $22,625 to the Adviser in
connection with the cost of computing the Fund's NAV.
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. This amount, if any, would be shown as "interest expense"
in the Statement of Operations. At March 31, 2007, 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, 2007 was $8,566 with a weighted average
interest rate of 6.00%. The maximum amount borrowed at any time during the six
months ended March 31, 2007 was $1,559,000.
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 1.00% 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.
The Fund imposes 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. 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, 2007 and fiscal year ended September 30, 2006 amounted to
$3,515 and $7,401, respectively.
17
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
The redemption fee will not apply to redemptions of shares where (i) the shares
were purchased through automatic reinvestment of dividends or other
distributions, (ii) the redemption is initiated by the Fund, (iii) the shares
were purchased through programs that collect the redemption fees at the program
level and remit them to the Fund, or (iv)the shares were purchased through
programs that the Adviser determines to have appropriate anti-short-term trading
policies in place or as to which the Adviser has received assurances that
look-through redemption fee procedures or effective anti-short-term trading
policies and procedures are in place.
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED
MARCH 31, 2007 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2006
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- -----------
CLASS AAA CLASS AAA
---------------------------- ---------------------------
Shares sold ........................................ 10,566,027 $222,281,703 16,251,000 $ 309,539,237
Shares issued upon reinvestment of distributions ... 1,225,988 25,313,087 951,459 18,000,990
Shares redeemed .................................... (4,412,419) (92,766,345) (8,928,232) (171,316,121)
---------- ------------ ---------- -------------
Net increase ..................................... 7,379,596 $154,828,445 8,274,227 $ 156,224,106
========== ============ ========== =============
CLASS A CLASS A
---------------------------- ---------------------------
Shares sold ........................................ 137,502 $ 2,880,649 316,965 $ 5,979,164
Shares issued upon reinvestment of distributions ... 11,505 236,852 7,240 137,173
Shares redeemed .................................... (55,405) (1,164,173) (104,070) (2,013,515)
---------- ------------ ---------- -------------
Net increase ..................................... 93,602 $ 1,953,328 220,135 $ 4,102,822
========== ============ ========== =============
CLASS B CLASS B
---------------------------- ---------------------------
Shares sold ........................................ 262 $ 5,476 15,928 $ 302,564
Shares issued upon reinvestment of distributions ... 574 11,569 181 3,433
Shares redeemed .................................... (2,252) (47,295) (43) (815)
---------- ------------ ---------- -------------
Net increase (decrease) .......................... (1,416) $ (30,250) 16,066 $ 305,182
========== ============ ========== =============
CLASS C CLASS C
---------------------------- ---------------------------
Shares sold ........................................ 182,934 $ 3,761,463 344,076 $ 6,388,556
Shares issued upon reinvestment of distributions ... 13,625 275,007 8,157 152,213
Shares redeemed .................................... (21,542) (443,595) (128,826) (2,417,865)
---------- ------------ ---------- -------------
Net increase ..................................... 175,017 $ 3,592,875 223,407 $ 4,122,904
========== ============ ========== =============
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.
18
THE GABELLI EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
10. OTHER MATTERS. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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.
19
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
2007(b) $20.23 $0.13 $ 1.66 $ 1.79 $(0.21) $(0.45) $(0.66)
2006 18.72 0.38 1.68 2.06 (0.36) (0.19) (0.55)
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)
CLASS A
2007(b) $20.17 $0.13 $ 1.65 $ 1.78 $(0.21) $(0.45) $(0.66)
2006 18.66 0.39 1.67 2.06 (0.36) (0.19) (0.55)
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
2007(b) $19.82 $0.05 $ 1.62 $ 1.67 $(0.21) $(0.45) $(0.66)
2006 18.48 0.36 1.53 1.89 (0.36) (0.19) (0.55)
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
2007(b) $19.81 $0.05 $ 1.62 $ 1.67 $(0.21) $(0.45) $(0.66)
2006 18.47 0.24 1.65 1.89 (0.36) (0.19) (0.55)
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
2007(b) $0.00(c) $21.36 8.98% $996,117 1.26%(d) 1.41%(d) 4%
2006 0.00(c) 20.23 11.25 794,375 1.98 1.46(e) 14
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
CLASS A
2007(b) $0.00(c) $21.29 8.96% $ 10,836 1.25%(d) 1.41%(d) 4%
2006 0.00(c) 20.17 11.29 8,379 2.02 1.46(e) 14
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
2007(b) $0.00(c) $20.83 8.56% $ 341 0.50%(d) 2.16%(d) 4%
2006 0.00(c) 19.82 10.46 352 1.91 2.21(e) 14
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
2007(b) $0.00(c) $20.82 8.56% $ 12,097 0.50%(d) 2.16%(d) 4%
2006 0.00(c) 19.81 10.46 8,044 1.26 2.21(e) 14
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 distributions and does not reflect applicable
sales charges. Total return for a period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) For the period ending March 31, 2007, 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 fiscal year ended September 30, 2006
would have been 1.45%, 1.45%, 2.20%, and 2.20% for Class AAA, Class A, Class
B, and Class C, respectively. Custodian fee credits for the period ended
March 31, 2007 were minimal.
(f) From the commencement of offering Class A, Class B, and Class C Shares on
December 31, 2003.
See accompanying notes to financial statements.
20
THE GABELLI EQUITY INCOME FUND
BOARD CONSIDERATION AND RE-APPROVAL OF ADVISORY AGREEMENT (UNAUDITED)
During the six months ended March 31, 2007, 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 independent 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 independent 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
independent directors noted that the Fund's expense ratios and the Fund's size
were above average within this group. The independent directors also noted that
the management fee structure was the same as that in effect for most of the
Gabelli funds. The independent 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 independent 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.
21
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO and Westwood 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
SHAREHOLDER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
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 FAMILY OF FUNDS
VALUE _______________________________________
GABELLI ASSET FUND
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND
Seeks long term growth of capital through investment primarily in the common
stocks of established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE _______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE _____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations at the time of investment of $2 billion or less) believed to
have rapid revenue and earnings growth potential. The Fund's primary objective
is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $2.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) TEAM MANAGED
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations generally less than $3.0 billion) believed to be undervalued
with shareholder oriented management teams that are employing strategies to grow
the company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
GAMCO GROWTH FUND
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GAMCO INTERNATIONAL GROWTH FUND
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH ___________________________
GAMCO GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing on
the globalization and interactivity of the world's marketplace. The Fund invests
in companies at the forefront of accelerated growth. The Fund's primary
objective is capital appreciation. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
WESTWOOD MIGHTY MITES(SM) FUND
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above average market yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
WESTWOOD BALANCED FUND
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
WESTWOOD INCOME FUND
Seeks to provide a high level of current income as well as long-term capital
appreciation by investing in income producing equity and fixed income
securities. (MULTICLASS) TEAM MANAGED
SPECIALTY EQUITY ____________________________
GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is total return through a combination of current income and capital
appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in revenues
and earnings and potential for above average capital appreciation or are
undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
GABELLI SRI FUND
Seeks to invest in common and preferred stocks of companies that meet the Fund's
guidelines for social responsibility at the time of investment, looking to avoid
companies in tobacco, alcohol, and gaming, defense/weapons contractors, and
manufacturers of abortifacients. The Fund's primary objective is capital
appreciation. (MULTICLASS) PORTFOLIO MANAGER: CHRISTOPHER C. DESMARAIS
SECTOR ______________________________________
GAMCO GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world - targeting
undervalued companies with strong earnings and cash flow dynamics. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GOLD FUND
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of worldwide economic, financial, and political factors. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE ________________________
GABELLI ABC FUND
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss.
(NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
CONTRARIAN___________________________________
GAMCO MATHERS FUND
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of debt instruments. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
FIXED INCOME ________________________________
WESTWOOD INTERMEDIATE BOND FUND
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET ________________
GABELLI U.S. TREASURY MONEY MARKET FUND
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
THE FUNDS MAY INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC, AND POLITICAL RISKS.
TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND
BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION
ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
Gabelli Equity Series Funds, Inc.
THE GABELLI EQUITY INCOME FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: WWW.GABELLI.COM
E-MAIL: INFO@GABELLI.COM
Net Asset Value per share 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. ZIZZA & CO., LTD.
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.
- --------------------------------------------------------------------------------
GAB444Q107SR
[GRAPHIC OMITTED] E P
Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GABELLI
EQUITY
INCOME
FUND
SEMI-ANNUAL REPORT
MARCH 31, 2007
THE GABELLI WOODLAND SMALL CAP VALUE FUND
SEMI-ANNUAL REPORT (A)
MARCH 31, 2007
TO OUR SHAREHOLDERS,
The Gabelli Woodland Small Cap Value Fund outperformed both its small cap
benchmark, the Russell 2000 Index, and the Standard & Poor's ("S&P") 500 Index
for the six months ended March 31, 2007. During this period, the Fund rose
13.34% versus gains of 11.02% for the Russell 2000 Index, 7.38% for the S&P 500
Index, and 12.49% for the Value Line Composite Index.
COMPARATIVE RESULTS
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2007 (A)(B)
-----------------------------------------------------
Since
Six Inception
Quarter Months 1 Year 3 Year (12/31/02)*
- ------------------------------------------------------------------------------------------------------------
GABELLI WOODLAND SMALL CAP VALUE FUND CLASS AAA .... 1.81% 13.34% 5.01% 11.25% 14.06%
Russell 2000 Index ................................. 1.95 11.02 5.91 12.00 20.36
S&P 500 Index ...................................... 0.64 7.38 11.82 10.05 13.98
Value Line Composite Index ......................... 3.76 12.49 9.77 12.59 20.70
Class A ............................................ 1.97 13.60 5.18 11.39 14.13
(3.90)(c) 7.07(c) (0.87)(c) 9.21(c) 12.55(c)
Class B ............................................ 1.36 12.98 4.10 10.91 13.96
(3.64)(d) 7.98(d) (0.90)(d) 10.09(d) 13.49(d)
Class C ............................................ 1.60 12.94 4.21 10.49 13.32
0.60(e) 11.94(e) 3.21(e) 10.49 13.32
THE CURRENT GROSS EXPENSE RATIO FOR CLASS AAA, A, B, AND C SHARES IS 2.31%,
2.31%, 3.06%, AND 3.06%, RESPECTIVELY. THE NET EXPENSE RATIO AFTER CONTRACTUAL
REIMBURSEMENTS BY THE ADVISER IN PLACE THROUGH SEPTEMBER 30, 2007 IS 2.00%,
2.00%, 2.75%, AND 2.75%, RESPECTIVELY. CLASS AAA SHARES DO NOT HAVE A SALES
CHARGE. THE MAXIMUM SALES CHARGE FOR CLASS A, B, AND C SHARES IS 5.75%, 5.00%,
AND 1.00%, RESPECTIVELY.
(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 CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND 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 RISKS 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 (COMPRISED OF EQUALLY WEIGHTED POSITIONS IN
EVERY STOCK COVERED IN THE VALUE LINE INVESTMENT SURVEY) ARE UNMANAGED
INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED
REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(c) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, SIX MONTHS, ONE YEAR,
THREE YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%, 5%, 3%, AND 2%,
RESPECTIVELY, OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER
IS LOWER. CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(e) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGE FOR THE CLASS C
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, SIX MONTHS, AND ONE YEAR
PERIODS OF 1% OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER
IS LOWER.
* 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, 2006 through March 31, 2007
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case - because the hypothetical return used is NOT the
Fund's actual return - the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
10/01/06 03/31/07 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI WOODLAND SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,133.40 2.02% $10.80
Class A $1,000.00 $1,136.00 2.02% $10.82
Class B $1,000.00 $1,129.80 2.77% $14.79
Class C $1,000.00 $1,129.40 2.77% $14.79
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,014.94 2.02% $10.20
Class A $1,000.00 $1,014.94 2.02% $10.20
Class B $1,000.00 $1,011.18 2.77% $13.97
Class C $1,000.00 $1,011.18 2.77% $13.97
*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, 2007:
THE GABELLI WOODLAND SMALL CAP VALUE FUND
Equipment and Supplies ............................ 10.2%
Diversified Industrial ............................ 8.7%
Food and Beverage ................................. 8.3%
Consumer Products ................................. 8.3%
Business Services ................................. 7.9%
Financial Services ................................ 7.4%
Computer Software and Services .................... 6.9%
Health Care ....................................... 6.9%
Hotels and Gaming ................................. 6.6%
U.S. Government Obligations ....................... 5.5%
Entertainment ..................................... 4.6%
Energy and Utilities .............................. 4.1%
Specialty Chemicals ............................... 3.4%
Aerospace ......................................... 3.0%
Aviation: Parts and Services ...................... 2.9%
Retail ............................................ 2.5%
Communications Equipment .......................... 1.7%
Automotive: Parts and Accessories ................. 1.4%
Other Assets and Liabilities (Net) ................ (0.3)%
-------
100.0%
=======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED DECEMBER 31,
2006. 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 SEC'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 is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
3
THE GABELLI WOODLAND SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS -- MARCH 31, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 94.8%
AEROSPACE -- 3.0%
3,275 Alliant Techsystems Inc.+ ...........$ 149,145 $ 287,938
---------- ----------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.4%
6,240 Midas Inc.+ ......................... 122,584 134,597
---------- ----------
AVIATION: PARTS AND SERVICES -- 2.9%
10,675 EDO Corp. ........................... 289,034 279,685
---------- ----------
BUSINESS SERVICES -- 7.9%
41,700 AMICAS Inc.+ ........................ 189,424 118,428
7,890 Deluxe Corp. ........................ 193,110 264,552
3,680 Imation Corp. ....................... 155,361 148,598
3,580 The Brink's Co. ..................... 86,901 227,151
---------- ----------
624,796 758,729
---------- ----------
COMMUNICATIONS EQUIPMENT -- 1.7%
15,320 Andrew Corp.+ ....................... 168,324 162,239
---------- ----------
COMPUTER SOFTWARE AND SERVICES -- 6.9%
17,040 eResearch Technology Inc.+ .......... 124,779 133,935
3,340 John H. Harland Co. ................. 114,989 171,108
33,280 Lawson Software Inc.+ ............... 252,294 269,235
9,760 ProQuest Co.+ ....................... 130,162 87,840
---------- ----------
622,224 662,118
---------- ----------
CONSUMER PRODUCTS -- 8.3%
10,130 Alberto-Culver Co. .................. 217,343 231,775
13,490 Callaway Golf Co. ................... 212,181 212,602
4,435 Church & Dwight Co. Inc. ............ 96,869 223,302
13,530 Sally Beauty Holdings Inc.+ ......... 111,710 124,341
---------- ----------
638,103 792,020
---------- ----------
DIVERSIFIED INDUSTRIAL -- 8.7%
11,180 Griffon Corp.+ ...................... 238,951 276,705
30,600 Magnetek Inc.+ ...................... 152,731 154,224
5,250 Texas Industries Inc. ............... 182,727 396,532
---------- ----------
574,409 827,461
---------- ----------
ENERGY AND UTILITIES -- 4.1%
2,879 ALLETE Inc. ......................... 82,983 134,219
5,420 Comstock Resources Inc.+ ............ 152,169 148,400
5,740 Mariner Energy Inc.+ ................ 106,895 109,806
---------- ----------
342,047 392,425
---------- ----------
ENTERTAINMENT -- 4.6%
17,080 Discovery Holding Co., Cl. A+ ....... 263,567 326,740
3,430 Steinway Musical Instruments Inc. ... 117,419 110,686
---------- ----------
380,986 437,426
---------- ----------
EQUIPMENT AND SUPPLIES -- 10.2%
17,220 C&D Technologies Inc. ............... 95,800 86,617
35,900 FSI International Inc.+ ............. 214,190 160,473
6,295 Mueller Water Products Inc., Cl. B .. 110,766 84,290
11,360 Tennant Co. ......................... 215,393 357,726
5,690 Toro Co. ............................ 147,245 291,556
---------- ----------
783,394 980,662
---------- ----------
MARKET
SHARES COST VALUE
------ ---- ------
FINANCIAL SERVICES -- 7.4%
11,540 Franklin Bank Corp.+ ................$ 195,803 $ 206,220
3,430 Hilb Rogal & Hobbs Co. .............. 145,621 168,241
14,700 NewAlliance Bancshares Inc. ......... 218,159 238,287
5,880 USI Holdings Corp.+ ................. 73,272 99,078
---------- ----------
632,855 711,826
---------- ----------
FOOD AND BEVERAGE -- 8.3%
29,000 Buca Inc.+ .......................... 154,972 159,500
4,180 H.J. Heinz Co. ...................... 160,116 196,962
4,620 PepsiAmericas Inc. .................. 72,529 103,118
13,580 Triarc Cos. Inc., Cl. A ............. 159,346 254,354
4,880 Triarc Cos. Inc., Cl. B ............. 56,528 83,887
---------- ----------
603,491 797,821
---------- ----------
HEALTH CARE -- 6.9%
6,872 Lifecore Biomedical Inc.+ ........... 85,919 128,987
5,130 PolyMedica Corp. .................... 175,042 217,153
8,686 SurModics Inc.+ ..................... 252,216 312,696
---------- ----------
513,177 658,836
---------- ----------
HOTELS AND GAMING -- 6.6%
6,260 Gaylord Entertainment Co.+ .......... 162,478 330,966
4,160 Marcus Corp. ........................ 99,220 96,762
3,730 Vail Resorts Inc.+ .................. 89,453 202,651
---------- ----------
351,151 630,379
---------- ----------
RETAIL -- 2.5%
25,863 dELiA*s Inc.+ ....................... 196,444 237,422
---------- ----------
SPECIALTY CHEMICALS -- 3.4%
5,100 Arch Chemicals Inc. ................. 148,969 159,222
2,230 FMC Corp. ........................... 162,098 168,209
---------- ----------
311,067 327,431
---------- ----------
TOTAL COMMON STOCKS ................. 7,303,231 9,079,015
---------- ----------
PRINCIPAL
AMOUNT
-------
U.S. GOVERNMENT OBLIGATIONS -- 5.5%
$528,000 U.S. Treasury Bill,
5.211%++, 04/05/07 ................ 527,774 527,774
---------- ----------
TOTAL
INVESTMENTS -- 100.3% .............$7,831,005 9,606,789
==========
OTHER ASSETS AND
LIABILITIES (NET) -- (0.3)% .................... (30,317)
----------
NET ASSETS -- 100.0% .............................$9,576,472
==========
- ----------------
+ 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, 2007 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $7,831,005) ........................ $9,606,789
Cash ........................................................... 23,870
Dividends receivable ........................................... 4,824
Receivable for Fund shares sold ................................ 1,826
Prepaid expense ................................................ 8,307
----------
TOTAL ASSETS ................................................... 9,645,616
----------
LIABILITIES:
Payable for legal and audit fees ............................... 26,035
Payable for Fund shares redeemed ............................... 18,310
Payable for investment advisory fees ........................... 4,449
Payable for distribution fees .................................. 2,329
Payable for shareholder
communications expenses ...................................... 13,086
Payable for shareholder services fees .......................... 3,516
Other accrued expenses ......................................... 1,419
----------
TOTAL LIABILITIES .............................................. 69,144
----------
NET ASSETS applicable to 809,592
shares outstanding ........................................... $9,576,472
==========
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ................ $7,341,068
Accumulated net investment income .............................. 47,119
Accumulated net realized gain on investments ................... 412,501
Net unrealized appreciation on investments ..................... 1,775,784
----------
NET ASSETS ..................................................... $9,576,472
==========
SHARES OF CAPITAL STOCK:
CLASS AAA:
Net Asset Value, offering and redemption
price per share ($9,135,646 / 771,343
shares outstanding; 100,000,000 shares
authorized) .................................................. $11.84
======
CLASS A:
Net Asset Value and redemption price per share
($60,670 / 5,091 shares outstanding;
50,000,000 shares authorized) ................................ $11.92
======
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75% of
the offering price) .......................................... $12.65
======
CLASS B:
Net Asset Value and offering price per share
($174 / 14.65 shares outstanding;
50,000,000 shares authorized) ................................ $11.88(a)
======
CLASS C:
Net Asset Value and offering price per share
($379,982 / 33,143 shares outstanding;
50,000,000 shares authorized) ................................ $11.46(a)
======
- -------------
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2007 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends ................................................. $ 181,019
Interest .................................................. 7,564
-----------
TOTAL INVESTMENT INCOME ................................... 188,583
-----------
EXPENSES:
Investment advisory fees .................................. 49,824
Distribution fees - Class AAA ............................. 11,824
Distribution fees - Class A ............................... 97
Distribution fees - Class B ............................... 1
Distribution fees - Class C ............................... 2,139
Legal and audit fees ...................................... 15,265
Registration expenses ..................................... 12,911
Shareholder communications expenses ....................... 12,352
Shareholder services fees ................................. 7,320
Custodian fees ............................................ 3,366
Interest expense .......................................... 991
Directors' fees ........................................... 194
Miscellaneous expenses .................................... 2,587
-----------
TOTAL EXPENSES BEFORE FEES WAIVED AND
EXPENSES REIMBURSED BY ADVISER .......................... 118,871
-----------
LESS:
Fees waived and expenses reimbursed
by Adviser ............................................ (16,685)
Custodian fee credits ................................... (110)
-----------
NET EXPENSES .............................................. 102,076
-----------
NET INVESTMENT INCOME ..................................... 86,507
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments .......................... 709,754
Net change in unrealized appreciation/
depreciation on investments ............................. 467,946
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ............................................ 1,177,700
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................... $ 1,264,207
===========
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, 2007 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2006
------------ ------------------
OPERATIONS:
Net investment income (loss) ............................................ $ 86,507 $ (93,708)
Net realized gain on investments ........................................ 709,754 2,164,088
Net change in unrealized appreciation/depreciation on investments ....... 467,946 (2,049,195)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................... 1,264,207 21,185
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ............................................................. (39,315) --
Class A ............................................................... (73) --
------------ ------------
(39,388) --
------------ ------------
Net realized gain on investments
Class AAA ............................................................. (2,044,420) (973,344)
Class A ............................................................... (10,470) (9,260)
Class B ............................................................... (36) (13)
Class C ............................................................... (99,535) (24,564)
------------ ------------
(2,154,461) (1,007,181)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (2,193,849) (1,007,181)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Class AAA ............................................................. 883,790 (1,759,221)
Class A ............................................................... (40,998) 2,012
Class B ............................................................... 36 13
Class C ............................................................... 1,753 268,884
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ... 844,581 (1,488,312)
------------ ------------
REDEMPTION FEES ......................................................... 3 1
------------ ------------
NET DECREASE IN NET ASSETS .............................................. (85,058) (2,474,307)
NET ASSETS:
Beginning of period ..................................................... 9,661,530 12,135,837
------------ ------------
End of period (including undistributed net investment income of
$47,119 and $0, respectively) ......................................... $ 9,576,472 $ 9,661,530
============ ============
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. The Fund's primary objective is capital appreciation. The Fund's
Adviser currently characterizes small capitalization companies for the Fund as
those with a total market value at the time of investment not greater than that
of the largest company in the Russell 2000 Index or $3.0 billion, whichever is
greater. The Fund commenced investment operations on December 31, 2002.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("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 a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
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 fair valued 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
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value American Depository
Receipts 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)
================================================================================
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirement of SFAS 157 against
its current valuation policies to determine future applicability.
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, 2007, 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.
8
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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 AND INTEREST EXPENSE. 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". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the Federal
Funds rate on outstanding balances. This amount, if any, would be shown as
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under 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 capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the fiscal year ended September
30, 2006 was as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ... --
Net long-term capital gains ................. $1,007,181
----------
Total distributions paid .................... $1,007,181
==========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at March 31, 2007:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ -------------
Investments ......... $7,834,414 $2,013,636 $(241,261) $1,772,375
9
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for the Fund no later than its March 31, 2008 NAV, and is to be
applied to all open tax years as of the date of effectiveness. Management is
evaluating the application of the Interpretation to the Fund, and is not in a
position at this time to estimate the significance of its impact, if any, on the
Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. The Fund has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Fund will pay the Adviser a fee, computed daily
and paid monthly, at the annual rate of 1.00% of the value of its average daily
net assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are affiliated
persons of the Adviser.
The Adviser has agreed to waive its fees and reimburse expenses of the Fund to
the extent necessary to maintain the annualized total operating expenses
(exclusive of brokerage fees, interest, taxes, and extraordinary expenses) at
2.00%, 2.00%, 2.75%, and 2.75% of the value of the Fund's average daily net
assets for Class AAA, Class A, Class B, and Class C Shares, respectively. For
the six months ended March 31, 2007, the Adviser reimbursed the Fund in the
amount of $16,685. 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 the
applicable expense limitations. At March 31, 2007, the cumulative amount which
the Fund may repay the Adviser is $110,389.
The Corporation pays each Director that is not considered to be an affiliated
person an annual retainer of $6,000 plus $1,000 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $500 per meeting attended.
Directors who are directors or employees of the Adviser or an affiliated company
receive no compensation or expense reimbursement from the Fund.
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, 2007, other than short-term U.S. Government
securities, aggregated $2,529,436 and $3,981,837, respectively.
10
THE GABELLI WOODLAND SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
6. TRANSACTIONS WITH AFFILIATES. During the six months ended March 31, 2007, the
Fund paid brokerage commissions of $512 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $1,497 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. This amount, if any, is shown as "interest expense" in the
Statement of Operations. At March 31, 2007, 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, 2007 was $26,989 with a weighted average
interest rate of 6.03%. The maximum amount borrowed at any time during the six
months ended March 31, 2007 was $395,000.
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 1.00% 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.
The Fund imposes 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. 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, 2007 and the fiscal year ended September 30, 2006
amounted to $3 and $1, respectively.
The redemption fee will not apply to redemptions of shares where (i) the shares
were purchased through automatic reinvestment of dividends or other
distributions, (ii) the redemption is initiated by the Fund, (iii) the shares
were purchased through programs that collect the redemption fees at the program
level and remit them to the Fund, or (iv)the shares were purchased through
programs that the Adviser determines to have appropriate anti-short-term trading
policies in place or as to which the Adviser has received assurances that
look-through redemption fee procedures or effective anti-short-term trading
policies and procedures are in place.
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, 2007 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2006
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
CLASS AAA CLASS AAA
------------------------ -----------------------
Shares sold ............................................... 24,512 $ 322,692 75,819 $ 1,059,134
Shares issued upon reinvestment of distributions .......... 168,367 1,958,111 69,511 930,753
Shares redeemed ........................................... (106,043) (1,397,013) (269,630) (3,749,108)
-------- ----------- -------- -----------
Net increase/(decrease) ................................. 86,836 $ 883,790 (124,300) $(1,759,221)
======== =========== ======== ===========
CLASS A CLASS A
------------------------ -----------------------
Shares sold ............................................... 1,239 $ 16,101 1,276 $ 17,788
Shares issued upon reinvestment of distributions .......... 902 10,543 691 9,260
Shares redeemed ........................................... (4,553) (67,642) (1,812) (25,036)
-------- ----------- -------- -----------
Net increase/(decrease) ................................. (2,412) $ (40,998) 155 $ 2,012
======== =========== ======== ===========
CLASS B CLASS B
------------------------ -----------------------
Shares issued upon reinvestment of distributions .......... 3 $ 36 1 $ 13
-------- ----------- -------- -----------
Net increase ............................................ 3 $ 36 1 $ 13
======== =========== ======== ===========
CLASS C CLASS C
------------------------ -----------------------
Shares sold ............................................... 540 $ 6,300 18,046 $ 249,342
Shares issued upon reinvestment of distributions .......... 8,824 99,535 1,872 24,565
Shares redeemed ........................................... (8,887) (104,082) (378) (5,023)
-------- ----------- -------- -----------
Net increase ............................................ 477 $ 1,753 19,540 $ 268,884
======== =========== ======== ===========
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 received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. 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 SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------- --------------------------------------
Net
Net Asset Net Realized and Total Net
Period Value, Investment Unrealized from Net Realized
Ended Beginning Income/ Gain on Investment Investment Gain on Total
September 30 of Period (Loss)(a) Investments Operations Income Investments Distributions
- ------------ --------- ---------- ----------- ---------- ---------- ----------- -------------
CLASS AAA
2007(d) $13.35 $ 0.11 $1.61 $ 1.72 $(0.06) $(3.17) $(3.23)
2006 14.64 (0.12) 0.07 (0.05) -- (1.24) (1.24)
2005 12.79 (0.11) 2.69 2.58 -- (0.73) (0.73)
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
2007(d) $13.36 $ 0.18 $1.57 $ 1.75 $(0.02) $(3.17) $(3.19)
2006 14.65 (0.12) 0.07 (0.05) -- (1.24) (1.24)
2005 12.79 (0.09) 2.68 2.59 -- (0.73) (0.73)
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
2007(d) $13.37 $ 0.05 $1.63 $ 1.68 -- $(3.17) $(3.17)
2006 14.77 (0.25) 0.09 (0.16) -- (1.24) (1.24)
2005 12.98 (0.21) 2.73 2.52 -- (0.73) (0.73)
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
2007(d) $13.00 $ 0.06 $1.57 $ 1.63 -- $(3.17) $(3.17)
2006 14.39 (0.21) 0.06 (0.15) -- (1.24) (1.24)
2005 12.66 (0.20) 2.66 2.46 -- (0.73) (0.73)
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 Redemption End of Total Period Investment Reimburse- Reimburse- Turnover
September 30 Fees(a) Period Return+ (in 000's) Income/(Loss) ments(b) ments(c) Rate
- ------------ ---------- ------ ------- -------- ------------- ---------- ---------- ----------
CLASS AAA
2007(d) $0.00(e) $11.84 13.34% $ 9,135 1.76%(f) 2.02%(f) 2.35%(f) 26%
2006 0.00(e) 13.35 (0.35) 9,137 (0.84) 2.01 2.31 59
2005 0.00(e) 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)(f) 2.00(f) 15.05(f) 39
CLASS A
2007(d) $0.00(e) $11.92 13.60% $ 61 2.66%(f) 2.02%(f) 2.35%(f) 26%
2006 0.00(e) 13.36 (0.36) 100 (0.83) 2.01 2.31 59
2005 0.00(e) 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)(f) 2.00(f) 15.05(f) 39
CLASS B
2007(d) $0.00(e) $11.88 12.98% $ 0.1 0.75%(f) 2.77%(f) 3.10%(f) 26%
2006 0.00(e) 13.37 (1.19) 0.1 (1.77) 2.76 3.06 59
2005 0.00(e) 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)(f) 2.75(f) 15.80(f) 39
CLASS C
2007(d) $0.00(e) $11.46 12.94% $ 380 0.99%(f) 2.77%(f) 3.10%(f) 26%
2006 0.00(e) 13.00 (1.11) 425 (1.58) 2.76 3.06 59
2005 0.00(e) 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)(f) 2.75(f) 15.80(f) 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 distributions and does not reflect applicable
sales charges. Total return for a period of less than one year is not
annualized.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The Fund incurred interest expense during the six months ended March 31,
2007 and the fiscal year ended September 30, 2006. If interest expense had
not been incurred, the ratios of operating expenses to average net assets
would have been 2.00% and 2.00% (Class AAA), 2.00% and 2.00% (Class A),
2.75% and 2.75% (Class B), and 2.75% and 2.75% (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, 2007, unaudited.
(e) Amount represents less than $0.005 per share.
(f) Annualized.
(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. Custodian fee credits for the periods ended
March 31, 2007 and September 30, 2006 were minimal.
(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, 2007, 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 independent directors noted that the Fund's
performance was below average for the three year period and approximately
average for the one year period. The independent 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 independent 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
independent 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 independent directors also noted that the
management fee structure before waivers was the same as that in effect for most
of the Gabelli funds. The independent 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 independent
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.
14
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO and Westwood 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
SHAREHOLDER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
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 per share 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. ZIZZA & CO., LTD.
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.
- --------------------------------------------------------------------------------
GAB840Q107SR
[GRAPHIC OMITTED] E P
Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GABELLI
WOODLAND
SMALL CAP
VALUE
FUND
SEMI-ANNUAL REPORT
MARCH 31, 2007
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 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the 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 5/29/07
----------------------------------------------------------------------------
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 5/29/07
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date 5/29/07
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.