N-CSRS 1 d939519dncsrs.htm GABELLI DIVIDEND GROWTH FUND Gabelli Dividend Growth Fund

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             811-09377                    

            The Gabelli Dividend Growth Fund            

(Exact name of registrant as specified in charter)

One Corporate Center

                                 Rye, New York 10580-1422                                

(Address of principal executive offices) (Zip code)

Bruce N. Alpert

Gabelli Funds, LLC

One Corporate Center

                         Rye, New York 10580-1422                        

(Name and address of agent for service)

Registrant’s telephone number, including area code:   1-800-422-3554

Date of fiscal year end:   December 31

Date of reporting period:   June 30, 2015

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. § 3507.


Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.


The Gabelli Dividend Growth Fund

 

Semiannual Report — June 30, 2015

     LOGO     
  

 

 

 

Barbara G. Marcin, CFA 

 

  

To Our Shareholders,

     Portfolio Manager    

For the six months ended June 30, 2015, the net asset value (“NAV”) per Class AAA Share of The Gabelli Dividend Growth Fund increased 1.3% compared with an increase of 1.2% for the Standard & Poor’s (“S&P”) 500 Index. See below for additional performance information.

Enclosed are the financial statements, including the schedule of investments, as of June 30, 2015.

Comparative Results

 

Average Annual Returns through June 30, 2015 (a) (Unaudited)      Since  
          Six Months        1 Year        5 Year         10 Year        15 Year       Inception
 (8/26/99) 
 

  Class AAA (GABBX)

     1.33%            0.64%         13.48%         6.66%         4.75%         5.86%     

  S&P 500 Index

     1.23               7.42            17.34            7.89            4.36            4.62        

  Lipper Large Cap Value Fund Average

     0.12               3.89            15.36            6.71            5.09            4.77        

  Class A (GBCAX)

     1.34               0.62            13.48            6.67            4.77            5.88        

  With sales charge (b)

     (4.49)              (5.17)           12.14            6.04            4.36            5.49        

  Class C (GBCCX)

     0.96               (0.14)           12.63            5.87            4.16            5.29        

  With contingent deferred sales charge (c)

     (0.04)              (1.13)           12.63            5.87            4.16            5.29        

  Class I (GBCIX)

     1.43               0.85            13.76            6.93            4.94            6.05        

 

In the current prospectuses dated April 30, 2015, the expense ratios for Class AAA, A, C, and I Shares are 1.89%, 1.89%, 2.64%, and 1.64%, respectively. See page 7 for the expense ratios for the six months ended June 30, 2015. Class AAA and Class I Shares do not have a sales charge. The maximum sales charge for Class A Shares and Class C Shares is 5.75% and 1.00%, respectively.

  
(a)   

Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Returns would have been lower had Gabelli Funds, LLC (the “Adviser”) not reimbursed certain expenses of the Fund. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days after the date of purchase. Performance returns for periods of less than one year are not annualized. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus please visit our website at www.gabelli.com. The S&P 500 Index is a market capitalization weighted index of 500 large capitalization stocks commonly used to represent the U.S. equity market. The Lipper Large Cap Value Fund Average reflects the average performance of mutual funds classified in this particular category. Dividends are considered reinvested. You cannot invest directly in an index. The Class AAA Share NAVs are used to calculate performance for the periods prior to the issuance of Class A Shares and Class C Shares on December 31, 2003, and the Class I Shares on June 30, 2004.The actual performance of the Class A and Class C Shares would have been lower due to the additional fees and expenses associated with these classes of shares. The actual performance for the Class I Shares would have been higher due to the lower expenses related to this class of shares.

  
(b)   Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period.   
(c)   Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase.   


The Gabelli Dividend Growth Fund   
Disclosure of Fund Expenses (Unaudited)   
For the Six Month Period from January 1, 2015 through June 30, 2015    Expense Table

 

 

We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

The Expense Table below illustrates your Fund’s costs in two ways:

Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.

Hypothetical 5% Return:  This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

 

    Beginning
Account Value
01/01/15
  Ending
 Account Value 
06/30/15
   Annualized 
Expense
Ratio
  Expenses
Paid During
Period*

 

The Gabelli Dividend Growth Fund

 

Actual Fund Return

Class AAA

  $1,000.00   $1,013.30   1.84%   $  9.19

Class A

  $1,000.00   $1,013.40   1.84%   $  9.19

Class C

  $1,000.00   $1,009.60   2.59%   $12.91

Class I

  $1,000.00   $1,014.30   1.59%   $  7.94

Hypothetical 5% Return

Class AAA

  $1,000.00   $1,015.67   1.84%   $  9.20

Class A

  $1,000.00   $1,015.67   1.84%   $  9.20

Class C

  $1,000.00   $1,011.95   2.59%   $12.92

Class I

  $1,000.00   $1,016.91   1.59%   $  7.95

 

*

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 (181 days), then divided by 365.

 

 

2


Summary of Portfolio Holdings (Unaudited)

The following table presents portfolio holdings as a percent of net assets as of June 30, 2015:

The Gabelli Dividend Growth Fund

 

Financial Services

     20.4

Health Care

     16.7

Computer Software and Services

     13.7

Energy

     7.8

Diversified Industrial

     5.3

Entertainment

     5.0

Specialty Chemicals

     4.2

Automotive

     3.7

Food and Beverage

     3.0

Retail

     2.9

Metals and Mining

     2.9

Energy Services

     2.8

Paper and Forest Products

     2.4

Communications Equipment

     2.3

Water

     2.0

Electronics

     2.0

U.S. Government Obligations

     1.5

Telecommunications

     1.4
  

 

 

 

Other Assets and Liabilities (Net)

     (0.0 )%* 
  

 

 

 
         100.0
  

 

 

 

 

*

Amount represents less than (0.05)%

 

The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. 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 800-SEC-0330.

Proxy Voting

The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.

 

3


The Gabelli Dividend Growth Fund

Schedule of Investments — June 30, 2015 (Unaudited)

 

 

Shares

            

Cost

   

Market

Value

 
    

COMMON STOCKS — 98.5%

  

    

Automotive — 3.7%

  

   20,000         

General Motors Co.

  $ 675,236      $ 666,600   
  25,000         

Navistar International Corp.†

    739,368        565,750   
      

 

 

   

 

 

 
         1,414,604        1,232,350   
      

 

 

   

 

 

 
    

Communications Equipment — 2.3%

  

  27,300         

Cisco Systems Inc.

    611,615        749,658   
      

 

 

   

 

 

 
    

Computer Software and Services — 13.7%

  

  16,500         

Apple Inc.

    1,124,705        2,069,513   
  15,000         

eBay Inc.†

    773,020        903,600   
  1,300         

Google Inc., Cl. C†

    705,924        676,663   
  21,000         

Microsoft Corp.

    573,074        927,150   
      

 

 

   

 

 

 
           3,176,723        4,576,926   
      

 

 

   

 

 

 
    

Diversified Industrial — 5.3%

  

  28,000         

General Electric Co.

    488,174        743,960   
  10,000         

Honeywell International Inc.

    323,863        1,019,700   
      

 

 

   

 

 

 
         812,037        1,763,660   
      

 

 

   

 

 

 
    

Electronics — 2.0%

  

  21,600         

Intel Corp.

    490,712        656,964   
      

 

 

   

 

 

 
    

Energy — 7.8%

   
  2,000         

Apache Corp.

    171,419        115,260   
  2,000         

Chevron Corp.

    147,351        192,940   
  5,350         

ConocoPhillips

    227,880        328,543   
  23,000         

CONSOL Energy Inc.

    846,313        500,020   
  6,000         

Devon Energy Corp.

    359,387        356,940   
  6,000         

Exxon Mobil Corp.

    439,773        499,200   
  7,525         

Phillips 66

    215,472        606,214   
      

 

 

   

 

 

 
         2,407,595          2,599,117   
      

 

 

   

 

 

 
    

Energy Services — 2.8%

  

  7,800         

Halliburton Co.

    383,950        335,946   
  50,000         

Weatherford International plc†

    776,331        613,500   
      

 

 

   

 

 

 
         1,160,281        949,446   
      

 

 

   

 

 

 
    

Entertainment — 5.0%

  

  9,000         

The Walt Disney Co.

    307,957        1,027,260   
  20,000         

Twenty-First Century Fox Inc., Cl. A

    691,682        650,900   
      

 

 

   

 

 

 
         999,639        1,678,160   
      

 

 

   

 

 

 
    

Financial Services — 20.4%

  

  8,600         

American Express Co.

    457,329        668,392   
  21,000         

American International Group Inc.

    777,207        1,298,220   
  16,000         

Citigroup Inc.

    578,193        883,840   
  12,000         

CME Group Inc.

    640,042        1,116,720   
  12,000         

JPMorgan Chase & Co.

    412,688        813,120   
  17,000         

Morgan Stanley

    286,632        659,430   
  16,000         

The Blackstone Group LP

    503,171        653,920   
  5,000         

U.S. Bancorp

    166,500        217,000   
  11,000         

Waddell & Reed Financial Inc., Cl. A

    299,210        520,410   
      

 

 

   

 

 

 
         4,120,972        6,831,052   
      

 

 

   

 

 

 

Shares

            

Cost

   

Market

Value

 
    

Food and Beverage — 3.0%

  

  12,000           

Mondelēz International Inc., Cl. A

  $ 207,371      $ 493,680   
  5,400           

PepsiCo Inc.

    345,768        504,036   
      

 

 

   

 

 

 
         553,139        997,716   
      

 

 

   

 

 

 
    

Health Care — 16.7%

  

  12,200           

Baxter International Inc.

    825,220        853,146   
  6,487           

Bristol-Myers Squibb Co.

    165,712        431,645   
  4,000           

Eli Lilly & Co.

    166,519        333,960   
  7,000           

Gilead Sciences Inc.

    508,757        819,560   
  3,000           

Johnson & Johnson

    178,073        292,380   
  5,162           

Medtronic plc

    387,253        382,504   
  13,950           

Merck & Co. Inc.

    495,484        794,173   
  28,575           

Pfizer Inc.

    674,008        958,120   
  14,754           

Zoetis Inc.

    452,851        711,438   
      

 

 

   

 

 

 
         3,853,877        5,576,926   
      

 

 

   

 

 

 
    

Metals and Mining — 2.9%

  

  20,000           

Barrick Gold Corp.

    364,548        213,200   
  25,000           

Freeport-McMoRan Inc.

    854,151        465,500   
  12,000           

Newmont Mining Corp.

    488,021        280,320   
      

 

 

   

 

 

 
         1,706,720        959,020   
      

 

 

   

 

 

 
    

Paper and Forest Products — 2.4%

  

  17,000           

International Paper Co.

    488,794        809,030   
      

 

 

   

 

 

 
    

Retail — 2.9%

   
  30,000           

Best Buy Co. Inc.

    795,811        978,300   
      

 

 

   

 

 

 
    

Specialty Chemicals — 4.2%

  

  8,000           

E. I. du Pont de Nemours and Co.

    296,906        511,600   
  8,000           

H.B. Fuller Co.

    305,417        324,960   
  11,000           

The Dow Chemical Co.

    308,351        562,870   
      

 

 

   

 

 

 
         910,674        1,399,430   
      

 

 

   

 

 

 
    

Telecommunications — 1.4%

  

  10,260           

Verizon Communications Inc.

    399,351        478,219   
      

 

 

   

 

 

 
    

Water — 2.0%

  

  18,000           

Xylem Inc.

    480,940        667,260   
      

 

 

   

 

 

 
    

TOTAL COMMON STOCKS

    24,383,484        32,903,234   
      

 

 

   

 

 

 

Principal
 Amount

                      
    

U.S. GOVERNMENT OBLIGATIONS — 1.5%

  

$    515,000        

U.S. Treasury Bills,
0.010% to 0.020%††,
10/01/15 to 11/05/15

    514,970        514,976   
      

 

 

   

 

 

 
    

TOTAL INVESTMENTS — 100.0%

  $ 24,898,454        33,418,210   
      

 

 

   
    

Other Assets and Liabilities (Net) — 0.0%

   

    5,721   
        

 

 

 
    

NET ASSETS — 100.0%

    $ 33,423,931   
        

 

 

 

 

†         Non-income producing security.

††       Represents annualized yield at date of purchase.

 

 

See accompanying notes to financial statements.

 

4


The Gabelli Dividend Growth Fund

 

Statement of Assets and Liabilities

June 30, 2015 (Unaudited)

 

 

Assets:

 

Investments, at value (cost $24,898,454)

    $33,418,210   

Cash

    448   

Receivable for Fund shares sold

    18,502   

Dividends receivable

    37,072   

Prepaid expenses

             40,181   

Total Assets

      33,514,413   

Liabilities:

 

Payable for Fund shares redeemed

    28,193   

Payable for investment advisory fees

    28,246   

Payable for distribution fees

    6,759   

Payable for legal and audit fees

    14,886   

Payable for shareholder communications expenses

    7,595   

Other accrued expenses

               4,803   

Total Liabilities

             90,482   

Net Assets
(applicable to 1,763,951 shares outstanding)

    $33,423,931   

Net Assets Consist of:

 

Paid-in capital

    $23,117,601   

Accumulated net investment income

    68,707   

Accumulated net realized gain on investments and foreign currency transactions

    1,717,867   

Net unrealized appreciation on investments

        8,519,756   

Net Assets

    $33,423,931   
Shares of Beneficial Interest, each at $0.001 par value; unlimited number of shares authorized:    

Class AAA:

 

Net Asset Value, offering, and redemption price per share ($22,099,758 ÷ 1,163,898 shares outstanding)

    $18.99   

Class A:

 

Net Asset Value and redemption price per share ($4,163,124 ÷ 219,661 shares outstanding)

    $18.95   

Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price)

    $20.11   

Class C:

 

Net Asset Value and offering price per share ($1,437,040 ÷ 80,574 shares outstanding)

    $17.84 (a) 

Class I:

 

Net Asset Value, offering, and redemption price per share ($5,724,009 ÷ 299,818 shares outstanding)

    $19.09   

 

(a)

  Redemption price varies based on the length of time held.

Statement of Operations

For the Year Ended June 30, 2015 (Unaudited)

 

 

 

Investment Income:

  

Dividends (net of foreign withholding taxes of $2,231)

   $ 360,740   

Interest

     27   
  

 

 

 

Total Investment Income

     360,767   
  

 

 

 

Expenses:

  

Investment advisory fees

     170,248   

Distribution fees - Class AAA

     28,329   

Distribution fees - Class A

     4,983   

Distribution fees - Class C

     7,795   

Registration expenses

     23,837   

Shareholder communications expenses

     21,436   

Shareholder services fees

     16,717   

Trustees’ fees

     14,876   

Legal and audit fees

     12,171   

Custodian fees

     3,963   

Interest expense

     533   

Miscellaneous expenses

     8,055   
  

 

 

 

Total Expenses

     312,943   
  

 

 

 

Less:

  

Expenses paid indirectly by broker
(See Note 6)

     (1,569
  

 

 

 

Net Expenses

     311,374   
  

 

 

 

Net Investment Income

     49,393   
  

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency:

  

Net realized gain on investments

     1,771,277   

Net realized loss on foreign currency transactions

     (53
  

 

 

 

Net realized gain on investments and foreign currency transactions

     1,771,224   
  

 

 

 

Net change in unrealized appreciation/depreciation on investments

     (1,387,089
  

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency

     384,135   
  

 

 

 

Net Increase in Net Assets Resulting from Operations

   $ 433,528   
  

 

 

 
 

 

See accompanying notes to financial statements.

 

5


The Gabelli Dividend Growth Fund

Statement of Changes in Net Assets

 

 

     Six Months Ended    
     June 30, 2015   Year Ended
     (Unaudited)   December 31, 2014

Operations:

        

Net investment income

     $ 49,393       $ 472,545  

Net realized gain on investments and foreign currency transactions

       1,771,224         2,355,410  

Net change in unrealized depreciation on investments

       (1,387,089 )       (696,142 )
    

 

 

     

 

 

 

Net Increase in Net Assets Resulting from Operations

       433,528         2,131,813  
    

 

 

     

 

 

 

Distributions to Shareholders:

        

Net investment income

        

Class AAA

               (313,419 )

Class A

               (52,384 )

Class C

               (12,681 )

Class I

               (86,744 )
    

 

 

     

 

 

 
               (465,228 )
    

 

 

     

 

 

 

Net realized gain

        

Class AAA

               (1,578,825 )

Class A

               (257,894 )

Class C

               (117,639 )

Class I

               (365,094 )
    

 

 

     

 

 

 
               (2,319,452 )
    

 

 

     

 

 

 

Total Distributions to Shareholders

               (2,784,680 )
    

 

 

     

 

 

 

Shares of Beneficial Interest Transactions:

        

Class AAA

       (1,663,745 )       (1,248,594 )

Class A

       313,496         834,630  

Class C

       (229,471 )       81,029  

Class I

       (234,984 )       1,982,371  
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets from Shares of Beneficial Interest Transactions

       (1,814,704 )       1,649,436  
    

 

 

     

 

 

 

Redemption Fees

               12  
    

 

 

     

 

 

 

Net Increase/Decrease in Net Assets

       (1,381,176 )       996,581  

Net Assets:

        

Beginning of year

       34,805,107         33,808,526  
    

 

 

     

 

 

 

End of period (including undistributed net investment income of $68,707 and $19,314, respectively)

     $ 33,423,931       $ 34,805,107  
    

 

 

     

 

 

 

 

See accompanying notes to financial statements.

 

6


The Gabelli Dividend Growth Fund

Financial Highlights

 

Selected data for a share of beneficial interest outstanding throughout each period:

        Income (Loss)                             Ratios to Average Net Assets/
        from Investment Operations   Distributions                 Supplemental Data
            Net                                                  
            Realized                                             Operating    
            and                       Net                     Expenses    
    Net Asset   Net   Unrealized           Net           Asset             Net   Operating   Net of    
    Value,   Investment   Gain (Loss)   Total from   Net   Realized           Value,         Net Assets,   Investment   Expenses   Reimbursement   Portfolio   
 Year Ended   Beginning   Income   on   Investment   Investment   Gain on   Total   Redemption   End of   Total     End of Period   Income   Before   and   Turnover   

December 31

 

of Period

 

(Loss)(a)

 

Investments

 

Operations

 

Income

 

Investments

 

Distributions

 

Fees (a)(b)

 

Period

 

Return†

   

(in 000’s)

 

(Loss)

 

Reimbursement

 

Credits

  Rate   
Class AAA                              
   2015(c)   $18.74   $ 0.03   $ 0.22   $ 0.25          —        —         —        —   $18.99     1.3%      $22,100    0.27%(d)     1.85%(d)   1.84%(d)(e)       11%
   2014     19.10      0.28      0.98      1.26   $(0.27)   $(1.35)   $(1.62)   $0.00     18.74     6.4           23,476    1.40     1.89   1.89(f)                23  
   2013     15.10      0.11      4.66      4.77     (0.09)     (0.68)     (0.77)     0.00     19.10     31.7           25,051    0.64     2.00   2.00(f)                12  
   2012     13.71      0.18      1.40      1.58     (0.19)        —     (0.19)     0.00     15.10     11.5           18,621    1.21     2.11   2.00                    20  
   2011     13.82      0.04      (0.11)      (0.07)     (0.04)        —     (0.04)     0.00     13.71     (0.5)          21,551    0.28     2.00   2.00(f)                45  
   2010     12.25      (0.02)      1.59      1.57          —        —         —        —     13.82     12.8           25,152   (0.14)     2.12   2.00                    42  
Class A                              
   2015(c)   $18.70   $ 0.03   $ 0.22   $ 0.25          —        —         —        —   $18.95     1.3%      $  4,163    0.27%(d)     1.85%(d)   1.84%(d)(e)       11%
   2014     19.07      0.27      0.98      1.25   $(0.27)   $(1.35)   $(1.62)   $0.00     18.70     6.4             3,805    1.35     1.89   1.89(f)                 23  
   2013     15.09      0.12      4.64      4.76     (0.10)     (0.68)     (0.78)     0.00     19.07     31.6             3,062    0.66     2.00   2.00(f)                12  
   2012     13.70      0.17      1.41      1.58     (0.19)        —     (0.19)     0.00     15.09     11.6             1,421    1.18     2.11   2.00                   20  
   2011     13.82      0.04      (0.11)      (0.07)     (0.05)        —     (0.05)     0.00     13.70     (0.5)            1,451    0.32     2.00   2.00(f)                45  
   2010     12.25      (0.02)      1.59      1.57          —        —         —        —     13.82     12.8             1,153   (0.14)     2.12   2.00                   42  
Class C                              
   2015(c)   $17.67   $(0.04)   $ 0.21   $ 0.17          —        —         —        —   $17.84     1.0%      $  1,437   (0.49)%(d)     2.60%(d)   2.59%(d)(e)       11%
   2014     18.11      0.11      0.95      1.06   $(0.15)   $(1.35)   $(1.50)   $0.00     17.67     5.7             1,654    0.59     2.64   2.64(f)                23  
   2013     14.39      (0.02)      4.42      4.40     (0.00)(b)     (0.68)     (0.68)     0.00     18.11     30.6             1,630   (0.10)     2.75   2.75(f)                12  
   2012     13.12      0.07      1.32      1.39     (0.12)        —     (0.12)     0.00     14.39     10.6             1,103    0.51     2.86   2.75                   20  
   2011     13.28      (0.05)      (0.11)      (0.16)          —        —         —     0.00     13.12     (1.2)               600   (0.41)     2.75   2.75(f)               45  
   2010     11.86      (0.11)      1.53      1.42          —        —         —        —     13.28     12.0                424   (0.90)     2.87   2.75                   42  
Class I                              
   2015(c)   $18.82   $ 0.05   $ 0.22   $ 0.27          —        —         —        —   $19.09     1.4%      $  5,724    0.53%(d)     1.60%(d)   1.59%(d)(e)       11%
   2014     19.17      0.31      1.01      1.32   $(0.32)   $(1.35)   $(1.67)   $0.00     18.82     6.7             5,870    1.53     1.64   1.64(f)                23  
   2013     15.15      0.16      4.67      4.83     (0.13)     (0.68)     (0.81)     0.00     19.17     32.0             4,066    0.89     1.75   1.75(f)                12
   2012     13.76      0.22      1.40      1.62     (0.23)        —     (0.23)     0.00     15.15     11.8             2,913    1.50     1.86   1.75                   20  
   2011     13.87      0.08      (0.11)      (0.03)     (0.08)        —     (0.08)     0.00     13.76     (0.2)            1,800    0.57     1.75   1.75(f)                45  
   2010     12.26      0.01      1.60      1.61          —        —         —     0.00     13.87     13.1             1,575    0.11     1.87   1.75                   42  

 

   †

Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized.

(a)

Per share amounts have been calculated using the average shares outstanding method.

(b)

Amount represents less than $0.005 per share.

(c)

For the six months ended June 30, 2015, unaudited.

(d)

Annualized.

(e)

The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. Had such payments not been made, the expense ratios for the six months ended June 30, 2015 would have been 1.85%, 1.85%, 2.60%, and 1.60% for Class AAA, Class A, Class C, and Class I, respectively.

(f)

Under an expense deferral agreement with the Adviser, the Adviser recovered from the Fund $10,696, $16,430 and $13,570 for the years ended December 31, 2014, 2013, and 2011, respectively, representing previously reimbursed expenses from the Adviser. Had such payments not been made, the expense ratios would have been 1.86%, 1.94% and 1.95% (Class AAA and Class A) 2.61%, 2.69% and 2.70% (Class C), and 1.61%, 1.69% and 1.70% (Class I). During the years ended December 31, 2012 and 2010, the Adviser did not recover any previously reimbursed expenses.

 

See accompanying notes to financial statements.

 

7


The Gabelli Dividend Growth Fund

Notes to Financial Statements (Unaudited)

 

1. Organization. The Gabelli Dividend Growth Fund was organized on May 13, 1999 as a Delaware statutory trust. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s primary objective is long term growth of capital with current income as a secondary objective. The Fund commenced operations on August 26, 1999.

2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

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 Trustees (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 sixty 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 sixty 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. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.

Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.

 

8


The Gabelli Dividend Growth Fund

Notes to Financial Statements (Unaudited) (Continued)

 

 

The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:

 

   

Level 1 — quoted prices in active markets for identical securities;

 

   

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and

 

   

Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of June 30, 2015 is as follows:

 

     Investments
     in Securities
     (Market Value)

Valuation Inputs*

   Assets

Level 1 - Quoted Prices

     $ 32,903,234  

Level 2 - Other Significant Observable Inputs

       514,976  
    

 

 

 

Total

     $ 33,418,210  
    

 

 

 

 

*

Portfolio holdings designated in Level 1 are disclosed individually in the Schedule of Investments (“SOI”). Please refer to the SOI for the industry classifications of these portfolio holdings. Level 2 consists of U.S. Government Obligations.

The Fund did not have transfers between Level 1 and Level 2 during the six months ended June 30, 2015. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.

There were no Level 3 investments held at June 30, 2015 or December 31, 2014.

Additional Information to Evaluate Qualitative Information.

General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding

 

9


The Gabelli Dividend Growth Fund

Notes to Financial Statements (Unaudited) (Continued)

 

 

factors do not apply. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.

The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.

Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.

Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.

Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on 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 from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.

Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.

In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.

Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains 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.

 

10


The Gabelli Dividend Growth Fund

Notes to Financial Statements (Unaudited) (Continued)

 

 

The tax character of distributions paid during the year ended December 31, 2014 was as follows:

 

Distributions paid from:

  

Ordinary income

   $ 465,228   

Net long term capital gains

     2,319,452   
  

 

 

 

 

Total distributions paid

   $ 2,784,680   
  

 

 

 

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 Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses.

The following summarizes the tax cost of investments and the related net unrealized appreciation at June 30, 2015:

 

                 Gross         Gross            
                 Unrealized         Unrealized           Net Unrealized
     Cost              Appreciation            Depreciation              Appreciation

 

Investments

     $24,952,956          $10,140,238         $(1,674,984)          $8,465,254

The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the six months ended June 30, 2015, the Fund did not incur any income tax, interest, or penalties. As of June 30, 2015, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

3. Investment Advisory Agreement and Other Transactions.  The Fund has entered into an investment advisory agreement (the “Advisory Agreement”) with the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, at the annual rate of 1.00% of the value of its average daily net assets. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Trustees of the Fund who are affiliated persons of the Adviser.

The Adviser has contractually agreed to waive its advisory fee and/or reimburse expenses of the Fund to the extent necessary to maintain the annualized total operating expenses of the Fund (exclusive of brokerage fees, interest, taxes, acquired fund fees and expenses, and extraordinary expenses) until at least May 1, 2016, at no more than 2.00%, 2.00%, 2.75%, and 1.75%, respectively, of Class AAA, Class A, Class C, and Class I Shares’ average daily net assets. In addition, the Fund has agreed, during the two year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent, that after giving the effect to the repayment, such adjusted annualized total operating expenses of the Fund would not exceed 2.00%, 2.00%, 2.75%, and 1.75% of the value of the Fund’s average daily net assets for Class AAA, Class A, Class C, and

 

11


The Gabelli Dividend Growth Fund

Notes to Financial Statements (Unaudited) (Continued)

 

 

Class I, respectively. The Fund is obliged to repay the Adviser for a period of two years following the year in which the Adviser reimbursed the Fund only to the extent that the operating expenses of the Fund, after giving effect to the recovery by the Adviser, would not exceed the foregoing limitations. The agreement is renewable annually.

The Fund pays each Trustee who is not considered an affiliated person an annual retainer of $3,000 plus $500 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 and the Chairman of the Audit Committee and the Lead Trustee each receive a $1,000 annual fee. A Trustee may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Trustees 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, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the “Distributor”), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.

5. Portfolio Securities.  Purchases and sales of securities during the six months ended June 30, 2015, other than short term securities and U.S. Government obligations, aggregated $3,598,394 and $5,897,643, respectively.

6. Transactions with Affiliates and Other Arrangements.  The Distributor retained a total of $4,710 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.

During the six months ended June 30, 2015, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $1,569.

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. The Adviser did not seek a reimbursement during the six months ended June 30, 2015.

7. Line of Credit.  The Fund participates in an unsecured line of credit of up to $75,000,000 under which it may borrow up to 15% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at the higher of the sum of the overnight LIBOR rate plus 125 basis points or the sum of the federal funds rate plus 125 basis points at the time of borrowing. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At June 30, 2015, there were no borrowings under the line of credit.

The average daily amount of borrowings outstanding under the line of credit during the six months ended June 30, 2015 was $60,839 with a weighted average interest rate of 1.15%. The maximum amount borrowed at any time during the six months ended June 30, 2015 was $397,000.

8. Shares of Beneficial Interest.  The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA Shares are offered without a sales charge only to investors

 

12


The Gabelli Dividend Growth Fund

Notes to Financial Statements (Unaudited) (Continued)

 

 

who acquire them directly from the Distributor, through selected broker/dealers, or the transfer agent. Class I Shares are offered without a sales charge, directly through the Distributor, or brokers that have entered into selling agreements specifically with respect to Class I Shares. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.

The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended June 30, 2015 and the year ended December 31, 2014, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.

Transactions in shares of beneficial interest were as follows:

 

       Six Months Ended         
       June 30, 2015      Year Ended  
       (Unaudited)      December 31, 2014  
      

 

 Shares 

       Amount         Shares         Amount    

Class AAA

             

Shares sold

       50,413       $ 971,105         139,348       $ 2,758,010   

Shares issued upon reinvestment of distributions

                       94,791         1,802,927   

Shares redeemed

       (139,383      (2,634,850      (293,139      (5,809,531
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Net decrease

       (88,970    $ (1,663,745      (59,000    $ (1,248,594
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Class A

             

Shares sold

       46,661       $ 892,228         83,208       $ 1,614,115   

Shares issued upon reinvestment of distributions

                       15,739         298,716   

Shares redeemed

       (30,454      (578,732      (56,079      (1,078,201
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Net increase

       16,207       $ 313,496         42,868       $ 834,630   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Class C

             

Shares sold

       14,086       $ 255,438         22,859       $ 436,410   

Shares issued upon reinvestment of distributions

                       7,222         129,496   

Shares redeemed

       (27,121      (484,909      (26,428      (484,877
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Net increase/(decrease)

       (13,035    $ (229,471      3,653       $ 81,029   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Class I

             

Shares sold

       13,480       $ 257,605         104,087       $ 2,086,092   

Shares issued upon reinvestment of distributions

                       22,274         425,441   

Shares redeemed

       (25,632      (492,589      (26,490      (529,162
    

 

 

    

 

 

    

 

 

    

 

 

 

 

Net increase/(decrease)

       (12,152    $ (234,984      99,871       $ 1,982,371   
    

 

 

    

 

 

    

 

 

    

 

 

 

9. Indemnifications.  The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

10. Subsequent Events.  Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.

 

13


The Gabelli Dividend Growth Fund

Board Consideration and Re-Approval of Investment Advisory Agreements (Unaudited)

At its meeting on February 12, 2015, the Board of Trustees (“Board”) of the Fund approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the trustees who are not “interested persons” of the Fund (the “Independent Board Members”). The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.

Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.

Investment Performance. The Independent Board Members reviewed the short, medium, and long term performance of the Fund since inception against a peer group of large-cap value funds. The Independent Board Members noted that the Fund’s performance was in the fourth quartile for the one, three, and five year periods. The Independent Board Members noted that he Fund had changed its investment strategy in November 2011.

Profitability.  The Independent Board Members 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 Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that another affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate amount of soft dollar benefits through the Fund’s portfolio brokerage.

Economies of Scale.  The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale. The Independent Board Members noted that the Fund needed significantly more assets before any potential economies of scale could be realized.

Sharing of Economies of Scale.  The Independent Board Members noted that the investment advisory fee schedule for the Fund does not take into account any potential economies of scale that may develop or any historical losses or diminished profitability to the Adviser in prior years.

Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment advisory fee, other expenses, and total expenses of the Fund with similar expense ratios of the peer group of large-cap value funds and noted that the advisory fee includes substantially all administrative services for the Fund as well as the investment advisory services of the Adviser. The Independent Board Members noted that the Fund’s expense ratios were above average and the Fund’s size was below average within these groups. The Independent Board Members also noted that an advisory fee waiver structure was in effect for the Fund. The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fee with the fees for other types of accounts managed by affiliates of the Adviser.

Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and a reasonable performance record. The Independent Board Members also concluded that the Fund’s expense ratios and low 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 Board Members did not view the potential

 

14


The Gabelli Dividend Growth Fund

Board Consideration and Re-Approval of Investment Advisory Agreements (Unaudited) (Continued)

 

profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreement to the full Board.

Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.

 

15


 

Gabelli/GAMCO Funds and Your Personal Privacy

 

Who are we?

 

The Gabelli/GAMCO Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC and GAMCO Asset Management 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 fund shareholder?

 

If you apply to open an account directly with us, you will be giving us some non-public information about yourself. The non-public information we collect about you is:

 

   

Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information.

 

   

Information about your transactions with us, any transactions with our affiliates, and transactions with the entities we hire to provide services to you. This would include information about the shares that you buy or redeem. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them.

 

What information do we disclose and to whom do we disclose it?

 

We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www.sec.gov.

 

What do we do to protect your personal information?

 

We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential.

 

 




 

 

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THE GABELLI DIVIDEND GROWTH FUND

One Corporate Center

Rye, NY 10580-1422

 

Portfolio Manager Biography

Barbara G. Marcin, CFA, joined GAMCO Investors, Inc. in 1999 and currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Fund Complex. Prior to joining GAMCO, Ms. Marcin was head of value investments at Citibank Global Asset Management. Ms. Marcin graduated with Distinction as an Echols Scholar from the University of Virginia and holds an MBA degree from Harvard University’s Graduate School of Business.

 

 

 

 

 

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. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.

 


 

THE GABELLI DIVIDEND GROWTH FUND

 

One Corporate Center

 

Rye, New York 10580-1422

 

t   800-GABELLI  (800-422-3554)

 

f   914-921-5118

 

e  info@gabelli.com

 

    GABELLI.COM

 

   LOGO
Net Asset Value per share available daily   

by calling 800-GABELLI after 7:00 P.M.

 

  

 

BOARD OF TRUSTEES

 

Mario J. Gabelli, CFA

Chairman and

Chief Executive Officer,

GAMCO Investors, Inc.

 

Anthony J. Colavita

President,

Anthony J. Colavita, P.C.

 

Vincent D. Enright

Former Senior Vice

President and Chief

Financial Officer,

KeySpan Corp.

 

Mary E. Hauck

Former Senior Portfolio

Manager,

Gabelli-O’Connor Fixed

Income Mutual Fund

Management Co.

 

Kuni Nakamura

President,

Advanced Polymer, Inc.

 

Werner J. Roeder, MD

Former Medical Director,

Lawrence Hospital

 

  

 

OFFICERS

 

Bruce N. Alpert

President

 

Andrea R. Mango

Secretary

 

Agnes Mullady

Treasurer

 

Richard J. Walz

Chief Compliance Officer

 

DISTRIBUTOR

 

G.distributors, LLC

 

CUSTODIAN, TRANSFER

AGENT, AND DIVIDEND

DISBURSING 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 Dividend Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.

 

  
       

GAB402Q215SR

     
     
     
     


Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Investments.

 

(a)

Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

 

(b)

Not applicable.

 

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.


Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Trustees, 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)

 

    The Gabelli Dividend Growth Fund

 

By (Signature and Title)*

 

    /s/ Bruce N. Alpert

 

        Bruce N. Alpert, Principal Executive Officer

 

Date

 

    09/02/2015

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

 

    09/02/2015

 

By (Signature and Title)*

 

    /s/ Agnes Mullady

 

        Agnes Mullady, Principal Financial Officer and Treasurer

 

Date

 

    09/02/2015

* Print the name and title of each signing officer under his or her signature.