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 811-22021
The Gabelli Healthcare & Wellness(Rx) Trust
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Agnes Mullady
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: December 31, 2008
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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST LOGO)
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
Annual Report
December 31, 2008
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2008.
COMPARATIVE RESULTS
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2008 (a)
Since
Inception
Quarter 1 Year (06/28/07)
------- ------ ----------
GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NAV TOTAL RETURN (b) .................... (14.70)% (22.03)% (14.61)%
INVESTMENT TOTAL RETURN (c) ............. (9.63) (28.63) (25.78)
S&P 500 Index .............................. (21.95) (36.99) (27.17)(d)
S&P 500 Health Care Index .................. (12.10) (22.81) (15.46)
S&P 500 Consumer Staples Index ............. (12.83) (15.43) (5.41)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
WHEN SHARES ARE SOLD, 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. 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
S&P 500 INDEX IS AN UNMANAGED INDICATOR OF STOCK MARKET PERFORMANCE. THE
S&P 500 HEALTH CARE INDEX IS AN UNMANAGED INDICATOR OF HEALTH CARE
EQUIPMENT AND SERVICES, PHARMACEUTICALS, BIOTECHNOLOGY, AND LIFE SCIENCES
STOCK PERFORMANCE. THE S&P 500 CONSUMER STAPLES INDEX IS AN UNMANAGED
INDICATOR OF FOOD AND STAPLES RETAILING, FOOD, BEVERAGE AND TOBACCO, AND
HOUSEHOLD AND PERSONAL PRODUCTS STOCK PERFORMANCE. DIVIDENDS ARE CONSIDERED
REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN THE NET ASSET
VALUE ("NAV") PER SHARE AND REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE
EX-DIVIDEND DATE AND ARE NET OF EXPENSES. SINCE INCEPTION RETURN IS BASED
ON AN INITIAL NAV OF $8.00.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE AND REINVESTMENT OF DISTRIBUTIONS.
SINCE INCEPTION RETURN IS BASED ON AN INITIAL OFFERING PRICE OF $8.00.
(d) FROM JUNE 30, 2007, THE DATE CLOSEST TO THE FUND'S INCEPTION FOR WHICH DATA
IS AVAILABLE.
Sincerely yours,
/s/ Agnes Mullady
Agnes Mullady
President
February 20, 2009
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments as of December 31, 2008:
Food .................................................................. 27.5%
Health Care Equipment and Supplies .................................... 17.4%
U.S. Government Obligations ........................................... 14.9%
Health Care Providers and Services .................................... 10.5%
Food and Staples Retailing ............................................ 10.0%
Pharmaceuticals ....................................................... 8.2%
Beverages ............................................................. 6.8%
Biotechnology ......................................................... 2.3%
Computers and Peripheral .............................................. 0.9%
Chemicals ............................................................. 0.7%
Consumer Services and Supplies ........................................ 0.7%
Computer Software and Services ........................................ 0.1%
-----
100.0%
=====
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST (THE "FUND") WILL FILE 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 SEPTEMBER 30, 2008.
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; and (iii) visiting the SEC's website at
www.sec.gov.
2
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
----------- ----------- ------------
COMMON STOCKS -- 85.0%
BEVERAGES -- 6.8%
45,000 Dr. Pepper Snapple Group Inc.+ ...... $ 1,162,935 $ 731,250
12,000 Hansen Natural Corp.+ ............... 483,967 402,360
70,000 ITO EN Ltd. ......................... 1,504,670 1,020,849
6,000 ITO EN Ltd., Preference ............. 136,369 59,636
12,000 PepsiCo Inc. ........................ 800,300 657,240
14,000 The Coca-Cola Co. ................... 738,261 633,780
100,000 Vitasoy International
Holdings Ltd. .................... 35,811 44,515
----------- ------------
4,862,313 3,549,630
----------- ------------
BIOTECHNOLOGY -- 2.3%
25,000 3SBio Inc., ADR+ .................... 311,281 195,000
200 Arena Pharmaceuticals Inc.+ ......... 2,222 834
40,000 Array Biopharma Inc.+ ............... 456,689 162,000
6,500 Cephalon Inc.+ ...................... 458,994 500,760
6,000 Crucell NV, ADR+ .................... 88,665 90,900
25,000 CytRx Corp.+ ........................ 47,750 7,750
5,000 Gilead Sciences Inc.+ ............... 207,845 255,700
2,593 RXi Pharmaceuticals Corp.+ .......... 38,843 14,910
----------- ------------
1,612,289 1,227,854
----------- ------------
CHEMICALS -- 0.7%
12,000 International Flavors &
Fragrances Inc. .................. 571,938 356,640
----------- ------------
COMPUTER SOFTWARE AND SERVICES -- 0.1%
5,000 eResearch Technology Inc. + ......... 42,619 33,150
----------- ------------
COMPUTERS AND PERIPHERAL -- 0.9%
11,000 Quality Systems Inc. ................ 351,369 479,820
----------- ------------
CONSUMER SERVICES AND SUPPLIES -- 0.7%
12,000 Weight Watchers
International Inc. ............... 462,132 353,040
----------- ------------
FOOD -- 27.5%
12,800 Cadbury plc, ADR .................... 693,535 456,576
40,000 Campbell Soup Co. ................... 1,437,303 1,200,400
85,000 Dean Foods Co.+ ..................... 1,896,726 1,527,450
50,000 Del Monte Foods Co. ................. 503,345 357,000
22,000 Flowers Foods Inc. .................. 463,990 535,920
20,000 General Mills Inc. .................. 1,136,982 1,215,000
20,000 Groupe Danone ....................... 1,542,303 1,200,445
12,000 H.J. Heinz Co. ...................... 533,871 451,200
30,000 Hain Celestial Group Inc.+ .......... 869,430 572,700
17,000 Kellogg Co. ......................... 861,718 745,450
16,000 Kerry Group plc, Cl. A .............. 419,845 294,691
56,000 Kikkoman Corp. ...................... 717,679 649,266
59,000 Lifeway Foods Inc.+ ................. 629,880 529,820
100,000 Meiji Seika Kaisha Ltd. ............. 491,785 472,146
15,000 Morinaga Milk Industry Co. Ltd. ..... 48,287 57,749
39,000 Nestle SA ........................... 1,571,277 1,524,311
10,000 Parmalat SpA ........................ 28,587 16,194
6,000 Rock Field Co. Ltd. ................. 81,896 78,235
84,400 Smart Balance Inc.+ ................. 644,707 573,920
15,000 The J.M. Smucker Co. ................ 757,913 650,400
20,000 Tingyi (Cayman Islands)
Holding Corp. .................... 24,537 23,173
14,000 Wimm-Bill-Dann Foods OJSC, ADR+ ..... 956,955 368,340
40,000 YAKULT HONSHA Co. Ltd. .............. 963,651 842,361
----------- ------------
17,276,202 14,342,747
----------- ------------
MARKET
SHARES COST VALUE
----------- ----------- ------------
FOOD AND STAPLES RETAILING -- 10.0%
6,000 Costco Wholesale Corp. .............. $ 347,483 $ 315,000
36,000 CVS Caremark Corp. .................. 1,295,865 1,034,640
12,000 SUPERVALU Inc. ...................... 399,638 175,200
28,000 The Great Atlantic &
Pacific Tea Co. Inc.+ ............ 560,153 175,560
30,000 UST Inc. ............................ 2,051,247 2,081,400
500 Village Super Market Inc., Cl. A .... 23,378 28,695
10,000 Wal-Mart Stores Inc. ................ 458,576 560,600
24,000 Walgreen Co. ........................ 882,059 592,080
27,000 Whole Foods Market Inc. ............. 669,022 254,880
----------- ------------
6,687,421 5,218,055
----------- ------------
HEALTH CARE EQUIPMENT AND
SUPPLIES -- 17.3%
14,000 Advanced Medical Optics Inc.+ ....... 282,125 92,540
7,500 Align Technology Inc.+ .............. 88,408 65,625
28,187 AMDL Inc.+ .......................... 84,606 19,449
161,813 AMDL Inc.+ (a) ...................... 351,597 111,651
40,000 AngioDynamics Inc.+ ................. 729,281 547,600
20,000 Boston Scientific Corp.+ ............ 243,780 154,800
16,000 Covidien Ltd. ....................... 652,545 579,840
33,000 Cutera Inc.+ ........................ 487,963 292,710
24,000 Datascope Corp. ..................... 1,232,236 1,253,760
21,100 ev3 Inc.+ ........................... 345,702 128,710
26,000 Greatbatch Inc.+ .................... 644,549 687,960
10,000 Henry Schein Inc.+ .................. 446,346 366,900
15,000 Hologic Inc+ ........................ 284,551 196,050
27,000 Inverness Medical
Innovations Inc.+ ................ 652,312 510,570
14,000 Kinetic Concepts Inc.+ .............. 796,765 268,520
15,000 Medical Action Industries Inc.+ ..... 270,907 150,000
261,900 Medical Nutrition USA Inc.+ ......... 580,847 392,850
9,000 Medtronic Inc. ...................... 470,816 282,780
13,000 Mentor Corp. ........................ 397,930 402,090
34,000 Micrus Endovascular Corp.+ .......... 718,227 394,740
12,000 Orthofix International NV+ .......... 404,667 183,960
21,000 St. Jude Medical Inc.+ .............. 864,933 692,160
4,000 Stryker Corp. ....................... 197,260 159,800
80,000 Vascular Solutions Inc.+ ............ 734,110 721,600
9,000 Zimmer Holdings Inc.+ ............... 735,874 363,780
----------- ------------
12,698,337 9,020,445
----------- ------------
HEALTH CARE PROVIDERS AND
SERVICES -- 10.5%
14,000 Aetna Inc. .......................... 703,453 399,000
12,000 Amedisys Inc.+ ...................... 492,990 496,080
7,000 AmerisourceBergen Corp. ............. 314,391 249,620
8,000 Cardinal Health Inc. ................ 469,607 275,760
3,000 Chemed Corp. ........................ 126,720 119,310
350,000 Continucare Corp.+ .................. 750,819 738,500
14,000 Healthways Inc.+ .................... 442,693 160,720
12,000 IMS Health Inc. ..................... 324,226 181,920
10,000 McKesson Corp. ...................... 522,503 387,300
275,100 Metropolitan Health Networks
Inc.+ ............................ 490,429 440,160
23,000 Omnicare Inc. ....................... 750,078 638,480
9,000 Owens & Minor Inc. .................. 332,562 338,850
12,000 PSS World Medical Inc.+ ............. 199,315 225,840
31,200 UnitedHealth Group Inc. ............. 1,355,499 829,920
----------- ------------
7.275,285 5,481,460
----------- ------------
See accompanying notes to financial statements.
3
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
----------- ----------- ------------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS -- 8.2%
11,000 Abbott Laboratories ................. $ 582,962 $ 587,070
705,600 Genelabs Technologies Inc.+ ......... 894,721 910,224
30,000 Inspire Pharmaceuticals Inc.+ ....... 132,501 108,000
22,000 Johnson & Johnson ................... 1,387,793 1,316,260
18,500 Matrixx Initiatives Inc.+ ........... 344,204 305,065
13,000 Merck & Co. Inc. .................... 649,566 395,200
46,000 Pain Therapeutics Inc.+ ............. 385,459 272,320
8,781 Teva Pharmaceutical Industries
Ltd., ADR ........................ 369,759 373,799
----------- ------------
4,746,965 4,267,938
----------- ------------
TOTAL COMMON STOCKS ................. 56,586,870 44,330,779
----------- ------------
WARRANTS -- 0.1%
HEALTH CARE EQUIPMENT AND
SUPPLIES -- 0.1%
80,907 AMDL Inc.,
expire 03/05/11+ (a)(b) .......... 148,405 28,093
----------- ------------
PRINCIPAL
AMOUNT
-----------
U.S. GOVERNMENT OBLIGATIONS -- 14.9%
U.S. TREASURY CASH MANAGEMENT BILLS -- 7.1%
$ 3,731,000 U.S. Treasury Cash Management Bills,
0.051% to 0.183%++,
04/29/09 to 06/24/09 ............. 3,729,091 3,729,333
----------- ------------
U.S. TREASURY BILLS -- 7.8%
4,076,000 U.S. Treasury Bills,
0.020% to 1.129%++,
01/08/09 to 06/25/09 ............. 4,073,569 4,073,421
----------- ------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ...................... 7,802,660 7,802,754
----------- ------------
TOTAL INVESTMENTS -- 100.0% ....................... $64,537,935 52,161,626
===========
OTHER ASSETS AND LIABILITIES (NET) ................ 459,911
============
NET ASSETS -- COMMON SHARES
(8,474,459 common shares outstanding) .......... $ 52,621,537
============
NET ASSET VALUE PER COMMON SHARE
($52,621,537 / 8,474,459 shares outstanding) ... $ 6.21
============
----------
(a) 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 December
31, 2008, the market value of Rule 144A securities amounted to $139,744 or
0.27% of total investments.
(b) Security fair valued under procedures established by the Board of Trustees.
The procedures may include reviewing available financial information about
the company and reviewing the valuation of comparable securities and other
factors on a regular basis. At December 31, 2008, the market value of fair
valued securities amounted to $28,093 or 0.05% of total investments.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
-------------------------- ----------- ------------
North America ..................................... 83.6% $ 43,629,640
Europe ............................................ 8.3 4,325,255
Japan ............................................. 6.1 3,180,243
Latin America ..................................... 1.9 981,973
Asia/Pacific ...................................... 0.1 44,515
----- ------------
Total Investments ................................. 100.0% $ 52,161,626
===== ============
See accompanying notes to financial statements.
4
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
ASSETS:
Investments, at value (cost $ 64,537,935) ................... $ 52,161,626
Cash ........................................................ 722
Receivable for investments sold ............................. 1,218,935
Dividends and interest receivable ........................... 66,973
Prepaid expense ............................................. 3,191
------------
TOTAL ASSETS ................................................ 53,451,447
------------
LIABILITIES:
Payable for investments purchased ........................... 470,713
Distributions payable ....................................... 47,212
Payable for investment advisory fees ........................ 43,435
Payable for payroll expenses ................................ 22,168
Payable for accounting fees ................................. 7,500
Payable for shareholder communications expenses ............. 185,919
Other accrued expenses ...................................... 52,963
------------
TOTAL LIABILITIES ........................................... 829,910
------------
NET ASSETS applicable to 8,474,459 shares outstanding ....... $ 52,621,537
============
NET ASSETS CONSIST OF:
Paid-in capital, at $ 0.001 par value ....................... $ 67,217,075
Accumulated distributions in excess of
net investment income .................................... (644)
Accumulated net realized loss on investments and
foreign currency transactions ............................ (2,218,852)
Net unrealized depreciation on investments .................. (12,376,309)
Net unrealized appreciation on foreign currency
translations ............................................. 267
------------
NET ASSETS .................................................. $ 52,621,537
============
NET ASSET VALUE PER COMMON SHARE:
($52,621,537 / 8,474,459 shares outstanding:
unlimited number of shares authorized) ...................... $ 6.21
============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
INVESTMENT INCOME:
Dividends (net of foreign taxes of $ 7,747) ................. $ 707,838
Interest .................................................... 190,496
------------
TOTAL INVESTMENT INCOME ..................................... 898,334
------------
EXPENSES:
Investment advisory fees .................................... 611,844
Shareholder communications expenses ......................... 477,182
Payroll expenses ............................................ 105,572
Shareholder services fees ................................... 68,557
Legal and audit fees ........................................ 65,077
Trustees' fees .............................................. 59,490
Accounting fees ............................................. 45,000
Custodian fees .............................................. 2,824
Tax expense ................................................. 1,004
Interest expense ............................................ 1,000
Miscellaneous expenses ...................................... 40,671
------------
TOTAL EXPENSES .............................................. 1,478,221
Less: Custodian fee credits ................................. (2,604)
------------
NET EXPENSES ................................................ 1,475,617
------------
NET INVESTMENT LOSS ......................................... (577,283)
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss on investments ............................ (2,210,586)
Net realized loss on foreign currency transactions .......... (1,314)
------------
Net realized loss on investments and
foreign currency transactions ............................ (2,211,900)
------------
Net change in unrealized appreciation/(depreciation):
on investments ........................................... (12,234,916)
on foreign currency translations ......................... 99
------------
Net change in unrealized appreciation/(depreciation)
on investments and foreign currency
translations ............................................. (12,234,817)
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ......................... (14,446,717)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS .......................................... $(15,024,000)
============
See accompanying notes to financial statements.
5
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007 (a)
----------------- ---------------------
OPERATIONS:
Net investment income/(loss) ................................................ $ (577,283) $ 193,924
Net realized gain/(loss) on investments and foreign currency transactions ... (2,211,900) 644,611
Net change in unrealized appreciation/(depreciation) on investments and
foreign currency translations ............................................ (12,234,817) (141,225)
------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............. (15,024,000) 697,310
------------ ------------
DISTRIBUTIONS TO COMMON SHARES:
Net investment income ....................................................... (97,110) (97,456)
Net realized short-term gain ................................................ (326,612) (326,267)
------------ ------------
TOTAL DISTRIBUTIONS TO COMMON SHARES ........................................ (423,722) (423,723)
------------ ------------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares issued in offering ............ -- 67,695,672
------------ ------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ..................... -- 67,695,672
------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS ....................................... (15,447,722) 67,969,259
NET ASSETS:
Beginning of period ......................................................... 68,069,259 100,000
------------ ------------
End of period (including undistributed net investment income of $0 and
$96,466, respectively) ................................................... $ 52,621,537 $ 68,069,259
============ ============
----------
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
See accompanying notes to financial statements.
6
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD:
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007 (a)
----------------- ---------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ........................................ $ 8.03 $ 8.00
------- -------
Net investment income/(loss) ................................................ (0.07) 0.02
Net realized and unrealized gain/(loss) on investments and foreign currency
transactions ............................................................. (1.70) 0.06
------- -------
Total from investment operations ............................................ (1.77) 0.08
------- -------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ....................................................... (0.01) (0.01)
Net realized short-term gain ................................................ (0.04) (0.04)
------- -------
Total distributions to common shareholders .................................. (0.05) (0.05)
------- -------
NET ASSET VALUE, END OF PERIOD .............................................. $ 6.21 $ 8.03
======= =======
Net asset value total return + .............................................. (22.03)% 1.00%
======= =======
Market value, end of period ................................................. $ 5.01 $ 7.09
======= =======
Total investment return ++ .................................................. (28.63)% (10.75)%
======= =======
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets end of period (in 000's) ......................................... $52,622 $68,069
Ratio of net investment income/(loss) to average net assets ................. (0.94)% 0.56%(b)
Ratio of operating expenses to average net assets ........................... 2.41% 1.97%(b)
Portfolio turnover rate ..................................................... 122.0% 26.7%+++
----------
+ Based on net asset value per share at commencement of operations of $8.00
per share, adjusted for reinvestment of distributions at the net asset
value per share on the ex-dividend dates. Total return for a period of less
than one year is not annualized.
++ Based on market value per share at initial public offering of $8.00 per
share, adjusted for reinvestment of distributions at prices obtained under
the Fund's dividend reinvestment plan. Total return for a period of less
than one year is not annualized.
+++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate to include cash proceeds due
to mergers. Had this policy been adopted retroactively, the portfolio
turnover rate for the period ended December 31, 2007 would have been 60.6%.
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
(b) Annualized.
See accompanying notes to financial statements.
7
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Healthcare & Wellness(Rx) Trust (the "Fund") is a
non-diversified closed-end management investment company organized as a Delaware
statutory trust on February 20, 2007 and registered under the Investment Company
Act of 1940 as amended (the "1940 Act"), whose objective is long-term growth of
capital. Investment operations commenced on June 28, 2007. The Fund had no
operations prior to June 28, 2007, other than the sale of 12,500 common shares
for $100,000 to The Gabelli Equity Trust Inc. (the "Equity Trust"). On June 28,
2007, the Equity Trust contributed $67,695,672 in cash in exchange for shares of
the Fund, and on the same date distributed such shares to the Equity Trust
holders of record as of June 21, 2007 at the rate of one share of the Fund for
every twenty shares of the Equity Trust common stock.
Under normal market conditions, the Fund will invest at least 80% of its
assets in equity securities and income producing securities of domestic and
foreign companies in the healthcare and wellness industries.
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 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 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 with the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities with 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.
Statement of Financial Accounting Standard No. 157, "Fair Value
Measurements" ("SFAS 157") clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value, and requires
additional disclosures about the use of fair value measurements. The three
levels of the fair value hierarchy under SFAS 157 are described 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 Fund's
determinations as to the fair value of investments).
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, by inputs used to value the Fund's
investments as of December 31, 2008 is, as follows:
INVESTMENTS IN
SECURITIES
(MARKET VALUE)
VALUATION INPUTS ASSETS
---------------- --------------
Level 1 - Quoted Prices $44,330,779
Level 2 - Other Significant Observable Inputs 7,830,847
-----------
Total $52,161,626
===========
There were no Level 3 investments at December 31, 2007 or 2008.
8
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In March 2008, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161") that is effective
for fiscal years beginning after November 15, 2008. SFAS 161 is intended to
improve financial reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why an entity uses
derivatives, how derivatives are accounted for, and how derivative instruments
affect an entity's results of operations and financial position. Management is
currently evaluating the implications of SFAS 161 on the Fund's financial
statement disclosures.
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.
It is the policy of the Fund to always receive and maintain securities as
collateral whose market value, including accrued interest, are 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 December 31, 2008, there were no open repurchase agreements.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest, from time
to time, in shares of other investment companies (or entities that would be
considered investment companies but are excluded from the definition pursuant to
certain exceptions under the 1940 Act) (the "Acquired Funds") in accordance with
the 1940 Act and related rules. As a shareholder in the Fund, you would bear the
pro rata portion of the periodic expenses of the Acquired Funds in addition to
the Fund's expenses. During the year ended December 31, 2008, the Fund did not
hold any investments in Acquired Funds.
OPTIONS. The Fund may purchase or write call or put options on securities
or indices. As a writer of put options, the Fund receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Fund would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Fund would
realize a gain, to the extent of the premium, if the price of the financial
instrument increases between those dates. If a written call option is exercised,
the premium is added to the proceeds from the sale of the underlying security in
determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security.
As a purchaser of put options, the Fund pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If the price of the underlying
security declines, the Fund would realize a gain upon sale or exercise. If the
price of the underlying security increases or stays the same, the Fund would
realize a loss upon sale or at the expiration date, but only to the extent of
the premium paid.
In the case of call options, these exercise prices are referred to as
"in-the-money", "at-the-money", and "out-of-the-money", respectively. The Fund
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline during the option
period, (b) at-the-money call options when the Adviser expects that the price of
the underlying security will remain stable, decline or advance moderately during
the option period, and (c) out-of-the-money call options when the Adviser
expects that the premiums received from writing the call option will be greater
than the appreciation in the price of the underlying security above the exercise
price. By writing a call option, the Fund limits its opportunity to profit from
any increase in the market value of the underlying security above the exercise
price of the option. Out-of-the-money, at-the-money, and in-the-money put
options (the reverse of call options as to the relation of exercise price to
market price) may be utilized in the same market environments that such call
options are used in equivalent transactions. At December 31, 2008, the Fund had
no investments in options.
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.
9
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 December 31, 2008 there were no open
futures contracts.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At December 31, 2008, there were no open forward
foreign exchange contracts in the Fund.
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 without limit in
illiquid securities. 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.
CONCENTRATION RISKS. The Fund will invest a significant portion of its
assets in companies in the healthcare and wellness industries. As a result, the
Fund may be more susceptible to economic, political, and regulatory developments
in this particular sector of the market, positive or negative, and may
experience increased volatility to the Fund's NAV and a magnified effect in its
total return.
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.
10
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 110% of the 90 day
Treasury Bill rate on outstanding balances. This amount, if any, would be
included in "interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common 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,
write-offs of net operating loss, 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. For the year ended December 31, 2008, reclassifications were
made to decrease accumulated distributions in excess of net investment income by
$577,283 and decrease accumulated net realized loss on investments and foreign
currency transactions by $1,314, with an offsetting adjustment to paid-in
capital.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
YEAR ENDED
DECEMBER 31,
-------------------
2008 2007
-------- --------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ............... $423,722 $423,723
-------- --------
Total distributions paid ................................. $423,722 $423,723
======== ========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for federal income taxes is required.
At December 31, 2008, the difference between book basis and tax basis
unrealized depreciation was primarily due to deferral of losses from wash sales
for tax purposes.
As of December 31, 2008, the components of accumulated earnings/losses on a
tax basis were as follows:
Accumulated capital loss carryforwards ................... $ (1,540,875)
Net unrealized depreciation on investments and
foreign currency translations ......................... (13,054,019)
Other temporary differences* ............................. (644)
------------
Total .................................................... $(14,595,538)
============
----------
* Other temporary differences are primarily due to adjustments on dividend
payables.
At December 31, 2008, the Fund had net capital loss carryforwards for
federal income tax purposes of $1,540,875 which are available to reduce future
required distributions of net capital gains to shareholders through 2016.
The following summarizes the tax cost of investments and the related
unrealized appreciation/depreciation at December 31, 2008:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
----------- ------------ ------------ --------------
Investments ................. $65,215,912 $655,402 $(13,709,688) $(13,054,286)
11
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
("FIN 48") provides guidance for how uncertain tax positions should be
recognized, measured, presented, and disclosed in the financial statements. FIN
48 requires the evaluation of 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. Tax positions not deemed to meet the "more-likely-than-not" threshold
are recorded as a tax benefit or expense in the current year. In accordance with
FIN 48, management has analyzed the Fund's tax positions taken on the federal
and state income tax returns for all open tax years (the current and prior three
tax years) and has concluded that no provision for income tax is required in the
Fund's financial statements. Management's determination regarding FIN 48 may be
subject to review and adjustment at a later date based on factors including, but
not limited to, an on-going analysis of tax laws, regulations, and
interpretations thereof.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. 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 weekly and paid
monthly, equal on an annual basis to 1.00% of the value of the Fund's average
weekly net assets. In accordance with the Advisory Agreement, the Adviser
provides a continuous investment program for the Fund's portfolio and oversees
the administration of all aspects of the Fund's business and affairs.
During the year ended December 31, 2008, the Fund paid brokerage
commissions on security trades of $53,052 to Gabelli & Company, Inc. ("Gabelli &
Company"), an affiliate of the Adviser.
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 year
ended December 31, 2008, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
As per the approval of the Board, the Fund compensates officers of the
Fund, who are employed by the Fund and are not employed by the Adviser (although
the officers may receive incentive based variable compensation from affiliates
of the Adviser) and pays its affiliated portion of the cost of the Fund's Chief
Compliance Officer. For the year ended December 31, 2008, the Fund accrued
$105,572, which is included in payroll expenses in the Statement of Operations.
The Fund pays each Trustee who is not considered to be an affiliated person
an annual retainer of $3,000 plus $1,000 for each Board meeting attended in
person and $500 per telephonic meeting, and they are reimbursed for any out of
pocket expenses incurred in attending meetings. In addition, the Audit Committee
Chairman receives an annual fee of $3,000, the Nominating Committee Chairman
receives an annual fee of $2,000, and the Lead Trustee receives an annual fee of
$1,000. Trustees who are directors or employees of the Adviser or an affiliated
company receive no compensation or expense reimbursement from the Fund.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2008, other than short-term securities and U.S.
Government obligations, aggregated $68,398,070 and $61,261,817, respectively.
Purchases and proceeds from the sales of U.S. Government obligations for
the year ended December 31, 2008, other than short-term obligations, aggregated
$1,749,903 and $1,730,000, respectively.
5. CAPITAL. The Fund is authorized to issue an unlimited number of shares of
beneficial interest (par value $0.001). The Board has authorized the repurchase
of its shares on the open market when the shares are trading on the NYSE at a
discount of 10% or more (or such other percentage as the Board may determine
from time to time) from the NAV of the shares. During the year ended December
31, 2008, the Fund did not have any transactions in shares of beneficial
interest.
Transactions in common shares were as follows:
PERIOD ENDED
DECEMBER 31, 2007(a)
------------------------
SHARES AMOUNT
---------- -----------
Initial seed capital ................................ 12,500 $ 100,000
Additional shares issued immediately
prior to spin-off from the Equity Trust .......... 8,461,959 67,695,672
---------- -----------
Net increase ........................................ 8,474,459 $67,795,672
========== ===========
----------
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
6. 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.
12
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. OTHER MATTERS. On April 24, 2008, the Adviser entered into an administrative
settlement with the SEC to resolve the SEC's inquiry regarding prior frequent
trading activity in shares of the GAMCO Global Growth Fund (the "Global Growth
Fund") by one investor who was banned from the Global Growth Fund in August
2002. In the settlement, the SEC found that the Adviser had violated Section
206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule
17d-1 thereunder and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement is not expected to impact the Fund and will not
have a material adverse impact on the Adviser or its ability to fulfill its
obligations under the Advisory Agreement. On the same day, the SEC filed a civil
action against the Executive Vice President and Chief Operating Officer of the
Adviser, alleging violations of certain federal securities laws arising from the
same matter. The officer is also an officer of the Global Growth Fund and other
funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies
the allegations and is continuing in his positions with the Adviser and the
funds. The Adviser currently expects that any resolution of the action against
the officer will not have a material adverse impact on the Adviser or its
ability to fulfill its obligations under the Advisory Agreement.
In a separate matter, on January 12, 2009, the SEC issued an administrative
action approving a final settlement of a previously disclosed matter with the
Adviser involving compliance with Section 19(a) of the Investment Company Act of
1940 and Rule 19a-1 thereunder by two closed-end funds. These provisions require
registered investment companies when making a distribution in the nature of a
dividend from sources other than net investment income to contemporaneously
provide written statements to shareholders, which adequately disclose the source
or sources of such distribution. While the two funds sent annual statements and
provided other materials containing this information, the shareholders did not
receive the notices required by Rule 19a-1 with any of the distributions that
were made for 2002 and 2003. The Adviser believes that the funds have been in
compliance with Section 19(a) and Rule 19a-1 since the beginning of 2004. As
part of the settlement, in which the Adviser neither admits nor denies the
findings by the SEC, the Adviser agreed to pay a civil monetary penalty of
$450,000 and to cease and desist from causing violations of Section 19(a) and
Rule 19a-1. In connection with the settlement, the SEC noted the remedial
actions previously undertaken by the Adviser. The staff's notice to the Adviser
did not relate to the Fund.
13
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
The Gabelli Healthcare & Wellness(Rx) Trust:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Healthcare &
Wellness(Rx) Trust (hereafter referred to as the "Trust") at December 31, 2008,
the results of its operations for the year then ended, and the changes in its
net assets and the financial highlights for the year then ended and for the
period June 28, 2007 (commencement of operations) through December 31, 2007, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Trust's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 27, 2009
14
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Trustees and is available
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Healthcare & Wellness(Rx) Trust at One Corporate Center,
Rye, NY 10580-1422.
NUMBER OF
TERM OF FUNDS IN FUND
NAME, POSITION(S) OFFICE AND COMPLEX
ADDRESS(1) LENGTH OF OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE TIME SERVED(2) TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE(4)
------------------------------ -------------- ------------- ------------------------------------ -------------------------
INTERESTED TRUSTEES(3):
MARIO J. GABELLI Since 2007*** 26 Chairman and Chief Executive Officer Director of Morgan Group
Trustee and of GAMCO Investors, Inc. and Chief Holdings, Inc. (holding
Chief Investment Officer Investment Officer - Value company); Chairman of the
Age: 66 Portfolios of Gabelli Funds, LLC and Board of LICT Corp.
GAMCO Asset Management Inc.; (multimedia and
Director/Trustee or Chief Investment communication services
Officer of other registered company)
investment companies in the
Gabelli/GAMCO Funds complex;
Chairman and Chief Executive Officer
of GGCP, Inc.
INDEPENDENT TRUSTEES (5):
THOMAS E. BRATTER Since 2007** 4 Director, President, and Founder of --
Trustee The John Dewey Academy (residential
Age: 69 college preparatory therapeutic high
school)
ANTHONY J. COLAVITA Since 2007* 36 Partner in the law firm of --
Trustee Anthony J. Colavita, P.C.
Age: 73
JAMES P. CONN Since 2007** 18 Former Managing Director and Chief --
Trustee Investment Officer of Financial
Age: 70 Security Assurance Holdings Ltd.
(insurance holding company)
(1992-1998)
VINCENT D. ENRIGHT Since 2007*** 16 Former Senior Vice President and Director of Echo
Trustee Chief Financial Officer of KeySpan Therapeutics, Inc.
Age: 65 Corporation (public utility) (therapeutics and
(1994-1998) diagnostics)
ROBERT C. KOLODNY, MD Since 2007* 2 Physician, author, and lecturer --
Trustee (self- employed) since 1983; General
Age: 64 Partner of KBS Partnership, KBS II
Investment Partnership, KBS III
Investment Partnership, KBS IV
Limited Partnership, KBS New
Dimensions, L.P., KBS Global
Opportunities, L.P. and KBS VII
Limited Partnership (private
investment partnerships) since 1981;
Medical Director and Chairman of the
Board of the Behavioral Medicine
Institute since 1983
ANTHONIE C. VAN EKRIS Since 2007*** 20 Chairman of BALMAC International, --
Trustee Inc. (commodities and futures
Age: 74 trading)
SALVATORE J. ZIZZA Since 2007* 28 Chairman of Zizza & Co., Ltd. Director of Hollis-Eden
Trustee (consulting) Pharmaceuticals
Age: 63 (biotechnology) and Earl
Scheib, Inc. (automotive
services)
15
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS(1) LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED(2) DURING PAST FIVE YEARS
------------------------ -------------- --------------------------------------------------------
OFFICERS:
AGNES MULLADY Since 2007 Vice President of Gabelli Funds, LLC since 2007; Officer
President and Treasurer of all of the registered investment companies in the
Age: 50 Gabelli/GAMCO Funds complex; Senior Vice President of
U.S. Trust Company, N.A. and Treasurer and Chief
Financial Officer of Excelsior Funds from 2004 through
2005; Chief Financial Officer of AMIC Distribution
Partners from 2002 through 2004
BRUCE N. ALPERT Since 2007 Executive Vice President and Chief Operating Officer of
Secretary Gabelli Funds, LLC since 1988 and an officer of all of
Age: 57 the registered investment companies in the Gabelli/GAMCO
Funds complex. Director and President of Teton Advisors,
Inc. (formerly Gabelli Advisers, Inc.) since 1998
CARTER W. AUSTIN Since 2007 Vice President of the Gabelli Equity Trust Inc. since
Vice President 2000, Vice President of The Gabelli Dividend & Income
Age: 42 Trust since 2003, The Gabelli Global Gold, Natural
Resources & Income Trust since 2005, The Gabelli Global
Deal Fund since 2006, and the Fund since 2007; Vice
President of Gabelli Funds, LLC since 1996
PETER D. GOLDSTEIN Since 2007 Director of Regulatory Affairs at GAMCO Investors, Inc.
Chief Compliance Officer since 2004; Chief Compliance Officer of all of the
Age: 55 registered investment companies in the Gabelli/GAMCO
Funds complex; Vice President of Goldman Sachs Asset
Management from 2000 through 2004
DAVID I. SCHACHTER Since 2007 Vice President of The Gabelli Utility Trust since 1999,
Vice President The Gabelli Global Utility & Income Trust since 2004,
Age: 55 The Gabelli Global Deal Fund since 2006, and the Fund
since 2007; Vice President of Gabelli & Company, Inc.
since 1999.
ADAM E. TOKAR Since 2007 Assistant Vice President of the Fund since 2007;
Assistant Vice President Portfolio Administrator for GAMCO Asset Management, Inc.
& Ombudsman since 2003; Student at Gettysburg College prior to 2003.
Age: 28
----------
(1) Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
(2) The Fund's Board of Trustees is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Fund's 2009 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
** - Term expires at the Fund's 2010 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
*** - Term expires at the Fund's 2011 Annual Meeting of Shareholders or until
their successors are duly elected and qualified. Each officer will hold
office for an indefinite term until the date he or she resigns or retires
or until his or her successor is elected and qualified.
(3) "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" of the Fund because of his affiliation
with Gabelli Funds, LLC which acts as the Fund's investment adviser.
(4) This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
(5) Trustees who are not interested persons are considered "Independent"
Trustees.
CERTIFICATIONS
The Fund's Chief Executive Officer has certified to the New York Stock
Exchange ("NYSE") that, as of June 17, 2008, she was not aware of any violation
by the Fund of applicable NYSE corporate governance listing standards. The Fund
reports to the SEC on Form N-CSR which contains certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.
16
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2008
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY DIVIDEND
PAYABLE RECORD PAID INVESTMENT REINVESTMENT
DATE DATE PER SHARE INCOME PRICE
-------- -------- ------------ ---------- ------------
COMMON SHARES
12/29/08 12/22/08 $0.05000 $0.05000 $4.96360
12/28/07 12/21/07 0.05000 0.05000 7.09030
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2008 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. Ordinary income is reported in
box 1a of Form 1099-DIV.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME, AND U.S.
TREASURY SECURITIES INCOME
The Fund paid to common shareholders an ordinary income distribution of
$0.05000 per share in 2008. For the year ended December 31, 2008, 14.79% of the
ordinary distribution qualified for the dividends received deduction available
to corporations, and 14.36% of the ordinary income distribution was qualified
dividend income. The percentage of ordinary income distributions paid by the
Fund during 2008 derived from U.S. Treasury securities was 0.00%. Such income is
exempt from state and local tax in all states. However, many states, including
New York and California, allow a tax exemption for a portion of the income
earned only if a mutual fund has invested at least 50% of its assets at the end
of each quarter of its fiscal year in U.S. Government securities. The Fund did
not meet this strict requirement in 2008. The percentage of net assets of U.S.
Government securities held as of December 31, 2008 was 14.83%.
HISTORICAL DISTRIBUTION SUMMARY
COMMON SHARES
SHORT-TERM
INVESTMENT CAPITAL TOTAL
INCOME (A) GAINS (A) DISTRIBUTIONS
---------- ---------- -------------
2008 .......... $0.0114 $0.0386 $0.0500
2007 .......... 0.0115 0.0385 0.0500
----------
(a) Taxable as ordinary income for federal tax purposes.
All designations are based on financial information available as of the
date of this annual report and, accordingly, are subject to change. For each
item, it is the intention of the Fund to designate the maximum amount permitted
under the Internal Revenue Code and the regulations thereunder.
The Annual Meeting of The Gabelli Healthcare & Wellness(Rx) Trust's shareholders
will be held on Monday, May 18, 2009 at the Greenwich Library in Greenwich,
Connecticut.
17
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Healthcare & Wellness(Rx) Trust (the "Fund") is a closed-end
management investment company registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. We are managed by Gabelli
Funds, LLC, which is affiliated with GAMCO Investors, Inc. 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?
When you purchase shares of the Fund on the New York Stock Exchange, you have
the option of registering directly with our transfer agent in order, for
example, to participate in our dividend reinvestment plan.
- 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. This would include information
about the shares that you buy or sell; it may also include information
about whether you sell or exercise rights that we have issued from time to
time. 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.
TRUSTEES AND OFFICERS
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GAMCO INVESTORS, INC.
Dr. Thomas E. Bratter
PRESIDENT & FOUNDER, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR &
CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT &
CHIEF FINANCIAL OFFICER,
KEYSPAN CORP.
Robert C. Kolodny, MD
PHYSICIAN, AUTHOR, AND LECTURER,
GENERAL PARTNER OF KBS PARTNERSHIP
Anthonie C. van Ekris
CHAIRMAN, BALMAC INTERNATIONAL, INC.
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD.
OFFICERS
Agnes Mullady
PRESIDENT AND TREASURER
Bruce N. Alpert
SECRETARY
Carter W. Austin
VICE PRESIDENT
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
David I. Schachter
VICE PRESIDENT
Adam E. Tokar
ASSISTANT VICE PRESIDENT & OMBUDSMAN
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
The Bank of New York Mellon
COUNSEL
Willkie Farr & Gallagher LLP
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
STOCK EXCHANGE LISTING
Common
---------
NYSE-Symbol: GRX
Shares Outstanding: 8,474,459
The Net Asset Value per share appears in the Publicly Traded Funds column, under
the heading "Specialized Equity Funds," in Monday's The Wall Street Journal. It
is also listed in Barron's Mutual Funds/Closed End Funds section under the
heading "Specialized Equity Funds." The Net Asset Value per share may be
obtained each day by calling (914) 921-5070 or visiting www.gabelli.com.
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
its common shares in the open market when the Fund's shares are trading at a
discount of 10% or more from the net asset value of the shares.
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM GRX Q4/2008
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Trustees has determined that Vincent D. Enright is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$47,000 for 2007 and $31,900 for 2008.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2007 and $0 for 2008.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $4,350 for 2007 and
$3,250 for 2008. Tax fees represent tax compliance services provided
in connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$0 for 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee
("Committee") of the registrant is responsible for pre-approving (i)
all audit and permissible non-audit services to be provided by the
independent registered public accounting firm to the registrant and
(ii) all permissible non-audit services to be provided by the
independent registered public accounting firm to the Adviser, Gabelli
Funds, LLC, and any affiliate of Gabelli Funds, LLC ("Gabelli") that
provides services to the registrant (a "Covered Services Provider") if
the independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's
pre-approval responsibilities to the other persons (other than Gabelli
or the registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant
at the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of
the audit.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $0 for 2007 and $0 for 2008.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following members: Anthony J. Colavita, Vincent D. Enright, and Salvatore J.
Zizza.
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.
The Proxy Voting Policies are attached herewith.
THE VOTING OF PROXIES ON BEHALF OF CLIENTS
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli
Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively,
the "Advisers") to determine how to vote proxies relating to portfolio
securities held by their clients, including the procedures that the Advisers use
when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of
the Advisers; the principal underwriter; or any affiliated person of the
investment company, the Advisers, or the principal underwriter. These procedures
will not apply where the Advisers do not have voting discretion or where the
Advisers have agreed to with a client to vote the client's proxies in accordance
with specific guidelines or procedures supplied by the client (to the extent
permitted by ERISA).
I. PROXY VOTING COMMITTEE
The Proxy Voting Committee was originally formed in April 1989 for the
purpose of formulating guidelines and reviewing proxy statements within the
parameters set by the substantive proxy voting guidelines originally published
in 1988 and updated periodically, a copy of which are appended as Exhibit A. The
Committee will include representatives of Research, Administration, Legal, and
the Advisers. Additional or replacement members of the Committee will be
nominated by the Chairman and voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in
which the Advisers should vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.
All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.
1
A. CONFLICTS OF INTEREST.
The Advisers have implemented these proxy voting procedures in
order to prevent conflicts of interest from influencing their
proxy voting decisions. By following the Proxy Guidelines, as
well as the recommendations of ISS, other third-party services
and the analysts of Gabelli & Company, the Advisers are able
to avoid, wherever possible, the influence of potential
conflicts of interest. Nevertheless, circumstances may arise
in which one or more of the Advisers are faced with a conflict
of interest or the appearance of a conflict of interest in
connection with its vote. In general, a conflict of interest
may arise when an Adviser knowingly does business with an
issuer, and may appear to have a material conflict between its
own interests and the interests of the shareholders of an
investment company managed by one of the Advisers regarding
how the proxy is to be voted. A conflict also may exist when
an Adviser has actual knowledge of a material business
arrangement between an issuer and an affiliate of the Adviser.
In practical terms, a conflict of interest may arise, for
example, when a proxy is voted for a company that is a client
of one of the Advisers, such as GAMCO Asset Management Inc. A
conflict also may arise when a client of one of the Advisers
has made a shareholder proposal in a proxy to be voted upon by
one or more of the Advisers. The Director of Proxy Voting
Services, together with the Legal Department, will scrutinize
all proxies for these or other situations that may give rise
to a conflict of interest with respect to the voting of
proxies.
B. OPERATION OF PROXY VOTING COMMITTEE
For matters submitted to the Committee, each member of the
Committee will receive, prior to the meeting, a copy of the
proxy statement, any relevant third party research, a summary
of any views provided by the Chief Investment Officer and any
recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may
be invited to present their viewpoints. If the Director of
Proxy Voting Services or the Legal Department believe that the
matter before the committee is one with respect to which a
conflict of interest may exist between the Advisers and their
clients, counsel will provide an opinion to the Committee
concerning the conflict. If the matter is one in which the
interests of the clients of one or more of Advisers may
diverge, counsel will so advise and the Committee may make
different recommendations as to different clients. For any
matters where the recommendation may trigger appraisal rights,
counsel will provide an opinion concerning the likely risks
and merits of such an appraisal action.
2
Each matter submitted to the Committee will be determined by the vote
of a majority of the members present at the meeting. Should the vote concerning
one or more recommendations be tied in a vote of the Committee, the Chairman of
the Committee will cast the deciding vote. The Committee will notify the proxy
department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the
voting of any shares not covered by a contrary investment guideline provided by
the client, the Committee is not bound by the preferences set forth in the Proxy
Guidelines and will review each matter on its own merits. Written minutes of all
Proxy Voting Committee meetings will be maintained. The Advisers subscribe to
ISS, which supplies current information on companies, matters being voted on,
regulations, trends in proxy voting and information on corporate governance
issues.
If the vote cast either by the analyst or as a result of the
deliberations of the Proxy Voting Committee runs contrary to the recommendation
of the Board of Directors of the issuer, the matter will be referred to legal
counsel to determine whether an amendment to the most recently filed Schedule
13D is appropriate.
II. SOCIAL ISSUES AND OTHER CLIENT GUIDELINES
If a client has provided special instructions relating to the voting of
proxies, they should be noted in the client's account file and forwarded to the
proxy department. This is the responsibility of the investment professional or
sales assistant for the client. In accordance with Department of Labor
guidelines, the Advisers' policy is to vote on behalf of ERISA accounts in the
best interest of the plan participants with regard to social issues that carry
an economic impact. Where an account is not governed by ERISA, the Advisers will
vote shares held on behalf of the client in a manner consistent with any
individual investment/voting guidelines provided by the client. Otherwise the
Advisers will abstain with respect to those shares.
III. CLIENT RETENTION OF VOTING RIGHTS
If a client chooses to retain the right to vote proxies or if there is
any change in voting authority, the following should be notified by the
investment professional or sales assistant for the client.
- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account
3
In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. VOTING RECORDS
The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers will supply information on how
an account voted its proxies upon request.
A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.
V. VOTING PROCEDURES
1. Custodian banks, outside brokerage firms and clearing firms are responsible
for forwarding proxies directly to the Advisers.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms ("VAFs") - Issued by Broadridge
Financial Solutions, Inc. ("Broadridge") VAFs must be voted through the
issuing institution causing a time lag. Broadridge is an outside service
contracted by the various institutions to issue proxy materials.
o Proxy cards which may be voted directly.
2. Upon receipt of the proxy, the number of shares each form represents is
logged into the proxy system according to security.
3. In the case of a discrepancy such as an incorrect number of shares, an
improperly signed or dated card, wrong class of security, etc., the issuing
custodian is notified by phone. A corrected proxy is requested. Any arrangements
are made to insure that a proper proxy is received in time to be voted
(overnight delivery, fax, etc.). When securities are out on loan on record date,
the custodian is requested to supply written verification.
4
4. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system. The system is backed up
regularly.
Proxy Edge records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.
6. Shareholder Vote Authorization Forms issued by Broadridge are always sent
directly to a specific individual at Broadridge.
7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:
o VAFs can be faxed to Broadridge up until the time of the meeting. This is
followed up by mailing the original form.
o When a solicitor has been retained, the solicitor is called. At the
solicitor's direction, the proxy is faxed.
8. In the case of a proxy contest, records are maintained for each opposing
entity.
9. Voting in Person
a) At times it may be necessary to vote the shares in person. In this case, a
"legal proxy" is obtained in the following manner:
o Banks and brokerage firms using the services at Broadridge:
The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to Broadridge. Broadridge issues individual
legal proxies and sends them back via overnight (or the Adviser can pay
messenger charges). A lead-time of at least two weeks prior to the meeting is
needed to do this. Alternatively, the procedures detailed below for banks not
using Broadridge may be implemented.
5
o Banks and brokerage firms issuing proxies directly:
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."
b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:
o A limited Power of Attorney appointing the attendee an Adviser
representative.
o A list of all shares being voted by custodian only. Client names and
account numbers are not included. This list must be presented, along with
the proxies, to the Inspectors of Elections and/or tabulator at least
one-half hour prior to the scheduled start of the meeting. The tabulator
must "qualify" the votes (i.e. determine if the vote have previously been
cast, if the votes have been rescinded, etc. vote have previously been
cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
6
APPENDIX A
PROXY GUIDELINES
PROXY VOTING GUIDELINES
GENERAL POLICY STATEMENT
It is the policy of GAMCO INVESTORS, INC. to vote in the best economic interests
of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.
7
BOARD OF DIRECTORS
The advisers do not consider the election of the Board of Directors a routine
issue. Each slate of directors is evaluated on a case-by-case basis.
Factors taken into consideration include:
o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance
SELECTION OF AUDITORS
In general, we support the Board of Directors' recommendation for auditors.
BLANK CHECK PREFERRED STOCK
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.
CLASSIFIED BOARD
A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.
8
Where a classified board is in place we will generally not support attempts to
change to an annually elected board.
When an annually elected board is in place, we generally will not support
attempts to classify the board.
INCREASE AUTHORIZED COMMON STOCK
The request to increase the amount of outstanding shares is considered on a
case-by-case basis.
Factors taken into consideration include:
o Future use of additional shares
-Stock split
-Stock option or other executive compensation plan
-Finance growth of company/strengthen balance sheet
-Aid in restructuring
-Improve credit rating
-Implement a poison pill or other takeover defense
o Amount of stock currently authorized but not yet issued or reserved for
stock option plans
o Amount of additional stock to be authorized and its dilutive effect
We will support this proposal if a detailed and verifiable plan for the use of
the additional shares is contained in the proxy statement.
CONFIDENTIAL BALLOT
We support the idea that a shareholder's identity and vote should be treated
with confidentiality.
However, we look at this issue on a case-by-case basis.
In order to promote confidentiality in the voting process, we endorse the use of
independent Inspectors of Election.
9
CUMULATIVE VOTING
In general, we support cumulative voting.
Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.
Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.
Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.
DIRECTOR LIABILITY AND INDEMNIFICATION
We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.
EQUAL ACCESS TO THE PROXY
The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.
FAIR PRICE PROVISIONS
Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.
10
We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.
Reviewed on a case-by-case basis.
GOLDEN PARACHUTES
Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.
We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by-case basis.
NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.
ANTI-GREENMAIL PROPOSALS
We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.
LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS
We support the right of shareholders to call a special meeting.
CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER
This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.
11
As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.
12
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the
following:
o State of Incorporation
o Management history of responsiveness to shareholders
o Other mitigating factors
POISON PILL
In general, we do not endorse poison pills.
In certain cases where management has a history of being responsive to the needs
of shareholders and the stock is very liquid, we will reconsider this position.
REINCORPORATION
Generally, we support reincorporation for well-defined business reasons. We
oppose reincorporation if proposed solely for the purpose of reincorporating in
a state with more stringent anti-takeover statutes that may negatively impact
the value of the stock.
STOCK OPTION PLANS
Stock option plans are an excellent way to attract, hold and motivate directors
and employees. However, each stock option plan must be evaluated on its own
merits, taking into consideration the following:
o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing stock
option plans
13
SUPERMAJORITY VOTE REQUIREMENTS
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of a simple majority of the outstanding shares. In
general, we oppose supermajority-voting requirements. Supermajority requirements
often exceed the average level of shareholder participation. We support
proposals' approvals by a simple majority of the shares voting.
LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT
Written consent allows shareholders to initiate and carry on a shareholder
action without having to wait until the next annual meeting or to call a special
meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a
shareholder meeting.
Reviewed on a case-by-case basis.
14
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
PORTFOLIO MANAGERS
Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of Gabelli Healthcare & Wellness(Rx) Trust, (the Trust). Mr. Gabelli
has served as Chairman, Chief Executive Officer, and Chief Investment Officer
-Value Portfolios of GAMCO Investors, Inc. and its affiliates since their
organization.
Kevin V. Dreyer joined Gabelli & Company, Inc. in 2005 as a research analyst
upon earning an MBA from Columbia Business School. Mr. Dryer previously worked
as an investment banking analyst at Banc of America Securities following his
graduation from the University of Pennsylvania.
Mr. Jeffrey J. Jonas, CFA joined Gabelli & Company, Inc. in 2003 as a research
analyst. Prior to his appointment as Associated Portfolio Manager of the
Healthcare Trust, Mr. Jonas served as co-portfolio manager of GAMCO Medical
Opportunities LP. Mr. Jonas was a Presidential Scholar at Boston College where
he received a BS in finance and management information systems.
MANAGEMENT OF OTHER ACCOUNTS
The table below shows the number of other accounts managed by the portfolio
managers and the total assets in each of the following categories: registered
investment companies, other paid investment vehicles and other accounts. For
each category, the table also shows the number of accounts and the total assets
in the accounts with respect to which the advisory fee is based on account
performance.
No. of Total Assets
Accounts in Accounts
where where
Name of Portfolio Total Advisory Fee Advisory Fee
Manager or Type of No. of Accounts Total is Based on is Based on
Team Member Accounts Managed Assets Performance Performance
----------------- --------------- --------------- ------ ------------ ------------
1. Mario Gabelli Registered 24 10.5B 7 3.4B
Investment
Companies:
Other Pooled 22 355.1M 19 316.4M
Investment
Vehicles:
Other Accounts: 2,049 8.1B 6 994.1M
2. Kevin Dreyer Registered 1 12.3M 0 0
Investment
Companies:
Other Pooled 0 0 0 0
Investment
Vehicles:
Other Accounts: 1 4.4M 0 0
3. Jeff Jonas Registered 0 0 0 0
Investment
Companies:
Other Pooled 0 0 0 0
Investment
Vehicles:
Other Accounts: 0 0 0 0
POTENTIAL CONFLICTS OF INTEREST
Actual or apparent conflicts of interest may arise when a Portfolio Manager also
has day-to-day management responsibilities with respect to one or more other
accounts. These potential conflicts include:
ALLOCATION OF LIMITED TIME AND ATTENTION. Because the portfolio managers manage
many accounts, they may not be able to formulate as complete a strategy or
identify equally attractive investment opportunities for each of those accounts
as might be the case if they were to devote all of their attention to the
management of only a few accounts.
ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. If the portfolio managers
identify an investment opportunity that may be suitable for multiple accounts,
the Fund may not be able to take full
advantage of that opportunity because the opportunity may be allocated among all
or many of these accounts or other accounts managed primarily by other portfolio
managers of the Adviser, and their affiliates.
PURSUIT OF DIFFERING STRATEGIES. At times, the portfolio managers may determine
that an investment opportunity may be appropriate for only some of the accounts
for which they exercises investment responsibility, or may decide that certain
of these accounts should take differing positions with respect to a particular
security. In these cases, the portfolio managers may execute differing or
opposite transactions for one or more accounts which may affect the market price
of the security or the execution of the transaction, or both, to the detriment
of one or more of their accounts.
VARIATION IN COMPENSATION. A conflict of interest may arise where the financial
or other benefits available to the portfolio manager differ among the accounts
that they manage. If the structure of the Adviser's management fee or the
portfolio manager's compensation differs among accounts (such as where certain
accounts pay higher management fees or performance-based management fees), the
portfolio managers may be motivated to favor certain accounts over others. The
portfolio managers also may be motivated to favor accounts in which they have an
investment interest, or in which the Adviser, or its affiliates have investment
interests. In Mr. Gabelli's case, the Adviser's compensation and expenses for
the Fund are marginally greater as a percentage of assets than for certain other
accounts and are less than for certain other accounts managed by Mr. Gabelli,
while his personal compensation structure varies with near-term performance to a
greater degree in certain performance fee based accounts than with
on-performance based accounts. In addition, he has investment interests in
several of the funds managed by the Adviser and its affiliates.
The Adviser, and the Funds have adopted compliance policies and procedures that
are designed to address the various conflicts of interest that may arise for the
Adviser and their staff members. However, there is no guarantee that such
policies and procedures will be able to detect and prevent every situation in
which an actual or potential conflict may arise.
COMPENSATION STRUCTURE FOR MARIO J. GABELLI
Mr. Gabelli receives incentive-based variable compensation based on a percentage
of net revenues received by the Adviser for managing the Trust. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Trust. Five
closed-end registered investment companies (including this Trust) managed by Mr.
Gabelli have arrangements whereby the Adviser will only receive its investment
advisory fee attributable to the liquidation value of outstanding preferred
stock (and Mr. Gabelli would only receive his percentage of such advisory fee)
if certain performance levels are met. Additionally, he receives similar
incentive based variable compensation for managing other accounts within the
firm and its affiliates. This method of compensation is based on the premise
that superior long-term performance in managing a portfolio should be rewarded
with higher compensation as a result of growth of assets through appreciation
and net investment activity. The level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. One of the other registered investment companies managed by Mr.
Gabelli has a performance (fulcrum) fee arrangement for which his compensation
is adjusted up or down based on the performance of the investment company
relative to an index. Mr. Gabelli manages other accounts with performance fees.
Compensation for managing these accounts has two components. One component is
based on a percentage of net revenues to the investment adviser for managing the
account. The second component is based on absolute performance of the account,
with respect to which a percentage of such performance fee is paid to Mr.
Gabelli. As an executive officer of the Adviser's parent company, GBL, Mr.
Gabelli also receives ten percent of the net operating profits of the parent
company. He receives no base salary, no annual bonus, and no stock options.
COMPENSATION STRUCTURE FOR PORTFOLIO MANAGERS OF THE ADVISER OTHER THAN MARIO
GABELLI
The compensation of the Portfolio Managers for the Fund is structure to enable
the Adviser to attract and retain highly qualified professionals in a
competitive environment. The Portfolio Managers receive a compensation package
that includes a minimum draw or base salary, equity-based incentive compensation
via awards of stock options, and incentive-based variable compensation based on
a percentage of net revenue received by the Adviser for managing a Fund to the
extent that the amount exceeds a minimum level of compensation. Net revenues are
determined by deducting from gross investment management fees certain of the
firm's expenses (other than the respective Portfolio Manager's compensation)
allocable to the respective Fund (the incentive-based variable compensation for
managing other accounts is also based on a percentage of net revenues to the
investment adviser for managing the account). This method of compensation is
based on the premise that superior long-term performance in managing a portfolio
should be rewarded with higher compensation as a result of growth of assets
through appreciation and net investment activity. The level of equity-based
incentive and incentive-based variable compensation is based on an evaluation by
the Adviser's parent, GBL, of quantitative and qualitative performance
evaluation criteria. This evaluation takes into account, in a broad sense, the
performance of the accounts managed by the Portfolio Manager, but the level of
compensation is not determined with specific reference to the performance of any
account against any specific benchmark. Generally, greater consideration is
given to the performance of larger accounts and to longer term performance over
smaller accounts and short-term performance.
OWNERSHIP OF SHARES IN THE FUND
Mario Gabelli, Kevin Dreyer, and Jeff Jonas owned $100,001 - $500,000,
$10,001 - $50,000, and $0 - $10,000, respectively, of shares of the Trust as of
December 31, 2008.
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
(c) TOTAL NUMBER OF (d) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(a) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY
SHARES (OR UNITS) (b) AVERAGE PRICE PAID PUBLICLY ANNOUNCED YET BE PURCHASED UNDER THE
PERIOD PURCHASED PER SHARE (OR UNIT) PLANS OR PROGRAMS PLANS OR PROGRAMS
-------- ------------------- ---------------------- -------------------- ----------------------------
Month #1 Common - N/A Common - N/A Common - N/A Common - 8,474,459
07/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
07/31/08
Month #2 Common - N/A Common - N/A Common - N/A Common - 8,474,459
08/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
08/31/08
Month #3 Common - N/A Common - N/A Common - N/A Common - 8,474,459
09/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
09/30/08
Month #4 Common - N/A Common - N/A Common - N/A Common - 8,474,459
10/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
10/31/08
Month #5 Common - N/A Common - N/A Common - N/A Common - 8,474,459
11/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
11/30/08
Month #6 Common - N/A Common - N/A Common - N/A Common - 8,474,459
12/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
12/31/08
Total Common - N/A Common - N/A Common - N/A N/A
Preferred - N/A Preferred - N/A Preferred - N/A
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the potential
repurchase of common and preferred shares occurs quarterly in the Fund's
quarterly report in accordance with Section 23(c) of the Investment Company
Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all common
shares outstanding may be repurchased when the Fund's common shares are
trading at a discount of 10% or more from the net asset value of the
shares.
Any or all preferred shares outstanding may be repurchased when the Fund's
preferred shares are trading at a discount to the liquidation value of
$25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases. - The Fund's repurchase plans are ongoing.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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 Healthcare & Wellness(Rx) Trust
-------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
----------------------------------------
Agnes Mullady, Principal Executive
Officer and Principal Financial Officer
Date 3/9/09
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/ Agnes Mullady
----------------------------------------
Agnes Mullady, Principal Executive
Officer and Principal Financial Officer
Date 3/9/09
* Print the name and title of each signing officer under his or her signature.