UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

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, 2010

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

The Gabelli Healthcare & Wellness^Rx Trust

Annual Report — December 31, 2010

		Mario J. Gabelli, CFA		Kevin V. Dreyer		Jeffrey J. Jonas, CFA

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 (“SEC”) on Form N-CSR. This certification would cover the portfolio managers’ 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 including the investment portfolio as of December 31, 2010.

Investment Performance

     For the year ended December 31, 2010, The Gabelli Healthcare & Wellness^Rx Trust’s (the “Fund”) net asset value (“NAV”) total return was 9.2% and the total return for the Fund’s publicly traded shares was 5.7%, compared with gains of 2.9% and 14.1% for the S&P 500 Health Care Index and the S&P 500 Consumer Staples Index, respectively.

     On December 31, 2010, the Fund’s NAV per share was $8.47, while the price of the Fund’s publicly traded shares closed at $7.08 on the New York Stock Exchange (“NYSE”).

Sincerely yours,

Agnes Mullady
President

February 25, 2011
Comparative Results

Average Annual Returns through December 31, 2010 (a) (Unaudited)

														Since
														Inception
		Quarter				1 Year				2 Year				(06/28/07)
Gabelli Healthcare & WellnessRx Trust
NAV Total Return (b)			9.43	%			9.15	%			16.79	%			2.06	%
Investment Total Return (c)			10.62				5.67				18.88				(2.95	)
S&P 500 Index			10.76				15.08				20.64				(2.83	)(d)
S&P 500 Health Care Index			3.64				2.90				10.98				(1.26	)
S&P 500 Consumer Staples Index			6.11				14.11				14.50				5.48

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, 2010:

Food			25.9	%
Health Care Equipment and Supplies			15.8	%
Pharmaceuticals			15.5	%
Health Care Providers and Services			12.2	%
Food and Staples Retailing			9.5	%
Beverages			7.1	%
U.S. Government Obligations			6.1	%
Biotechnology			2.7	%
Computer Software and Services			2.7	%
Consumer Services and Supplies			0.9	%
Capital Goods			0.8	%
Household and Personal Products			0.8	%
			100.0	%

     The Fund will file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, the last of which was filed for the quarter ended September 30, 2010. 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 twelve 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.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST

SCHEDULE OF INVESTMENTS

December 31, 2010

										Market
Shares						Cost				Value
				COMMON STOCKS — 93.9%
				Beverages — 7.1%
	35,000			Dr Pepper Snapple Group Inc.		$	914,769			$	1,230,600
	12,000			Hansen Natural Corp.†			412,587				627,360
	46,000			ITO EN Ltd.			888,494				764,873
	15,000			Morinaga Milk Industry Co. Ltd.			48,287				63,555
	350,000			Parmalat SpA			944,922				958,802
	22,000			Peet’s Coffee & Tea Inc.†			847,156				918,280
	10,000			PepsiCo Inc.			648,904				653,300
	25,000			The Coca-Cola Co.			1,347,432				1,644,250
	400,000			Vitasoy International Holdings Ltd.			234,646				333,471
							6,287,197				7,194,491
				Biotechnology — 2.7%
	10,000			Acorda Therapeutics Inc.†			300,606				272,600
	8,000			Biogen Idec Inc.†			374,546				536,400
	7,000			Cephalon Inc.†			492,219				432,040
	8,000			Crucell NV†			268,389				252,295
	22,000			Crucell NV, ADR†			675,974				688,380
	17,000			Gilead Sciences Inc.†			711,161				616,080
							2,822,895				2,797,795
				Capital Goods — 0.8%
	6,000			Baldor Electric Co.			379,800				378,240
	5,000			Bucyrus International Inc.			446,647				447,000
							826,447				825,240
				Computer Software and Services — 2.7%
	60,000			McAfee Inc.†			2,836,910				2,778,600
				Consumer Services and Supplies — 0.9%
	25,000			Weight Watchers International Inc.			840,614				937,250
				Food — 25.9%
	30,000			Campbell Soup Co.			1,051,407				1,042,500
	30,000			Danone			1,863,689				1,884,997
	52,000			Dean Foods Co.†			873,021				459,680
	50,000			Del Monte Foods Co.			503,345				940,000
	80,000			Dole Food Co. Inc.†			866,552				1,080,800
	30,000			Flowers Foods Inc.			657,458				807,300
	45,000			General Mills Inc.			1,315,478				1,601,550
	20,000			H.J. Heinz Co.			855,165				989,200
	24,100			Inventure Foods Inc.†			97,879				104,353
	25,000			Kellogg Co.			1,263,183				1,277,000
	16,000			Kerry Group plc, Cl. A			419,845				532,813
	110,000			Kikkoman Corp.			1,292,882				1,232,910
	40,000			Kraft Foods Inc., Cl. A			1,163,767				1,260,400
	74,000			Lifeway Foods Inc.†			750,596				706,700
	10,000			MEIJI Holdings Co. Ltd.			433,330				452,026
	42,000			Nestlé SA			1,758,030				2,459,358
	6,000			Rock Field Co. Ltd.			81,896				94,223
	120,000			Sara Lee Corp.			1,661,383				2,101,200
	200,000			Smart Balance Inc.†			1,186,517				866,000
	62,000			The Hain Celestial Group Inc.†			1,444,927				1,677,720
	24,000			The J.M. Smucker Co.			1,307,314				1,575,600
	110,000			Tingyi (Cayman Islands) Holding Corp.			176,608				281,623
	44,000			Wimm-Bill-Dann Foods OJSC, ADR			397,009				1,450,680
	56,000			YAKULT HONSHA Co. Ltd.			1,454,640				1,613,302
							22,875,921				26,491,935
				Food and Staples Retailing — 9.5%
	62,000			CVS Caremark Corp.			2,085,588				2,155,740
	25,000			Ingles Markets Inc., Cl. A			374,303				480,000
	55,000			Safeway Inc.			1,120,632				1,236,950
	50,000			SUPERVALU Inc.			948,511				481,500
	40,000			The Kroger Co.			852,218				894,400
	40,000			United Natural Foods Inc.†			1,339,920				1,467,200
	21,000			Walgreen Co.			709,267				818,160
	43,000			Whole Foods Market Inc.†			1,102,154				2,175,370
							8,532,593				9,709,320
				Health Care Equipment and Supplies — 15.8%
	30,000			American Medical Systems Holdings Inc.†			559,210				565,800
	18,000			Baxter International Inc.			952,520				911,160
	19,000			Beckman Coulter Inc.			1,114,126				1,429,370
	8,000			Becton, Dickinson and Co.			530,993				676,160
	45,000			Boston Scientific Corp.†			412,984				340,650
	36,000			Covidien plc			1,418,568				1,643,760
	33,000			Cutera Inc.†			362,481				273,570
	4,000			Exactech Inc.†			75,462				75,280
	30,000			Greatbatch Inc.†			719,309				724,500
	9,400			Henry Schein Inc.†			418,608				577,066
	35,000			Hologic Inc.†			603,664				658,700
	11,000			ICU Medical Inc.†			401,687				401,500
	30,000			Immucor Inc.†			576,767				594,900
	12,000			IRIS International Inc.†			111,243				122,760
	16,000			Kinetic Concepts Inc.†			839,863				670,080
	5,000			Medical Action Industries Inc.†			89,640				47,900
	12,000			Medtronic Inc.			604,076				445,080
	550,000			Northstar Neuroscience Inc.†			0				16,500
	35,000			Orthofix International NV†			1,028,943				1,015,000
	45,000			Q-Med AB			493,726				510,174
	22,000			Rochester Medical Corp.†			220,200				240,240
	35,000			St. Jude Medical Inc.†			1,380,891				1,496,250
	4,000			Stryker Corp.			197,260				214,800
	25,000			Thermo Fisher Scientific Inc.†			1,164,522				1,384,000
	46,200			Vascular Solutions Inc.†			400,583				541,464
	10,000			Zimmer Holdings Inc.†			560,785				536,800
							15,238,111				16,113,464
				Health Care Providers and Services — 12.2%
	20,000			Aetna Inc.			877,801				610,200
	19,000			Alere Inc.†			416,343				695,400
	10,000			Amedisys Inc.†			368,946				335,000
	32,000			AmerisourceBergen Corp.			809,091				1,091,840
	6,000			Chemed Corp.			290,940				381,060
	20,000			CIGNA Corp.			620,145				733,200
	5,000			Community Health Systems Inc.†			149,493				186,850
	310,000			Continucare Corp.†			910,875				1,450,800
	14,000			Express Scripts Inc.†			366,996				756,700
	38,000			Genoptix Inc.†			1,119,104				722,760
	30,000			Healthways Inc.†			681,813				334,800
	23,000			McKesson Corp.			1,314,652				1,618,740
	30,000			Medco Health Solutions Inc.†			1,362,389				1,838,100
	20,250			Owens & Minor Inc.			501,559				595,957
	14,000			PSS World Medical Inc.†			219,891				316,400
	22,000			UnitedHealth Group Inc.			759,712				794,420
							10,769,750				12,462,227
				Household and Personal Products — 0.8%
	14,000			Alberto-Culver Co.			521,350				518,560
	10,000			Avon Products Inc.			291,651				290,600
							813,001				809,160

See accompanying notes to financial statements.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST

SCHEDULE OF INVESTMENTS (Continued)

December 31, 2010

										Market
Shares						Cost				Value
				COMMON STOCKS (Continued)
				Pharmaceuticals — 15.5%
	28,000			Abbott Laboratories		$	1,466,069			$	1,341,480
	1,000			Allergan Inc.			70,890				68,670
	30,000			Bristol-Myers Squibb Co.			774,373				794,400
	183,976			Cypress Bioscience Inc.†			1,121,295				1,192,164
	25,000			Inspire Pharmaceuticals Inc.†			101,275				210,000
	36,500			Johnson & Johnson			2,147,509				2,257,525
	170,000			King Pharmaceuticals Inc.†			2,359,936				2,388,500
	37,000			Mead Johnson Nutrition Co.			1,481,758				2,303,250
	37,000			Merck & Co. Inc.			1,188,303				1,333,480
	50,000			Mylan Inc.†			714,413				1,056,500
	35,000			Pain Therapeutics Inc.†			225,922				236,250
	30,000			Pfizer Inc.			527,385				525,300
	20,000			Teva Pharmaceutical Industries Ltd., ADR			924,841				1,042,600
	20,000			Watson Pharmaceuticals Inc.†			741,806				1,033,000
							13,845,775				15,783,119
				TOTAL COMMON STOCKS			85,689,214				95,902,601
				WARRANTS — 0.0%
				Health Care Equipment and Supplies — 0.0%
	80,907			Radient Pharmaceutical Corp., expire 03/05/11† (a)			148,405				21,045

Principal
Amount
				U.S. GOVERNMENT OBLIGATIONS — 6.1%
$	6,270,000			U.S. Treasury Bill,
				0.170%††, 04/21/11			6,266,802				6,267,649
TOTAL INVESTMENTS — 100.0%						$	92,104,421				102,191,295
Other Assets and Liabilities (Net)											(751,475	)
PREFERRED STOCK (1,200,000 preferred shares outstanding)											(30,000,000	)
NET ASSETS — COMMON SHARES (8,431,401 common shares outstanding)										$	71,439,820
NET ASSET VALUE PER COMMON SHARE ($71,439,820 ÷8,431,401 shares outstanding)										$	8.47

		% of
		Market				Market
Geographic Diversification		Value				Value
North America			83.1	%		$	84,916,453
Europe			11.2				11,423,859
Japan			4.1				4,220,889
Latin America			1.0				1,015,000
Asia/Pacific			0.6				615,094
Total Investments			100.0	%		$	102,191,295

See accompanying notes to financial statements.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST

STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010

Assets:
Investments, at value (cost $92,104,421)		$	102,191,295
Cash			689
Receivable for investments sold			2,483
Dividends and interest receivable			123,478
Deferred offering expense			121,590
Prepaid expense			3,319
Total Assets			102,442,854
Liabilities:
Payable for investments purchased			668,702
Payable for Fund shares repurchased			58,058
Distributions payable			24,000
Payable for investment advisory fees			85,632
Payable for payroll expenses			25,609
Payable for accounting fees			7,500
Payable for shareholder communications expenses			100,932
Other accrued expenses			32,601
Total Liabilities			1,003,034
Preferred Shares:
Series A Cumulative Preferred Shares (5.760%, $25 liquidation value, $0.001 par value 1,200,000 shares authorized with 1,200,000 shares issued and outstanding)			30,000,000
Net Assets Attributable to Common Shareholders		$	71,439,820
Net Assets Attributable to Common Shareholders Consist of:
Paid-in capital		$	64,114,277
Accumulated net realized loss on investments and foreign currency transactions			(2,765,825	)
Net unrealized appreciation on investments			10,086,874
Net unrealized appreciation on foreign currency translations			4,494
Net Assets		$	71,439,820
Net Asset Value per Common Share: ($71,439,820 ÷ 8,431,401 shares outstanding at $0.001 par value; unlimited number of shares authorized)		$	8.47

STATEMENT OF OPERATIONS
For the Year Ended December 31, 2010

Investment Income:
Dividends (net of foreign withholding taxes of $11,357)		$	956,586
Interest			12,152
Total Investment Income			968,738
Expenses:
Investment advisory fees			774,825
Shareholder communications expenses			210,200
Payroll expenses			104,594
Legal and audit fees			86,437
Trustees’ fees			66,204
Shareholder services fees			59,348
Accounting fees			45,000
Custodian fees			8,153
Miscellaneous expenses			49,777
Total Expenses			1,404,538
Net Investment Loss			(435,800	)
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency:
Net realized gain on investments			1,568,735
Net realized loss on foreign currency transactions			(1,184	)
Net realized gain on investments and foreign currency transactions			1,567,551
Net change in unrealized appreciation:
on investments			6,808,290
on foreign currency translations			3,949
Net change in unrealized appreciation on investments and foreign currency translations			6,812,239
Net Realized and Unrealized Gain/(Loss) on Investments, and Foreign Currency			8,379,790
Net Increase in Net Assets Resulting from Operations			7,943,990
Total Distributions to Preferred Shareholders			(633,600	)
Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations		$	7,310,390

See accompanying notes to financial statements.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS

		Year Ended				Year Ended
		December 31, 2010				December 31, 2009
Operations:
Net investment loss		$	(435,800	)		$	(409,073	)
Net realized gain/(loss) on investments and foreign currency transactions			1,567,551				(2,117,813	)
Net change in unrealized appreciation on investments and foreign currency translations			6,812,239				15,655,171
Net Increase in Net Assets Resulting from Operations			7,943,990				13,128,285
Distributions to Preferred Shareholders:
Net investment income			(633,600	)			—
Total Distributions to Preferred Shareholders			(633,600	)			—
Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations			7,310,390				13,128,285
Fund Share Transactions:
Net decrease from repurchase of common shares			(293,456	)			—
Offering costs for preferred shares charged to paid-in capital			(1,326,936	)			—
Net Decrease in Net Assets from Fund Share Transactions			(1,620,392	)			—
Net Increase in Net Assets Attributable to Common Shareholders			5,689,998				13,128,285
Net Assets Attributable to Common Shareholders:
Beginning of period			65,749,822				52,621,537
End of period (including undistributed net investment income of $0 and $0, respectively)		$	71,439,820			$	65,749,822

See accompanying notes to financial statements.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
FINANCIAL HIGHLIGHTS

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

		Year Ended December 31,
														Period Ended
		2010				2009				2008				December 31, 2007 (c)
Operating Performance:
Net asset value, beginning of period		$	7.76			$	6.21			$	8.03			$	8.00
Net investment income/(loss)			(0.05	)			(0.05	)			(0.07	)			0.02
Net realized and unrealized gain/(loss) on investments and foreign currency transactions			0.98				1.60				(1.70	)			0.06
Total from investment operations			0.93				1.55				(1.77	)			0.08
Distributions to Preferred Shareholders: (a)
Net investment income			(0.07	)			—				—				—
Total distributions to preferred shareholders			(0.07	)			—				—				—
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations			0.86				1.55				(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	)
Fund Share Transactions:
Increase in net asset value from common share transactions			0.01				—				—				—
Offering costs for preferred shares charged to paid-in capital			(0.16	)			—				—				—
Total fund share transactions			(0.15	)			—				—				—
Net Asset Value Attributable to Common Shareholders, End of Period		$	8.47			$	7.76			$	6.21			$	8.03
NAV total return †			9.15	%			24.96	%			(22.03	)%			1.00	%
Market value, end of period		$	7.08			$	6.70			$	5.01			$	7.09
Investment total return††			5.67	%			33.73	%			(28.63	)%			(10.75	)%
Ratios to Average Net Assets and Supplemental Data:
Net assets including liquidation value of preferred shares, end of period (in 000’s)		$	101,440				—				—				—
Net assets attributable to common shares, end of period (in 000’s)		$	71,440			$	65,750			$	52,622			$	68,069
Ratio of net investment income/(loss) to average net assets attributable to common shares			(0.65	)%			(0.72	)%			(0.94	)%			0.56	%(d)
Ratio of operating expenses to average net assets attributable to common shares			2.11	%			2.04	%			2.41	%			1.97	%(d)
Ratio of operating expenses to average net assets including liquidation value of preferred shares			1.82	%			—				—				—
Portfolio turnover rate			45.2	%			55.7	%			122.0	%			26.7	%†††
Preferred Shares:
5.760% Series A Cumulative Preferred Shares
Liquidation value, end of period (in 000’s)		$	30,000				—				—				—
Total shares outstanding (in 000’s)			1,200				—				—				—
Liquidation preference per share		$	25.00				—				—				—
Average market value (b)		$	25.35				—				—				—
Asset coverage per share		$	84.53				—				—				—
Asset coverage			338	%			—				—				—

See accompanying notes to financial statements.

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”). Investment operations commenced on June 28, 2007.

     The Fund’s investment objective is long-term growth of capital. 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.

     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.

2. Significant Accounting Policies. The Fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

     Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Trustees (the “Board”) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the “Adviser”).

     Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Debt instruments having a maturity greater than sixty days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. 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.

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

	•		Level 1 — quoted prices in active markets for identical securities;
	•		Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and
	•		Level 3 — significant unobservable inputs (including the Fund’s determinations as to the fair value of investments).

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)

     A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of December 31, 2010 is as follows:

		Investments in
		Securities
		(Market Value)
Valuation Inputs		Assets
Level 1 - Quoted Prices*		$	95,902,601
Level 2 - Other Significant Observable Inputs*			6,288,694
Total		$	102,191,295

     The Fund did not have significant transfers between Level 1 and Level 2 during the year ended December 31, 2010.

     There were no Level 3 investments held at December 31, 2010 or December 31, 2009.

     In January 2010, the Financial Accounting Standards Board (“FASB”) issued amended guidance to improve disclosure about fair value measurements which requires additional disclosures about transfers between Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). FASB also clarified existing disclosure requirements relating to the levels of disaggregation of fair value measurement and inputs and valuation techniques used to measure fair value. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2009 and interim periods within those fiscal years. Management has adopted the amended guidance and determined that there was no material impact to the Fund’s financial statements except for additional disclosures made in the notes. Disclosures about purchases, sales, issuances, and settlements in the rollforward of activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. Management is currently evaluating the impact of the additional disclosure requirements on the Fund’s financial statements.

Derivative Financial Instruments.

The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purpose of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or that, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.

The Fund’s derivative contracts held at December 31, 2010, if any, are not accounted for as hedging instruments under GAAP.

Options. The Fund may purchase or write call or put options on securities or indices for the purpose of achieving additional return or for hedging the value of the fund’s portfolio. 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.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)

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. During the year ended December 31, 2010, the Fund held 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, and are included in unrealized appreciation/depreciation on investments and futures contracts. The Fund recognizes a realized gain or loss when the contract is closed.

There are several risks in connection with the use of futures contracts as a hedging instrument. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. During the year ended December 31, 2010, the Fund held no investments in futures contracts.

Forward Foreign Exchange Contracts. The Fund may engage in forward foreign exchange contracts for the purpose of 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. During the year ended December 31, 2010, the Fund held no investments in forward foreign exchange contracts.

     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 receive and maintain securities as collateral whose market value is not less than their repurchase price. 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, 2010, the Fund held no investments in 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. Shareholders in the Fund 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, 2010, the Fund did not hold any investments in Acquired Funds.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)

     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 purchase 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 inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than 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. The Fund held no restricted or illiquid securities at December 31, 2010.

     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 from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.

     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. There were neither custodian fee credits earned nor such interest expense incurred during the year ended December 31, 2010.

     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 GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income for federal income tax purposes 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. Permanent differences were primarily due to the tax treatment of currency gains and losses, a write-off of the current year net operating loss, and recharacterization of distributions. These reclassifications have no impact on the NAV of the Fund. For the year ended December 31, 2010, reclassifications were made to decrease accumulated distributions in excess of net investment income by $1,069,400 and decrease accumulated net realized loss on investments and foreign currency transactions by $1,184, with an offsetting adjustment to paid-in capital.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)

The tax character of distributions paid during the year ended December 31, 2010 was as follows:

		Year Ended
		December 31, 2010
		Preferred
Distributions paid from:
Ordinary income		$	633,600

     No distributions were made during the year ended December 31, 2009.

     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.

     As of December 31, 2010, the components of accumulated earnings/losses on a tax basis were as follows:

Accumulated capital loss carryforwards		$	(2,159,475	)
Net unrealized appreciation on investments and foreign currency translations			9,485,018
Total		$	(7,325,543	)

     At December 31, 2010, the Fund had net capital loss carryforwards for federal income tax purposes of $2,159,475 which are available to reduce future required distributions of net capital gains to shareholders. $199,277 of the loss carryforward is available through 2016; and $1,960,198 is available through 2017.

     During the year ended December 31, 2010, the Fund utilized capital loss carryforwards of $1,341,598.

     At December 31, 2010, the temporary difference between book basis and tax basis net unrealized appreciation on investments was primarily due to deferral of losses on wash sales for tax purposes.

     The following summarizes the tax cost of investments and the related net unrealized appreciation at December 31, 2010:

						Gross				Gross
						Unrealized				Unrealized				Net Unrealized
		Cost				Appreciation				Depreciation				Appreciation
Investments		$	92,710,771			$	13,699,791			$	(4,219,267	)		$	9,480,524

     The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended December 31, 2010, the Fund did not incur any income tax, interest, or penalties. As of December 31, 2010, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. Tax years ended December 31, 2007 through December 31, 2010 remain subject to examination by the Internal Revenue Service and state taxing authorities. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

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, 2010, the Fund paid brokerage commissions on security trades of $58,753 to Gabelli & Company, Inc. (“Gabelli & Co.”), 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, 2010, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)

     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 allocated portion of the cost of the Fund’s Chief Compliance Officer. For the year ended December 31, 2010, the Fund accrued $104,594 in payroll expenses in the Statement of Operations.

     The Fund pays each Trustee who is not considered an affiliated person an annual retainer of $3,000 plus $1,000 for each Board meeting attended. Each Trustee is reimbursed by the Fund 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. A Trustee may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Trustees who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.

4. Portfolio Securities. Purchases and sales of securities for the year ended December 31, 2010, other than short-term securities and U.S. Government obligations, aggregated $56,015,579 and $31,275,652, 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, 2010, the Fund repurchased and retired 43,058 shares of its common stock on the open market at a cost of $293,456 and an average discount of approximately 17.27% from its NAV.

     Transactions in shares of beneficial interest were as follows:

		Year Ended
		December 31, 2010
		Shares				Amount
Net decrease from repurchase of common shares			(43,058	)		$	(293,456	)

     During the year ended December 31, 2009, the Fund did not have any transactions in shares of beneficial interest.

     The Fund’s Declaration of Trust, as amended, authorizes the issuance of an unlimited number of shares of $0.001 par value Cumulative Preferred Shares (“Preferred Shares”). The Preferred Shares is senior to the common shares and results in the financial leveraging of the common shares. Such leveraging tends to magnify both the risks and opportunities to common shareholders. Dividends on 5.760% Series A Preferred Shares are cumulative. The Fund is required by the 1940 Act and by the Statements of Preferences to meet certain asset coverage tests with respect to the Preferred Shares. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Preferred Shares at redemption prices of $25 per share plus an amount equal to the accumulated and unpaid dividends whether or not declared on such shares in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to common shareholders and could lead to sales of portfolio securities at inopportune times. The income received on the Fund’s assets may vary in a manner unrelated to the fixed rates, which could have either a beneficial or detrimental impact on net investment income and gains available to common shareholders.

     The Fund filed a $100 million shelf offering with the SEC that went effective June 21, 2010. The shelf offering gave the Fund the ability to offer additional common and preferred shares.

     On August 20, 2010, the Fund received net proceeds of $28,725,173 (after underwriting discounts of $945,000 and offering expenses of $329,827) from the public offering of 1,200,000 shares of 5.760% Series A Cumulative Preferred Shares. Commencing August 20, 2015 and at any time thereafter, the Fund, at its option, may redeem the Preferred Shares in whole or in part at the redemption price. The Board has authorized the repurchase of the Preferred Shares in the open market at prices less than the $25 liquidation value per share. During the year ended December 31, 2010 the Fund did not repurchase any of the Preferred Shares. At December 31, 2010, 1,200,000 Preferred Shares were outstanding and accrued dividends amounted to $24,000.

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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)

7. Other Matters. On April 24, 2008, the Adviser entered into a settlement with the SEC to resolve an 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 administrative settlement order, the SEC found that the Adviser had willfully violated Section 206(2) of the 1940 Act, Section 17(d) of the 1940 Act and Rule 17d-1 thereunder, and had willfully 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, paid $16 million (which included a $5 million civil monetary penalty), approximately $12.8 million of which is in the process of being paid to shareholders of the Global Growth Fund in accordance with a plan developed by an independent distribution consultant and approved by the independent directors of the Global Growth Fund and acceptable to the staff of the SEC, and agreed to cease and desist from future violations of the above referenced federal securities laws and rule. The SEC order also noted the cooperation that the Adviser had given the staff of the SEC during its inquiry. The settlement did 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 Fund, the Global Growth Fund, and other funds in the Gabelli/GAMCO fund complex. The officer denied the allegations and is continuing in his positions with the Adviser and the funds. The court dismissed certain claims and found that the SEC was not entitled to pursue various remedies against the officer while leaving one remedy in the event the SEC were able to prove violations of law. The court subsequently dismissed without prejudice the remaining remedy against the officer, which would allow the SEC to appeal the court’s rulings. On October 29, 2010 the SEC filed its appeal with the U.S. Court of Appeals for the Second Circuit regarding the lower court’s orders. The Adviser currently expects that any resolution of the action against the officer will not have a material adverse impact on the Fund or the Adviser or its ability to fulfill its obligations under the Advisory Agreement.

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

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, 2010, the results of its operations for the year then ended, and the changes in its net assets for each of the two years in the period then ended and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. The 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, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 28, 2011

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
Address1		Length of		Overseen by				Principal Occupation(s)		Other Directorships
and Age		Time Served2		Trustee				During Past Five Years		Held by Trustee4
INTERESTED TRUSTEES3:
Mario J. Gabelli Trustee and Chief Investment Officer Age: 68		Since 2007*			26			Chairman and Chief Executive Officer of GAMCO Investors, Inc. and Chief Investment Officer — Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies in the Gabelli/GAMCO Funds complex; Chief Executive Officer of GGCP, Inc.		Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications)
INDEPENDENT TRUSTEES 5:
Thomas E. Bratter Trustee Age: 71		Since 2007***			3			Director, President, and Founder of The John Dewey Academy (residential college preparatory therapeutic high school)		—
Anthony J. Colavita Trustee Age: 75		Since 2007**			34			President of the law firm of Anthony J. Colavita, P.C.		—
James P. Conn Trustee Age: 72		Since 2007***			18			Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (insurance holding company) (1992-1998)		Director of First Republic Bank (banking) through January 2008 and LaQuinta Corp. (hotels)  through January 2006
Vincent D. Enright Trustee Age: 67		Since 2007*			16			Former Senior Vice President and Chief Financial Officer of KeySpan Corporation (public utility) (1994-1998)		Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) and until September
										2006, Director of Aphton
										Corporation (pharmaceuticals)
Robert C. Kolodny, MD Trustee Age: 66		Since 2007**			2			Physician; Principal of KBS Management LLC (investment adviser) since 2006; General 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 Trustee Age: 76		Since 2007*			20			Chairman of BALMAC International, Inc. (commodities and futures trading)		Director of Aurado Energy Inc. (oil and gas operations) through 2005
Salvatore J. Zizza Trustee Age: 65		Since 2007**			28			Chairman and Chief Executive Officer of Zizza & Co., Ltd. (private holding company) and Chief Executive Officer of General Employment Enterprises, Inc.		Director of Harbor BioSciences, Inc. (biotechnology); and Trans-Lux Corporation (business services); Chairman of each of BAM (manufacturing); Metropolitan Paper Recycling (recycling); Bergen Cove Realty Inc. (real estate); Bion Environmental Technologies (technology) (2005-2008); Director of Earl Scheib Inc. (automotive painting) through April 2009

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
ADDITIONAL FUND INFORMATION (Continued) (Unaudited)

		Term of
Name, Position(s)		Office and
Address1		Length of		Principal Occupation(s)
and Age		Time Served2		During Past Five Years
OFFICERS:
Bruce N. Alpert Secretary Age: 59		Since 2007		Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988 and an officer of all of the registered investment companies in the Gabelli/GAMCO Funds complex. Director of Teton Advisors, Inc. since 1998; Chairman of Teton Advisors, Inc. 2008 to 2010; President of Teton Advisors, Inc. 1998 through 2008; Senior Vice President of GAMCO Investors, Inc. since 2008
Carter W. Austin Vice President Age: 44		Since 2007		Vice President of other closed-end funds within the Gabelli Funds complex; Vice President of Gabelli Funds, LLC since 1996
Agnes Mullady President and Treasurer Age: 52		Since 2007		Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies in the Gabelli/GAMCO Funds complex
David I. Schachter Vice President Age: 57		Since 2007		Vice President of other closed-end funds within the Gabelli Funds complex; Vice President of Gabelli & Company, Inc. since 1999
Adam E. Tokar Assistant Vice President and Ombudsman Age: 30		Since 2007		Portfolio Administrator for GAMCO Asset Management, Inc. 2003 through 2006
Peter D. Goldstein Chief Compliance Officer Age: 57		Since 2007		Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief Compliance Officer of all of the registered investment companies in the Gabelli/GAMCO Funds complex

Certifications

     The Fund’s Chief Executive Officer has certified to the New York Stock Exchange (“NYSE”) that, as of June 14, 2010, he 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.

THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
INCOME TAX INFORMATION (Unaudited)
December 31, 2010
Historical Distribution Summary

						Short-Term
		Investment				Capital				Total
Common Shares		Income (a)				Gains (a)				Distributions
2010			—				—				—
2009			—				—				—
2008		$	0.0114			$	0.0386			$	0.0500
2007			0.0115				0.0385				0.0500
5.760% Series A Cumulative Preferred Shares
2010			—			$	0.50800			$	0.50800

Cash Dividends and Distributions

										Total Amount				Ordinary
		Payable				Record				Paid				Investment
		Date				Date				Per Share				Income
5.760% Series A Cumulative Preferred Shares
			09/27/10				09/20/10			$	0.14800			$	0.14800
			12/27/10				12/17/10				0.36000				0.36000
										$	0.50800			$	0.50800

                    

     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.

TRUSTEES AND OFFICERS
THE GABELLI HEALTHCARE & WELLNESS^Rx TRUST
One Corporate Center, Rye, NY 10580-1422

Trustees		Officers
Mario J. Gabelli, CFA		Bruce N. Alpert
Chairman & Chief Executive Officer,		Secretary
GAMCO Investors, Inc.
		Carter W. Austin
Dr. Thomas E. Bratter		Vice President
President & Founder, John Dewey Academy
		Peter D. Goldstein
Anthony J. Colavita		Chief Compliance Officer
President,
Anthony J. Colavita, P.C.		Agnes Mullady
		President & Treasurer
James P. Conn
Former Managing Director &		David I. Schachter
Chief Investment Officer,		Vice President
Financial Security Assurance Holdings Ltd.
		Adam E. Tokar
Vincent D. Enright		Assistant Vice President & Ombudsman
Former Senior Vice President &
Chief Financial Officer,		Investment Adviser
KeySpan Corp.		Gabelli Funds, LLC
		One Corporate Center
Robert C. Kolodny, MD		Rye, New York 10580-1422
Physician, Principal of KBS Management LLC
		Custodian
Anthonie C. van Ekris		The Bank of New York Mellon
Chairman, BALMAC International, Inc.
		Counsel
		Willkie Farr & Gallagher LLP
Salvatore J. Zizza		Transfer Agent and Registrar
Chairman, Zizza & Co., Ltd.		Computershare Trust Company, N.A.
		Stock Exchange Listing
						5.76%
				Common		Preferred
		NYSE–Symbol:		GRX		GRX PrA
		Shares Outstanding:		8,431,401		1,200,000

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.

The NASDAQ symbol for the Net Asset Value is “XXGRX.”

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 $30,400 for 2009 and $24,927 for 2010.

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

2009 and $60,000 for 2010. Audit-related fees represent services provided in the preparation of Preferred Shares Reports.

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 $3,250 for 2009 and $3,250 for 2010. 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 2009 and $0 for 2010.
	(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)		100%
	(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 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 2009 and $0 for 2010.
	(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.

	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.

     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

     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:

•		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.
•		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. 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:

•		VAFs can be faxed to Broadridge up until the time of the meeting. This is followed up by mailing the original form.
•		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:

•

Banks and brokerage firms using the services at Broadridge: