nvcsrs
 
 
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 & WellnessRx 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: June 30, 2009
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.
 
 

 


 

(THE GABELLI HEALTHCARE & WELLNESS RX TRUST LOGO)
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
The Gabelli Healthcare & WellnessRx Trust
Semi-Annual Report
June 30, 2009
To Our Shareholders,
     The Gabelli Healthcare & WellnessRx Trust’s (the “Fund”) net asset value (“NAV”) total return was 6.1% during the first half of 2009, compared with gains of 3.2% and 0.2% for the Standard & Poor’s (“S&P”) 500 Index and the S&P 500 Health Care Index, respectively. The total return for the Fund’s publicly traded shares was 1.2% during the first half of the year. On June 30, 2009, the Fund’s NAV per share was $6.59, while the price of the publicly traded shares closed at $5.07 on the New York Stock Exchange (“NYSE”).
Comparative Results
Average Annual Returns through June 30, 2009 (a)
                                 
                            Since
            Year to           Inception
    Quarter   Date   1 Year   (06/28/07)
Gabelli Healthcare & WellnessRx Trust
                               
NAV Total Return (b)
    13.04 %     6.12 %     (8.10 )%     (8.55 )%
Investment Total Return (c)
    9.98       1.20       (17.54 )     (19.64 )
S&P 500 Index
    15.92       3.19       (26.20 )     (19.95 )(d)
S&P 500 Health Care Index
    8.88       0.17       (11.51 )     (11.77 )
S&P 500 Consumer Staples Index
    9.81       (1.77 )     (10.26 )     (4.94 )
 
(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 market 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 market performance. Dividends are considered reinvested. You cannot invest directly in an index.
 
(b)   Total returns and average annual returns reflect changes in the 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.

We have separated the portfolio managers’ commentary from the financial statements and investment portfolios due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio managers’ commentary is unrestricted. Both the commentary and the financial statements, including the portfolios of investments, will be available on our website at www.gabelli.com/funds.

 


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of total investments as of June 30, 2009:
         
Food
    29.8 %
Health Care Equipment and Supplies
    19.6 %
Health Care Providers and Services
    13.9 %
Pharmaceuticals
    13.8 %
Food and Staples Retailing
    7.1 %
U.S. Government Obligations
    6.8 %
Beverages
    5.0 %
Biotechnology
    2.2 %
Chemicals
    0.7 %
Consumer Services and Supplies
    0.7 %
Real Estate Investment Trusts
    0.4 %
 
       
 
    100.0 %
 
       
     The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q, the last of which was filed for the quarter ended March 31, 2009. 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; or (iii) visiting the SEC’s website at www.sec.gov.
Shareholder Meeting — May 18, 2009 — Final Results
     The Fund’s Annual Meeting of Shareholders was held on May 18, 2009 at the Greenwich Library in Greenwich, Connecticut. At that meeting, shareholders elected Anthony J. Colavita, Robert C. Kolodny, and Salvatore J. Zizza as Trustees of the Fund. A total of 6,838,380 votes, 6,870,478 votes, and 6,850,936 votes were cast in favor of each Trustee and a total of 473,460 votes, 441,362 votes, and 460,904 votes were withheld for each Trustee, respectively.
     Mario J. Gabelli, Thomas E. Bratter, James P. Conn, Vincent D. Enright, and Anthonie C. van Ekris continue to serve in their capacities as Trustees of the Fund.
     We thank you for your participation and appreciate your continued support.

2


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
SCHEDULE OF INVESTMENTS
June 30, 2009 (Unaudited)
                         
                    Market  
Shares         Cost     Value  
       
COMMON STOCKS — 93.2%
               
       
Beverages — 5.0%
               
  45,000    
Dr. Pepper Snapple Group Inc.†
  $ 1,162,935     $ 953,550  
  10,000    
Hansen Natural Corp.†
    348,317       308,200  
  48,000    
ITO EN Ltd.
    938,191       683,116  
  15,000    
The Coca-Cola Co.
    786,241       719,850  
  200,000    
Vitasoy International Holdings Ltd.
    83,955       105,290  
       
 
           
       
 
    3,319,639       2,770,006  
       
 
           
       
Biotechnology — 2.2%
               
  25,000    
3SBio Inc., ADR†
    311,281       206,000  
  35,000    
Array Biopharma Inc.†
    398,392       109,900  
  7,000    
Cephalon Inc.†
    492,220       396,550  
  10,000    
Crucell NV, ADR†
    180,402       240,600  
  5,000    
Gilead Sciences Inc.†
    217,198       234,200  
  452,000    
Neose Technologies Inc.
    24,056       49,720  
       
 
           
       
 
    1,623,549       1,236,970  
       
 
           
       
Chemicals — 0.7%
               
  12,000    
International Flavors & Fragrances Inc.
    571,938       392,640  
       
 
           
       
Consumer Services and Supplies — 0.7%
               
  15,000    
Weight Watchers International Inc.
    536,212       386,550  
       
 
           
       
Food — 29.8%
               
  12,800    
Cadbury plc, ADR
    693,535       440,320  
  40,000    
Campbell Soup Co.
    1,437,303       1,176,800  
  28,193    
Danone
    1,863,300       1,391,403  
  105,000    
Dean Foods Co.†
    2,275,408       2,014,950  
  50,000    
Del Monte Foods Co.
    503,345       469,000  
  13,000    
Diamond Foods Inc.
    275,920       362,700  
  25,000    
Flowers Foods Inc.
    532,398       546,000  
  20,000    
General Mills Inc.
    1,136,982       1,120,400  
  15,000    
H.J. Heinz Co.
    641,109       535,500  
  17,000    
Kellogg Co.
    861,718       791,690  
  16,000    
Kerry Group plc, Cl. A
    419,845       362,499  
  80,000    
Kikkoman Corp.
    938,281       804,692  
  57,400    
Lifeway Foods Inc.†
    601,951       740,460  
  13,000    
MEIJI Holdings Co. Ltd.†
    580,865       523,590  
  15,000    
Morinaga Milk Industry Co. Ltd.
    48,287       57,611  
  40,000    
Nestlé SA
    1,606,111       1,506,419  
  10,000    
Parmalat SpA
    28,587       24,115  
  6,000    
Rock Field Co. Ltd.
    81,896       74,428  
  84,400    
Smart Balance Inc.†
    644,707       574,764  
  41,000    
The Hain Celestial Group Inc.†
    1,080,830       640,010  
  15,000    
The J.M. Smucker Co.
    757,913       729,900  
  130,000    
Tingyi (Cayman Islands) Holding Corp.
    175,116       214,373  
  11,000    
Wimm-Bill-Dann Foods OJSC, ADR†
    397,009       604,450  
  40,000    
YAKULT HONSHA Co. Ltd.
    963,651       764,831  
       
 
           
       
 
    18,546,067       16,470,905  
       
 
           
       
Food and Staples Retailing — 7.1%
               
  6,000    
Costco Wholesale Corp.
    347,483       274,200  
  44,000    
CVS Caremark Corp.
    1,525,659       1,402,280  
  12,000    
SUPERVALU Inc.
    399,638       155,400  
  38,000    
The Great Atlantic & Pacific Tea Co. Inc.†
    521,363       161,500  
  1,000    
Village Super Market Inc., Cl. A
    23,378       29,750  
  10,000    
Wal-Mart Stores Inc.
    458,576       484,400  
  26,000    
Walgreen Co.
    916,822       764,400  
  34,000    
Whole Foods Market Inc.
    694,061       645,320  
       
 
           
       
 
    4,886,980       3,917,250  
       
 
           
       
Health Care Equipment and Supplies — 19.6%
               
  158,500    
AMDL Inc.† (a)
    367,758       118,875  
  35,700    
AngioDynamics Inc.†
    651,708       473,739  
  12,000    
Baxter International Inc.
    609,676       635,520  
  6,000    
Becton, Dickinson and Co.
    396,288       427,860  
  36,000    
Boston Scientific Corp.†
    378,813       365,040  
  17,000    
Covidien plc
    688,858       636,480  
  31,000    
Cutera Inc.†
    366,576       267,220  
  30,000    
Greatbatch Inc.†
    719,309       678,300  
  10,000    
Henry Schein Inc.†
    446,346       479,500  
  15,000    
Hologic Inc†
    284,551       213,450  
  27,000    
Inverness Medical Innovations Inc.†
    652,312       960,660  
  15,000    
Kinetic Concepts Inc.†
    824,220       408,750  
  15,000    
Medical Action Industries Inc.†
    270,907       171,750  
  259,400    
Medical Nutrition USA Inc.†
    575,222       529,176  
  9,000    
Medtronic Inc.
    470,816       314,010  
  34,000    
Micrus Endovascular Corp.†
    718,227       307,360  
  550,000    
Northstar Neuroscience Inc.†
    1,013,271       1,105,500  
  15,000    
Orthofix International NV†
    459,682       375,150  
  21,000    
St. Jude Medical Inc.†
    864,933       863,100  
  4,000    
Stryker Corp.
    197,260       158,960  
  7,500    
Thermo Fisher Scientific Inc.†
    295,502       305,775  
  78,000    
Vascular Solutions Inc.†
    714,855       609,960  
  10,000    
Zimmer Holdings Inc.†
    632,919       426,000  
       
 
           
       
 
    12,600,009       10,832,135  
       
 
           
See accompanying notes to financial statements.

3


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2009 (Unaudited)
                         
                    Market  
Shares         Cost     Value  
       
COMMON STOCKS (Continued)
               
       
Health Care Providers and Services — 13.9%
               
  14,000    
Aetna Inc.
  $ 703,453     $ 350,700  
  12,000    
Amedisys Inc.†
    480,065       396,240  
  18,000    
AmerisourceBergen Corp.
    386,491       319,320  
  8,000    
Cardinal Health Inc.
    469,607       244,400  
  3,000    
Chemed Corp.
    126,720       118,440  
  376,100    
Continucare Corp.†
    802,213       876,313  
  12,000    
Express Scripts Inc.†
    552,587       825,000  
  19,000    
Genoptix Inc.†
    556,407       607,810  
  14,100    
Healthways Inc.†
    444,080       189,645  
  12,000    
IMS Health Inc.
    324,226       152,400  
  10,000    
McKesson Corp.
    522,503       440,000  
  9,000    
Medco Health Solutions Inc.†
    355,735       410,490  
  280,000    
Metropolitan Health Networks Inc.†
    489,278       562,800  
  25,000    
Omnicare Inc.
    799,508       644,000  
  12,000    
Owens & Minor Inc.
    442,249       525,840  
  22,000    
PSS World Medical Inc.†
    355,879       407,220  
  26,200    
UnitedHealth Group Inc.
    1,098,144       654,476  
       
 
           
       
 
    8,909,145       7,725,094  
       
 
           
       
Pharmaceuticals — 13.8%
               
  11,000    
Abbott Laboratories
    582,962       517,440  
  10,000    
Cougar Biotechnology Inc.†
    428,776       429,600  
  21,000    
Inspire Pharmaceuticals Inc.†
    81,948       116,760  
  40,000    
Johnson & Johnson
    2,395,463       2,272,000  
  10,000    
King Pharmaceuticals Inc.†
    89,350       96,300  
  19,000    
Mead Johnson Nutrition Co., Cl. A†
    492,474       603,630  
  20,000    
Mylan Inc.†
    259,095       261,000  
  47,000    
Pain Therapeutics Inc.†
    389,689       252,390  
  32,500    
Schering-Plough Corp.
    763,856       816,400  
  13,500    
Teva Pharmaceutical Industries Ltd., ADR
    581,342       666,090  
  35,000    
Wyeth
    1,380,513       1,588,650  
       
 
           
       
 
    7,445,468       7,620,260  
       
 
           
       
Real Estate Investment Trusts — 0.4%
               
  6,000    
Alexandria Real Estate Equities Inc.
    335,841       214,740  
       
 
           
       
TOTAL COMMON STOCKS
    58,774,848       51,566,550  
       
 
           
 
       
WARRANTS — 0.0%
               
       
Health Care Equipment and Supplies — 0.0%
               
  80,907    
AMDL Inc., expire 03/05/11† (a)(b)
    148,405       15,450  
       
 
           
                         
Principal                    
Amount                  
       
U.S. GOVERNMENT OBLIGATIONS — 6.8%
               
$ 3,743,000    
U.S. Treasury Bills, 0.086% to 0.183%††, 07/02/09 to 09/03/09
    3,742,376       3,742,407  
       
 
           
TOTAL INVESTMENTS — 100.0%   $ 62,665,629       55,324,407  
       
 
             
 
Other Assets and Liabilities (Net)             563,002  
       
 
             
 
NET ASSETS — COMMON SHARES
(8,474,459 common shares outstanding)
          $ 55,887,409  
       
 
             
 
NET ASSET VALUE PER COMMON SHARE
($55,887,409 ÷ 8,474,459 shares outstanding)
          $ 6.59  
       
 
             
 
(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 June 30, 2009, the market value of Rule 144A securities amounted to $134,325 or 0.24% 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 June 30, 2009, the market value of the fair valued security amounted to $15,450 or 0.03% 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
    82.5 %   $ 45,642,950  
Europe
    10.6       5,872,376  
Japan
    5.3       2,908,268  
Latin America
    1.4       795,523  
Asia/Pacific
    0.2       105,290  
 
           
Total Investments
    100.0 %   $ 55,324,407  
 
           
See accompanying notes to financial statements.

4


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009 (Unaudited)
         
Assets:
       
Investments, at value (cost $62,665,629)
  $ 55,324,407  
Receivable for investments sold
    1,389,672  
Dividends receivable
    66,229  
Prepaid expense
    1,464  
 
     
Total Assets
    56,781,772  
 
     
Liabilities:
       
Payable to custodian
    24,444  
Payable for investments purchased
    712,161  
Payable for investment advisory fees
    45,584  
Payable for payroll expenses
    21,788  
Payable for accounting fees
    3,750  
Payable for shareholder communications expenses
    61,591  
Other accrued expenses
    25,045  
 
     
Total Liabilities
    894,363  
 
     
Net Assets applicable to 8,474,459 shares outstanding
  $ 55,887,409  
 
     
Net Assets Consist of:
       
Paid-in capital, at $0.001 par value
  $ 67,217,075  
Accumulated net investment loss
    (188,379 )
Accumulated net realized loss on investments and foreign currency transactions
    (3,799,610 )
Net unrealized depreciation on investments
    (7,341,222 )
Net unrealized depreciation on foreign currency translations
    (455 )
 
     
Net Assets
  $ 55,887,409  
 
     
Net Asset Value per Common Share:
($55,887,409 ÷ 8,474,459 shares outstanding; unlimited number of shares authorized)
  $ 6.59  
 
     
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2009 (Unaudited)
         
Investment Income:
       
Dividends (net of foreign taxes of $6,472)
  $ 361,507  
Interest
    4,457  
 
     
Total Investment Income
    365,964  
 
     
Expenses:
       
Investment advisory fees
    256,962  
Shareholder communications expenses
    113,336  
Payroll expenses
    43,983  
Shareholder services fees
    36,161  
Legal and audit fees
    29,991  
Trustees’ fees
    29,770  
Accounting fees
    18,750  
Custodian fees
    5,082  
Interest expense
    2  
Miscellaneous expenses
    20,797  
 
     
Total Expenses
    554,834  
 
     
Less:
       
Advisory fee reduction on unsupervised assets
    (1,066 )
Custodian fee credits
    (69 )
 
     
Total Reductions and Credits
    (1,135 )
 
     
Net Expenses
    553,699  
 
     
Net Investment Loss
    (187,735 )
 
     
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency:
       
Net realized loss on investments
    (1,580,713 )
Net realized loss on foreign currency transactions
    (45 )
 
     
Net realized loss on investments and foreign currency transactions
    (1,580,758 )
 
     
Net change in unrealized appreciation/depreciation:
       
on investments
    5,035,087  
on foreign currency translations
    (722 )
 
     
Net change in unrealized appreciation/depreciation on investments and foreign currency translations
    5,034,365  
 
     
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency
    3,453,607  
 
     
Net Increase in Net Assets Resulting from Operations
  $ 3,265,872  
 
     
See accompanying notes to financial statements.

5


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST

STATEMENT OF CHANGES IN NET ASSETS
                 
    Six Months Ended        
    June 30, 2009     Year Ended  
    (Unaudited)     December 31, 2008  
Operations:
               
Net investment loss
  $ (187,735 )   $ (577,283 )
Net realized loss on investments and foreign currency transactions
    (1,580,758 )     (2,211,900 )
Net change in unrealized appreciation/depreciation on investments and foreign currency translations
    5,034,365       (12,234,817 )
 
           
Net Increase/(Decrease) in Net Assets Resulting from Operations
    3,265,872       (15,024,000 )
 
           
Distributions to Common Shareholders:
               
Net investment income
          (97,110 )
Net realized short-term gain
          (326,612 )
 
           
Total Distributions to Common Shareholders
          (423,722 )
 
           
Net Increase/(Decrease) in Net Assets
    3,265,872       (15,447,722 )
Net Assets:
               
Beginning of period
    52,621,537       68,069,259  
 
           
End of period (including undistributed net investment income of $0 and $0, respectively)
  $ 55,887,409     $ 52,621,537  
 
           
See accompanying notes to financial statements.

6


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
FINANCIAL HIGHLIGHTS
Selected data for a common share of beneficial interest outstanding throughout each period:
                         
    Six Months Ended              
    June 30, 2009     Year Ended     Period Ended  
    (Unaudited)     December 31, 2008     December 31, 2007 (b)  
Operating Performance:
                       
Net asset value, beginning of period
  $ 6.21     $ 8.03     $ 8.00  
 
                 
Net investment income/(loss)
    (0.02 )     (0.07 )     0.02  
Net realized and unrealized gain/(loss) on investments and foreign currency transactions
    0.40       (1.70 )     0.06  
 
                 
Total from investment operations
    0.38       (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
  $ 6.59     $ 6.21     $ 8.03  
 
                 
Net asset value total return †
    6.12 %     (22.03 )%     1.00 %
 
                 
Market value, end of period
  $ 5.07     $ 5.01     $ 7.09  
 
                 
Total investment return ††
    1.20 %     (28.63 )%     (10.75 )%
 
                 
Ratios to Average Net Assets and Supplemental Data:
                       
Net assets end of period (in 000’s)
  $ 55,887     $ 52,622     $ 68,069  
Ratio of net investment income/(loss) to average net assets
    (0.73) %(a)     (0.94 )%     0.56 %(a)
Ratio of operating expenses to average net assets
    2.16 %(a)     2.41 %     1.97 %(a)
Portfolio turnover rate
    32.6 %     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)   Annualized.
 
(b)   The Gabelli Healthcare & WellnessRx Trust commenced investment operations on June 28, 2007.
See accompanying notes to financial statements.

7


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Organization. The Gabelli Healthcare & WellnessRx 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.
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 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. 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

8


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
    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 June 30, 2009 is as follows:
         
    Investments in  
    Securities  
    (Market Value)  
Valuation Inputs   Assets  
Level 1 — Quoted Prices*
  $ 51,566,550  
Level 2 — Other Significant Observable Inputs**
    3,757,857  
 
     
Total
  $ 55,324,407  
 
     
 
*   The industry classifications are detailed in the Schedule of Investments.
 
**   The Level 2 securities represent U.S. Government Obligations and Warrants as detailed in the Schedule of Investments.
     There were no Level 3 investments at December 31, 2008 or June 30, 2009.
Derivative Financial Instruments.
The Fund may invest in various derivative financial instruments and engage in various portfolio investment strategies 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. Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying security or if the counterparty does not perform its duties under the contract. Investing in certain derivative financial instruments entails certain execution, market, liquidity, hedging, and tax risks. Participation in the options or futures markets and in currency exchange transactions involves investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies. If the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate, the consequences to the Fund may leave the Fund in a worse position than if it had not used such strategies.
The Fund is subject to equity price risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives by investing in various derivative financial instruments, as described below.
Options. The Fund may purchase or write call or put options on securities or indices for the purpose of increasing the income of the Fund. 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.

9


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
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 June 30, 2009, 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.
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 June 30, 2009 there were no open 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. At June 30, 2009, there were no open forward foreign exchange contracts in the Fund.
     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, is at least equal to 102% of the dollar amount invested by the Fund in each agreement. The Fund

10


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
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 June 30, 2009, 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 six months ended June 30, 2009, the Fund did not hold any investments in Acquired Funds.
     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.

11


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
     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.
     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.
     The tax character of distributions paid during the year ended December 31, 2008 was as follows:
         
Distributions paid from:        
Ordinary income
(inclusive of short-term capital gains)
  $ 423,722  
 
     
Total distributions paid
  $ 423,722  
 
     
     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 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.
     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.

12


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
     The following summarizes the tax cost of investments and the related unrealized appreciation/depreciation at June 30, 2009:
                                 
            Gross   Gross    
            Unrealized   Unrealized   Net Unrealized
    Cost   Appreciation   Depreciation   Depreciation
Investments
  $ 63,538,289     $ 2,314,961     $ (10,528,843 )   $ (8,213,882 )
     Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (current and prior three tax years) and has concluded that no provision for federal income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
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 six months ended June 30, 2009, the Fund paid brokerage commissions on security trades of $17,876 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 six months ended June 30, 2009, the Fund paid or accrued $18,750 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 allocated portion of the cost of the Fund’s Chief Compliance Officer. For the six months ended June 30, 2009, the Fund accrued $43,983, 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. 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 receive 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 six months ended June 30, 2009, other than short-term securities and U.S. Government obligations, aggregated $19,038,121 and $15,309,080, 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 six months ended June 30, 2009 and the year ended December 31, 2008, the Fund did not have any transactions in shares of beneficial interest.

13


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
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.
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 being 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 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 Fund or the Adviser or its ability to fulfill its obligations under the Advisory Agreement.
8. Subsequent Events. Management has evaluated the impact of all subsequent events on the Fund through August 26, 2009, the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
Certifications
     The Fund’s Chief Executive Officer has certified to the New York Stock Exchange (“NYSE”) that, as of June 12, 2009, 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.

14


 

THE GABELLI HEALTHCARE & WELLNESSRx TRUST
Board Consideration and Re-Approval of Advisory Agreement (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), contemplates that the Board of Trustees (the “Board”) of The Gabelli Healthcare & WellnessRx Trust (the “Fund”), including a majority of the Trustees who have no direct or indirect interest in the investment advisory agreement and are not “interested persons” of the Fund, as defined in the 1940 Act (the “Independent Board Members”), are required to review and approve the terms of the Fund’s proposed investment advisory agreement. In this regard, the Board reviewed and approved, during the most recent six month period covered by this report, the Investment Advisory Agreement (the “Advisory Agreement”) with Gabelli Funds, LLC (the “Adviser”) for the Fund.
More specifically, at a meeting held on February 26, 2009, the Board, including the Independent Board Members, considered the factors and reached the conclusions described below relating to the selection of the Adviser and the approval of the Advisory Agreement.
Nature, Extent, and Quality of Services.
The Independent Board Members considered the nature, quality, and extent of administrative and shareholder services performed by the Adviser, including portfolio management, supervision of Fund operations and compliance and regulatory filings and disclosures to shareholders, general oversight of other service providers, review of Fund legal issues, assisting the Independent Board Members in their capacity as Trustees, and other services. The Independent Board Members concluded that the services are extensive in nature and that the Adviser consistently delivered a high level of service.
Investment Performance of the Fund and Adviser.
The Independent Board Members considered one year investment performance for the Fund as compared with relevant equity indices and the performance of other sector equity closed end funds, including other funds focused on healthcare or life sciences, and concluded that the Adviser was delivering satisfactory performance results consistent with the investment strategy being pursued by the Fund.
Costs of Services and Profits Realized by the Adviser.
(a) Costs of Services to Fund: Fees and Expenses. The Independent Board Members considered the Fund’s management fee rate and expense ratio relative to industry averages for the Fund’s peer group category and the advisory fees charged by the Adviser and its affiliates to other fund and non-fund clients. The Independent Board Members noted that the mix of services under the Agreement are much more extensive than those under the advisory agreements for non-fund clients. The Independent Board Members noted that the investment advisory fee paid by the Fund is lower than average for its peer group, but recognized the Fund’s other expenses and total expenses were above the group average. They were advised that the high level of expense related to the large number of shareholder accounts and related transfer agency costs. They concluded that the management fee is acceptable based upon the qualifications, experience, reputation, and performance of the Adviser.
(b) Profitability and Costs of Services to Adviser. The Independent Board Members considered the Adviser’s overall profitability and costs, and pro forma estimates of the Adviser’s profitability and costs attributable to the Fund: (i) as part of the Fund complex; and (ii) assuming the Fund constituted the Adviser’s only investment company under its management. The Independent Board Members also considered whether the amount of profit is a fair entrepreneurial profit for the management of the Fund and noted that the Adviser has substantially increased its resources devoted to Fund matters in response to recently enacted regulatory requirements and new or enhanced Fund policies and procedures. The Independent Board Members concluded that the Adviser’s profitability was at an acceptable level.

15


 

Extent of Economies of Scale as Fund Grows. The Independent Board Members considered whether there have been economies of scale with respect to the management of the Fund and whether the Fund has appropriately benefited from any economies of scale. The Independent Board Members noted that economies of scale may develop for certain funds as their assets increase and their fund-level expenses decline as a percentage of assets, but that fund-level economies of scale may not necessarily result in Adviser-level economies of scale. The Board Members concluded that there was an appropriate sharing of economies of scale.
Whether Fee Levels Reflect Economies of Scale. The Independent Board Members also considered whether the management fee rate is reasonable in relation to the asset size of the Fund and any economies of scale that may exist, and concluded that the Fund’s current fee schedule (without breakpoint) was considered reasonable.
Other Relevant Considerations.
(a) Adviser Personnel and Methods. The Independent Board Members considered the size, education, and experience of the Adviser’s staff, the Adviser’s fundamental research capabilities, and the Adviser’s approach to recruiting, training, and retaining portfolio managers and other research and management personnel, and concluded that in each of these areas the Adviser was structured in such a way to support the high level of services being provided to the Fund.
(b) Other Benefits to the Adviser. The Independent Board Members also considered the character and amount of other incidental benefits received by the Adviser and its affiliates from its association with the Fund. The Independent Board Members considered the brokerage commissions paid to an affiliate of the Adviser. The Independent Board Members concluded that potential “fall-out” benefits that the Adviser and its affiliates may receive, such as affiliated brokerage commissions, greater name recognition, or increased ability to obtain research services, appear to be reasonable, and may in some cases benefit the Fund.
Conclusions
In considering the Agreement, the Independent Board Members did not identify any factor as all important or all controlling, and instead considered these factors collectively in light of the Fund’s surrounding circumstances. Based on this review, it was the judgment of the Independent Board Members that shareholders had received satisfactory absolute and relative performance at reasonable fees and, therefore, re-approval of the Agreement was in the best interests of the Fund and its shareholders. As a part of its decision making process, the Independent Board Members considered, generally, that shareholders invested in the Fund knowing that the Adviser managed the Fund and knowing its investment management fee schedule. As such, the Independent Board Members considered, in particular, whether the Adviser managed the Fund in accordance with its investment objectives and policies as disclosed to shareholders. The Independent Board Members concluded that the Fund was managed by the Adviser consistent with its investment objectives and policies.

16


 

AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
Enrollment in the Plan
     It is the policy of The Gabelli Healthcare & WellnessRx Trust (the “Fund”) to automatically reinvest dividends. As a “registered” shareholder you automatically become a participant in the Fund’s Automatic Dividend Reinvestment Plan (the “Plan”). The Plan authorizes the Fund to credit common shares to participants upon an income dividend or a capital gains distribution regardless of whether the shares are trading at a discount or a premium to net asset value. All distributions to shareholders whose shares are registered in their own names will be automatically reinvested pursuant to the Plan in additional shares of the Fund. Plan participants may send their shares certificates to Computershare Trust Company, N.A. (“Computershare”) to be held in their dividend reinvestment account. Registered shareholders wishing to receive their distribution in cash must submit this request in writing to:
The Gabelli Healthcare & WellnessRx Trust
c/o Computershare
P.O. Box 43010
Providence, RI 02940-3010
     Shareholders requesting this cash election must include the shareholder’s name and address as they appear on the share certificate. Shareholders with additional questions regarding the Plan, or requesting a copy of the terms of the Plan, may contact Computershare at (800) 336-6983.
     If your shares are held in the name of a broker, bank, or nominee, you should contact such institution. If such institution is not participating in the Plan, your account will be credited with a cash dividend. In order to participate in the Plan through such institution, it may be necessary for you to have your shares taken out of “street name” and re-registered in your own name. Once registered in your own name your dividends will be automatically reinvested. Certain brokers participate in the Plan. Shareholders holding shares in “street name” at participating institutions will have dividends automatically reinvested. Shareholders wishing a cash dividend at such institution must contact their broker to make this change.
     The number of common shares distributed to participants in the Plan in lieu of cash dividends is determined in the following manner. Under the Plan, whenever the market price of the Fund’s common shares is equal to or exceeds net asset value at the time shares are valued for purposes of determining the number of shares equivalent to the cash dividends or capital gains distribution, participants are issued common shares valued at the greater of (i) the net asset value as most recently determined or (ii) 95% of the then current market price of the Fund’s common shares. The valuation date is the dividend or distribution payment date or, if that date is not a New York Stock Exchange (“NYSE”) trading day, the next trading day. If the net asset value of the common shares at the time of valuation exceeds the market price of the common shares, participants will receive shares from the Fund valued at market price. If the Fund should declare a dividend or capital gains distribution payable only in cash, Computershare will buy common shares in the open market, or on the NYSE or elsewhere, for the participants’ accounts, except that Computershare will endeavor to terminate purchases in the open market and cause the Fund to issue shares at net asset value if, following the commencement of such purchases, the market value of the common shares exceeds the then current net asset value.
     The automatic reinvestment of dividends and capital gains distributions will not relieve participants of any income tax which may be payable on such distributions. A participant in the Plan will be treated for federal income tax purposes as having received, on a dividend payment date, a dividend or distribution in an amount equal to the cash the participant could have received instead of shares.

17


 

Voluntary Cash Purchase Plan
     The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders to increase their investment in the Fund. In order to participate in the Voluntary Cash Purchase Plan, shareholders must have their shares registered in their own name.
     Participants in the Voluntary Cash Purchase Plan have the option of making additional cash payments to Computershare for investments in the Fund’s shares at the then current market price. Shareholders may send an amount from $250 to $10,000. Computershare will use these funds to purchase shares in the open market on or about the 1st and 15th of each month. Computershare will charge each shareholder who participates $0.75, plus a pro rata share of the brokerage commissions. Brokerage charges for such purchases are expected to be less than the usual brokerage charge for such transactions. It is suggested that any voluntary cash payments be sent to Computershare, P.O. Box 43010, Providence, RI 02940–3010 such that Computershare receives such payments approximately 10 days before the 1st and 15th of the month. Funds not received at least five days before the investment date shall be held for investment until the next purchase date. A payment may be withdrawn without charge if notice is received by Computershare at least 48 hours before such payment is to be invested.
     Shareholders wishing to liquidate shares held at Computershare must do so in writing or by telephone. Please submit your request to the above mentioned address or telephone number. Include in your request your name, address, and account number. The cost to liquidate shares is $2.50 per transaction as well as the brokerage commission incurred. Brokerage charges are expected to be less than the usual brokerage charge for such transactions.
     For more information regarding the Dividend Reinvestment Plan and Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by writing directly to the Fund.
     The Fund reserves the right to amend or terminate the Plans as applied to any voluntary cash payments made and any dividend or distribution paid subsequent to written notice of the change sent to the members of the Plan at least 90 days before the record date for such dividend or distribution. The Plan also may be amended or terminated by Computershare on at least 90 days written notice to participants in the Plan.

18


 

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
       
President,
       
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
       
Bruce N. Alpert
       
Secretary
       
 
       
Carter W. Austin
       
Vice President
       
 
       
Peter D. Goldstein
       
Chief Compliance Officer
       
 
       
Agnes Mullady
       
President & Treasurer
       
 
       
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.

 


 

(GRAPHIC)
THE GABELLI HEALTHCARE & WELLNESS Rx TRUST
One Corporate Center Rye, NY 10580-1422 (914) 921-5070 www.gabelli.com Semi Annual Report June 30, 2009

 


 

Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed registrants.
Not applicable.
Item 6. Investments.
(a)   Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.
 
(b)   Not applicable.
Item 7.   Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.

 


 

Item 8. Portfolio Managers of Closed-End Management Investment Companies.
There has been no change, as of the date of this filing, in any of the portfolio managers identified in response to paragraph (a)(1) of this Item in the registrant’s most recently filed annual report on Form N-CSR.
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
01/01/09 through 01/31/09
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — 8,474,459

Preferred — N/A
 
               
Month #2
02/01/09 through 02/28/09
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — 8,474,459

Preferred — N/A
 
               
Month #3
03/01/09 through 03/31/09
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — 8,474,459

Preferred — N/A
 
               
Month #4
04/01/09 through 04/30/09
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — 8,474,459

Preferred — N/A
 
               
Month #5
05/01/09 through 05/31/09
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — 8,474,459

Preferred — N/A
 
               
Month #6
06/01/09 through 06/30/09
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — 8,474,459

Preferred — N/A
 
               
Total
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  Common — N/A

Preferred — N/A
  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)   Not applicable.
 
  (a)(2)   Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

 


 

  (a)(3)   Not applicable.
 
  (b)   Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.

 


 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
(registrant)
  The Gabelli Healthcare & WellnessRx Trust    
 
       
By (Signature and Title)*
  /s/ Agnes Mullady    
 
       
 
  Agnes Mullady, Principal Executive Officer and Principal
Financial Officer
   
 
       
Date 9/1/09
       
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 9/1/09
       
 
*   Print the name and title of each signing officer under his or her signature.