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 811-22041
Gabelli 787 Fund, Inc. |
(Exact name of registrant as specified in charter) |
One Corporate Center Rye, New York 10580-1422 |
(Address of principal executive offices) (Zip code) |
Bruce N. Alpert Gabelli Funds, LLC One Corporate Center Rye, New York 10580-1422 |
(Name and address of agent for service) |
Registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: October 31
Date of reporting period: October 31, 2015
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
Gabelli Enterprise Mergers and Acquisitions Fund
Annual Report
October 31, 2015
To Our Shareholders,
For the year ended October 31, 2015, the net asset value (“NAV”) per Class A Share of the Gabelli Enterprise Mergers and Acquisitions Fund increased 3.3% compared with an increase of 5.2% for the Standard & Poor’s (“S&P”) 500 Index. The performance of the Bank of America Merrill Lynch 3 Month U.S. Treasury Bill Index for this year was 0.02%. See page 3 for additional performance information.
Enclosed are the financial statements, including the schedule of investments, as of October 31, 2015.
Performance Discussion (Unaudited)
In 2014, global deal volumes increased 47.4% to $3.5 trillion, marking the strongest year for worldwide mergers and acquisitions (“M&A”) since 2007. This surge was propelled by ninety-five deals in excess of $5 billion, more than double the number of comparably sized deals announced in 2013. In the fourth calendar quarter of 2014, deal volume totaled $922.5 billion, an increase of 7% sequentially.
In the first calendar quarter of 2015, global deal volumes increased by 25% to $854 billion, compared with the first quarter last year, marking the strongest opening quarter for deals since 2007. Announced deals greater than $5 billion remained prevalent, with twenty-seven deals in excess of $5 billion announced over that period. Although volume increased, the number of worldwide deals announced in the first quarter decreased by 3% from the same period in 2014, and by 21% from the fourth quarter of 2014.
In the second quarter of 2015, global deal volumes totaled $1.4 trillion, a 63% increase from the first quarter of this year, and a 40% increase over the same period last year. This strong quarter contributed to global deal volumes totaling $2.2 trillion for the first half of 2015, marking the strongest first half for M&A since 2007. This surge was driven by sixty-two announced deals greater than $5 billion, which accounted for 50% of total volume for the first half. Additionally, the number of worldwide deals announced has increased by 3% compared with the same period in 2014, and by 8% from the first quarter of 2015.
In the third quarter of 2015, global deal volumes totaled $1.1 trillion, a 24% increase over the third quarter of 2014. This continued strength was driven by a 96% increase in announced deals greater than $10 billion, which accounted for 36% of total volume for the three quarters. Additionally, the number of worldwide deals announced increased by 2% in the first nine months of the year.
Selected deals that closed during the Fund’s fiscal year (Unaudited)
Bally Technologies Inc. is a designer and manufacturer of gaming machines and casino management systems. On August 1, 2014, the company received an $83.30 cash merger offer from New York based Scientific Games, a lottery operator and gaming machines manufacturer. The deal valued Bally Technologies at $5.1 billion and was completed on November 21, 2014. The Fund earned a 20.78% annualized return.
Concur Technologies Inc. is a provider of cloud based corporate travel software. On September 18, 2014, SAP SE, the German software giant, announced that it would acquire Concur for $129 cash per share. This merger valued the company at $8.3 billion. After receiving the requisite regulatory and shareholder approvals, the deal closed on December 4, 2014. The Fund earned a 7.28% annualized return.
Avanir Pharmaceuticals Inc. is a biopharma firm focused on products related to the nervous system. In December 2014, Otsuka Pharmaceutical Company Ltd. announced that it would acquire Avanir in a $17 per share cash tender worth $3.5 billion. Otsuka’s strategy was to combine its expertise in drugs for mental illness with Avanir’s strengths in neurological drugs. The tender offer closed on January 13, 2015, and the Fund earned a 10.62% annualized return.
Cubist Pharmaceuticals Inc. is a pharmaceutical company engaged in the development and commercialization of antibiotic treatments. On December 8, 2014, Merck & Co. offered to acquire Cubist in a cash tender offer valued at $8.4 billion, a premium of approximately 35% to the company’s previous valuation. The tender offer closed on January 21, 2015. The Fund earned an 18.57% annualized return.
Catamaran Corporation is a provider of pharmacy benefit management services and technology solutions. On March 30, 2015, the company agreed to combine with OptumRX, UnitedHealth Group’s independent pharmacy care services business. This was a combination of the #3 and #4 PBMs in the United States. Under the terms of the combination, OptumRx acquired Catamaran for $61.50 cash per share. The combination closed on July 23, 2015. The Fund earned an annualized return of 8.64%.
Polypore International Inc. develops and manufactures microporous membranes used in products such as smartphones, laptops, tablets, and lawn and garden equipment. On February 23, 2015, it announced that the company would be sold to a U.S. subsidiary of Asahi Kasei Corporation for $60.50 per share in cash. Additionally, immediately prior to the completion of Asahi Kasei’s acquisition, 3M would purchase the assets of Polypore’s Separations Media Segment for $1 billion, with Asahi Kasei receiving the proceeds from the sale. After receiving regulatory and shareholder approvals, the merger closed on August 26, 2015. The Fund earned a 6.67% annualized return.
Thoratec Corp. designs, manufactures, and sells products to treat the full range of clinical needs for patients suffering from advanced heart failure. On July 22, 2015, St. Jude Medical announced that it would acquire the company for $63.50 cash per share in a merger worth $3.4 billion. Following regulatory and shareholder approval, the transaction closed on October 8, 2015. The Fund earned a 4.27% annualized return.
We appreciate your continuing confidence and trust.
2
Comparative Results
Average Annual Returns through October 31, 2015 (a)(b) (Unaudited) | Since | |||||||||||||||||||
1 Year | 5 Year | 10 Year | Inception (2/28/01) | |||||||||||||||||
Class A (EMAAX) | 3.29 | % | 5.16 | % | 4.24 | % | 4.41 | % | ||||||||||||
With sales charge (c) | (2.65 | ) | 3.92 | 3.63 | 3.98 | |||||||||||||||
Class AAA (EAAAX) | 3.50 | 5.36 | 4.35 | 4.48 | ||||||||||||||||
Class C (EMACX) | 2.69 | 4.57 | 3.67 | 3.83 | ||||||||||||||||
With contingent deferred sales charge (d) | 1.69 | 4.57 | 3.67 | 3.83 | ||||||||||||||||
Class Y (EMAYX) | 3.73 | 5.63 | 4.71 | 4.87 | ||||||||||||||||
S&P 500 Index | 5.20 | 14.33 | 7.85 | 5.65 | ||||||||||||||||
Lipper U.S. Treasury Money Market Fund Average | 0.00 | 0.01 | 1.04 | 1.18 | ||||||||||||||||
Bank of America Merrill Lynch 3 Month U.S. Treasury Bill Index | 0.02 | 0.07 | 1.31 | 1.57 |
In the current prospectuses dated February 27, 2015, the Fund’s expense ratios are 1.46%, 1.66%, 2.21%, and 1.21% for the Class AAA, A, C, and Y Shares, respectively. See page 13 for expense ratios for the year ended October 31, 2015. Class AAA and Class Y Shares have no sales charge. The maximum sales charge for Class A Shares and Class C Shares is 5.75% and 1.00%, respectively.
(a) | Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days after the date of purchase. Investors should carefully consider the investment objectives, risks, sales charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus, please visit our website at www.gabelli.com. The Class A Shares’ NAV are used to calculate the performance for the periods prior to the issuance of the Class AAA Shares on February 26, 2010. The actual performance for the Class AAA Shares would have been higher than the returns of the Class A Shares due to lower expenses. The S&P 500 Index is a market capitalization weighted index of 500 large capitalization stocks commonly used to represent the U.S. equity market. The Lipper U.S. Treasury Money Market Fund Average reflects the average performance of mutual funds classified in this particular category. The Bank of America Merrill Lynch 3 Month U.S. Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month, that issue is sold and rolled into the outstanding Treasury Bill that matures closest to, but not beyond three months from the rebalancing date. To qualify for selection, an issue must have settled on or before the rebalancing (month end) date. Dividends are considered reinvested except for the Bank of America Merrill Lynch 3 Month U.S. Treasury Bill Index. You cannot invest directly in an index. |
(b) | The Fund’s fiscal year ends October 31. |
(c) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(d) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GABELLI ENTERPRISE
MERGERS AND ACQUISITIONS FUND (CLASS A SHARES) AND THE S&P 500 INDEX (Unaudited)
* | Past performance is not predictive of future results. The performance tables and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
3
Gabelli Enterprise Mergers and Acquisitions Fund | ||
Disclosure of Fund Expenses (Unaudited) | ||
For the Six Month Period from May 1, 2015 through October 31, 2015 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and
hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The “Annualized Expense Ratio” represents the actual expenses for the last six months and may be different from the expense ratio in the Financial Highlights which is for the year ended October 31, 2015.
Beginning Account Value 05/01/15 | Ending Account Value 10/31/15 | Annualized Expense Ratio | Expenses Paid During Period* | |||||
Gabelli Enterprise Mergers and Acquisitions Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $ 992.50 | 1.44% | $ 7.23 | ||||
Class A | $1,000.00 | $ 992.50 | 1.66% | $ 8.34 | ||||
Class C | $1,000.00 | $ 989.50 | 2.20% | $11.03 | ||||
Class Y | $1,000.00 | $ 994.30 | 1.19% | $ 5.98 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,017.95 | 1.44% | $ 7.32 | ||||
Class A | $1,000.00 | $1,016.84 | 1.66% | $ 8.44 | ||||
Class C | $1,000.00 | $1,014.12 | 2.20% | $11.17 | ||||
Class Y | $1,000.00 | $1,019.21 | 1.19% | $ 6.06 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (184 days), then divided by 365. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of October 31, 2015:
Gabelli Enterprise Mergers and Acquisitions Fund
U.S. Government Obligations | 16.9 | % | ||
Consumer Discretionary | 16.0 | % | ||
Financials | 14.0 | % | ||
Information Technology | 12.4 | % | ||
Materials | 10.7 | % | ||
Industrials | 7.5 | % | ||
Health Care | 6.9 | % |
Utilities | 5.4 | % | ||
Telecommunication Services | 4.8 | % | ||
Consumer Staples | 4.8 | % | ||
Energy | 1.2 | % | ||
Other Assets and Liabilities | (0.6 | )% | ||
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100.0 | % | |||
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The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
We have separated the portfolio manager’s commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio manager’s commentary is unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.
5
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments — October 31, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 83.1% |
| |||||||||||
CONSUMER DISCRETIONARY — 16.0% |
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Auto Components — 1.3% |
| |||||||||||
1,500 | Montupet | $ | 121,312 | $ | 117,855 | |||||||
52,000 | Navistar International Corp.† | 1,259,214 | 639,600 | |||||||||
40,000 | Remy International Inc. | 1,177,321 | 1,179,600 | |||||||||
10,000 | Tenneco Inc.† | 31,846 | 565,900 | |||||||||
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| |||||||||
2,589,693 | 2,502,955 | |||||||||||
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Diversified Consumer Services — 0.0% |
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2,000 | Funespana SA† | 18,121 | 15,835 | |||||||||
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| |||||||||
Hotels, Restaurants, and Leisure — 3.2% |
| |||||||||||
8,000 | Belmond Ltd., Cl. A† | 87,650 | 85,920 | |||||||||
1,800 | Churchill Downs Inc. | 58,934 | 264,294 | |||||||||
180,000 | Dover Motorsports Inc. | 667,976 | 405,000 | |||||||||
13,000 | Eldorado Resorts Inc.† | 65,272 | 128,700 | |||||||||
12,001 | International Game Technology plc | 225,095 | 194,656 | |||||||||
38,000 | Ryman Hospitality Properties Inc. | 1,354,565 | 1,998,800 | |||||||||
225,000 | Strategic Hotels & Resorts Inc.† | 3,165,140 | 3,172,500 | |||||||||
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5,624,632 | 6,249,870 | |||||||||||
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Household Durables — 0.1% |
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10,000 | Nobility Homes Inc.† | 133,178 | 112,550 | |||||||||
18,000 | Skyline Corp.† | 99,216 | 63,000 | |||||||||
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232,394 | 175,550 | |||||||||||
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Media — 10.1% | ||||||||||||
100,000 | ACME Communications Inc.† | 115,451 | 3,400 | |||||||||
70,000 | Cablevision Systems Corp., Cl. A | 2,284,351 | 2,281,300 | |||||||||
155,000 | Clear Channel Outdoor Holdings Inc., Cl. A† | 1,211,268 | 1,159,400 | |||||||||
76,000 | Crown Media Holdings Inc., Cl. A† | 307,160 | 440,040 | |||||||||
3,600 | Discovery Communications Inc., Cl. A† | 26,174 | 105,984 | |||||||||
10,800 | Discovery Communications Inc., Cl. C† | 60,976 | 297,216 | |||||||||
20,000 | DISH Network Corp., Cl. A† | 386,434 | 1,259,400 | |||||||||
20,000 | Journal Media Group Inc. | 236,600 | 244,800 | |||||||||
5,000 | Liberty Broadband Corp., Cl. A† | 21,191 | 272,800 | |||||||||
11,000 | Liberty Broadband Corp., Cl. C† | 157,036 | 591,470 | |||||||||
18,866 | Liberty Global plc, Cl. A† | 772,599 | 839,914 | |||||||||
38,000 | Liberty Global plc, Cl. C† | 1,536,054 | 1,620,320 | |||||||||
500 | Liberty Global plc LiLAC, Cl. A† | 17,978 | 19,310 | |||||||||
1,400 | Liberty Global plc LiLAC, Cl. C† | 61,935 | 54,124 | |||||||||
20,000 | Liberty Media Corp., Cl. A† | 63,573 | 815,200 | |||||||||
30,000 | Liberty Media Corp., Cl. C† | 97,832 | 1,174,500 | |||||||||
50,000 | Martha Stewart Living Omnimedia Inc., Cl. A† | 305,743 | 302,000 | |||||||||
32,000 | Media General Inc.† | 545,496 | 475,520 | |||||||||
14,000 | Meredith Corp. | 661,448 | 658,280 |
Shares | Cost | Market Value | ||||||||||
5,000 | Scripps Networks Interactive Inc., Cl. A | $ | 372,586 | $ | 300,400 | |||||||
13,000 | SFX Entertainment Inc.† | 47,851 | 12,091 | |||||||||
20,000 | Shaw Communications Inc., Cl. B | 265,164 | 415,000 | |||||||||
20,000 | Starz, Cl. A† | 33,996 | 670,200 | |||||||||
76,000 | Telenet Group Holding NV† | 3,439,325 | 4,422,706 | |||||||||
4,000 | Time Warner Cable Inc. | 585,055 | 757,600 | |||||||||
5,000 | Time Warner Inc. | 384,734 | 376,700 | |||||||||
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13,998,010 | 19,569,675 | |||||||||||
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Specialty Retail — 1.3% | ||||||||||||
8,000 | Aaron’s Inc. | 231,784 | 197,360 | |||||||||
12,000 | Pier 1 Imports Inc. | 88,183 | 89,040 | |||||||||
142,000 | The Pep Boys - Manny, Moe & Jack† | 1,697,420 | 2,135,680 | |||||||||
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2,017,387 | 2,422,080 | |||||||||||
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TOTAL CONSUMER DISCRETIONARY | 24,480,237 | 30,935,965 | ||||||||||
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FINANCIALS — 14.0% | ||||||||||||
Capital Markets — 0.1% | ||||||||||||
50,000 | BKF Capital Group Inc.† | 200,759 | 34,025 | |||||||||
3,000 | Kinnevik Investment AB, Cl. A | 103,561 | 96,459 | |||||||||
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304,320 | 130,484 | |||||||||||
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Commercial Banks — 1.7% | ||||||||||||
6,000 | Astoria Financial Corp. | 102,132 | 95,760 | |||||||||
1,000 | City National Corp. | 89,227 | 89,600 | |||||||||
120,000 | First Niagara Financial Group Inc. | 1,668,233 | 1,242,000 | |||||||||
30,000 | Hilltop Holdings Inc.† | 600,677 | 629,100 | |||||||||
100,000 | Hudson City Bancorp Inc. | 927,637 | 1,012,000 | |||||||||
200 | National Penn Bancshares Inc. | 2,521 | 2,408 | |||||||||
20,025 | Sterling Bancorp | 201,872 | 308,185 | |||||||||
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3,592,299 | 3,379,053 | |||||||||||
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Consumer Finance — 2.1% | ||||||||||||
30,000 | Blackhawk Network Holdings Inc.† | 720,867 | 1,277,400 | |||||||||
90,000 | Navient Corp. | 849,595 | 1,187,100 | |||||||||
100,000 | SLM Corp.† | 573,264 | 706,000 | |||||||||
40,041 | Xoom Corp.† | 992,074 | 998,622 | |||||||||
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3,135,800 | 4,169,122 | |||||||||||
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Insurance — 7.6% | ||||||||||||
100,000 | Amlin plc | 1,009,132 | 1,015,909 | |||||||||
1,650 | Argo Group International Holdings Ltd. | 36,600 | 103,158 | |||||||||
1,000 | Aspen Insurance Holdings Ltd. | 43,388 | 48,610 | |||||||||
34,500 | National Interstate Corp. | 1,009,938 | 990,150 | |||||||||
40,000 | PartnerRe Ltd. | 5,498,417 | 5,560,000 | |||||||||
60,000 | StanCorp Financial Group Inc. | 6,840,210 | 6,883,200 | |||||||||
2,000 | Symetra Financial Corp. | 63,265 | 63,460 |
See accompanying notes to financial statements.
6
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
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FINANCIALS (Continued) |
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Insurance (Continued) |
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1,000 | The Phoenix Companies Inc.† | $ | 34,385 | $ | 34,380 | |||||||
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14,535,335 | 14,698,867 | |||||||||||
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Real Estate Management and Development — 2.5% |
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205,000 | BioMed Realty Trust Inc. | 4,807,884 | 4,799,050 | |||||||||
1,000 | Conwert Immobilien Invest SE† | 13,727 | 14,334 | |||||||||
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4,821,611 | 4,813,384 | |||||||||||
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TOTAL FINANCIALS | 26,389,365 | 27,190,910 | ||||||||||
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INFORMATION TECHNOLOGY — 12.4% |
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Communications Equipment — 0.1% |
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4,050 | Harris Corp. | 317,552 | 320,477 | |||||||||
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Electrical Equipment and Instruments — 1.0% |
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47,300 | Axis Communications AB | 1,895,619 | 1,887,892 | |||||||||
1,000 | Park Electrochemical Corp. | 11,650 | 16,340 | |||||||||
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1,907,269 | 1,904,232 | |||||||||||
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Semiconductors and Semiconductor Equipment — 8.8% |
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105,000 | Altera Corp. | 5,436,772 | 5,517,750 | |||||||||
40,000 | Atmel Corp. | 323,914 | 304,000 | |||||||||
43,000 | Broadcom Corp., Cl. A | 2,305,722 | 2,210,200 | |||||||||
210,000 | EZchip Semiconductor Ltd.† | 5,264,641 | 5,126,100 | |||||||||
4,000 | KLA-Tencor Corp. | 260,258 | 268,480 | |||||||||
10,000 | MoSys Inc.† | 39,042 | 13,900 | |||||||||
300 | OmniVision Technologies Inc.† | 8,366 | 8,661 | |||||||||
2,000 | Pericom Semiconductor Corp. | 34,378 | 34,900 | |||||||||
300,000 | PMC-Sierra Inc.† | 3,075,427 | 3,576,000 | |||||||||
2,500 | Xcerra Corp.† | 18,894 | 17,350 | |||||||||
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16,767,414 | 17,077,341 | |||||||||||
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Software — 2.5% | ||||||||||||
5,000 | EMC Corp. | 139,481 | 131,100 | |||||||||
75,000 | FalconStor Software Inc.† | 251,646 | 150,000 | |||||||||
2,000 | Innovation Group plc | 1,227 | 1,226 | |||||||||
200 | InterXion Holding NV† | 6,505 | 5,876 | |||||||||
2,000 | Rocket Fuel Inc.† | 14,062 | 9,200 | |||||||||
40,000 | SolarWinds Inc.† | 2,331,732 | 2,321,200 | |||||||||
31,800 | Solera Holdings Inc. | 1,735,133 | 1,738,188 | |||||||||
13,000 | Take-Two Interactive Software Inc.† | 106,294 | 431,600 | |||||||||
|
|
|
| |||||||||
4,586,080 | 4,788,390 | |||||||||||
|
|
|
| |||||||||
TOTAL INFORMATION TECHNOLOGY | 23,578,315 | 24,090,440 | ||||||||||
|
|
|
| |||||||||
MATERIALS — 10.7% | ||||||||||||
Building Products — 1.6% | ||||||||||||
100,000 | Griffon Corp. | 850,000 | 1,718,000 | |||||||||
14,000 | Norbord Inc. | 318,662 | 264,561 |
Shares | Cost | Market Value | ||||||||||
12,000 | Vulcan Materials Co. | $ | 471,544 | $ | 1,158,960 | |||||||
|
|
|
| |||||||||
1,640,206 | 3,141,521 | |||||||||||
|
|
|
| |||||||||
Chemicals — 5.3% | ||||||||||||
30,000 | SGL Carbon SE† | 716,266 | 551,585 | |||||||||
69,800 | Sigma-Aldrich Corp. | 9,599,355 | 9,752,456 | |||||||||
|
|
|
| |||||||||
10,315,621 | 10,304,041 | |||||||||||
|
|
|
| |||||||||
Containers and Packaging — 2.5% | ||||||||||||
10,000 | Greif Inc., Cl. B | 521,769 | 385,000 | |||||||||
282,000 | Myers Industries Inc. | 5,598,387 | 4,402,020 | |||||||||
|
|
|
| |||||||||
6,120,156 | 4,787,020 | |||||||||||
|
|
|
| |||||||||
Materials — 0.7% | ||||||||||||
6,000 | Cytec Industries Inc. | 443,205 | 446,520 | |||||||||
75,000 | Italcementi SpA | 832,523 | 832,985 | |||||||||
|
|
|
| |||||||||
1,275,728 | 1,279,505 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 0.6% | ||||||||||||
44,068 | Alamos Gold Inc., Cl. A | 645,142 | 169,221 | |||||||||
100,000 | Alcoa Inc. | 969,962 | 893,000 | |||||||||
400 | Allegheny Technologies Inc. | 25,020 | 5,880 | |||||||||
17,752 | AuRico Metals Inc.† | 9,447 | 10,725 | |||||||||
19,000 | Pan American Silver Corp. | 298,459 | 144,142 | |||||||||
|
|
|
| |||||||||
1,948,030 | 1,222,968 | |||||||||||
|
|
|
| |||||||||
TOTAL MATERIALS | 21,299,741 | 20,735,055 | ||||||||||
|
|
|
| |||||||||
INDUSTRIALS — 7.5% |
| |||||||||||
Aerospace and Defense — 2.2% |
| |||||||||||
40,000 | Kaman Corp. | 1,361,916 | 1,555,600 | |||||||||
12,000 | Precision Castparts Corp. | 2,767,928 | 2,769,720 | |||||||||
|
|
|
| |||||||||
4,129,844 | 4,325,320 | |||||||||||
|
|
|
| |||||||||
Air Freight and Logistics — 1.7% | ||||||||||||
2,000 | Norbert Dentressangle SA | 484,562 | 435,461 | |||||||||
318,426 | TNT Express NV | 2,817,773 | 2,678,703 | |||||||||
26,700 | UTi Worldwide Inc.† | 186,232 | 190,371 | |||||||||
|
|
|
| |||||||||
3,488,567 | 3,304,535 | |||||||||||
|
|
|
| |||||||||
Commercial Services and Supplies — 2.2% |
| |||||||||||
10,500 | Rollins Inc. | 21,042 | 281,610 | |||||||||
10,000 | The Brink’s Co. | 243,291 | 309,800 | |||||||||
150,000 | The Interpublic Group of Companies Inc. | 2,927,842 | 3,439,500 | |||||||||
2,000 | Towers Watson & Co., Cl. A | 248,111 | 247,120 | |||||||||
1,111 | Vectrus Inc.† | 19,941 | 27,630 | |||||||||
|
|
|
| |||||||||
3,460,227 | 4,305,660 | |||||||||||
|
|
|
| |||||||||
Electrical Equipment — 0.5% | ||||||||||||
140,000 | HellermannTyton Group plc | 1,036,973 | 1,022,785 | |||||||||
|
|
|
| |||||||||
Machinery — 0.8% | ||||||||||||
7,000 | CIRCOR International Inc. | 230,587 | 321,440 | |||||||||
15,000 | CNH Industrial NV | 146,111 | 101,443 |
See accompanying notes to financial statements.
7
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
INDUSTRIALS (Continued) |
| |||||||||||
Machinery (Continued) | ||||||||||||
30,000 | Xylem Inc. | $ | 883,503 | $ | 1,092,300 | |||||||
|
|
|
| |||||||||
1,260,201 | 1,515,183 | |||||||||||
|
|
|
| |||||||||
Railroads and Transportation — 0.1% |
| |||||||||||
3,000 | GATX Corp. | 118,938 | 140,100 | |||||||||
|
|
|
| |||||||||
TOTAL INDUSTRIALS | 13,494,750 | 14,613,583 | ||||||||||
|
|
|
| |||||||||
HEALTH CARE — 6.8% | ||||||||||||
Biotechnology — 0.5% | ||||||||||||
6,800 | Bio-Rad Laboratories Inc., Cl. A† | 693,006 | 948,464 | |||||||||
|
|
|
| |||||||||
Health Care Equipment and Supplies — 0.6% |
| |||||||||||
2,000 | Alere Inc.† | 79,363 | 92,240 | |||||||||
110,000 | ArthroCare Corp. Stub | 0 | 38,500 | |||||||||
6,000 | Audika Groupe† | 113,382 | 117,377 | |||||||||
12,000 | Exactech Inc.† | 161,584 | 204,360 | |||||||||
5,700 | ICU Medical Inc.† | 365,322 | 626,829 | |||||||||
5,000 | Smith & Nephew plc, ADR | 178,855 | 170,600 | |||||||||
|
|
|
| |||||||||
898,506 | 1,249,906 | |||||||||||
|
|
|
| |||||||||
Health Care Providers and Services — 2.4% |
| |||||||||||
33,000 | Amica Mature Lifestyles Inc. | 461,014 | 463,100 | |||||||||
1,000 | Chemed Corp. | 30,478 | 157,290 | |||||||||
4,500 | Cigna Corp. | 639,876 | 603,180 | |||||||||
1,900 | Humana Inc. | 347,274 | 339,397 | |||||||||
37,000 | IPC Healthcare Inc.† | 2,936,558 | 2,904,500 | |||||||||
2,500 | Synergy Health plc† | 70,574 | 97,619 | |||||||||
|
|
|
| |||||||||
4,485,774 | 4,565,086 | |||||||||||
|
|
|
| |||||||||
Life Sciences Tools and Services — 1.5% |
| |||||||||||
3,600 | Illumina Inc.† | 160,467 | 515,808 | |||||||||
54,000 | WuXi PharmaTech Cayman Inc., ADR† | 966,228 | 2,413,800 | |||||||||
|
|
|
| |||||||||
1,126,695 | 2,929,608 | |||||||||||
|
|
|
| |||||||||
Pharmaceuticals — 1.8% | ||||||||||||
2,556 | AbbVie Inc. | 146,140 | 152,210 | |||||||||
32,000 | AstraZeneca plc, ADR | 1,247,215 | 1,020,480 | |||||||||
26,000 | Bristol-Myers Squibb Co. | 747,680 | 1,714,700 | |||||||||
4,000 | Grifols SA, ADR | 53,680 | 139,240 | |||||||||
5,000 | Mylan NV† | 252,650 | 220,450 | |||||||||
1,400 | Perrigo Co. plc | 248,460 | 220,836 | |||||||||
|
|
|
| |||||||||
2,695,825 | 3,467,916 | |||||||||||
|
|
|
| |||||||||
TOTAL HEALTH CARE | 9,899,806 | 13,160,980 | ||||||||||
|
|
|
| |||||||||
UTILITIES — 5.4% | ||||||||||||
Electric Utilities — 3.6% | ||||||||||||
76,368 | Cleco Corp. | 4,171,988 | 4,047,504 | |||||||||
40,000 | Endesa SA | 1,228,952 | 890,717 | |||||||||
4,000 | Hawaiian Electric Industries Inc. | 120,882 | 117,040 |
Shares | Cost | Market Value | ||||||||||
62,000 | Pepco Holdings Inc. | $ | 1,659,343 | $ | 1,651,060 | |||||||
2,000 | TECO Energy Inc. | 51,480 | 54,000 | |||||||||
5,000 | UIL Holdings Corp. | 246,037 | 254,950 | |||||||||
|
|
|
| |||||||||
7,478,682 | 7,015,271 | |||||||||||
|
|
|
| |||||||||
Gas Utilities — 0.2% | ||||||||||||
2,000 | AGL Resources Inc. | 121,799 | 125,000 | |||||||||
2,000 | Piedmont Natural Gas Co. Inc. | 114,369 | 114,620 | |||||||||
3,600 | Southwest Gas Corp. | 125,398 | 221,256 | |||||||||
|
|
|
| |||||||||
361,566 | 460,876 | |||||||||||
|
|
|
| |||||||||
Independent Power Producers and Energy Traders — 0.0% |
| |||||||||||
75,000 | GenOn Energy Inc., Escrow | 0 | 0 | |||||||||
|
|
|
| |||||||||
Multi-Utilities — 1.4% | ||||||||||||
48,000 | NorthWestern Corp. | 1,282,043 | 2,601,120 | |||||||||
|
|
|
| |||||||||
Water — 0.2% | ||||||||||||
10,000 | Severn Trent plc | 277,722 | 345,779 | |||||||||
|
|
|
| |||||||||
TOTAL UTILITIES | 9,400,013 | 10,423,046 | ||||||||||
|
|
|
| |||||||||
CONSUMER STAPLES — 4.7% |
| |||||||||||
Consumer Products — 0.6% | ||||||||||||
65,000 | Avon Products Inc. | 645,117 | 261,950 | |||||||||
90,000 | Wausau Paper Corp. | 919,445 | 918,900 | |||||||||
|
|
|
| |||||||||
1,564,562 | 1,180,850 | |||||||||||
|
|
|
| |||||||||
Food and Staples Retailing — 2.4% |
| |||||||||||
5,000 | CST Brands Inc. | 172,581 | 179,650 | |||||||||
170,000 | Rite Aid Corp.† | 1,358,779 | 1,339,600 | |||||||||
36,000 | SABMiller plc | 2,182,341 | 2,217,118 | |||||||||
6,400 | SpartanNash Co. | 62,762 | 178,560 | |||||||||
29,000 | Village Super Market Inc., Cl. A | 662,626 | 726,740 | |||||||||
|
|
|
| |||||||||
4,439,089 | 4,641,668 | |||||||||||
|
|
|
| |||||||||
Food Products — 1.7% | ||||||||||||
2,000 | Diamond Foods Inc.† | 73,885 | 79,240 | |||||||||
4,500 | Flowers Foods Inc. | 10,669 | 121,500 | |||||||||
38,000 | GrainCorp Ltd., Cl. A | 440,268 | 245,235 | |||||||||
500,000 | Parmalat SpA | 1,849,699 | 1,300,886 | |||||||||
43,260 | Tootsie Roll Industries Inc. | 893,914 | 1,373,072 | |||||||||
1,000 | Warrnambool Cheese & Butter Factory Co. Holding Ltd.† | 6,834 | 6,846 | |||||||||
550,000 | Yashili International Holdings Ltd. | 234,871 | 156,826 | |||||||||
|
|
|
| |||||||||
3,510,140 | 3,283,605 | |||||||||||
|
|
|
| |||||||||
TOTAL CONSUMER STAPLES | 9,513,791 | 9,106,123 | ||||||||||
|
|
|
| |||||||||
TELECOMMUNICATION SERVICES — 4.4% |
| |||||||||||
Diversified Telecommunications Services — 1.2% |
| |||||||||||
280,000 | Asia Satellite Telecommunications Holdings Ltd. | 604,206 | 416,897 | |||||||||
218,109 | Cincinnati Bell Inc.† | 797,116 | 822,271 |
See accompanying notes to financial statements.
8
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2015
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
TELECOMMUNICATION SERVICES (Continued) |
| |||||||||||
Diversified Telecommunications Services (Continued) |
| |||||||||||
220,000 | Koninklijke KPN NV | $ | 657,892 | $ | 808,023 | |||||||
3,500 | Level 3 Communications Inc.† | 164,185 | 178,325 | |||||||||
1,400 | Loral Space & Communications Inc.† | 105,535 | 62,594 | |||||||||
1,000 | Rogers Communications Inc., Cl. B | 2,955 | 39,800 | |||||||||
|
|
|
| |||||||||
2,331,889 | 2,327,910 | |||||||||||
|
|
|
| |||||||||
Wireless Telecommunications Services — 3.2% |
| |||||||||||
23,000 | Millicom International Cellular SA, SDR | 1,723,450 | 1,284,127 | |||||||||
70,000 | Sprint Corp.† | 369,069 | 331,100 | |||||||||
9,000 | Telephone & Data Systems Inc. | 255,177 | 257,760 | |||||||||
40,000 | T-Mobile US Inc.† | 650,000 | 1,515,600 | |||||||||
70,000 | United States Cellular Corp.† | 3,221,188 | 2,851,800 | |||||||||
|
|
|
| |||||||||
6,218,884 | 6,240,387 | |||||||||||
|
|
|
| |||||||||
TOTAL TELECOMMUNICATION SERVICES | 8,550,773 | 8,568,297 | ||||||||||
|
|
|
| |||||||||
ENERGY — 1.2% | ||||||||||||
Energy Equipment and Services — 0.2% |
| |||||||||||
5,500 | Baker Hughes Inc. | 329,869 | 289,740 | |||||||||
1,000 | Cameron International Corp.† | 60,013 | 68,010 | |||||||||
|
|
|
| |||||||||
389,882 | 357,750 | |||||||||||
|
|
|
| |||||||||
Oil, Gas, and Consumable Fuels — 1.0% |
| |||||||||||
500,000 | Alvopetro Energy Ltd.† | 467,728 | 133,833 | |||||||||
7,000 | Anadarko Petroleum Corp. | 518,578 | 468,160 | |||||||||
29,000 | BG Group plc | 529,746 | 458,238 | |||||||||
345,000 | Gulf Coast Ultra Deep Royalty Trust† | 603,750 | 86,250 | |||||||||
10,000 | Halcon Resources Corp.† | 86,812 | 7,011 | |||||||||
2,700 | Noble Energy Inc. | 120,517 | 96,768 | |||||||||
140,000 | WesternZagros Resources Ltd.† | 409,637 | 12,313 | |||||||||
40,000 | Whiting Petroleum Corp.† | 1,343,441 | 689,200 | |||||||||
|
|
|
| |||||||||
4,080,209 | 1,951,773 | |||||||||||
|
|
|
| |||||||||
TOTAL ENERGY | 4,470,091 | 2,309,523 | ||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 151,076,882 | 161,133,922 | ||||||||||
|
|
|
| |||||||||
RIGHTS — 0.6% | ||||||||||||
TELECOMMUNICATION SERVICES — 0.4% |
| |||||||||||
Wireless Telecommunications Services — 0.4% |
| |||||||||||
315,000 | Leap Wireless International Inc., CVR, expire 03/14/16† | 734,287 | 793,800 | |||||||||
|
|
|
| |||||||||
HEALTH CARE — 0.1% | ||||||||||||
Biotechnology — 0.0% | ||||||||||||
20,000 | Adolor Corp., CPR, expire 07/01/19† | 0 | 10,400 |
Shares | Cost | Market Value | ||||||||||
13,000 | Ambit Biosciences Corp., CVR† | $ | 0 | $ | 7,800 | |||||||
|
|
|
| |||||||||
0 | 18,200 | |||||||||||
|
|
|
| |||||||||
Health Care Equipment and Supplies — 0.0% |
| |||||||||||
5,000 | American Medical Alert Corp.† | 0 | 50 | |||||||||
250,200 | Synergetics USA Inc., CVR, expire 06/30/18 | 25,020 | 25,020 | |||||||||
|
|
|
| |||||||||
25,020 | 25,070 | |||||||||||
|
|
|
| |||||||||
Pharmaceuticals — 0.1% | ||||||||||||
11,000 | Chelsea Therapeutics International Ltd., CVR† | 1,210 | 1,210 | |||||||||
20,000 | Durata Therapeutics Inc., CVR† | 0 | 3,200 | |||||||||
4,700 | Furiex Pharmaceuticals Inc., CVR† | 45,960 | 45,919 | |||||||||
100 | Omthera Pharmaceuticals Inc., expire 12/31/20† | 0 | 60 | |||||||||
23,200 | Prosensa Holding, CVR† | 22,801 | 22,968 | |||||||||
156,000 | Teva Pharmaceutical Industries Ltd., CPR, expire 02/20/23† | 74,375 | 82,680 | |||||||||
86,000 | Trius Therapeutics, CVR† | 0 | 11,180 | |||||||||
|
|
|
| |||||||||
144,346 | 167,217 | |||||||||||
|
|
|
| |||||||||
TOTAL HEALTH CARE | 169,366 | 210,487 | ||||||||||
|
|
|
| |||||||||
CONSUMER STAPLES — 0.1% |
| |||||||||||
Food and Staples Retailing — 0.1% |
| |||||||||||
220,000 | Safeway Casa Ley, CVR, expire 01/30/19† | 39,570 | 99,000 | |||||||||
220,000 | Safeway PDC, CVR, expire 01/30/17† | 1,900 | 10,736 | |||||||||
|
|
|
| |||||||||
41,470 | 109,736 | |||||||||||
|
|
|
| |||||||||
TOTAL CONSUMER STAPLES | 41,470 | 109,736 | ||||||||||
|
|
|
| |||||||||
TOTAL RIGHTS | 945,123 | 1,114,023 | ||||||||||
|
|
|
| |||||||||
WARRANTS — 0.0% | ||||||||||||
ENERGY — 0.0% | ||||||||||||
Oil, Gas, and Consumable Fuels — 0.0% |
| |||||||||||
45,000 | Kinder Morgan Inc., expire 05/25/17† | 87,715 | 27,450 | |||||||||
|
|
|
| |||||||||
MATERIALS — 0.0% | ||||||||||||
Metals and Mining — 0.0% | ||||||||||||
850 | HudBay Minerals Inc., expire 07/20/18† | 962 | 344 | |||||||||
|
|
|
| |||||||||
TOTAL WARRANTS | 88,677 | 27,794 | ||||||||||
|
|
|
|
See accompanying notes to financial statements.
9
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2015
Principal | Cost | Market Value | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 16.9% |
| |||||||||||
$32,689,000 | U.S. Treasury Bills, | $ | 32,674,715 | $ | 32,675,997 | |||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 100.6% | $ | 184,785,397 | 194,951,736 | |||||||||
|
| |||||||||||
Notional | Termination Date | Unrealized | ||||||||||
EQUITY CONTRACT FOR DIFFERENCE SWAP AGREEMENTS — 0.0% |
| |||||||||||
$ 1,020,188 | Amlin plc(b) | 10/14/16 | (4,279 | ) | ||||||||
| (100,000 Shares) | |||||||||||
Market Value | ||||||||||||
Other Assets and Liabilities (Net) — (0.6)% |
| (1,079,841 | ) | |||||||||
|
| |||||||||||
NET ASSETS — 100.0%. | $ | 193,867,616 | ||||||||||
|
|
(a) | At October 31, 2015, $1,000,000 of the principal amount was pledged as collateral for equity contract for difference swap agreements. |
(b) | At October 31, 2015, the Fund had entered into an equity contract for difference swap agreement with The Goldman Sachs Group, Inc. |
† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
ADR | American Depositary Receipt |
CPR | Contingent Payment Right |
CVR | Contingent Value Right |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
10
Gabelli Enterprise Mergers and Acquisitions Fund
Statement of Assets and Liabilities
October 31, 2015
Assets: | ||||
Investments, at value (cost $184,785,397) | $ | 194,951,736 | ||
Cash | 7,302 | |||
Receivable for investments sold | 2,413,100 | |||
Receivable for Fund shares sold | 138,114 | |||
Dividends receivable | 19,393 | |||
Prepaid expenses | 20,974 | |||
|
| |||
Total Assets | 197,550,619 | |||
|
| |||
Liabilities: | ||||
Payable for Fund shares redeemed | 166,588 | |||
Payable for investments purchased | 3,162,102 | |||
Payable for investment advisory fees | 153,266 | |||
Payable for distribution fees | 68,468 | |||
Payable for accounting fees | 7,500 | |||
Unrealized depreciation on swap contracts | 4,279 | |||
Other accrued expenses | 120,800 | |||
|
| |||
Total Liabilities | 3,683,003 | |||
|
| |||
Net Assets | $ | 193,867,616 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 201,130,879 | ||
Accumulated net investment loss | (1,171,661 | ) | ||
Accumulated net realized loss on investments, securities sold short, swap contracts, and foreign currency transactions | (16,253,653 | ) | ||
Net unrealized appreciation on investments | 10,166,339 | |||
Net unrealized depreciation on swap contracts | (4,279 | ) | ||
Net unrealized depreciation on foreign currency translations | (9 | ) | ||
|
| |||
Net Assets | $ | 193,867,616 | ||
|
| |||
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($4,942,615 ÷ 371,248 shares outstanding; 100,000,000 shares authorized) | $13.31 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($58,039,410 ÷ 4,408,432 shares outstanding; 200,000,000 shares authorized) | $13.17 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $13.97 | |||
Class C: | ||||
Net Asset Value and offering price per share ($53,737,826 ÷ 4,393,923 shares outstanding; 100,000,000 shares authorized) | $12.23 | (a) | ||
Class Y: | ||||
Net Asset Value, offering, and redemption price per share ($77,147,765 ÷ 5,545,056 shares outstanding; 100,000,000 shares authorized) | $13.91 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations
For the Year Ended October 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $37,331) | $ | 2,215,372 | ||
Interest | 19,936 | |||
|
| |||
Total Investment Income | 2,235,308 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 2,029,717 | |||
Distribution fees - Class AAA | 16,421 | |||
Distribution fees - Class A | 386,007 | |||
Distribution fees - Class C | 552,555 | |||
Shareholder services fees | 230,553 | |||
Shareholder communications expenses | 71,298 | |||
Registration expenses | 69,739 | |||
Directors’ fees | 67,000 | |||
Custodian fees | 46,575 | |||
Accounting fees | 45,000 | |||
Legal and audit fees | 39,247 | |||
Dividend expense on securities sold short | 4,739 | |||
Payroll expenses | 3,768 | |||
Interest expense | 3,311 | |||
Miscellaneous expenses | 34,672 | |||
|
| |||
Total Expenses | 3,600,602 | |||
|
| |||
Expenses paid indirectly by broker | (2,988 | ) | ||
|
| |||
Net Expenses | 3,597,614 | |||
|
| |||
Net Investment Loss | (1,362,306 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, Swap Contracts, and Foreign Currency: | ||||
Net realized gain on investments | 10,040,012 | |||
Net realized gain on securities sold short | 50,986 | |||
Net realized loss on swap contracts | (190 | ) | ||
Net realized gain on foreign currency transactions | 101,904 | |||
|
| |||
Net realized gain on investments, securities sold short, swap contracts, and foreign currency transactions | 10,192,712 | |||
|
| |||
Net change in unrealized appreciation/depreciation: | ||||
on investments | (1,881,877 | ) | ||
on securities sold short | 117,380 | |||
on swap contracts | (4,279 | ) | ||
on foreign currency translations | 7,194 | |||
|
| |||
Net change in unrealized appreciation/ depreciation on investments, securities sold short, swap contracts, and foreign currency translations | (1,761,582 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, Swap Contracts, and Foreign Currency | 8,431,130 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 7,068,824 | ||
|
|
See accompanying notes to financial statements.
11
Gabelli Enterprise Mergers and Acquisitions Fund
Statement of Changes in Net Assets
Year Ended October 31, 2015 | Year Ended October 31, 2014 | ||||||||||||||
Operations: | |||||||||||||||
Net investment loss | $ (1,362,306) | $ (1,225,311) | |||||||||||||
Net realized gain on investments, securities sold short, swap contracts, and foreign currency transactions | 10,192,712 | 12,602,357 | |||||||||||||
Net change in unrealized appreciation/depreciation on investments, securities sold short, swap contracts, and foreign currency translations | (1,761,582) | (7,897,779) | |||||||||||||
Net Increase in Net Assets Resulting from Operations | 7,068,824 | 3,479,267 | |||||||||||||
Capital Share Transactions: | |||||||||||||||
Class AAA | (6,534,281) | 2,547,405 | |||||||||||||
Class A | (38,647,717) | (17,193,488) | |||||||||||||
Class B* | (931,796) | (951,934) | |||||||||||||
Class C | (5,360,329) | (959,468) | |||||||||||||
Class Y | (6,238,127) | 12,805,304 | |||||||||||||
Net Decrease in Net Assets from Capital Share Transactions | (57,712,250) | (3,752,181) | |||||||||||||
Redemption Fees | 382 | 1,907 | |||||||||||||
Net Decrease in Net Assets | (50,643,044) | (271,007) | |||||||||||||
Net Assets: | |||||||||||||||
Beginning of year | 244,510,660 | 244,781,667 | |||||||||||||
End of year (including undistributed net investment income of $0 and $0, respectively) | $193,867,616 | $244,510,660 |
* | Class B Shares were fully redeemed and closed on December 8, 2014. |
See accompanying notes to financial statements.
12
Gabelli Enterprise Mergers and Acquisitions Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Income (Loss) from Investment Operations | Ratios to Average Net Assets/ Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31 | Net Asset Value, Beginning of Year | Net | Net Realized and | Total from | Redemption | Net Asset Year | Total | Net Assets End of Year | Net Investment Income (Loss) | Operating | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 12.86 | $(0.07) | $0.52 | $0.45 | $0.00 | $13.31 | 3.50% | $ 4,943 | (0.51)% | 1.47%(c) | 162% | |||||||||||||||||||||||||||||||||||||||||||
2014 | 12.66 | (0.03) | 0.23 | 0.20 | 0.00 | 12.86 | 1.58 | 11,315 | (0.24) | 1.46 | 181 | ||||||||||||||||||||||||||||||||||||||||||||
2013 | 11.00 | 0.04 | 1.62 | 1.66 | 0.00 | 12.66 | 15.09 | 8,671 | 0.37 | 1.49 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(d) | 10.60 | (0.08) | 0.48 | 0.40 | 0.00 | 11.00 | 3.77 | 7,814 | (0.75) | 1.50 | 202 | ||||||||||||||||||||||||||||||||||||||||||||
2011 | 10.25 | (0.04) | 0.39 | 0.35 | 0.00 | 10.60 | 3.41 | 7,936 | (0.39) | 1.45 | 232 | ||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 12.75 | $(0.08) | $0.50 | $0.42 | $0.00 | $13.17 | 3.29% | $ 58,039 | (0.63)% | 1.67%(c) | 162% | |||||||||||||||||||||||||||||||||||||||||||
2014 | 12.57 | (0.06) | 0.24 | 0.18 | 0.00 | 12.75 | 1.43 | 93,980 | (0.51) | 1.66 | 181 | ||||||||||||||||||||||||||||||||||||||||||||
2013 | 10.94 | 0.02 | 1.61 | 1.63 | 0.00 | 12.57 | 14.90 | 109,446 | 0.15 | 1.69 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(d) | 10.57 | (0.11) | 0.48 | 0.37 | 0.00 | 10.94 | 3.50 | 103,827 | (1.00) | 1.70 | 202 | ||||||||||||||||||||||||||||||||||||||||||||
2011 | 10.24 | (0.06) | 0.39 | 0.33 | 0.00 | 10.57 | 3.22 | 134,334 | (0.56) | 1.65 | 232 | ||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 11.91 | $(0.14) | $0.46 | $0.32 | $0.00 | $12.23 | 2.69% | $ 53,738 | (1.19)% | 2.22%(c) | 162% | |||||||||||||||||||||||||||||||||||||||||||
2014 | 11.81 | (0.12) | 0.22 | 0.10 | 0.00 | 11.91 | 0.85 | 57,616 | (1.04) | 2.21 | 181 | ||||||||||||||||||||||||||||||||||||||||||||
2013 | 10.33 | (0.04) | 1.52 | 1.48 | 0.00 | 11.81 | 14.33 | 58,062 | (0.39) | 2.24 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(d) | 10.04 | (0.16) | 0.45 | 0.29 | 0.00 | 10.33 | 2.89 | 51,498 | (1.56) | 2.25 | 202 | ||||||||||||||||||||||||||||||||||||||||||||
2011 | 9.78 | (0.11) | 0.37 | 0.26 | 0.00 | 10.04 | 2.66 | 64,637 | (1.11) | 2.20 | 232 | ||||||||||||||||||||||||||||||||||||||||||||
Class Y | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | $ | 13.41 | $(0.03) | $0.53 | $0.50 | $0.00 | $13.91 | 3.73% | $ 77,148 | (0.20)% | 1.21%(c) | 162% | |||||||||||||||||||||||||||||||||||||||||||
2014 | 13.16 | (0.00) | 0.25 | 0.25 | 0.00 | 13.41 | 1.90 | 80,672 | (0.03) | 1.21 | 181 | ||||||||||||||||||||||||||||||||||||||||||||
2013 | 11.41 | 0.06 | 1.69 | 1.75 | 0.00 | 13.16 | 15.34 | 66,746 | 0.48 | 1.24 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(d) | 10.97 | (0.05) | 0.49 | 0.44 | 0.00 | 11.41 | 4.01 | 32,883 | (0.49) | 1.25 | 202 | ||||||||||||||||||||||||||||||||||||||||||||
2011 | 10.58 | (0.01) | 0.40 | 0.39 | 0.00 | 10.97 | 3.69 | 50,893 | (0.11) | 1.20 | 232 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the year and sold at the end of the year including reinvestment of distributions and does not reflect applicable sales charges. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Amount represents less than $0.005 per share. |
(c) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the year ended October 31, 2015, there was no impact on the expense ratios. |
(d) | During the year ended October 31, 2012, the Fund changed its previously recognized estimate of the characterization of prior year income associated with a portfolio holding involved in a corporate reorganization that was subsequently sold. If this recharacterization had not occurred, Net Investment Income(Loss) would have been $(0.02) (Class AAA), $(0.05) (Class A), $(0.10) (Class C), and $0.00 (Class Y), respectively, Net Realized and Unrealized Gain (Loss) on Investments would have been $0.42 (Class AAA and Class A), $0.39 (Class C), and $0.44 (Class Y), respectively, and Net Investment Income (Loss) Ratio would have been (0.22)% (Class AAA), (0.47)% (Class A), (1.00)% (Class C), and 0.02% (Class Y), respectively. |
See accompanying notes to financial statements.
13
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements
1. Organization. The Gabelli Enterprise Mergers and Acquisitions Fund is a series of the Gabelli 787 Fund, Inc. (the “Corporation”), which was organized in Maryland and commenced operations on February 28, 2001. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). Its primary objective is capital appreciation.
2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the “Board”) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the “Adviser”).
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Debt instruments having a maturity greater than sixty days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and nonfinancial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
14
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of October 31, 2015 is as follows:
Valuation Inputs | ||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 10/31/15 | |||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Consumer Discretionary | ||||||||||||||||
Household Durables | $ 63,000 | $ 112,550 | — | $ 175,550 | ||||||||||||
Media | 19,566,275 | 3,400 | — | 19,569,675 | ||||||||||||
Other Industries (a) | 11,190,740 | — | — | 11,190,740 | ||||||||||||
Financials | ||||||||||||||||
Capital Markets | 96,459 | 34,025 | — | 130,484 | ||||||||||||
Other Industries (a) | 27,060,426 | — | — | 27,060,426 | ||||||||||||
Health Care | ||||||||||||||||
Health Care Equipment and Supplies | 1,211,406 | — | $ 38,500 | 1,249,906 | ||||||||||||
Health Care Providers and Services | 4,467,467 | 97,619 | — | 4,565,086 | ||||||||||||
Other Industries (a) | 7,345,988 | — | — | 7,345,988 | ||||||||||||
All Other Industries (a) | 89,846,067 | — | — | 89,846,067 | ||||||||||||
| ||||||||||||||||
Total Common Stocks | 160,847,828 | 247,594 | 38,500 | 161,133,922 | ||||||||||||
| ||||||||||||||||
Rights (a) | — | — | 1,114,023 | 1,114,023 | ||||||||||||
Warrants (a) | 27,794 | — | — | 27,794 | ||||||||||||
U.S. Government Obligations | — | 32,675,997 | — | 32,675,997 | ||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $160,875,622 | $32,923,591 | $1,152,523 | $194,951,736 | ||||||||||||
| ||||||||||||||||
OTHER FINANCIAL INSTRUMENTS:* | ||||||||||||||||
LIABILITIES (Unrealized Depreciation): EQUITY CONTRACT: | ||||||||||||||||
Contract for Difference Swap Agreement | — | $ (4,279) | — | $ (4,279) | ||||||||||||
|
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
* | Other financial instruments are derivatives reflected in the SOI, such as options, futures, forwards, and swaps, which may be valued at the unrealized appreciation/depreciation of the instrument. |
During the year ended October 31, 2015, the Fund had transfers of $193,426 or 0.08% of net assets as of October 31, 2014 from Level 1 to Level 2 and Level 2 to Level 1. Transfers from Level 1 to Level 2 or from Level 2 to Level 1 are due to a decline or an increase in market activity, e.g., frequency of trades, respectively, which resulted in a lack of or increase in available market inputs to determine price. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.
15
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
The following table reconciles Level 3 investments for which significant unobservable inputs were used to determine fair value:
Balance as of 10/31/14 | Accrued discounts/ (premiums) | Realized gain/ (loss) | Change in unrealized appreciation/ depreciation | Purchases | Sales | Transfers Into Level 3†† | Transfers out of Level 3†† | Balance as of 10/31/15 | Net change in unrealized appreciation/ depreciation during the period on Level 3 investments still held at 10/31/15† | |||||||||||||||||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||||||||||||||||||||||
Common Stocks: | ||||||||||||||||||||||||||||||||||||||||
Information Technology Software | $ | 1,900 | — | $ | 3,391 | $ (1,900 | ) | — | $ | (3,391 | ) | — | — | — | — | |||||||||||||||||||||||||
Health Care | ||||||||||||||||||||||||||||||||||||||||
Health Care Equipment and Supplies | 38,500 | — | — | — | — | — | — | — | $ | 38,500 | — | |||||||||||||||||||||||||||||
Utilities | ||||||||||||||||||||||||||||||||||||||||
Independent Power Producers and Energy Traders | 0 | — | — | — | — | — | — | — | 0 | — | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Total Common Stocks | 40,400 | — | 3,391 | (1,900 | ) | — | (3,391 | ) | — | — | 38,500 | — | ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Rights | 5,674,099 | — | 806,490 | 54,393 | $89,291 | (5,510,250 | ) | — | — | 1,114,023 | $79,433 | |||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES | $ | 5,714,499 | — | $ | 809,881 | $52,493 | $89,291 | $ | (5,513,641 | ) | — | — | $ | 1,152,523 | $79,433 | |||||||||||||||||||||||||
|
† | Net change in unrealized appreciation/depreciation on investments is included in the related amounts in the Statement of Operations. |
†† | The Fund’s policy is to recognize transfers into and out of Level 3 as of the beginning of the reporting period. |
The following table summarizes the valuation techniques used and unobservable inputs utilized to determine the value of certain of the Fund’s Level 3 investments as of October 31, 2015:
Description | Balance at 10/31/15 | Valuation Technique | Unobservable Input | Range | ||||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||||
Acquisition price/ | ||||||||||||||||||||||
Rights | $1,114,023 | Last available closing price | Discount Range | 0 | % | |||||||||||||||||
All Other Investments (a) | 38,500 | |||||||||||||||||||||
|
| |||||||||||||||||||||
$1,152,523 | ||||||||||||||||||||||
|
|
(a) | Includes fair value securities of investments developed using various valuation techniques and unobservable inputs. |
Unobservable Input | Impact to Value if Input Increases | Impact to Value if Input Decreases | ||
Discount Range | Decrease | Increase |
16
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
Additional Information to Evaluate Qualitative Information.
General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.
Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purposes of increasing the income of the Fund or 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.
Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded derivatives, while collateral terms are contract specific for derivatives traded over-the-counter. Securities pledged to cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported separately in the Statement of Assets and Liabilities.
17
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
The Fund’s policy with respect to offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the master agreement does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.
The Fund’s derivative contracts held at October 31, 2015, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
At October 31, 2015, the Fund’s derivative liabilities (by type) are as follows:
Gross Amounts of Recognized Liabilities Presented in the Statement of Assets and Liabilities | Gross Amounts Available for Offset in the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | ||||
| ||||||
Liabilities | ||||||
Equity Contract for Difference Swap Agreements | $(4,279) | — | $(4,279) |
The following table presents the Fund’s derivative liabilities by counterparty net of the related collateral segregated by the Fund for the benefit of the counterparty as of October 31, 2015:
Gross Amounts Not Offset in the Statement of Assets and Liabilities | ||||||||
| ||||||||
Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities | Financial Instruments | Cash Collateral Pledged | Net Amount | |||||
| ||||||||
Counterparty | ||||||||
The Goldman Sachs Group, Inc. | $(4,279) | 4,279 | — | — |
Swap Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the Fund’s portfolio securities at the time an equity contract for difference swap transaction reaches its scheduled termination date, there is a risk that the Fund will not be able to obtain a replacement transaction or that the terms of the replacement will not be as favorable as on the expiring transaction.
Unrealized gains related to swaps are reported as an asset and unrealized losses are reported as a liability in the Statement of Assets and Liabilities. The change in value of swaps, including the accrual of periodic amounts of interest to be paid or received on swaps, is reported as unrealized gain or loss in the Statement of Operations. A realized gain or loss is recorded upon payment or receipt of a periodic payment or termination of swap agreements.
18
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
The Fund has entered into equity contract for difference swap agreement with The Goldman Sachs Group, Inc. Details of the swap at October 31, 2015 are reflected within the Schedule of Investments and further details are as follows:
Notional Amount | Equity Security Received | Interest Rate/Equity Security Paid | Termination Date | Net Unrealized Depreciation | ||||||||||||||||
$1,020,188 (100,000 Shares) | Market Value Appreciation on:
Amlin plc | One month LIBOR plus 90 bps plus Market Value Depreciation on:
Amlin plc | 10/14/16 | $(4,279) |
The Fund’s volume of activity in equity contract for difference swap agreements during the year ended October 31, 2015 had an average monthly notional amount of approximately $1,016,835 over the period that the swap was outstanding.
At October 31, 2015, the value of equity contract for difference swap agreements can be found in the Statement of Assets and Liabilities under Liabilities, Unrealized depreciation on swap contracts. For the year ended October 31, 2015, the effect of equity contract for difference swap agreements can be found in the Statement of Operations under Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, Swap Contracts, and Foreign Currency, Net realized loss on swap contracts and Net change in unrealized appreciation/depreciation on swap 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 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. For the year ended October 31, 2015, the effect of forward foreign exchange contracts, if any, can be found in the Statement of Operations under Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, Swap Contracts, and Foreign Currency, within Net realized gain on foreign currency transactions and Net change in unrealized appreciation/depreciation on foreign currency translations.
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. During the year ended October 31, 2015, the Fund held no forward foreign exchange contracts. The Fund’s volume of activity in forward foreign exchange contracts during the year ended October 31, 2015 had an average monthly notional amount of approximately $495,000 over the period that the forwards were outstanding.
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 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
19
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
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 securities of comparable U.S. issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Securities Sold Short. The Fund may enter into short sale transactions. Short selling involves selling securities that may or may not be owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the difference between the proceeds received and the value of an open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The broker retains collateral for the value of the open positions, which is adjusted periodically as the value of the position fluctuates. At October 31, 2015, there were no short sales outstanding.
Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted 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. At October 31, 2015, the Fund held no restricted securities.
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
20
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to the write-off of current year net operating loss and the tax treatment of currency gains and losses. These reclassifications have no impact on the NAV of the Fund. For the year ended October 31, 2015, reclassifications were made to decrease accumulated net investment loss by $1,149,962 and increase accumulated net realized loss on investments, securities sold short, swap contracts, and foreign currency translations by $95,272, with an offsetting adjustment to paid-in capital.
No distributions were made during the years ended October 31, 2015 or 2014.
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 October 31, 2015, the components of accumulated earnings/losses on a tax basis were as follows:
Accumulated capital loss carryforwards | $ | (13,046,182 | ) | |
Net unrealized appreciation on investments and foreign currency translations | 6,960,297 | |||
Qualified late year loss deferral* | (1,177,378 | ) | ||
|
| |||
Total | $ | (7,263,263 | ) | |
|
|
* | Qualified late year losses relate to ordinary losses incurred after December 31, 2014 through the Fund’s October 31, 2015 fiscal year end which were elected to be treated as if they occurred on the first day of the following fiscal year November 1, 2015. |
At October 31, 2015, the Fund had net capital loss carryforwards for federal income tax purposes of $13,046,182 which are available to reduce future required distributions of net capital gains to shareholders through 2017. The Fund is permitted to carry forward for an unlimited period capital losses incurred in fiscal years beginning after December 22, 2010. In addition, these losses must be utilized prior to the losses incurred in pre-enactment
21
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
taxable years. As a result of the rule, pre-enactment capital loss carryforwards may have an increased likelihood of expiring unused. Additionally, post enactment capital losses that are carried forward will retain their character as either short term or long term capital losses rather than being considered all short term as under previous law.
During the year October 31, 2015, the Fund utilized capital loss carryforwards of $10,870,774.
At October 31, 2015, the differences between book basis and tax basis unrealized appreciation/depreciation were 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 October 31, 2015:
Cost/ (Proceeds) | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||
Investments | $187,991,431 | $21,666,811 | $(14,706,506) | $6,960,305 |
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 October 31, 2015, the Fund did not incur any income tax, interest, or penalties. As of October 31, 2015, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions. The Fund has entered into an investment advisory agreement (the “Advisory Agreement”) with the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, at annual rates as follows:
First $ 1 Billion | 0.935 | % | ||
Next $1 Billion | 0.910 | % | ||
Next $3 Billion | 0.885 | % | ||
Next $5 Billion | 0.860 | % | ||
Thereafter | 0.835 | % |
In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Directors of the Fund who are affiliated persons of the Adviser.
As per the approval of the Board, the Fund is allocated a portion of the Chief Compliance Officer’s cost. For the year ended October 31, 2015, the Fund paid or accrued $3,768 in payroll expenses in the Statement of Operations.
The Fund pays each Director who is not considered an affiliated person an annual retainer of $6,000 plus $1,000 for each Board meeting attended, and they are reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive $500 per meeting attended and the Chairman of the Audit Committee and the Lead Director receive annual fees of $1,500 and $2,000, respectively. The Chairmen of the Proxy Voting Committee and the Nominating Committee each receive annual fees of
22
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
$1,000. A Director may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.
4. Distribution Plan. The Fund’s Board has adopted a distribution agreement and distribution plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to the G.distributors, LLC (the “Distributor”), an affiliate of the Adviser, at annual rates of 0.25%, 0.45%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly. Class Y shares do not participate in the Plan and pay no distribution fees.
5. Portfolio Securities. Purchases and sales of securities during the year ended October 31, 2015, other than short term securities and U.S. Government obligations, aggregated $303,966,235 and $375,909,905, respectively.
6. Transactions with Affiliates and Other Arrangements. During the year ended October 31, 2015, the Fund paid brokerage commissions on security trades of $111,059 to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $15,302 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the year ended October 31, 2015, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $2,988.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the year ended October 31, 2015, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.
7. Line of Credit. The Fund participates in an unsecured line of credit of up to $75,000,000 under which it may borrow up to 15% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a variable rate per annum equal to the overnight rate plus a spread, as determined and quoted by the custodian in its sole discretion at the time of the request, which rate may be subject to change from time to time at the sole discretion of the custodian. The overnight rate is defined as of any day, the higher of (a) the federal funds rate as in effect on that day and (b) the overnight LIBOR rate as in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At October 31, 2015, there were no borrowings outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the year ended October 31, 2015 was $279,481 with a weighted average interest rate of 1.41%. The maximum amount borrowed at any time during the year ended October 31, 2015 was $8,146,000.
8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class Y Shares. Class AAA Shares and Class Y Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%, and Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase. Class B Shares were fully redeemed on December 8, 2014.
23
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund as an increase in paid-in capital. The redemption fees retained by the Fund during the years ended October 31, 2015 and 2014, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of capital stock were as follows:
Year Ended | Year Ended | |||||||||||||||||||||||
October 31, 2015 | October 31, 2014 | |||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||
Class AAA | ||||||||||||||||||||||||
Shares sold | 157,240 | $ | 2,083,134 | 456,002 | $ | 5,904,935 | ||||||||||||||||||
Shares redeemed | (665,560 | ) | (8,617,415 | ) | (261,355 | ) | (3,357,530 | ) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Net increase/(decrease) | (508,320 | ) | $ | (6,534,281 | ) | 194,647 | $ | 2,547,405 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Class A | ||||||||||||||||||||||||
Shares sold | 674,258 | $ | 8,807,688 | 2,046,548 | $ | 26,192,549 | ||||||||||||||||||
Shares redeemed | (3,636,369 | ) | (47,455,405 | ) | (3,382,224 | ) | (43,386,037 | ) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Net decrease | (2,962,111 | ) | $ | (38,647,717 | ) | (1,335,676 | ) | $ | (17,193,488 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Class B* | ||||||||||||||||||||||||
Shares sold | — | — | 9 | $ | 100 | |||||||||||||||||||
Shares redeemed | (77,924 | ) | $ | (931,796 | ) | (79,300 | ) | (952,034 | ) | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Net decrease | (77,924 | ) | $ | (931,796 | ) | (79,291 | ) | $ | (951,934 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Class C | ||||||||||||||||||||||||
Shares sold | 438,955 | $ | 5,356,928 | 855,447 | $ | 10,278,528 | ||||||||||||||||||
Shares redeemed | (883,010 | ) | (10,717,257 | ) | (935,419 | ) | (11,237,996 | ) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Net decrease | (444,055 | ) | $ | (5,360,329 | ) | (79,972 | ) | $ | (959,468 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Class Y | ||||||||||||||||||||||||
Shares sold | 2,607,403 | $ | 35,937,386 | 4,016,391 | $ | 54,159,131 | ||||||||||||||||||
Shares redeemed | (3,076,879 | ) | (42,175,513 | ) | (3,072,407 | ) | (41,353,827 | ) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Net increase/(decrease) | (469,476 | ) | $ | (6,238,127 | ) | 943,984 | $ | 12,805,304 | ||||||||||||||||
|
|
|
|
|
|
|
|
* | Class B Shares were fully redeemed and closed on December 8, 2014. |
9. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
10. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
24
Gabelli Enterprise Mergers and Acquisitions Fund
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Gabelli Enterprise Mergers and Acquisitions Fund:
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 Gabelli Enterprise Mergers and Acquisitions Fund (a series of the Gabelli 787 Fund, Inc. and hereafter referred to as the “Fund”) at October 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’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 October 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, NY
December 22, 2015
25
Gabelli Enterprise Mergers and Acquisitions Fund
Additional Fund Information (Unaudited)
The business and affairs of the Fund are managed under the direction of the Fund’s Board of Directors. Information pertaining to the Directors and officers of the Fund is set forth below. The Fund’s Statement of Additional Information includes additional information about the Fund’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to the Gabelli Enterprise Mergers and Acquisitions Fund at One Corporate Center, Rye, NY 10580-1422.
Name, Position(s) Address1 and Age | Term of Office and Length of Time Served2 | Number of Funds in Fund Complex Overseen by Director | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director4 | ||||
INTERESTED DIRECTORS3: | ||||||||
Regina M. Pitaro Director Age: 60 |
Since 2008 |
1 |
Managing Director of GAMCO Asset Management, Inc. |
— | ||||
INDEPENDENT DIRECTORS5: | ||||||||
Anthony J. Colavita Director Age: 79 |
Since 1994 |
37 |
President of the law firm of Anthony J. Colavita, P.C. |
— | ||||
James P. Conn Director Age: 77 | Since 1994 | 23 | Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (1992-1998) | — | ||||
Vincent D. Enright Director Age: 71 | Since 2008 | 17 | Former Senior Vice President and Chief Financial Officer of KeySpan Corp. (public utility) (1994-1998) | Director of Echo Therapeutics, Inc. (therapeutics and diagnostics) (2008-2014); Director of LGL Group, Inc. (diversified manufacturing) (2011-2014) | ||||
Arthur V. Ferrara Director Age: 85 | Since 2008 | 8 | Former Chairman of the Board and Chief Executive Officer of The Guardian Life Insurance Company of America (1993-1995) | — | ||||
Kuni Nakamura Director Age: 47 | Since 2008 | 18 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||
Salvatore J. Zizza Director Age: 69 | Since 2004 | 31 | President of Zizza & Associates Corp. (financial consulting); Chairman of Harbor Diversified, Inc. (pharmaceuticals); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Bergen Cove Realty Inc.; Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014) | Director and Vice Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals); Director, Chairman, and CEO of General Employment Enterprises (staffing services) (2009-2012) |
26
Gabelli Enterprise Mergers and Acquisitions Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) Address1 and Age | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past Five Years | ||||
OFFICERS: | ||||||
Bruce N. Alpert President Age: 63 |
Since 1994 |
Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of several registered investment companies within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2008; Director of Teton Advisors, Inc., 1998-2012; Chairman of Teton Advisors, Inc., 2008-2010; President of Teton Advisors, Inc., 1998-2008 | ||||
Andrea R. Mango Secretary Age: 43 | Since 2013 | Counsel of Gabelli Funds, LLC since 2013; Secretary of all registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of all closed-end funds within the Gabelli/GAMCO Fund Complex since 2014; Corporate Vice President within the Corporate Compliance Department of New York Life Insurance Company, 2011-2013; Vice President and Counsel of Deutsche Bank, 2006-2011 | ||||
Agnes Mullady Treasurer Age: 57 | Since 2006 | President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010; Chief Executive Officer of G.distributors, LLC since 2010; 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 within the Gabelli/GAMCO Fund Complex | ||||
Richard J. Walz Chief Compliance Officer Age: 56 | Since 2013 | Chief Compliance Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Chief Compliance Officer of AEGON USA Investment Management, 2011-2013; Chief Compliance Officer of Cutwater Asset Management, 2004- 2011 |
1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. |
2 | Each Director will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Director and until the election and qualification of his or her successor, if any, elected at such meeting, or (ii) the date a Director resigns or retires, or a Director is removed by the Board of Directors or shareholders, in accordance with the Fund’s By-Laws and Articles of Incorporation. Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. |
3 | “Interested person” of the Fund as defined in the 1940 Act. Ms. Pitaro is considered an “interested person” because of her affiliation with Gabelli Funds, LLC that acts as the Fund’s investment adviser. |
4 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act. |
5 | Directors who are not interested persons are considered “Independent” Directors. |
Portfolio Manager Biography
Mario J. Gabelli, CFA, is Chairman and Chief Executive Officer of GAMCO Investors, Inc. that he founded in 1977 and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.
27
GABELLI ENTERPRISE MERGERS AND
ACQUISITIONS FUND
A Portfolio of the Gabelli 787 Fund, Inc.
One Corporate Center
Rye, New York 10580-1422
t 800-GABELLI (800-422-3554)
f 914-921-5118
e info@gabelli.com
GABELLI.COM
Net Asset Value per share available daily
by calling 800-GABELLI after 7:00 P.M.
BOARD OF DIRECTORS
Anthony J. Colavita President, Anthony J. Colavita, P.C.
James P. Conn Former Managing Director and Chief Investment Officer, Financial Security Assurance Holdings Ltd.
Vincent D. Enright Former Senior Vice President and, Chief Financial Officer, KeySpan Corporation
Arthur V. Ferrara Former Chairman and Chief Executive Officer, Guardian Life Insurance Company of America
Kuni Nakamura President, Advanced Polymer, Inc.
Regina M. Pitaro Managing Director, GAMCO Asset Management Inc.
Salvatore J. Zizza Chairman, Zizza & Associates Corp. | OFFICERS
Bruce N. Alpert President
Andrea R. Mango Secretary
Agnes Mullady Treasurer
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR G.distributors, LLC
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT State Street Bank and Trust Company
LEGAL COUNSEL Paul Hastings LLP |
This report is submitted for the general information of the shareholders of the Gabelli Enterprise Mergers and Acquisitions Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
GAB208Q415AR
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 directors has determined that James P. Conn 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 $20,085 in 2014 and $20,688 in 2015. |
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 in 2014 and $0 in 2015. |
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 $3,970 in 2014 and $4,089 in 2015. Tax fees include amounts related to tax compliance, tax reporting and tax planning. |
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 in 2014 and $0 in 2015. |
(e)(1) | Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
Pre-Approval Policies and Procedures. The Audit Committee (“Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent registered public accounting firm to the registrant and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC (“Gabelli”) that provides services to the registrant (a “Covered Services Provider”) if the independent registered public accounting firm’s engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s). The Committee may also establish detailed pre-approval policies and procedures for pre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to the other persons (other than Gabelli or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (ii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit.
(e)(2) | The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: |
(b) N/A
(c) 100%
(d) N/A
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 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 $3,970 in 2014 and $4,089 in 2015. |
(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.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(12.other) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Gabelli 787 Fund, Inc. |
By (Signature and Title)* | /s/ Bruce N. Alpert | |||
Bruce N. Alpert, Principal Executive Officer |
Date | 12/30/2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Bruce N. Alpert | |||
Bruce N. Alpert, Principal Executive Officer |
Date | 12/30/2015 |
By (Signature and Title)* | /s/ Agnes Mullady | |||
Agnes Mullady, Principal Financial Officer and Treasurer |
Date | 12/30/2015 |
* Print the name and title of each signing officer under his or her signature.