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, 2016
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, 450 Fifth Street, NW, Washington, DC 20549-0609. 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, 2016
To Our Shareholders,
For the year ended October 31, 2016, the net asset value (“NAV”) per Class A Share of the Gabelli Enterprise Mergers and Acquisitions Fund increased 1.4% compared with an increase of 4.5% 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 0.3%. See page 3 for additional performance information.
Enclosed are the financial statements, including the schedule of investments, as of October 31, 2016.
Performance Discussion (Unaudited)
In the fourth calendar quarter of 2015, global deal volume totaled $1.6 trillion, a 50% increase over the third quarter.
Global deal activity for the first calendar quarter of 2016 totaled $699.4 billion, representing an 18% decrease from the same period in 2015. Breaking down volumes by sector, Industrials and Materials led the charge in terms of volume. Specifically, Industrial mergers and acquisitions (M&A) totaled $116.4 billion during the quarter which represented an increase of 71% over first quarter 2015 data. Similarly, activity in the Materials sector increased 41%. On the opposite end of the spectrum, Healthcare, which had record breaking activity in 2015, was down 53% year over year to $52.8 billion.
Global deal activity for the second quarter of 2016 totaled approximately $913 billion bringing the first half of 2016 to $1.6 trillion. The second quarter volume represented a 19% decrease from last year’s levels. An important trend in this quarter was the continued strength in cross-border activity. For the first half of 2016, cross-border deals accounted for 30.8% of total activity, up 2% from 2015, as Asian buyers continued to seek growth in Western equities and other exogenous macro events such as “Brexit” provided global dislocation of capital. We expect this trend to continue to contribute to global M&A volume.
The third calendar quarter of 2016 saw global deal activity total $796.2 billion. Since January, there have been 32,551 deals announced worldwide, 65 of them with values of $5 billion or greater, which does represent a decrease from this period in 2015. Geographically speaking, U.S. centered M&A fell by roughly 32% in the first nine months, while deals in Europe totaled $491.7 billion year to date, a 20% decrease year over year. Turning to Asia, M&A activity has decreased by 18% compared with 2015. To date, Asia Pacific represents approximately 26% of global deal value, a slight improvement from 2015. Total cross border M&A activity totaled $922.4 billion during the first nine months of 2016, a decrease of 12% from 2015 levels.
Selected deals that closed during the Fund’s fiscal year
Sigma-Aldrich Corp. is a leading life science and technology company based in St. Louis, Missouri that manufactures and distributes more than 230,000 chemicals, biochemical, and other essential products to more than 1.4 million customers globally. On September 22, 2014, Merck KGaA, a German multinational pharmaceutical and chemical company, announced that it would acquire Sigma-Aldrich for $16.7 billion, or $140 cash per share. After a lengthy regulatory review in Europe, the deal was completed on November 18, 2015.
ZS Pharma Inc. is a pharmaceutical company based in Coppell, Texas that develops a drug to treat hyperkalemia. On November 6, 2015, AstraZeneca plc announced it would acquire ZS Pharma in a $90 cash per share or $2.7 billion tender offer. The deal closed on December 17, 2015.
BioMed Realty Trust, Inc., based in San Diego, California operates as a real estate investment trust. The company owns, acquires, develops, redevelops, leases, and manages laboratory and office space for the life science industry. On October 8, 2015, BMR entered into an agreement to be acquired by Blackstone Real Estate Partners VIII. The deal price was $23.75 cash per share and included a provision for a “ticking fee” of $0.003 per share, per day, for each day the deal remained outstanding beyond January 1, 2016. After regulatory and shareholder approvals, the deal closed on January 27, 2016 for a total payout per share of $23.82.
Precision Castparts Corp., headquartered in Portland, Oregon, manufactures complex metal components and products for the aerospace, power, and general industrial markets. On August 10, 2015, the company announced that it would be purchased by Berkshire Hathaway for $235 cash per share in a merger worth $32.3 billion. The transaction closed on January 29, 2016 after receiving shareholder and regulatory approvals.
Keurig Green Mountain Inc., based in Waterbury, Vermont, is a personal beverage system company best known for its line of Keurig single brew coffee makers and coffee pods. On December 7, 2015 the company entered into an agreement to be acquired by JAB Holding Company for $92 cash per share, in a merger worth $13.7 billion. After regulatory votes and shareholder approval – including Coca Cola who owned 17% of the company – the deal closed on March 3, 2016.
AGL Resources is an Atlanta, Georgia based holding company that is involved in the distribution of natural gas. AGL has over 81,300 miles of natural gas pipelines and over 10 storage facilities providing natural gas power for residential, commercial, and industrial clients. AGL agreed with Southern Company to a $66 cash per share merger which valued the company at $7.9 billion. The merger closed on July 1, 2016 after receiving shareholder and regulatory approvals.
Qlik Technologies Inc. is a data analytics and business intelligence company based in Radnor, Pennsylvania. On June 2, 2016, Qlik agreed to be acquired by Thoma Bravo, the Chicago based private equity firm, for $30.50 cash per share in a deal valuing the company at $3 billion. The merger closed on August 22, 2016 after receiving the necessary approvals.
Questar Corporation is an integrated natural gas holding company that develops, produces, and delivers clean energy in Utah, Wyoming, and Idaho. Questar entered into an agreement to merge with Dominion Resources on February 1, 2016 for $25 cash per share in a $6 billion transaction. The deal closed on September 16, 2016.
Piedmont Natural Gas is an energy services company based in Charlotte, North Carolina. Piedmont is engaged in the distribution of natural gas to residential, commercial, and industrial customers across the Carolinas and Tennessee. On October 24, 2015, Duke Energy agreed to acquire Piedmont for $60 cash per share in a $6.7 billion all cash merger. The deal closed on October 3, 2016 after the companies received the necessary regulatory and shareholder approvals.
We appreciate your continuing confidence and trust.
2
Comparative Results
Average Annual Returns through October 31, 2016 (a)(b) (Unaudited) | Since | |||||||||||||||
Inception | ||||||||||||||||
1 Year | 5 Year | 10 Year | (2/28/01) | |||||||||||||
Class A (EMAAX) | 1.37% | 4.78% | 2.96% | 4.21% | ||||||||||||
With sales charge (c) | (4.46) | 3.55 | 2.35 | 3.81 | ||||||||||||
Class AAA (EAAAX) | 1.58 | 4.99 | 3.09 | 4.29 | ||||||||||||
Class C (EMACX) | 0.82 | 4.19 | 2.39 | 3.63 | ||||||||||||
With contingent deferred sales charge (d) | (0.18) | 4.19 | 2.39 | 3.63 | ||||||||||||
Class Y (EMAYX) | 1.87 | 5.25 | 3.42 | 4.68 | ||||||||||||
S&P 500 Index | 4.51 | 13.57 | 6.70 | 5.58 | ||||||||||||
Lipper U.S. Treasury Money Market Fund Average | 0.04 | 0.01 | 0.64 | 1.10 | ||||||||||||
Bank of America Merrill Lynch 3 Month U.S. Treasury Bill Index | 0.31 | 0.11 | 0.88 | 1.49 |
In the current prospectuses dated February 26, 2016, the Fund’s expense ratios are 1.47%, 1.67%, 2.22%, and 1.22% for the Class AAA, A, C, and Y Shares, respectively. See page 13 for expense ratios for the year ended October 31, 2016. 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 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 due to lower expenses associated with this class of shares. 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, 2016 through October 31, 2016 | 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, 2016.
Beginning | Ending | Annualized | Expenses | |||||||
Account Value | Account Value | Expense | Paid During | |||||||
05/01/16 | 10/31/16 | Ratio | Period* | |||||||
Gabelli Enterprise Mergers and Acquisitions Fund | ||||||||||
Actual Fund Return |
| |||||||||
Class AAA | $1,000.00 | $1,000.00 | 1.50% | $ 7.54 | ||||||
Class A | $1,000.00 | $1,000.00 | 1.70% | $ 8.55 | ||||||
Class C | $1,000.00 | $ 996.80 | 2.25% | $11.29 | ||||||
Class Y | $1,000.00 | $1,002.10 | 1.25% | $ 6.29 | ||||||
Hypothetical 5% Return | ||||||||||
Class AAA | $1,000.00 | $1,017.60 | 1.50% | $ 7.61 | ||||||
Class A | $1,000.00 | $1,016.59 | 1.70% | $ 8.62 | ||||||
Class C | $1,000.00 | $1,013.83 | 2.25% | $11.39 | ||||||
Class Y | $1,000.00 | $1,018.85 | 1.25% | $ 6.34 |
* | 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 366. |
4
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of October 31, 2016:
Gabelli Enterprise Mergers and Acquisitions Fund
Long Positions | ||||
U.S. Government Obligations | 20.5 | % | ||
Consumer Discretionary | 15.0 | % | ||
Information Technology | 14.0 | % | ||
Consumer Staples | 9.9 | % | ||
Materials | 8.6 | % | ||
Telecommunication Services | 7.6 | % | ||
Health Care | 6.8 | % |
Utilities | 6.0 | % | ||
Financials | 5.5 | % | ||
Industrials | 5.3 | % | ||
Energy | 0.7 | % | ||
Other Assets and Liabilities (Net) | 0.3 | % | ||
Short Positions | ||||
Real Estate Investment Trusts | (0.2 | )% | ||
|
| |||
100.0 | % | |||
|
|
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. 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.
5
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments — October 31, 2016
Shares | Cost | Market | ||||||||
COMMON STOCKS — 78.7% |
| |||||||||
CONSUMER DISCRETIONARY — 15.0% |
| |||||||||
Auto Components — 1.3% |
| |||||||||
10,000 | Federal-Mogul Holdings Corp.† | $ | 90,132 | $ | 92,600 | |||||
24,000 | Haldex AB | 288,867 | 309,561 | |||||||
55,000 | Navistar International Corp.† | 1,076,415 | 1,226,500 | |||||||
7,800 | Tenneco Inc.† | 24,840 | 429,546 | |||||||
|
|
|
| |||||||
1,480,254 | 2,058,207 | |||||||||
|
|
|
| |||||||
Diversified Consumer Services — 1.0% |
| |||||||||
2,000 | Funespana SA† | 18,121 | 14,666 | |||||||
30,000 | gategroup Holding AG† | 1,622,145 | 1,577,990 | |||||||
|
|
|
| |||||||
1,640,266 | 1,592,656 | |||||||||
|
|
|
| |||||||
Hotels, Restaurants, and Leisure — 2.5% |
| |||||||||
17,000 | Belmond Ltd., Cl. A† | 185,552 | 220,150 | |||||||
25,400 | Carmike Cinemas Inc.† | 749,625 | 829,310 | |||||||
800 | Churchill Downs Inc. | 26,193 | 108,800 | |||||||
180,000 | Dover Motorsports Inc. | 667,976 | 432,000 | |||||||
2,000 | Eldorado Resorts Inc.† | 9,768 | 24,200 | |||||||
6,500 | Marriott International, Inc., | 454,504 | 446,550 | |||||||
38,000 | Ryman Hospitality Properties Inc. | 1,354,565 | 1,915,960 | |||||||
|
|
|
| |||||||
3,448,183 | 3,976,970 | |||||||||
|
|
|
| |||||||
Household Durables — 0.3% |
| |||||||||
3,000 | Bang & Olufsen A/S† | 30,849 | 33,206 | |||||||
10,000 | Nobility Homes Inc.† | 133,178 | 155,000 | |||||||
17,000 | Skyline Corp.† | 92,454 | 196,690 | |||||||
|
|
|
| |||||||
256,481 | 384,896 | |||||||||
|
|
|
| |||||||
Media — 8.9% |
| |||||||||
100,000 | ACME Communications Inc.† | 115,451 | 4,500 | |||||||
180,000 | Clear Channel Outdoor Holdings Inc., Cl. A | 1,360,637 | 1,035,000 | |||||||
124,500 | Crown Media Holdings Inc., Cl. A† | 553,993 | 628,725 | |||||||
3,600 | Discovery Communications Inc., Cl. A† | 26,174 | 93,996 | |||||||
10,800 | Discovery Communications Inc., Cl. C† | 60,976 | 271,188 | |||||||
20,000 | DISH Network Corp., Cl. A† | 386,434 | 1,171,200 | |||||||
4,000 | Liberty Broadband Corp., | 17,490 | 259,800 | |||||||
6,000 | Liberty Broadband Corp., | 103,161 | 399,900 | |||||||
21,000 | Liberty Global plc, Cl. A† | 735,349 | 684,600 | |||||||
28,000 | Liberty Global plc, Cl. C† | 994,232 | 890,400 | |||||||
2,853 | Liberty Global plc LiLAC, | 118,382 | 78,857 | |||||||
4,394 | Liberty Global plc LiLAC, Cl. C† | 193,039 | 121,450 | |||||||
5,000 | Liberty Media Group, Cl. A† | 11,443 | 139,150 | |||||||
5,000 | Liberty Media Group, Cl. C† | 13,511 | 137,050 | |||||||
6,500 | Liberty SiriusXM Group, | 19,439 | 216,255 | |||||||
6,500 | Liberty SiriusXM Group, | 25,888 | 215,735 | |||||||
32,000 | Media General Inc.† | 545,496 | 539,200 | |||||||
8,000 | Meredith Corp. | 369,669 | 362,800 |
Shares | Cost | Market | ||||||||
4,000 | Scripps Networks Interactive Inc., Cl. A | $ | 291,606 | $ | 257,440 | |||||
20,000 | Shaw Communications Inc., Cl. B | 265,164 | 396,400 | |||||||
12,000 | Starz, Cl. A† | 22,243 | 377,520 | |||||||
76,000 | Telenet Group Holding NV† | 3,439,325 | 4,068,434 | |||||||
50,000 | The E.W. Scripps Co., Cl. A† | 853,140 | 663,000 | |||||||
10,000 | Time Warner Inc. | 732,543 | 889,900 | |||||||
2,000 | tronc Inc. | 22,980 | 24,060 | |||||||
|
|
|
| |||||||
11,277,765 | 13,926,560 | |||||||||
|
|
|
| |||||||
Specialty Retail — 1.0% |
| |||||||||
8,000 | Aaron’s Inc. | 226,063 | 197,680 | |||||||
22,000 | Cabela’s Inc.† | 1,388,678 | 1,355,420 | |||||||
11,000 | Pier 1 Imports Inc. | 80,398 | 47,410 | |||||||
1,695,139 | 1,600,510 | |||||||||
|
|
|
| |||||||
TOTAL CONSUMER DISCRETIONARY | 19,798,088 | 23,539,799 | ||||||||
|
|
|
| |||||||
INFORMATION TECHNOLOGY — 14.0% |
| |||||||||
Communications Equipment — 0.2% |
| |||||||||
6,925 | exactEarth Ltd.† | 19,881 | 7,693 | |||||||
4,050 | Harris Corp. | 317,552 | 361,302 | |||||||
|
|
|
| |||||||
337,433 | 368,995 | |||||||||
|
|
|
| |||||||
Electrical Equipment and Instruments — 2.8% |
| |||||||||
47,300 | Axis Communications AB | 1,895,619 | 1,815,092 | |||||||
400 | DTS Inc. | 16,886 | 16,940 | |||||||
20,000 | Lexmark International Inc., | 799,578 | 793,800 | |||||||
6,600 | Park Electrochemical Corp. | 93,217 | 101,838 | |||||||
50,000 | Rofin-Sinar Technologies Inc.† | 1,595,500 | 1,627,500 | |||||||
200 | SLM Solutions Group AG | 8,741 | 6,608 | |||||||
|
|
|
| |||||||
4,409,541 | 4,361,778 | |||||||||
|
|
|
| |||||||
Semiconductors and Semiconductor Equipment — 0.1% |
| |||||||||
200 | AIXTRON SE† | 1,237 | 967 | |||||||
5,000 | Intersil Corp., Cl. A | 108,090 | 110,400 | |||||||
10,000 | MoSys Inc.† | 39,042 | 5,200 | |||||||
1,200 | NXP Semiconductors NV† | 119,916 | 120,000 | |||||||
|
|
|
| |||||||
268,285 | 236,567 | |||||||||
|
|
|
| |||||||
Software — 10.9% |
| |||||||||
5,000 | Apigee Corp.† | 87,025 | 86,750 | |||||||
8,000 | Ausy† | 485,138 | 480,729 | |||||||
94,000 | Cvent Inc.† | 3,346,296 | 2,934,680 | |||||||
557 | Dell Technologies, Inc. - VMware Inc.† | 25,104 | 27,343 | |||||||
6,500 | Everyday Health Inc.† | 68,284 | 68,250 | |||||||
75,000 | FalconStor Software Inc.† | 251,646 | 53,250 | |||||||
80,000 | Fleetmatics Group plc | 4,769,504 | 4,792,000 | |||||||
23,000 | inContact Inc.† | 318,434 | 319,930 | |||||||
2,000 | Interactive Intelligence Group Inc.† | 120,209 | 120,900 | |||||||
200 | InterXion Holding NV† | 6,505 | 7,446 |
See accompanying notes to financial statements.
6
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2016
Shares | Cost | Market Value | ||||||||
COMMON STOCKS (Continued) |
| |||||||||
INFORMATION TECHNOLOGY (Continued) |
| |||||||||
Software (Continued) | ||||||||||
30,000 | LinkedIn Corp., Cl. A† | $ | 5,744,923 | $ | 5,688,000 | |||||
14,500 | Monster Worldwide Inc.† | 49,300 | 49,445 | |||||||
15,000 | NetSuite Inc.† | 1,633,415 | 1,396,800 | |||||||
10,000 | Rackspace Hosting Inc.† | 316,457 | 319,400 | |||||||
89,000 | Silicon Graphics International Corp. | 684,496 | 689,750 | |||||||
|
|
|
| |||||||
17,906,736 | 17,034,673 | |||||||||
|
|
|
| |||||||
TOTAL INFORMATION TECHNOLOGY | 22,921,995 | 22,002,013 | ||||||||
|
|
|
| |||||||
CONSUMER STAPLES — 9.9% |
| |||||||||
Consumer Products — 0.2% |
| |||||||||
60,000 | Avon Products Inc. | 448,533 | 393,000 | |||||||
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|
|
| |||||||
Food and Staples Retailing — 3.8% |
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50,000 | CST Brands Inc. | 2,286,595 | 2,401,000 | |||||||
365,000 | Rite Aid Corp.† | 2,915,460 | 2,449,150 | |||||||
6,000 | SpartanNash Co. | 60,130 | 168,000 | |||||||
29,000 | Village Super Market Inc., Cl. A | 662,626 | 867,100 | |||||||
|
|
|
| |||||||
5,924,811 | 5,885,250 | |||||||||
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|
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| |||||||
Food Products — 5.9% |
| |||||||||
4,500 | Flowers Foods Inc. | 10,669 | 69,840 | |||||||
34,000 | GrainCorp Ltd., Cl. A | 389,544 | 217,256 | |||||||
800 | Mead Johnson Nutrition Co. | 66,350 | 59,816 | |||||||
600,000 | Parmalat SpA | 2,108,080 | 1,584,719 | |||||||
2,000,000 | Premier Foods plc† | 1,376,332 | 1,113,845 | |||||||
4,650 | Snyder’s-Lance Inc. | 152,288 | 165,401 | |||||||
2,000 | The Hershey Co. | 199,810 | 204,920 | |||||||
83,000 | The WhiteWave Foods Co.† | 4,618,194 | 4,522,670 | |||||||
32,000 | Tootsie Roll Industries Inc. | 656,478 | 1,134,400 | |||||||
1,375 | Warrnambool Cheese & Butter Factory Co. Holding Ltd.† | 8,695 | 7,018 | |||||||
450,000 | Yashili International Holdings Ltd. | 189,692 | 91,676 | |||||||
|
|
|
| |||||||
9,776,132 | 9,171,561 | |||||||||
|
|
|
| |||||||
TOTAL CONSUMER STAPLES | 16,149,476 | 15,449,811 | ||||||||
|
|
|
| |||||||
MATERIALS — 8.6% |
| |||||||||
Building Products — 2.1% |
| |||||||||
100,000 | Griffon Corp. | 850,000 | 1,670,000 | |||||||
14,000 | Norbord Inc. | 318,662 | 329,307 | |||||||
11,000 | Vulcan Materials Co. | 432,608 | 1,245,200 | |||||||
|
|
|
| |||||||
1,601,270 | 3,244,507 | |||||||||
|
|
|
| |||||||
Chemicals — 3.9% |
| |||||||||
7,000 | Ferro Corp.† | 98,512 | 90,720 | |||||||
2,000 | Monsanto Co. | 206,121 | 201,540 | |||||||
34,000 | SGL Carbon SE† | 652,505 | 423,997 | |||||||
4,500 | Syngenta AG, ADR | 389,458 | 361,890 |
Shares | Cost | Market | ||||||||
50,000 | The Valspar Corp. | $ | 5,265,248 | $ | 4,980,000 | |||||
|
|
|
| |||||||
6,611,844 | 6,058,147 | |||||||||
|
|
|
| |||||||
Containers and Packaging — 2.1% |
| |||||||||
1,200 | Greif Inc., Cl. B | 44,478 | 69,900 | |||||||
271,893 | Myers Industries Inc. | 5,374,569 | 3,276,311 | |||||||
30,000 | Powerflute OYJ | 35,049 | 32,956 | |||||||
|
|
|
| |||||||
5,454,096 | 3,379,167 | |||||||||
|
|
|
| |||||||
Metals and Mining — 0.5% |
| |||||||||
39,000 | Alamos Gold Inc., Cl. A | 562,113 | 306,150 | |||||||
6,666 | Alcoa Inc. | 213,023 | 191,448 | |||||||
17,752 | AuRico Metals Inc.† | 9,447 | 16,279 | |||||||
19,000 | Pan American Silver Corp. | 298,459 | 303,422 | |||||||
|
|
|
| |||||||
1,083,042 | 817,299 | |||||||||
|
|
|
| |||||||
TOTAL MATERIALS | 14,750,252 | 13,499,120 | ||||||||
|
|
|
| |||||||
TELECOMMUNICATION SERVICES — 7.1% |
| |||||||||
Diversified Telecommunications Services — 3.0% |
| |||||||||
280,000 | Asia Satellite Telecommunications Holdings Ltd.† | 604,206 | 379,083 | |||||||
42,000 | Cincinnati Bell Inc.† | 759,572 | 825,300 | |||||||
53,000 | Infoblox Inc.† | 1,397,919 | 1,404,500 | |||||||
220,000 | Koninklijke KPN NV | 657,892 | 717,515 | |||||||
20,000 | Level 3 Communications Inc.† | 1,081,168 | 1,123,000 | |||||||
5,000 | Loral Space & Communications Inc.† | 234,737 | 194,000 | |||||||
1,000 | Rogers Communications Inc., Cl. B | 2,955 | 40,230 | |||||||
|
|
|
| |||||||
4,738,449 | 4,683,628 | |||||||||
|
|
|
| |||||||
Wireless Telecommunications Services — 4.1% |
| |||||||||
30,000 | Millicom International Cellular SA, SDR | 2,088,664 | 1,318,955 | |||||||
70,000 | Sprint Corp.† | 369,068 | 431,200 | |||||||
9,000 | Telephone & Data Systems Inc. | 255,177 | 232,560 | |||||||
40,000 | T-Mobile US Inc.† | 650,000 | 1,989,200 | |||||||
70,000 | United States Cellular Corp.† | 3,221,188 | 2,453,500 | |||||||
|
|
|
| |||||||
6,584,097 | 6,425,415 | |||||||||
|
|
|
| |||||||
TOTAL TELECOMMUNICATION SERVICES | 11,322,546 | 11,109,043 | ||||||||
|
|
|
| |||||||
HEALTH CARE — 6.7% |
| |||||||||
Biotechnology — 2.1% |
| |||||||||
6,000 | Bio-Rad Laboratories Inc., | 606,260 | 948,480 | |||||||
38,000 | Cepheid | 1,999,237 | 2,010,200 | |||||||
7,000 | Tobira Therapeutics Inc.† | 276,474 | 294,630 | |||||||
|
|
|
| |||||||
2,881,971 | 3,253,310 | |||||||||
|
|
|
| |||||||
Health Care Equipment and Supplies — 1.8% |
| |||||||||
26,000 | Alere Inc.† | 1,389,348 | 1,161,680 | |||||||
47,000 | EndoChoice Holdings Inc.† | 376,140 | 373,650 | |||||||
12,000 | Exactech Inc.† | 161,584 | 289,800 |
See accompanying notes to financial statements.
7
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2016
Shares | Cost | Market | ||||||||
COMMON STOCKS (Continued) |
| |||||||||
HEALTH CARE (Continued) |
| |||||||||
Health Care Equipment and Supplies (Continued) |
| |||||||||
5,700 | ICU Medical Inc.† | $ | 365,322 | $ | 794,010 | |||||
5,000 | Smith & Nephew plc, ADR | 178,855 | 146,250 | |||||||
|
|
|
| |||||||
2,471,249 | 2,765,390 | |||||||||
|
|
|
| |||||||
Health Care Providers and Services — 0.7% |
| |||||||||
1,000 | Chemed Corp. | 30,478 | 141,420 | |||||||
4,300 | Cigna Corp. | 606,775 | 510,969 | |||||||
1,500 | Humana Inc. | 271,636 | 257,295 | |||||||
6,500 | Team Health Holdings Inc.† | 278,135 | 278,525 | |||||||
|
|
|
| |||||||
1,187,024 | 1,188,209 | |||||||||
|
|
|
| |||||||
Life Sciences Tools and Services — 0.3% |
| |||||||||
3,000 | Illumina Inc.† | 157,770 | 408,420 | |||||||
|
|
|
| |||||||
Pharmaceuticals — 1.8% |
| |||||||||
3,300 | Allergan plc† | 894,902 | 689,502 | |||||||
28,000 | AstraZeneca plc, ADR | 1,093,312 | 792,960 | |||||||
15,000 | Bristol-Myers Squibb Co. | 465,021 | 763,650 | |||||||
1,000 | Depomed Inc.† | 23,752 | 22,360 | |||||||
8,000 | Grifols SA, ADR | 53,680 | 114,320 | |||||||
6,000 | Mylan NV† | 293,980 | 219,000 | |||||||
2,600 | Perrigo Co. plc | 242,840 | 216,294 | |||||||
|
|
|
| |||||||
3,067,487 | 2,818,086 | |||||||||
|
|
|
| |||||||
TOTAL HEALTH CARE | 9,765,501 | 10,433,415 | ||||||||
|
|
|
| |||||||
UTILITIES — 5.9% | ||||||||||
Electric Utilities — 5.2% |
| |||||||||
4,000 | Avangrid Inc. | 155,000 | 157,640 | |||||||
38,000 | Endesa SA | 1,064,270 | 807,805 | |||||||
2,500 | Hawaiian Electric Industries Inc. | 74,415 | 73,750 | |||||||
70,000 | The Empire District Electric Co. | 2,308,865 | 2,396,100 | |||||||
81,468 | Westar Energy Inc. | 4,595,432 | 4,669,746 | |||||||
|
|
|
| |||||||
8,197,982 | 8,105,041 | |||||||||
|
|
|
| |||||||
Gas Utilities — 0.1% |
| |||||||||
3,500 | Gas Natural Inc. | 43,997 | 43,225 | |||||||
1,000 | Southwest Gas Corp. | 34,833 | 72,460 | |||||||
|
|
|
| |||||||
78,830 | 115,685 | |||||||||
|
|
|
| |||||||
Independent Power Producers and Energy |
| |||||||||
7,000 | Alerion Cleanpower SpA | 19,191 | 20,579 | |||||||
75,000 | GenOn Energy Inc., Escrow | 0 | 0 | |||||||
1,000 | Talen Energy Corp.† | 13,887 | 13,930 | |||||||
|
|
|
| |||||||
33,078 | 34,509 | |||||||||
|
|
|
| |||||||
Multi-Utilities — 0.4% |
| |||||||||
12,500 | NorthWestern Corp. | 343,998 | 719,375 | |||||||
|
|
|
|
Shares | Cost | Market | ||||||||
Water — 0.2% |
| |||||||||
10,000 | Severn Trent plc | $ | 277,722 | $ | 284,948 | |||||
|
|
|
| |||||||
TOTAL UTILITIES | 8,931,610 | 9,259,558 | ||||||||
|
|
|
| |||||||
FINANCIALS — 5.5% | ||||||||||
Capital Markets — 0.1% |
| |||||||||
5,000 | BKF Capital Group Inc.† | 200,759 | 38,750 | |||||||
3,000 | Kinnevik AB, Cl. A | 103,561 | 82,372 | |||||||
3,400 | Nordnet AB, Cl. B | 14,279 | 13,966 | |||||||
|
|
|
| |||||||
318,599 | 135,088 | |||||||||
|
|
|
| |||||||
Commercial Banks — 2.3% |
| |||||||||
150,000 | Astoria Financial Corp. | 2,257,426 | 2,194,500 | |||||||
300 | EverBank Financial Corp. | 5,739 | 5,793 | |||||||
77,000 | KeyCorp | 1,314,128 | 1,087,240 | |||||||
20,025 | Sterling Bancorp | 201,872 | 360,450 | |||||||
|
|
|
| |||||||
3,779,165 | 3,647,983 | |||||||||
|
|
|
| |||||||
Consumer Finance — 1.2% |
| |||||||||
90,000 | Navient Corp. | 849,595 | 1,150,200 | |||||||
100,000 | SLM Corp.† | 573,264 | 705,000 | |||||||
|
|
|
| |||||||
1,422,859 | 1,855,200 | |||||||||
|
|
|
| |||||||
Insurance — 1.7% |
| |||||||||
1,400 | Argo Group International Holdings Ltd. | 28,231 | 77,840 | |||||||
1,000 | Aspen Insurance Holdings Ltd. | 43,388 | 48,250 | |||||||
7,000 | Delta Lloyd NV | 41,634 | 42,340 | |||||||
12,000 | Endurance Specialty Holdings Ltd. | 1,101,827 | 1,103,400 | |||||||
40,000 | National Interstate Corp. | 1,174,306 | 1,296,000 | |||||||
100 | Patriot National Inc.† | 968 | 634 | |||||||
400 | Topdanmark A/S† | 11,380 | 10,774 | |||||||
|
|
|
| |||||||
2,401,734 | 2,579,238 | |||||||||
|
|
|
| |||||||
Real Estate Management and Development — 0.2% |
| |||||||||
1,000 | Conwert Immobilien Invest SE | 13,727 | 17,740 | |||||||
5,000 | Post Properties Inc. | 334,600 | 328,950 | |||||||
|
|
|
| |||||||
348,327 | 346,690 | |||||||||
|
|
|
| |||||||
TOTAL FINANCIALS | 8,270,684 | 8,564,199 | ||||||||
|
|
|
| |||||||
INDUSTRIALS — 5.3% | ||||||||||
Aerospace and Defense — 1.3% |
| |||||||||
5,000 | B/E Aerospace Inc. | 297,774 | 297,600 | |||||||
40,000 | Kaman Corp. | 1,361,916 | 1,746,400 | |||||||
|
|
|
| |||||||
1,659,690 | 2,044,000 | |||||||||
|
|
|
| |||||||
Air Freight and Logistics — 0.3% |
| |||||||||
100 | Virgin America Inc.† | 5,450 | 5,435 | |||||||
2,000 | XPO Logistics Europe SA† | 484,562 | 450,409 | |||||||
|
|
|
| |||||||
490,012 | 455,844 | |||||||||
|
|
|
|
See accompanying notes to financial statements.
8
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2016
Shares | Cost | Market | ||||||||
COMMON STOCKS (Continued) |
| |||||||||
INDUSTRIALS (Continued) |
| |||||||||
Commercial Services and Supplies — 2.3% |
| |||||||||
1,000 | G & K Services Inc., Cl. A | $ | 97,049 | $ | 94,700 | |||||
6,500 | Greif Inc., Cl. A | 262,294 | 304,590 | |||||||
9,000 | Rollins Inc. | 18,036 | 277,380 | |||||||
1,000 | The Brink’s Co. | 20,060 | 39,550 | |||||||
130,000 | The Interpublic Group of Companies Inc. | 2,536,242 | 2,910,700 | |||||||
1,111 | Vectrus Inc.† | 19,941 | 18,631 | |||||||
|
|
|
| |||||||
2,953,622 | 3,645,551 | |||||||||
|
|
|
| |||||||
Machinery — 1.3% |
| |||||||||
8,000 | Arcam AB† | 249,491 | 263,503 | |||||||
7,000 | CIRCOR International Inc. | 230,587 | 376,460 | |||||||
20,000 | CNH Industrial NV | 178,461 | 155,442 | |||||||
300 | Joy Global Inc. | 8,406 | 8,349 | |||||||
200 | KUKA AG† | 24,655 | 22,745 | |||||||
1,400 | SLM Solutions Group AG† | 46,592 | 46,259 | |||||||
23,000 | Xylem Inc. | 646,102 | 1,111,590 | |||||||
|
|
|
| |||||||
1,384,294 | 1,984,348 | |||||||||
|
|
|
| |||||||
Railroads and Transportation — 0.1% |
| |||||||||
3,000 | GATX Corp. | 118,937 | 131,310 | |||||||
1,200 | Providence and Worcester Railroad Co. | 29,478 | 29,988 | |||||||
|
|
|
| |||||||
148,415 | 161,298 | |||||||||
|
|
|
| |||||||
TOTAL INDUSTRIALS | 6,636,033 | 8,291,041 | ||||||||
|
|
|
| |||||||
ENERGY — 0.7% | ||||||||||
Oil, Gas, and Consumable Fuels — 0.7% |
| |||||||||
500,000 | Alvopetro Energy Ltd.† | 467,728 | 93,193 | |||||||
7,600 | Anadarko Petroleum Corp. | 537,511 | 451,744 | |||||||
200 | Etablissements Maurel et Prom† | 874 | 880 | |||||||
345,000 | Gulf Coast Ultra Deep Royalty Trust† | 603,750 | 14,059 | |||||||
8,001 | Royal Dutch Shell plc, Cl. B | 181,898 | 207,117 | |||||||
140,000 | WesternZagros Resources Ltd.† | 409,637 | 9,394 | |||||||
44,000 | Whiting Petroleum Corp.† | 750,923 | 362,560 | |||||||
|
|
|
| |||||||
2,952,321 | 1,138,947 | |||||||||
|
|
|
| |||||||
TOTAL ENERGY | 2,952,321 | 1,138,947 | ||||||||
|
|
|
| |||||||
TOTAL COMMON STOCKS | 121,498,506 | 123,286,946 | ||||||||
|
|
|
| |||||||
RIGHTS — 0.7% |
| |||||||||
TELECOMMUNICATION SERVICES — 0.5% |
| |||||||||
Wireless Telecommunications Services — 0.5% |
| |||||||||
315,000 | Leap Wireless International Inc., CVR, expire 03/14/17† | 734,287 | 793,800 | |||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||
HEALTH CARE — 0.1% | ||||||||||
Biotechnology — 0.0% | ||||||||||
20,000 | Adolor Corp., CPR, expire 07/01/19† | $ | 0 | $ | 10,400 | |||||
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., CPR† | 0 | 50 | |||||||
250,200 | Synergetics USA Inc., CVR† | 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 | 0 | |||||||
100 | Omthera Pharmaceuticals Inc.† | 0 | 60 | |||||||
156,000 | Teva Pharmaceutical Industries Ltd., CCCP, expire 02/20/23† | 74,375 | 82,680 | |||||||
86,000 | Trius Therapeutics, CVR† | 0 | 11,180 | |||||||
|
|
|
| |||||||
75,585 | 95,130 | |||||||||
|
|
|
| |||||||
TOTAL HEALTH CARE | 100,605 | 138,400 | ||||||||
|
|
|
| |||||||
UTILITIES — 0.1% | ||||||||||
Independent Power Producers and Energy |
| |||||||||
90,000 | Dyax Corp., CVR† | 0 | 99,900 | |||||||
|
|
|
| |||||||
CONSUMER STAPLES — 0.0% |
| |||||||||
Food and Staples Retailing — 0.0% |
| |||||||||
220,000 | Safeway Casa Ley, CVR, expire 01/30/19† | 39,570 | 83,600 | |||||||
220,000 | Safeway PDC, CVR, expire 01/30/17† | 1,900 | 4,400 | |||||||
|
|
|
| |||||||
41,470 | 88,000 | |||||||||
|
|
|
| |||||||
TOTAL CONSUMER STAPLES | 41,470 | 88,000 | ||||||||
|
|
|
| |||||||
TOTAL RIGHTS | 876,362 | 1,120,100 | ||||||||
|
|
|
| |||||||
WARRANTS — 0.0% |
| |||||||||
ENERGY — 0.0% | ||||||||||
Oil, Gas, and Consumable Fuels — 0.0% |
| |||||||||
45,000 | Kinder Morgan Inc., expire 05/25/17† | 87,715 | 270 | |||||||
|
|
|
| |||||||
MATERIALS — 0.0% |
| |||||||||
Metals and Mining — 0.0% | ||||||||||
850 | HudBay Minerals Inc., expire 07/20/18† | 962 | 128 | |||||||
|
|
|
| |||||||
TOTAL WARRANTS | 88,677 | 398 | ||||||||
|
|
|
|
See accompanying notes to financial statements.
9
Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments (Continued) — October 31, 2016
Principal | Cost | Market Value | ||||||||
U.S. GOVERNMENT OBLIGATIONS — 20.5% |
| |||||||||
$32,154,000 | U.S. Treasury Bills, | $ | 32,119,835 | $ | 32,124,942 | |||||
|
|
|
| |||||||
TOTAL INVESTMENTS — 99.9% | $ | 154,583,380 | 156,532,386 | |||||||
|
|
|
| |||||||
SECURITIES SOLD SHORT — (0.2)% |
| |||||||||
(Proceeds received $338,176) |
| (329,262 | ) | |||||||
|
| |||||||||
Other Assets and Liabilities |
| 473,749 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 156,676,873 | |||||||
|
|
Shares | Proceeds | Market Value | ||||||||
SECURITIES SOLD SHORT — (0.2)% |
| |||||||||
Real Estate Investment Trusts — (0.2)% |
| |||||||||
3,550 | Mid-America Apartment Communities Inc. | $ | 338,176 | $ | 329,262 | |||||
|
|
|
| |||||||
TOTAL SECURITIES SOLD SHORT(b) | $ | 338,176 | $ | 329,262 | ||||||
|
|
|
|
(a) | At October 31, 2016, $1,000,000 of the principal amount was pledged as collateral for securities sold short. |
(b) | At October 31, 2016, these proceeds are being held at Pershing LLC. |
† | Non-income producing security. |
†† | Represents annualized yield at date of purchase. |
ADR | American Depositary Receipt |
CCCP | Contingent Cash Consideration Payment |
CPR | Contingent Payment Right |
CVR | Contingent Value Right |
See accompanying notes to financial statements.
10
Gabelli Enterprise Mergers and Acquisitions Fund
Statement of Assets and Liabilities | ||||
October 31, 2016 | ||||
| ||||
Assets: | ||||
Investments, at value (cost $154,583,380) | $ | 156,532,386 | ||
Foreign currency, at value (cost $2,895,009) | 2,796,430 | |||
Cash | 21,141 | |||
Deposit at brokers | 305,943 | |||
Receivable for Fund shares sold | 920,175 | |||
Receivable for investments sold | 3,391 | |||
Dividends receivable | 7,484 | |||
Prepaid expenses | 21,512 | |||
|
| |||
Total Assets | 160,608,462 | |||
|
| |||
Liabilities: | ||||
Securities sold short, at value (proceeds $338,176) | 329,262 | |||
Payable for investments purchased | 1,292,373 | |||
Payable for Fund shares redeemed | 2,021,159 | |||
Payable for investment advisory fees | 126,830 | |||
Payable for distribution fees | 58,939 | |||
Payable for accounting fees | 7,500 | |||
Payable for payroll expenses | 674 | |||
Other accrued expenses | 94,852 | |||
|
| |||
Total Liabilities | 3,931,589 | |||
|
| |||
Net Assets | ||||
(applicable to 11,750,831 shares outstanding) | $ | 156,676,873 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 160,781,983 | ||
Accumulated net investment loss | (203,918 | ) | ||
Accumulated net realized loss on investments, securities sold short, swap contracts, and foreign currency transactions | (5,760,532 | ) | ||
Net unrealized appreciation on investments | 1,949,006 | |||
Net unrealized appreciation on securities sold short | 8,914 | |||
Net unrealized depreciation on foreign currency translations | (98,580 | ) | ||
|
| |||
Net Assets | $ | 156,676,873 | ||
|
|
Shares of Capital Stock, each at $0.001 par value: | ||||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($4,068,839 ÷ 300,857 shares outstanding; 100,000,000 shares authorized) | $ | 13.52 | ||
|
| |||
Class A: | ||||
Net Asset Value and redemption price per share ($48,770,123 ÷ 3,653,930 shares outstanding; 200,000,000 shares authorized) | $ | 13.35 | ||
|
| |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 14.16 | ||
|
| |||
Class C: | ||||
Net Asset Value and offering price per share ($44,423,839 ÷ 3,602,644 shares outstanding; 100,000,000 shares authorized) | $ | 12.33 | (a) | |
|
| |||
Class Y: | ||||
Net Asset Value, offering, and redemption price per share ($59,414,072 ÷ 4,193,400 shares outstanding; 100,000,000 shares authorized) | $ | 14.17 | ||
|
|
Statement of Operations | ||||
For the Year Ended October 31, 2016 | ||||
| ||||
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $29,778) | $ | 2,496,258 | ||
Interest | 101,470 | |||
|
| |||
Total Investment Income | 2,597,728 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 1,602,236 | |||
Distribution fees - Class AAA | 10,434 | |||
Distribution fees - Class A | 243,390 | |||
Distribution fees - Class C | 499,159 | |||
Shareholder services fees | 172,981 | |||
Registration expenses | 79,644 | |||
Directors’ fees | 70,234 | |||
Shareholder communications expenses | 59,185 | |||
Accounting fees | 45,000 | |||
Legal and audit fees | 45,000 | |||
Dividend expense on securities sold short | 34,057 | |||
Custodian fees | 30,738 | |||
Interest expense | 7,308 | |||
Payroll expenses | 3,591 | |||
Service fees for securities sold short | 1,171 | |||
Miscellaneous expenses | 30,746 | |||
|
| |||
Total Expenses | 2,934,874 | |||
|
| |||
Less: | ||||
Expenses paid indirectly by broker | (3,322 | ) | ||
Reimbursement for custody fees | (143,248 | ) | ||
|
| |||
Total Credits and Reimbursements | (146,570 | ) | ||
|
| |||
Net Expenses | 2,788,304 | |||
|
| |||
Net Investment Loss | (190,576 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, Swap Contracts, and Foreign Currency: | ||||
Net realized gain on investments | 10,800,498 | |||
Net realized loss on securities sold short | (326,058 | ) | ||
Net realized loss on swap contracts | (55,447 | ) | ||
Net realized loss on foreign currency transactions | (111,497 | ) | ||
|
| |||
Net realized gain on investments, securities sold short, swap contracts, and foreign currency transactions | 10,307,496 | |||
|
| |||
Net change in unrealized appreciation/depreciation: |
| |||
on investments | (8,217,333 | ) | ||
on securities sold short | 8,914 | |||
on swap contracts | 4,279 | |||
on foreign currency translations | (98,571 | ) | ||
|
| |||
Net change in unrealized appreciation/depreciation on investments, securities sold short, swap contracts, and foreign currency translations | (8,302,711 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, Swap Contracts, and Foreign Currency | 2,004,785 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 1,814,209 | ||
|
|
(a) | Redemption price varies based on the length of time held. |
See accompanying notes to financial statements.
11
Gabelli Enterprise Mergers and Acquisitions Fund
Statement of Changes in Net Assets
Year Ended October 31, 2016 | Year Ended October 31, 2015 | |||||||||
Operations: | ||||||||||
Net investment loss | $ | (190,576 | ) | $ | (1,362,306 | ) | ||||
Net realized gain on investments, securities sold short, swap contracts, and foreign currency transactions | 10,307,496 | 10,192,712 | ||||||||
Net change in unrealized appreciation/depreciation on investments, securities sold short, swap contracts, and foreign currency translations | (8,302,711 | ) | (1,761,582 | ) | ||||||
|
|
|
| |||||||
Net Increase in Net Assets Resulting from Operations | 1,814,209 | 7,068,824 | ||||||||
|
|
|
| |||||||
Capital Share Transactions: | ||||||||||
Class AAA | (922,957 | ) | (6,534,281 | ) | ||||||
Class A | (9,998,717 | ) | (38,647,717 | ) | ||||||
Class B* | — | (931,796 | ) | |||||||
Class C | (9,735,326 | ) | (5,360,329 | ) | ||||||
Class Y | (18,350,000 | ) | (6,238,127 | ) | ||||||
|
|
|
| |||||||
Net Decrease in Net Assets from Capital Share Transactions | (39,007,000 | ) | (57,712,250 | ) | ||||||
|
|
|
| |||||||
Redemption Fees | 2,048 | 382 | ||||||||
|
|
|
| |||||||
Net Decrease in Net Assets | (37,190,743 | ) | (50,643,044 | ) | ||||||
Net Assets: | ||||||||||
Beginning of year | 193,867,616 | 244,510,660 | ||||||||
|
|
|
| |||||||
End of year (including undistributed net investment income of $0 and $0, respectively) | $ | 156,676,873 | $ | 193,867,616 | ||||||
|
|
|
|
* | 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) | Ratios to Average Net Assets/ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
from Investment Operations | Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net | Net Realized and | Total | Net Asset | Net Assets | Net | |||||||||||||||||||||||||||||||||||||||||||||||||
Year | Value, | Investment | Unrealized | from | Value, | End of | Investment | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Ended | Beginning | Income | Gain on | Investment | Redemption | End of | Total | Year | Income | Operating | Turnover | ||||||||||||||||||||||||||||||||||||||||||||
October 31 | of Year | (Loss)(a) | Investments | Operations | Fees (a)(b) | Year | Return† | (in 000’s) | (Loss) | Expenses | Rate | ||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 13.31 | $ | 0.01 | $ | 0.20 | $ | 0.21 | $ | 0.00 | $ | 13.52 | 1.58% | $ | 4,069 | 0.07 | % | 1.52%(c)(d)(e) | 151% | ||||||||||||||||||||||||||||||||||||
2015 | 12.86 | (0.07) | 0.52 | 0.45 | 0.00 | 13.31 | 3.50 | 4,943 | (0.51 | ) | 1.47(c)(d) | 162 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 12.66 | (0.03) | 0.23 | 0.20 | 0.00 | 12.86 | 1.58 | 11,315 | (0.24 | ) | 1.46(c) | 181 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 11.00 | 0.04 | 1.62 | 1.66 | 0.00 | 12.66 | 15.09 | 8,671 | 0.37 | 1.49 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(f) | 10.60 | (0.08) | 0.48 | 0.40 | 0.00 | 11.00 | 3.77 | 7,814 | (0.75 | ) | 1.50 | 202 | |||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 13.17 | $ | (0.02) | $ | 0.20 | $ | 0.18 | $ | 0.00 | $ | 13.35 | 1.37% | $ | 48,770 | (0.13 | )% | 1.72%(c)(d)(e) | 151% | ||||||||||||||||||||||||||||||||||||
2015 | 12.75 | (0.08) | 0.50 | 0.42 | 0.00 | 13.17 | 3.29 | 58,039 | (0.63 | ) | 1.67(c)(d) | 162 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 12.57 | (0.06) | 0.24 | 0.18 | 0.00 | 12.75 | 1.43 | 93,980 | (0.51 | ) | 1.66(c) | 181 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 10.94 | 0.02 | 1.61 | 1.63 | 0.00 | 12.57 | 14.90 | 109,446 | 0.15 | 1.69 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(f) | 10.57 | (0.11) | 0.48 | 0.37 | 0.00 | 10.94 | 3.50 | 103,827 | (1.00 | ) | 1.70 | 202 | |||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 12.23 | $ | (0.08) | $ | 0.18 | $ | 0.10 | $ | 0.00 | $ | 12.33 | 0.82% | $ | 44,424 | (0.67 | )% | 2.27%(c)(d)(e) | 151% | ||||||||||||||||||||||||||||||||||||
2015 | 11.91 | (0.14) | 0.46 | 0.32 | 0.00 | 12.23 | 2.69 | 53,738 | (1.19 | ) | 2.22(c)(d) | 162 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 11.81 | (0.12) | 0.22 | 0.10 | 0.00 | 11.91 | 0.85 | 57,616 | (1.04 | ) | 2.21(c) | 181 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 10.33 | (0.04) | 1.52 | 1.48 | 0.00 | 11.81 | 14.33 | 58,062 | (0.39 | ) | 2.24 | 197 | |||||||||||||||||||||||||||||||||||||||||||
2012(f) | 10.04 | (0.16) | 0.45 | 0.29 | 0.00 | 10.33 | 2.89 | 51,498 | (1.56 | ) | 2.25 | 202 | |||||||||||||||||||||||||||||||||||||||||||
Class Y | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 13.91 | $ | 0.05 | $ | 0.21 | $ | 0.26 | $ | 0.00 | $ | 14.17 | 1.87% | $ | 59,414 | 0.33 | % | 1.27%(c)(d)(e) | 151% | ||||||||||||||||||||||||||||||||||||
2015 | 13.41 | (0.03) | 0.53 | 0.50 | 0.00 | 13.91 | 3.73 | 77,148 | (0.20 | ) | 1.21(c)(d) | 162 | |||||||||||||||||||||||||||||||||||||||||||
2014 | 13.16 | (0.00) | 0.25 | 0.25 | 0.00 | 13.41 | 1.90 | 80,672 | (0.03 | ) | 1.21(c) | 181 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 11.41 | 0.06 | 1.69 | 1.75 | 0.00 | 13.16 | 15.34 | 66,746 | 0.48 | 1.24 | 197 | ||||||||||||||||||||||||||||||||||||||||||||
2012(f) | 10.97 | (0.05) | 0.49 | 0.44 | 0.00 | 11.41 | 4.01 | 32,883 | (0.49 | ) | 1.25 | 202 |
† | 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 the 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 incurred dividend expense and service fees on securities sold short. If these expenses and fees had not been incurred, the ratios of operating expenses to average net assets for the year ended October 31, 2016 would have been 1.50% (Class AAA), 1.70% (Class A), 2.25% (Class C), and 1.25% (Class Y), respectively. For the years ended October 31, 2015, and 2014, there was no impact on the expense ratios. |
(d) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the years ended October 31, 2016 and 2015, there was no impact on the expense ratios. |
(e) | During the year ended October 31, 2016, the Fund received a one time reimbursement of custody expenses paid in prior years. Had such reimbursement (allocated by relative net asset values of the Fund’s share classes) been included in this period, the expense ratios would have been 1.44% (Class AAA), 1.64% (Class A), 2.19% (Class C), and 1.19% (Class Y), respectively. |
(f) | 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 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 by inputs used to value the Fund’s investments as of October 31, 2016 is as follows:
Valuation Inputs | ||||||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 10/31/16 | |||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||
Common Stocks: | ||||||||||||||||||||
Consumer Discretionary | ||||||||||||||||||||
Media | $ | 13,293,335 | $ | 4,500 | $ | 628,725 | $ | 13,926,560 | ||||||||||||
Other Industries (a) | 9,613,239 | — | — | 9,613,239 | ||||||||||||||||
Information Technology | ||||||||||||||||||||
Communications Equipment | 361,302 | 7,693 | — | 368,995 | ||||||||||||||||
Electrical Equipment and Instruments | 4,355,170 | 6,608 | — | 4,361,778 | ||||||||||||||||
Other Industries (a) | 17,271,240 | — | — | 17,271,240 | ||||||||||||||||
Consumer Staples | ||||||||||||||||||||
Food Products | 9,164,543 | 7,018 | — | 9,171,561 | ||||||||||||||||
Other Industries (a) | 6,278,250 | — | — | 6,278,250 | ||||||||||||||||
Utilities | ||||||||||||||||||||
Independent Power Producers and Energy Traders | 34,509 | — | 0 | 34,509 | ||||||||||||||||
Other Industries (a) | 9,225,049 | — | — | 9,225,049 | ||||||||||||||||
Financials | ||||||||||||||||||||
Capital Markets | 96,338 | 38,750 | — | 135,088 | ||||||||||||||||
Other Industries (a) | 8,429,111 | — | — | 8,429,111 | ||||||||||||||||
All Other Industries | 44,471,566 | — | — | 44,471,566 | ||||||||||||||||
Total Common Stocks | 122,593,652 | 64,569 | 628,725 | 123,286,946 | ||||||||||||||||
Rights (a) | — | — | 1,120,100 | 1,120,100 | ||||||||||||||||
Warrants (a) | 270 | 128 | — | 398 | ||||||||||||||||
U.S. Government Obligations | — | 32,124,942 | — | 32,124,942 | ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES - ASSETS | $ | 122,593,922 | $ | 32,189,639 | $ | 1,748,825 | $ | 156,532,386 | ||||||||||||
LIABILITIES (Market Value): | ||||||||||||||||||||
Securities Sold Short (a)* | $ | (329,262 | ) | — | — | $ | (329,262 | ) | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES - LIABILITIES | $ | (329,262 | ) | — | — | $ | (329,262 | ) |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
* | All Securities Sold Short positions are common stock. |
15
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
During the year ended October 31, 2016, the Fund had transfers of $440,040 or 0.23% from Level 1 to Level 3, $7,190 or 0.00% from Level 1 to Level 2, and $112,550 or 0.06% from Level 2 to Level 1 of net assets as of October 31, 2015. Transfers from Level 1 to Level 3 and Level 1 to Level 2 are due to a decline in market activity (e.g. frequency of trades), which resulted in a lack of available market inputs to determine price. Transfers from Level 2 to Level 1 are due to an increase in market activity (e.g. frequency of trades), which resulted in an 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.
The following table reconciles Level 3 investments for which significant unobservable inputs were used to determine fair value:
Net change | ||||||||||||||||||||||||||||||||||||||||||||||||||
in unrealized | ||||||||||||||||||||||||||||||||||||||||||||||||||
appreciation/ | ||||||||||||||||||||||||||||||||||||||||||||||||||
depreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||
during the | ||||||||||||||||||||||||||||||||||||||||||||||||||
period on | ||||||||||||||||||||||||||||||||||||||||||||||||||
Change in | Level 3 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance | Accrued | Realized | unrealized | Transfers | Transfers | Balance | investments | |||||||||||||||||||||||||||||||||||||||||||
as of | discounts/ | gain/ | appreciation/ | into | out of | as of | still held at | |||||||||||||||||||||||||||||||||||||||||||
10/31/15 | (premiums) | (loss) | depreciation | Purchases | Sales | Level 3†† | Level 3†† | 10/31/16 | 10/31/16† | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stocks: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer Discretionary | ||||||||||||||||||||||||||||||||||||||||||||||||||
Media | — | — | — | $ | 188,685 | — | — | $ | 440,040 | — | $ | 628,725 | $ | 188,685 | ||||||||||||||||||||||||||||||||||||
Health Care Equipment and Supplies | $ | 38,500 | — | $ | 46,294 | (38,500 | ) | — | $ | (46,294 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||||
Total Common Stocks | 38,500 | — | 46,294 | 150,185 | — | (46,294 | ) | 440,040 | — | 628,725 | 188,685 | |||||||||||||||||||||||||||||||||||||||
Rights | 1,114,023 | — | (21,761 | ) | 74,838 | $ | 0 | (47,000 | ) | — | 1,120,100 | 74,964 | ||||||||||||||||||||||||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES | $ | 1,152,523 | — | $ | 24,533 | $ | 225,023 | $ | 0 | $ | (93,294 | ) | $ | 440,040 | — | $ | 1,748,825 | $ | 263,649 |
† | 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, 2016:
Description | Balance at 10/31/16 | Valuation Technique | Unobservable Input | Range | ||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||
Acquisition price/ | ||||||||||||||||||||
Rights | $1,120,100 | Last available closing price | Discount Range | 0% | ||||||||||||||||
All Other Investments (a) | 628,725 | |||||||||||||||||||
$1,748,825 |
(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, 2016, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.
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. The Fund’s volume of activity in equity contract for difference swap agreements during the year ended October 31, 2016, had an average monthly notional amount of approximately $982,839 held over the period that the swap was outstanding. At October 31, 2016, the Fund held no investments in equity contract for difference swap agreements.
For the year ended October 31, 2016, 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.
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 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
18
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
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. Securities sold short and details of collateral at October 31, 2016 are reflected within the Schedule of Investments. For the year ended October 31, 2016, the Fund incurred $1,171 in service fees related to its investment positions sold short and held by the broker. The amount is included in the Statement of Operations under Expenses, Service fees for securities sold short.
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, 2016, 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 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.
19
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
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, 2016, reclassifications were made to decrease accumulated net investment loss by $1,158,319 and decrease accumulated net realized loss on investments, securities sold short, swap contracts, and foreign currency transactions by $185,625, with an offsetting adjustment to paid-in capital.
No distributions were made during the years ended October 31, 2016 or 2015.
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, 2016, the components of accumulated earnings/losses on a tax basis were as follows:
Accumulated capital loss carryforwards | $ | (3,064,357 | ) | |
Net unrealized depreciation on investments and foreign currency translations | (842,229 | ) | ||
Qualified late year loss deferral* | (198,524 | ) | ||
|
| |||
Total | $ | (4,105,110 | ) | |
|
|
* | Qualified late year losses relate to ordinary losses incurred after December 31, 2015 through the Fund’s October 31, 2016 fiscal year end which were elected to be treated as if they occurred on the first day of the following fiscal year November 1, 2016. |
At October 31, 2016, the Fund had net capital loss carryforwards for federal income tax purposes of $3,064,357 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 taxable years. As a result of the rule, pre-enactment capital loss carryforwards may have an increased likelihood
20
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
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 ended October 31, 2016, the Fund utilized capital loss carryforwards of $9,962,520.
At October 31, 2016, the temporary differences between book basis and tax basis unrealized appreciation on investments were due to deferral of losses from wash sales for tax purposes.
The following summarizes the tax cost of investments and the related net unrealized appreciation/depreciation at October 31, 2016:
Gross | Gross | Net Unrealized | ||||||||||||||
Cost/ | Unrealized | Unrealized | Appreciation/ | |||||||||||||
(Proceeds) | Appreciation | Depreciation | Depreciation | |||||||||||||
Investments | $ | 157,284,947 | $ | 15,605,244 | $ | (16,357,805 | ) | $ | (752,561 | ) | ||||||
Securities sold short | (338,176 | ) | 8,914 | — | 8,914 | |||||||||||
|
|
|
|
|
| |||||||||||
Total | $ | 15,614,158 | $ | (16,357,805 | ) | $ | (743,647 | ) | ||||||||
|
|
|
|
|
|
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, 2016, the Fund did not incur any income tax, interest, or penalties. As of October 31, 2016, 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, 2016, the Fund paid or accrued $3,591 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
21
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
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 $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, 2016, other than short term securities and U.S. Government obligations, aggregated $219,408,090 and $259,543,273, respectively.
6. Transactions with Affiliates and Other Arrangements. During the year ended October 31, 2016, the Fund paid brokerage commissions on security trades of $109,087 to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $22,562 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the year ended October 31, 2016, 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 $3,322.
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, 2016, 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, which expires on March 9, 2017 and may be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the custodian for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the overnight Federal Funds rate plus 125 basis points or the 30 day LIBOR plus 125 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. During the year ended October 31, 2016, there were no borrowings under the line of credit.
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.
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
22
Gabelli Enterprise Mergers and Acquisitions Fund
Notes to Financial Statements (Continued)
redemption fees retained by the Fund during the years ended October 31, 2016 and 2015, 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, 2016 | October 31, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 109,756 | $ | 1,478,333 | 157,240 | $ | 2,083,134 | ||||||||||
Shares redeemed | (180,147 | ) | (2,401,290 | ) | (665,560 | ) | (8,617,415 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (70,391 | ) | $ | (922,957 | ) | (508,320 | ) | $ | (6,534,281 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class A | ||||||||||||||||
Shares sold | 416,097 | $ | 5,502,463 | 674,258 | $ | 8,807,688 | ||||||||||
Shares redeemed | (1,170,599 | ) | (15,501,180 | ) | (3,636,369 | ) | (47,455,405 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (754,502 | ) | $ | (9,998,717 | ) | (2,962,111 | ) | $ | (38,647,717 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class B* | ||||||||||||||||
Shares redeemed | — | — | (77,924 | ) | $ | (931,796 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | — | — | (77,924 | ) | $ | (931,796 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 383,150 | $ | 4,699,402 | 438,955 | $ | 5,356,928 | ||||||||||
Shares redeemed | (1,174,428 | ) | (14,434,728 | ) | (883,010 | ) | (10,717,257 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (791,278 | ) | $ | (9,735,326 | ) | (444,055 | ) | $ | (5,360,329 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class Y | ||||||||||||||||
Shares sold | 1,326,196 | $ | 18,659,209 | 2,607,403 | $ | 35,937,386 | ||||||||||
Shares redeemed | (2,677,853 | ) | (37,009,209 | ) | (3,076,879 | ) | (42,175,513 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (1,351,657 | ) | $ | (18,350,000 | ) | (469,476 | ) | $ | (6,238,127 | ) | ||||||
|
|
|
|
|
|
|
|
* | 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.
23
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”) as of October 31, 2016, 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 as of October 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 21, 2016
24
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 | Number of Funds in Fund Complex | Principal Occupation(s) During Past Five Years | Other Directorships Held by Director4 | ||||
INTERESTED DIRECTORS3 : | ||||||||
Regina M. Pitaro Director Age: 61 | Since 2008 | 1 | Managing Director of GAMCO Asset Management, Inc. | — | ||||
INDEPENDENT DIRECTORS5 : | ||||||||
Anthony J. Colavita Director Age: 80 | Since 2008 | 36 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||
James P. Conn Director Age: 78 | Since 2008 | 22 | Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (1992-1998) | — | ||||
Vincent D. Enright Director Age: 72 | 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: 86 | 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: 48 | Since 2008 | 20 | President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate) | — | ||||
Salvatore J. Zizza Director Age: 70 | Since 2008 | 30 | President of Zizza & Associates Corp. (private holding company); 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) |
25
Gabelli Enterprise Mergers and Acquisitions Fund
Additional Fund Information (Continued) (Unaudited)
Name, Position(s) and Age | Term of Office | Principal Occupation(s) During Past Five Years | ||
OFFICERS: | ||||
Bruce N. Alpert President Age: 64 | Since 2008 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of 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: 44 | Since 2013 | Vice President of GAMCO Investors, Inc. since 2016; 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: 58 | Since 2008 | 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; Executive Vice President of Associated Capital Group, Inc. since November 2016; Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex | ||
Richard J. Walz Chief Compliance Officer Age: 57 | 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, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, 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.
26
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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 | OFFICERS | |
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. | 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. |
GAB208Q416AR
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 Salvatore Salibello 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 $20,688 in 2015 and $21,205 in 2016. |
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 2015 and $0 in 2016. |
Tax Fees
(c) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $4,089 in 2015 and $4,190 in 2016. 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 2015 and $0 in 2016. |
(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 $0 in 2015 and $0 in 2016. |
(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 01/05/2017 |
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 01/05/2017 |
By (Signature and Title)* /s/ Agnes Mullady | ||||
Agnes Mullady, Principal Financial Officer and Treasurer | ||||
Date 01/05/2017 |
* | Print the name and title of each signing officer under his or her signature. |