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 811-01311
The Gabelli Mathers Fund
-------------------------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
--------------
Date of fiscal year end: December 31
-----------
Date of reporting period: December 31, 2003
-----------------
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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Annual Report to Shareholders is attached herewith.
THE GABELLI MATHERS FUND
ANNUAL REPORT
DECEMBER 31, 2003
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a Fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2003 with a description of the factors that affected the
performance during the past year.
Sincerely yours,
/s/BRUCE N. ALPERT
Bruce N. Alpert
Executive Vice President
February 24, 2004
PERFORMANCE DISCUSSION
The Fund maintained a risk-averse portfolio structure during 2003. The
Fund's portfolio remained conservatively invested at year end, with stock
positions totaling 10.3% of assets, comprised of 6.4% longs and 3.9% shorts,
with the remainder in cash equivalents, awaiting lower risk entry points to
initiate new and larger capital commitments. The fixed income segment of the
portfolio, which was limited to short-term U.S. Treasury bills and U.S. Treasury
collateralized repos in 2003, added to the Fund's total return, while the short
equity segment had a negative return, and was the primary factor for the Fund's
investment performance in 2003.
During the year, a portion of the Fund's common stock segment was invested
in takeover-target companies subject to friendly, all cash tender or merger
offers from acquiring companies. The Fund purchased these event-driven stocks
after the deals were publicly announced, generally by financially strong,
strategic buyers. These stocks typically earn relatively high annualized returns
and are held for short time periods, which disproportionately raises the
portfolio turnover rate, which can be misleading. This occurs when the Fund
purchases a fixed income position which has a maturity of less than one year and
represents a relatively high percentage of the Fund's assets while the percent
invested in stocks is low.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
GROWTH OF $10,000 INVESTMENT IN GABELLI MATHERS FUND
Logarithmic Scale
GABELLI MATHERS S&P 500
FUND INDEX
'65 10,000 10,000
11,934 9,323
22,987 11,558
29,162 12,836
27,412 11,743
'70 27,953 12,213
33,496 13,961
38,897 16,610
24,447 14,179
16,965 10,427
'75 26,643 14,306
38,466 17,719
43,926 16,431
50,540 17,512
74,071 20,743
'80 103,911 27,466
95,865 26,119
110,107 31,708
127,906 38,849
124,601 41,282
'85 158,832 54,401
181,035 64,583
229,978 67,970
261,541 79,228
288,752 104,303
'90 318,857 101,075
348,967 131,795
359,817 141,818
367,517 156,087
345,859 158,130
'95 370,118 217,491
369,841 267,423
380,963 356,638
361,101 459,042
381,742 555,704
'00 400,913 505,093
417,955 445,063
368,824 346,700
361,659 446,166
Percent Average Annual Returns *
1 YR 5 YRS 10 YRS 20 YRS 25 YRS 30 YRS 38 YRS**
GABELLI MATHERS FUND (1.94) 0.03 (0.15) 5.33 8.19 9.40 9.95
Standard & Poor's 500 28.69 (0.57) 11.07 12.98 13.83 12.18 10.51
* All periods ended 12-31-03. Average annual returns reflect changes in share
price and reinvestment of dividends and are net of expenses. Returns
represent past performance and do not guarantee future results. 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. The
Standard & Poor's 500 is an unmanaged indicator of stock market performance.
** From commencement of investment operations on August 19, 1965.
2
THE GABELLI MATHERS FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2003
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- 6.4%
AEROSPACE -- 0.4%
10,000 Titan Corp.+ ................ $ 216,180 $ 218,100
----------- -----------
BROADCASTING -- 1.0%
50,000 Liberty Media Corp., Cl. A+ . 543,975 594,500
----------- -----------
BUILDING AND CONSTRUCTION -- 0.2%
65,400 Empresas ICA Sociedad
Controladora SA de CV
ADR+ ...................... 90,290 92,868
----------- -----------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
1,000 ON Technology Corp.+ ........ 3,910 3,960
1,000 Systems & Computer
Technology Corp.+ ......... 16,350 16,350
----------- -----------
20,260 20,310
----------- -----------
CONSUMER PRODUCTS -- 0.9%
20,000 Dial Corp. .................. 569,130 569,400
----------- -----------
DIVERSIFIED INDUSTRIAL -- 0.2%
6,000 Denison International plc, ADR+ 143,220 143,670
----------- -----------
ENERGY AND UTILITIES -- 0.8%
500 Anadarko Petroleum Corp. .... 22,080 25,505
500 Cinergy Corp. ............... 18,045 19,405
1,000 Duquesne Light Holdings Inc. 15,295 18,340
500 Murphy Oil Corp. ............ 29,891 32,655
15,000 Unisource Energy Corp. ...... 369,917 369,900
----------- -----------
455,228 465,805
----------- -----------
FINANCIAL SERVICES -- 0.2%
5,000 HPSC Inc.+ .................. 71,950 72,250
500 MONY Group Inc.+ ............ 16,635 15,645
1,000 Sovereign Bancorp Inc. ...... 18,360 23,750
----------- -----------
106,945 111,645
----------- -----------
FOOD AND BEVERAGE -- 1.8%
40,000 ConAgra Foods Inc. .......... 1,014,579 1,055,600
500 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A ...... 39,595 38,875
1,000 Hain Celestial Group Inc.+ .. 18,393 23,210
----------- -----------
1,072,567 1,117,685
----------- -----------
HEALTH CARE -- 0.7%
5,000 Bristol-Myers Squibb Co. .... 126,000 143,000
5,000 CIMA Labs Inc.+ ............. 165,053 163,100
4,000 ElderTrust .................. 50,060 50,120
2,000 Invivo Corp.+ ............... 42,540 43,840
----------- -----------
383,653 400,060
----------- -----------
RETAIL -- 0.1%
1,000 Gucci Group NV, ADR ......... 85,160 85,550
----------- -----------
TELECOMMUNICATIONS -- 0.1%
1,000 BellSouth Corp. ............. 24,080 28,300
1,000 SBC Communications Inc. ..... 22,310 26,070
1,000 Verizon Communications Inc. . 32,920 35,080
----------- -----------
79,310 89,450
----------- -----------
TOTAL COMMON STOCKS ......... 3,765,918 3,909,043
----------- -----------
MARKET
SHARES COST VALUE
------ ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 90.4%
$55,000,000 U.S. Treasury Bills,
0.876%++, 01/08/04 (a) .... $54,990,642 $54,990,642
----------- -----------
REPURCHASE AGREEMENT -- 3.5%
2,103,188 State Street Bank & Trust Co.,
0.810%, dated 12/31/03,
due 01/02/04, proceeds at
maturity, $2,103,282 (b) .. 2,103,188 2,103,188
----------- -----------
TOTAL INVESTMENTS --
100.3% .................... $60,859,748 61,002,873
===========
OTHER ASSETS AND LIABILITIES (NET) -- (0.3)% (157,348)
-----------
NET ASSETS -- 100.0% ............................. $60,845,525
===========
MARKET
SHARES COMMON STOCKS PROCEEDS VALUE
------ ------------- -------- ------
SECURITIES SOLD SHORT
2,000 99 Cents Only Stores ........ $ (58,037) $ (54,460)
3,000 Carnival Corp. .............. (99,265) (119,190)
3,000 Cheesecake Factory Inc. ..... (108,342) (132,090)
1,000 Ethan Allen Interiors Inc. .. (35,238) (41,880)
1,000 Gap Inc. .................... (16,949) (23,210)
7,000 Harley-Davidson Inc. ........ (302,806) (332,710)
2,000 Kohl's Corp. ................ (108,625) (89,880)
9,000 La-Z-Boy Inc. ............... (187,298) (188,820)
1,000 McDonald's Corp. ............ (17,099) (24,830)
6,000 Polaris Industries Inc. ..... (417,498) (531,480)
2,000 Sherwin-Williams Co. ........ (55,217) (69,480)
5,000 The Home Depot Inc. ......... (161,868) (177,450)
6,000 Tiffany & Co. ............... (167,392) (271,200)
4,000 Toro Co. .................... (128,296) (185,600)
2,000 Zale Corp. .................. (94,066) (106,400)
----------- -----------
TOTAL SECURITIES
SOLD SHORT ................ $(1,957,996) $(2,348,680)
=========== ===========
- ----------------
For Federal tax purposes:
Aggregate cost of investments ..................... $60,859,748
===========
Gross unrealized appreciation ..................... $ 146,805
Gross unrealized depreciation ..................... (3,680)
-----------
Net unrealized appreciation ....................... $ 143,125
===========
- ----------------
(a) At December 31, 2003, $25,000,000 of the principal amount was pledged
as collateral for securities sold short.
(b) Collateralized by U.S. Treasury Notes, 5.875%, due 11/15/04,
market value $2,147,375.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
See accompanying notes to financial statements.
3
THE GABELLI MATHERS FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $60,859,748) ..................... $ 61,002,873
Cash ......................................................... 3,657
Deposit at brokers ........................................... 2,356,627
Dividends and interest receivable ............................ 1,727
Receivable for fund shares sold .............................. 9,896
Other assets ................................................. 5,241
------------
TOTAL ASSETS ................................................. 63,380,021
------------
LIABILITIES:
Securities sold short (proceeds $1,957,996) .................. 2,348,680
Dividends payable on securities sold short ................... 562
Payable for Fund shares redeemed ............................. 7,495
Payable for investment advisory fees ......................... 55,240
Payable for distribution fees ................................ 13,810
Other accrued expenses and liabilities ....................... 108,709
------------
TOTAL LIABILITIES ............................................ 2,534,496
------------
NET ASSETS applicable to 5,738,616
shares outstanding ......................................... $ 60,845,525
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par value .................. $ 5,738,616
Additional paid-in capital ................................... 98,551,698
Accumulated net realized loss on investments
and securities sold short .................................. (43,197,230)
Net unrealized depreciation on securities
sold short ................................................. (390,684)
Net unrealized appreciation on investments ................... 143,125
------------
NET ASSETS ................................................... $ 60,845,525
============
NET ASSET VALUE, offering and redemptions
price per share ($60,845,525 / 5,738,616
shares outstanding; 100,000,000 shares
authorized of $1.00 par value) ............................. $10.60
======
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends ................................ $ 6,085
Interest ................................. 765,363
Other Income ............................. 17,713
-----------
TOTAL INVESTMENT INCOME .................. 789,161
-----------
EXPENSES:
Investment advisory fees ................. 747,475
Distribution fees ........................ 186,869
Trustees' fees ........................... 58,936
Custodian fees ........................... 43,553
Shareholder services fees ................ 40,818
Shareholder communications expenses ...... 39,471
Legal and audit fees ..................... 29,823
Registration fees ........................ 28,138
Dividends on securities sold short ....... 22,364
Miscellaneous expenses ................... 48,324
-----------
TOTAL EXPENSES ........................... 1,245,771
-----------
NET INVESTMENT LOSS ...................... (456,610)
-----------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND SECURITIES SOLD SHORT:
Net realized loss on investments ......... (132,253)
Net realized loss on securities sold short (537,948)
Net change in unrealized appreciation/
depreciation on investments and
securities sold short .................. (356,240)
-----------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND SECURITIES SOLD SHORT .. (1,026,441)
-----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $(1,483,051)
===========
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
OPERATIONS:
Net investment loss .......................................................... $ (456,610) $ (1,706)
Net realized loss on investments ............................................. (132,253) (12,725,118)
Net realized gain/loss on securities sold short .............................. (537,948) 285,919
Net change in unrealized appreciation/depreciation on
investments and securities sold short ...................................... (356,240) 1,274,536
------------ ------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................... (1,483,051) (11,166,369)
------------ ------------
SHARE TRANSACTIONS:
Net decrease in net assets from capital share transactions ................... (18,498,603) (5,899,570)
------------ ------------
NET DECREASE IN NET ASSETS ................................................... (19,981,654) (17,065,939)
NET ASSETS:
Beginning of period .......................................................... 80,827,179 97,893,118
------------ ------------
End of period ................................................................ $ 60,845,525 $ 80,827,179
============ ============
See accompanying notes to financial statements.
4
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli Mathers Fund (the "Fund") was organized on June 17,
1999 as a Delaware business trust. The Fund commenced investment operations on
October 1, 1999 as the successor to the Mathers Fund, Inc. (the "Mathers Fund")
which was organized on March 31, 1965 as a Maryland corporation. The Mathers
Fund commenced investment operations on August 19, 1965. The Fund is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's primary
objective is long-term capital appreciation.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") 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 on that exchange or market as of the close
of business on the day the securities are being valued. If there were no sales
that day, the security is valued at the average of the closing bid and asked
prices or, if there were no asked prices quoted on that day, then the security
is valued at the closing bid price on that day. If no bid or asked prices are
quoted on such day, the security is valued at the most recently available price
or, if the Board of Trustees so determines, by such other method as the Board of
Trustees 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 foreign markets are generally valued at the preceding closing values
of such securities on their respective exchanges. Securities and assets for
which market quotations are not readily available are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the Board of Trustees. Short term debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless the
Board of Trustees determines such does not reflect the securities fair value, in
which case these securities will be valued at their fair value as determined by
the Board of Trustees. Debt instruments having a maturity greater than 60 days
for which market quotations are readily available are valued at the latest
average of the bid and asked prices. If there were no asked prices quoted on
such day, the security is valued using the closing bid price. Options are valued
at the last sale price on the exchange on which they are listed. If no sales of
such options have taken place that day, they will be valued at the mean between
their closing bid and asked prices.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the Board
of Trustees. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
5
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. At December 31, 2003, there were no open futures contracts.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund
does not own. The proceeds received for 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 the 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 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. Securities sold short at
December 31, 2003 are reflected in the Portfolio of Investments.
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 as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles in
the United States. These differences are primarily due to differing treatments
of income and gains on various investment securities held by the Fund, timing
differences and differing characterization of distributions made by the Fund. No
distributions were made in the fiscal years ended December 31, 2003 and 2002.
6
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
For the year ended December 31, 2003, reclassifications were made to decrease
accumulated net investment loss for $456,610 and to decrease accumulated net
realized loss on investments for $4,819,701, with an offsetting adjustment to
additional paid-in capital.
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. As a result, a Federal income tax provision is not required.
As of December 31, 2003, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Accumulated capital loss carryforward ..................... $(43,197,230)
Net unrealized appreciation/(depreciation) of investments . 143,125
Net unrealized appreciation/(depreciation) of securities
sold short .............................................. (390,684)
------------
Total accumulated loss .................................... $(43,444,789)
============
The Fund has a net capital loss carryforward for Federal income tax purposes at
December 31, 2003 of $43,197,230. This capital loss carryforward is available to
reduce future distributions of net capital gains to shareholders. $22,226,886 of
the loss carryforward is available through 2004; $7,869,968 is available through
2006; $12,430,175 is available through 2010; and $670,201 is available through
2011.
3. INVESTMENT ADVISORY AGREEMENT. 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
the annual rate of 1.00% of the value of the Fund's average net assets. 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 Trustees of the Fund who are its affiliates.
4. DISTRIBUTION PLAN. On October 1, 1999, the Fund's Board of Trustees adopted a
distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For
the year ended December 31, 2003, the Fund incurred distribution costs payable
to Gabelli & Company, Inc., an affiliate of the Adviser, of $186,869, or 0.25%
of average daily net assets, the annual limitation under the Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2003, other than short term securities, aggregated
$5,545,292 and $1,685,885, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2003, the
Fund paid brokerage commissions of $7,353 to Gabelli & Company, Inc.
The cost of calculating the Fund's net asset value per share is a Fund expense
pursuant to the Investment Advisory Agreement between the Fund and the Adviser.
During fiscal 2003, the Fund reimbursed the Adviser $34,800 in connection with
the cost of computing the Fund's net asset value, which is included in
miscellaneous expenses in the Statement of Operations.
7
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -=------------------------------------------------------------------------------
7. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold ...................................... 271,933 $ 2,922,779 729,693 $ 8,237,339
Shares redeemed .................................. (2,007,763) (21,421,382) (1,246,765) (14,136,909)
---------- ------------ ---------- ------------
Net decrease ................................. (1,735,830) $(18,498,603) (517,072) $ (5,899,570)
========== ============ ========== ============
8. FINANCIAL HIGHLIGHTS. Selected data for a share of beneficial interest
outstanding throughout each period:
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2003 2002 2001 2000 1999(A)
------- ------- ------- ------- --------
OPERATING PERFORMANCE:
Net asset value, beginning of period ......... $ 10.81 $ 12.25 $ 12.05 $ 11.94 $ 11.73
------- ------- ------- ------- --------
Net investment income/(loss) ................. (0.07) (0.00)(b) 0.30 0.49 0.46
Net realized and unrealized
gain/(loss) on investments ................. (0.14) (1.44) 0.21 0.11 0.21
------- ------- ------- ------- --------
Total from investment operations ............. (0.21) (1.44) 0.51 0.60 0.67
------- ------- ------- ------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ........................ -- -- (0.31) (0.49) (0.46)
------- ------- ------- ------- --------
Total distributions .......................... -- -- (0.31) (0.49) (0.46)
------- ------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD ............... $ 10.60 $ 10.81 $ 12.25 $ 12.05 $ 11.94
======= ======= ======= ======= ========
Total return+ ................................ (1.94)% (11.76)% 4.25% 5.02% 5.73%
======= ======= ======= ======= ========
RATIOS TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ......... $60,846 $80,827 $97,893 $99,855 $104,693
Ratio of net investment income/(loss)
to average net assets ...................... (0.61)% (0.00)% 2.45% 3.79% 3.50%
Ratio of operating expenses
to average net assets ...................... 1.67% 1.63% 1.35% 1.34% 1.24%
Portfolio turnover rate ...................... 244% 776% 1013% 977% 922%
- --------------------------------------------------------------------------------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Gabelli Funds, LLC became the sole investment adviser of the Fund on October
1, 1999.
(b) Amount is less than $0.005 per share.
See accompanying notes to financial statements.
8
THE GABELLI MATHERS FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
The Gabelli Mathers Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The Gabelli Mathers Fund (the "Fund") as of
December 31, 2003, and the related statement of operations for the year then
ended, the statements of changes in 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. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2003, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Gabelli Mathers Fund at December 31, 2003, 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.
/s/ERNST & YOUNG
New York, New York
February 10, 2004
9
THE GABELLI MATHERS FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and Officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Trustees and is available,
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Mathers Fund at One Corporate Center, Rye, NY 10580-1422.
TERM OF NUMBER OF
NAME, POSITION(S) OFFICE AND FUNDS IN FUND
ADDRESS 1 LENGTH OF COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE TIME SERVED 2 BY TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE
- ---------------- ------------- ---------------- ---------------------- --------------------
INTERESTED TRUSTEES:3
- ---------------------
MARIO J. GABELLI, CFA Since 1999 24 Chairman of the Board and Chief Executive Director of Morgan Group
Trustee and Chairman Officer of Gabelli Asset Management Inc. and Holdings, Inc.
Age: 61 Chief Investment Officer of Gabelli Funds, (transportation services);
LLC and GAMCO Investors, Inc.; Vice Vice Chairman of Lynch
Chairman and Chief Executive Officer of Corporation (diversified
Lynch Interactive Corporation (multimedia manufacturing)
and services)
KARL OTTO POHL Since 1999 33 Member of the Shareholder Committee of Sal Director of Gabelli Asset
Trustee Oppenheim Jr. & Cie (private investment Management Inc. (investment
Age: 74 bank); Former President of the management); Chairman,
Deutsche Bundesbank and Chairman of its Incentive Capital and
Central Bank Council (1980-1991) Incentive Asset Management
(Zurich); Director at Sal
Oppenheim Jr. & Cie, Zurich
HENRY G. VAN DER EB, Since 1976 4 President and CEO of Gabelli Mathers --
CFA 4 Fund since 1999; Senior Vice President and
Trustee, President and Portfolio Manager of Gabelli Funds, LLC
Chief Executive Officer and GAMCO Investors, Inc. since 1999;
Age: 58 Prior to October 1999, Chairman and Chief
Executive Officer of Mathers Fund, Inc. and
President of Mathers and Company, Inc.
NON-INTERESTED TRUSTEES:
- -----------------------
E. VAL CERUTTI Since 2001 7 Chief Executive Officer of Cerutti Consultants, Director of Lynch
Trustee Inc.; Former President and Chief Operating Corporation (diversified
Age: 64 Officer of Stella D'oro Biscuit Company manufacturing)
(through 1992); Adviser, Iona College
School of Business
ANTHONY J. COLAVITA Since 1999 35 President and Attorney at Law in the law firm --
Trustee of Anthony J. Colavita, P.C.
Age: 68
VINCENT D. ENRIGHT Since 1999 12 Former Senior Vice President and Chief --
Trustee Financial Officer of KeySpan Energy
Age: 60 Corporation
ANTHONY R. PUSTORINO Since 1999 17 Certified Public Accountant; Professor Emeritus, Director of Lynch
Trustee Pace University Corporation (diversified
Age: 78 manufacturing)
WERNER J. ROEDER, MD Since 1999 26 Vice President/Medical Affairs of Lawrence --
Trustee Hospital Center and practicing private physician
Age: 63
ANTHONIE C. VAN EKRIS Since 1999 20 Managing Director of BALMAC Director of Aurado
Trustee International, Inc. (commodities) Exploration, Inc.
Age: 69 (oil and gas operations)
10
THE GABELLI MATHERS FUND
ADDITIONAL FUND INFORMATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
NAME, POSITION(S) OFFICE AND FUNDS IN FUND
ADDRESS 1 LENGTH OF COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE TIME SERVED 2 BY TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE
- ---------------- ------------- ---------------- ---------------------- --------------------
OFFICERS:
- --------
BRUCE N. ALPERT Since 1999 -- Executive Vice President and Chief Operating --
Executive Vice Officer of Gabelli Funds, LLC since 1988 and
President an officer of all mutual funds advised by
and Treasurer Gabelli Funds, LLC and its affiliates.
Age: 52 Director and President of Gabelli Advisers, Inc.
EDITH L. COOK 4 Since 1984 -- Vice President of Gabelli Mathers Fund since 1999. --
Vice President Prior to October 1999, Vice President and
Age: 62 Treasurer of Mathers Fund, Inc. and Vice
President of Mathers and Company, Inc.
JAMES E. MCKEE Since 1999 -- Vice President, General Counsel and Secretary --
Vice President and of Gabelli Asset Management Inc. since 1999
Secretary and GAMCO Investors, Inc. since 1993; Secretary
Age: 40 of all mutual funds advised by Gabelli Advisers,
Inc. and Gabelli Funds, LLC
ANNE E. MORRISSY, Since 1987 -- Executive Vice President of Gabelli Mathers Fund --
CFA 4 and Vice President of Gabelli Asset Management Inc.
Executive Vice ince 1999. Prior to October 1999, Executive Vice
President President, Secretary and Director of Mathers
Age: 42 Fund, Inc. and Vice President of Mathers and
Company, Inc.
HEIDI M. STUBNER 4 Since 1995 -- Vice President of Gabelli Mathers Fund since 1999. --
Vice President Prior to October 1999, Vice President of
Age: 35 Mathers Fund, Inc.
- --------------------------------------------------------------------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Trustee 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 Trustee and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Trustee resigns or retires, or a Trustee is
removed by the Board of Trustees or shareholders, in accordance with the
Fund's By-Laws and Declaration of Trust.
3 "Interested person" of the Fund as defined in the Investment Company Act of
1940. Messrs. Gabelli, Pohl and Van der Eb are each considered an
"interested person" because of their affiliation with Gabelli Funds, LLC
which acts as the Fund's investment adviser.
4 Address: 2801 Lakeside Drive, Suite 201, Bannockburn, IL 60015.
11
THE GABELLI MATHERS FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: WWW.GABELLI.COM
E-MAIL: INFO@GABELLI.COM
Net Asset Value available daily by calling
800-GABELLI after 6:00 P.M.
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Anthony R. Pustorino
CHAIRMAN AND CHIEF CERTIFIED PUBLIC ACCOUNTANT
INVESTMENT OFFICER PROFESSOR, PACE UNIVERSITY
GABELLI ASSET MANAGEMENT INC.
E. Val Cerutti Werner J. Roeder, MD
CHIEF EXECUTIVE OFFICER VICE PRESIDENT/MEDICAL AFFAIRS
CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL CENTER
Anthony J. Colavita Henry G. Van der Eb, CFA
ATTORNEY-AT-LAW PRESIDENT AND CHIEF
ANTHONY J. COLAVITA, P.C. EXECUTIVE OFFICER
THE GABELLI MATHERS FUND
Vincent D. Enright Anthonie C. van Ekris
FORMER SENIOR VICE PRESIDENT MANAGING DIRECTOR
AND CHIEF FINANCIAL OFFICER BALMAC INTERNATIONAL, INC.
KEYSPAN ENERGY CORP.
Karl Otto Pohl
FORMER PRESIDENT
DEUTSCHE BUNDESBANK
OFFICERS AND PORTFOLIO MANAGER
Henry G. Van der Eb, CFA Anne E. Morrissy, CFA
PRESIDENT AND EXECUTIVE VICE PRESIDENT
PORTFOLIO MANAGER
Bruce N. Alpert James E. McKee
EXECUTIVE VICE PRESIDENT VICE PRESIDENT
AND TREASURER AND SECRETARY
Heidi M. Stubner Edith L. Cook
VICE PRESIDENT VICE PRESIDENT
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
[GRAPHIC
OMITTED]
MARIO GABELLI PHOTO
THE
GABELLI
MATHERS
FUND
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Mathers Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB1726Q403SR
ANNUAL REPORT
DECEMBER 31, 2003
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.
(b) No response required.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
trustees has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: 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 $24,500 in 2003 and $23,000 in 2002.
(b) AUDIT-RELATED FEES: 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 2003 and $0 in 2002.
(c) TAX FEES: The aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning are $3,500 in 2003 and
$3,500 in 2002.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
(d) ALL OTHER FEES: 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 2003 and $0 in 2002.
(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 auditors to the registrant and (ii) all
permissible non-audit services to be provided by the independent
auditors to Gabelli and any affiliate of Gabelli that provides
services to the registrant (a "Covered Services Provider") if the
independent auditors' engagement relates 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 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 aggregate amount of all such permissible
non-audit services provided to the registrant, Gabelli and any
Covered Services Provider constitutes not more than 5% of the
total amount of revenues paid by the registrant to its independent
auditors during the fiscal year in which the permissible non-audit
services are provided; (ii) the permissible non-audit services
were not recognized by the registrant at the time of the
engagement to be non-audit services; and (iii) such services are
promptly brought to the attention of the Committee and approved by
the Committee or the Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X
are as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $62,500 in 2003 and $66,000 in 2002.
(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. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not yet applicable.
ITEM 10. 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 last
fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. 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) of the Investment Company
Act of 1940, as amended, are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company
Act of 1940, as amended, are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Mathers Fund
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive
Officer
Date March 9, 2004
----------------------------------------------------------------------------
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 and Principal Financial
Officer
Date March 9, 2004
---------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.