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 811-07326
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The Gabelli ABC Fund
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(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
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2003
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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 ABC 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 factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
The Gabelli ABC Fund (the "Fund") was created for conservative investors
desiring to participate in the equity markets without assuming the full risk of
portfolios fully invested in equities. Our objective is to achieve positive
returns in the various market environments. Our approach to this mandate has
been to build a diversified portfolio consisting of undervalued stocks, stable
risk arbitrage positions, and risk-free short-term U.S. Treasury securities.
Throughout the Fund's history, this portfolio mix has produced respectable
returns in up markets and preserved capital during down markets. The Fund closed
2003 with a 4.9% gain, and has had positive total returns in each of the last 10
calendar years.
After a deal-making drought, the pace of merger and acquisition activity
rebounded in 2003. During 2003, our Fund's top performers included PeopleSoft,
Titan Corp., Dana Corp. and Harbor Global. Completed deals during the year that
boosted Fund performance included Wella AG, Scios, Banyu Pharmaceutical, Chateau
Communities, J.D. Edwards and Pechiney. Lagging performers during the year
included Griffin Land & Nurseries and BayCorp Holdings.
As of April 1, 2002, we lowered our fees to 50 basis points because we
were sitting on an above-average amount of cash in the portfolio due to a low
level of merger and acquisition activity. Furthermore, as of January 1, 2003,
the distributor has voluntarily waived receipt of the 25 basis points Rule 12b-1
distribution fee from the Fund, resulting in a waiver of fees totaling 75 basis
points.
Sincerely yours,
/s/Bruce N. Alpert
Bruce N. Alpert
President
February 24, 2004
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GABELLI ABC FUND,
THE LIPPER U.S. TREASURY MONEY MARKET AVERAGE AND THE S&P 500 INDEX
Lipper U.S. Treasury
Gabelli ABC Fund Money Market S&P 500 Index
5/14/93 10,000 10,000 10,000
12/93 10,910 10,163 10,659
12/94 11,401 10,530 10,798
12/95 12,278 11,091 14,858
12/96 13,667 11,618 18,275
12/97 15,410 12,139 24,370
12/98 17,127 12,706 31,374
12/99 18,668 13,247 37,972
12/00 20,693 13,981 34,517
12/01 21,637 14,451 30,413
12/02 21,825 14,600 23,695
Dec-03 22,903 14,661 30,488
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.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2003 (A)
SINCE
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION (B)
------- ------ ------ ------ ------- -------------
Gabelli ABC Fund ......................... 1.98% 4.94% 3.44% 5.99% 7.70% 8.10%
S&P 500 Index ............................ 12.17% 28.67% (4.05)% (0.57)% 11.06% 11.19%
Lipper U.S. Treasury Money
Market Avg. ........................... 0.08% 0.42% 1.60% 2.91% 3.78% 3.71%(c)
(a) Returns represent past performance and do not guarantee future results.
Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and capital gains 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. The S&P 500 Index is an unmanaged indicator of stock
market performance, while the Lipper Average reflects the average
performance of mutual funds classified in this particular category.
Performance for periods less than one year is not annualized.
(b) From commencement of investment operations on May 14, 1993.
(c) From April 30, 1993, the date closest to the Fund's inception for which
data is available.
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2
THE GABELLI ABC FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2003
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MARKET
SHARES COST VALUE
------- ---- -----
COMMON STOCKS -- 25.1%
AEROSPACE -- 2.6%
350,000 Titan Corp.+ ...................... $ 7,476,598 $ 7,633,500
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.8%
125,000 Dana Corp. ........................ 1,990,644 2,293,750
5,000 Federal-Mogul Corp.+ .............. 14,938 1,125
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2,005,582 2,294,875
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AVIATION: PARTS AND SERVICES -- 0.1%
2,000 Aviall Inc.+ ...................... 14,216 31,020
20,000 Fairchild Corp., Cl. A+ ........... 157,951 100,800
18,000 Kaman Corp., Cl. A ................ 322,618 229,140
------------ ------------
494,785 360,960
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BROADCASTING -- 0.1%
4,000 Liberty Corp. ..................... 175,808 180,760
800 Salem Communications Corp.,
Cl. A+ .......................... 6,232 21,696
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182,040 202,456
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BUSINESS SERVICES -- 0.0%
2,580 ProcureNet Inc.+ (a) .............. 0 387
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.3%
40,000 PeopleSoft Inc.+ .................. 716,800 912,000
1,215,000 StorageNetworks Inc.
Escrow+ (a) ..................... 0 36,450
------------ ------------
716,800 948,450
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CONSUMER PRODUCTS -- 3.6%
350,000 Dial Corp. ........................ 9,961,725 9,964,500
60,000 Levcor International Inc.+ ........ 140,640 240,000
40,000 Packaging Dynamics Corp. .......... 261,828 411,200
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10,364,193 10,615,700
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DIVERSIFIED INDUSTRIAL -- 0.2%
6,000 Ampco-Pittsburgh Corp. ............ 69,606 82,020
45,120 Harbor Global Co. Ltd.+ ........... 175,722 410,592
4,000 Katy Industries Inc.+ ............. 41,365 22,840
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286,693 515,452
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ENERGY AND UTILITIES -- 2.1%
5,000 BayCorp Holdings Ltd.+ ............ 73,579 65,300
20,000 NiSource Inc.+ .................... 40,000 51,200
35,000 Northeast Utilities ............... 695,575 705,950
25,000 Progress Energy Inc., CVO+ ........ 13,000 5,750
7,000 SJW Corp. ......................... 666,802 624,750
1,500 Southwest Gas Corp. ............... 26,231 33,675
200,000 Unisource Energy Corp. ............ 4,918,210 4,932,000
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6,433,397 6,418,625
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MARKET
SHARES COST VALUE
------- ---- -----
ENTERTAINMENT -- 0.3%
150,000 CINAR Corp., Cl. B+ ............... $ 532,245 $ 541,500
25,000 GC Companies Inc.+ ................ 3,750 8,750
15,000 Liberty Media Corp., Cl. A+ ....... 157,955 178,350
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693,950 728,600
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EQUIPMENT AND SUPPLIES -- 0.1%
10,674 Juno Lighting Inc.+ ............... 157,139 240,165
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FINANCIAL SERVICES -- 1.7%
5,000 Abington Bancorp Inc. ............. 166,282 192,950
24,000 Argonaut Group Inc.+ .............. 624,709 372,960
83,900 Bank of Bermuda Ltd. .............. 3,774,040 3,771,305
1,000 Coastal Bancorp Inc. .............. 41,250 41,110
30,000 Concord EFS Inc.+ ................. 316,179 445,200
5,000 FleetBoston Financial Corp. ....... 198,780 218,250
1,000 Leucadia National Corp. ........... 30,175 46,100
1,000 Republic Bancshares Inc. .......... 31,750 31,470
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5,183,165 5,119,345
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FOOD AND BEVERAGE -- 6.6%
20,000 Denny's Corp.+ .................... 49,969 8,200
180,000 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A ............ 13,924,491 13,995,000
500 Genesee Corp., Cl. A+ ............. 1,500 1,850
12,200 Genesee Corp., Cl. B+ ............. 7,936 44,042
142,100 Grupo Continental SA .............. 218,331 240,263
211,900 Horizon Organic Holding
Corp.+ .......................... 5,043,213 5,075,005
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19,245,440 19,364,360
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HEALTH CARE -- 5.0%
60,000 BioReliance Corp.+ ................ 2,873,793 2,869,200
200,000 Esperion Therapeutics Inc.+ ....... 6,912,555 6,922,000
300,000 I-STAT Corp.+ ..................... 4,578,755 4,590,000
2,501 Zimmer Holdings Inc.+ ............. 135,038 176,049
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14,500,141 14,557,249
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METALS AND MINING -- 0.8%
50,001 Alcan Inc. ........................ 2,190,022 2,347,524
10,000 Royal Oak Mines Inc.+ ............. 11,858 45
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2,201,880 2,347,569
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PAPER AND FOREST PRODUCTS -- 0.4%
35,001 Boise Cascade Corp. ............... 1,048,265 1,150,117
------------ ------------
REAL ESTATE -- 0.1%
20,000 Griffin Land & Nurseries Inc.+ .... 322,381 284,220
316 HomeFed Corp.+ .................... 566 9,164
1,000 ProLogis .......................... 22,650 32,090
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345,597 325,474
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RETAIL -- 0.3%
1,000 Duane Reade Inc.+ ................. 16,760 16,920
10,000 Gucci Group NV, ADR ............... 849,843 855,500
------------ ------------
866,603 872,420
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See accompanying notes to financial statements.
3
THE GABELLI ABC FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2003
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MARKET
SHARES COST VALUE
------- ---- -----
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 0.0%
10,141 ATX Communications Inc.+ .......... $ 17,960 $ 2,231
3,000 Telegroup Inc.+ ................... 31 0
10,000 USN Communications Inc.+ (a) ...... 150 10
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18,141 2,241
------------ ------------
WIRELESS COMMUNICATIONS-- 0.0%
500 American Tower Corp., Cl. A+ ...... 7,707 5,410
14,000 Metricom Inc.+ .................... 1,680 112
50,000 Winstar Communications Inc.+ ...... 2,125 50
------------ ------------
11,512 5,572
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TOTAL COMMON STOCKS ............... 72,231,921 73,703,517
------------ ------------
PREFERRED STOCKS -- 0.6%
BROADCASTING -- 0.2%
1,063 Granite Broadcasting Corp.,
12.750% Pfd.+ ................... 439,685 680,320
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.0%
RSL Communications Ltd.,
1,000 7.500% Cv. Pfd. + (b)(c) ........ 92 0
2,000 7.500% Cv. Pfd., Ser. A + (c) ... 185 0
------------ ------------
277 0
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.1%
WHX Corp.,
24,000 6.500% Cv. Pfd., Ser. A+ ........ 413,792 118,800
24,000 $3.75 Cv. Pfd., Ser. B+ ......... 251,690 115,200
------------ ------------
665,482 234,000
------------ ------------
HOME FURNISHINGS -- 0.0%
8,000 O'Sullivan Industries Holdings Inc.,
12.000% Pfd.+ ................... 4,750 2,560
------------ ------------
TELECOMMUNICATIONS -- 0.3%
18,000 Citizens Communications Co.,
5.000% Cv. Pfd. ................. 922,290 918,000
------------ ------------
TOTAL PREFERRED STOCKS ............ 2,032,484 1,834,880
------------ ------------
PRINCIPAL
AMOUNT
------
CORPORATE BONDS -- 0.6%
COMPUTER SOFTWARE AND SERVICES -- 0.0%
$ 100,000 Exodus Communications Inc.,
Sub. Deb. Cv.,
5.250%, 02/15/08+ (c) ........... 2,250 375
------------ ------------
CONSUMER PRODUCTS -- 0.0%
200,000 Revlon Consumer Products,
Sub. Deb.,
8.625%, 02/01/08 ................ 114,982 87,000
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.4%
1,500,000 GP Strategies Corp., Sub. Deb.,
6.000%, 08/14/08 (a) ............ 1,047,342 1,036,680
------------ ------------
ELECTRONICS -- 0.1%
400,000 Oak Industries Inc.,
Sub. Deb. Cv.,
4.875%, 03/01/08 ................ 324,803 399,500
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- -----
ENERGY AND UTILITIES-- 0.1%
$ 300,000 Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21+ (c) ........... $ 226,624 $ 184,500
------------ ------------
RETAIL -- 0.0%
200,000 RDM Sports Group Inc.,
Sub. Deb.,
8.000%, 08/15/03+ (a)(c) ........ 4,000 20,500
------------ ------------
TRANSPORTATION -- 0.0%
850,000 Builders Transport Inc.,
Sub. Deb. Cv.,
6.500%, 05/01/11+ (a)(c) ........ 8,500 0
------------ ------------
TOTAL CORPORATE BONDS ............. 1,728,501 1,728,555
------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 73.5%
216,381,000 U.S. Treasury Bills,
0.842% to 0.945%++,
01/02/04 to 03/25/04 ............ 216,266,696 216,267,071
------------ ------------
SHARES
------
WARRANTS -- 0.2%
CONSUMER PRODUCTS -- 0.0%
10,396 Pillowtex Corp.,
expire 11/24/09+ ................ 45,461 1
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.2%
187,500 GP Strategies Corp.,
expire 08/14/08+ (a) ............ 477,799 477,799
------------ ------------
TOTAL WARRANTS .................... 523,260 477,800
------------ ------------
TOTAL INVESTMENTS --
100.0% .......................... $292,782,862 294,011,823
============
OTHER ASSETS AND LIABILITIES (NET) -- 0.0% 58,473
------------
NET ASSETS -- 100.0% .......................... $294,070,296
============
- ----------------
For Federal tax purposes:
Aggregate cost ................................ $292,661,488
============
Gross unrealized appreciation ................. $ 2,538,806
Gross unrealized depreciation ................. (1,188,471)
------------
Net unrealized appreciation/(depreciation) .... $ 1,350,335
============
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(a) Security fair valued under procedures established by the Board of
Directors. At December 31, 2003, the market value of fair valued
securities amounted to $1,571,826 or 0.5% of total net assets.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933, as amended. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
December 31, 2003, the market value of Rule 144A securities amounted to
$0 or 0.0% of total net assets.
(c) Security in default.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
CVO - Contingent Value Obligation.
See accompanying notes to financial statements.
4
THE GABELLI ABC FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value
(Cost $292,782,862) .................. $294,011,823
Cash ................................... 268,911
Dividends, reclaims and interest
receivable ........................... 89,119
Receivable for investments sold ........ 898,941
Receivable for Fund shares sold ........ 1,688,274
Other assets ........................... 15,136
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TOTAL ASSETS ........................... 296,972,204
------------
LIABILITIES:
Payable for investments purchased ...... 2,494,140
Payable for investment advisory fees ... 126,661
Payable for Fund shares redeemed ....... 128,098
Other accrued expenses ................. 153,009
------------
TOTAL LIABILITIES ...................... 2,901,908
------------
NET ASSETS applicable to 29,906,505
shares outstanding ................... $294,070,296
============
NET ASSETS CONSIST OF:
Capital stock, at par value ............ $ 29,906
Additional paid-in capital ............. 292,790,776
Accumulated net investment income ...... 433,994
Accumulated net realized loss
on investments ....................... (413,773)
Net unrealized appreciation
on investments ....................... 1,229,393
------------
TOTAL NET ASSETS ....................... $294,070,296
============
NET ASSET VALUE, offering and redemption price
per share ($294,070,296 / 29,906,505
shares outstanding; 1,000,000,000 shares
authorized of $0.001 par value) ...... $9.83
=====
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes
of $38,911) .......................... $ 906,441
Interest ............................... 2,455,658
-----------
TOTAL INVESTMENT INCOME ................ 3,362,099
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EXPENSES:
Investment advisory fees ............... 2,719,620
Distribution fees ...................... 679,861
Custodian fees ......................... 103,568
Shareholder services fees .............. 96,430
Shareholder communications expenses .... 67,863
Legal and audit fees ................... 42,179
Registration fees ...................... 22,671
Directors' fees ........................ 11,053
Miscellaneous expenses ................. 57,249
-----------
TOTAL EXPENSES ......................... 3,800,494
-----------
Fees waived ............................ (2,039,671)
-----------
TOTAL NET EXPENSES ..................... 1,760,823
-----------
NET INVESTMENT INCOME .................. 1,601,276
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS, FOREIGN CURRENCY
AND FUTURES TRANSACTIONS:
Net realized gain on investments,
foreign currency and futures
transactions ......................... 6,845,476
Net change in unrealized appreciation/
depreciation on investments and
foreign currency ..................... 4,808,623
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS, FOREIGN CURRENCY
AND FUTURES TRANSACTIONS ............. 11,654,099
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................... $13,255,375
===========
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
OPERATIONS:
Net investment income .................................................... $ 1,601,276 $ 1,918,519
Net realized gain on investments, foreign currency, options
and futures transactions ............................................... 6,845,476 1,340,955
Net change in unrealized appreciation/depreciation on
investments and foreign currency ....................................... 4,808,623 (1,021,955)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... 13,255,375 2,237,519
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income .................................................... (302,802) (1,365,987)
Net realized gain on investments ......................................... (8,024,250) (1,181,891)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................................... (8,327,052) (2,547,878)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net increase in net assets from capital share transactions ............... 28,127,775 93,915,547
------------ ------------
NET INCREASE IN NET ASSETS ............................................... 33,056,098 93,605,188
NET ASSETS:
Beginning of period ...................................................... 261,014,198 167,409,010
------------ ------------
End of period ............................................................ $294,070,296 $261,014,198
============ ============
See accompanying notes to financial statements.
5
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli ABC Fund (the "Fund"), a series of Gabelli Investor
Funds, Inc. (the "Corporation"), was organized on October 30, 1992 as a Maryland
corporation. The Fund is a non-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 to achieve total returns that are
attractive to investors in various market conditions without excessive risk of
capital loss. The Fund commenced investment operations on May 14, 1993.
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 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 so determines, by such other method as the Board of Directors
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 Directors. Short term debt securities with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board of
Directors 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 Directors. 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.
OPTIONS. The Fund may purchase or write call or put options on securities or
indices. As a writer of call options, the Fund receives a premium at the outset
and then bears the risk of unfavorable changes in the price of the financial
instrument underlying the option. The Fund would incur a loss if the price of
the underlying financial instrument increases between the date the option is
written and the date on which the option is terminated. The Fund would realize a
gain, to the extent of the premium, if the price of the financial instrument
decreases between those dates.
As a purchaser of put options, the Fund pays a premium for the right to sell to
the seller of the put option the underlying security at a specified price. The
seller of the put has the obligation to purchase the underlying security upon
exercise at the exercise price. If the price of the underlying security
declines, the Fund would
6
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
realize a gain upon sale or exercise. If the price of the underlying security
increases, the Fund would realize a loss upon sale or at expiration date, but
only to the extent of the premium paid. At December 31, 2003, there were no open
call options.
The option activity for the Fund for the year ended December 31, 2003 was as
follows:
NUMBER OF
CALL OPTIONS CONTRACTS PREMIUMS
- ------------ --------- --------
Options outstanding at December 31, 2002 .......... -- $ --
Options written during the period ................. 750 80,248
Options exercised during the period ............... (750) $(80,248)
------ ---------
Options outstanding at December 31, 2003 .......... -- --
====== =========
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 Directors. 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.
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. At December
31, 2003, there were no repurchase agreements.
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 the price of the security sold short.
7
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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. At
December 31, 2003, there were no open short sales.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency transactions. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain/(loss) that might result
should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and 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, which
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 transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Fund
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
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.
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.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income and long term capital
gain distributions are determined in accordance with Federal income tax
regulations which may differ from accounting principles generally accepted 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 characterizations of distributions made by the Fund.
8
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
For the year ended December 31, 2003, reclassifications were made to decrease
accumulated net investment income for $1,340,395 and to increase accumulated net
realized gain on investments for $907,060, with an offsetting adjustment to
additional paid-in capital. These reclassifications, which have no impact on the
net asset value of the Fund, are primarily attributable to certain differences
in computation of distributable income and capital gains under Federal tax rules
versus accounting principles generally accepted in the United States, including
the Fund's use of the tax accounting practice known as equalization. The
calculation of net investment income per share in the financial highlights
excludes these adjustments.
The tax characteristics of distributions paid during the fiscal year ended
December 31, 2003 and December 31, 2002 were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
------------------ -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short term capital gains) .. $ 302,802 $2,469,266
Net long term capital gains ................. 8,024,250 78,612
---------- ----------
Total distributions paid .................... $8,327,052 $2,547,878
========== ==========
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:
Undistributed ordinary income/(loss)
(inclusive of short term capital gains) ......... $ (100,721)
Net unrealized appreciation ........................ 1,350,335
----------
Total accumulated gain ............................. $1,249,614
==========
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 daily 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 Directors of the Fund who are its affiliates. The Adviser has
voluntarily agreed to reduce its advisory fee by 0.50%, but may increase or
decrease such amounts at any time. The Fund's expenses were reduced by
$1,359,810 for the year ended December 31, 2003.
4. DISTRIBUTION PLAN. The Fund's Board of Directors has 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 $679,861, or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly. Effective January 1, 2003, theDistributor has
voluntarily agreed to waive the full 0.25% fee indefinitely, which has reduced
the Fund's expenses by $679,861 for the year ended December 31, 2003.
9
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. PORTFOLIO SECURITIES. Purchases and sales of securities for the year ended
December 31, 2003, other than short term securities, aggregated $296,169,862 and
$150,025,493, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2003, the
Fund paid brokerage commissions of $248,359 to Gabelli & Company, Inc.
The cost of calculating the Fund's net asset value per share is a Fund expense
pursuant to the 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 on the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit up to
$25,000,000 from the custodian for temporary borrowing purposes. Borrowings
under this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. There were no borrowings during the year ended December
31, 2003.
8. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as
follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- -------------
Shares sold ...................................... 12,764,211 $ 125,709,683 20,404,013 $ 197,592,960
Shares issued upon reinvestment of dividends ..... 654,597 6,434,682 195,131 1,881,060
Shares redeemed .................................. (10,576,893) (104,016,590) (10,887,522) (105,558,473)
------------ ------------- ----------- -------------
Net increase ................................... 2,841,915 $ 28,127,775 9,711,622 $ 93,915,547
=========== ============= =========== =============
9. CHANGE IN FUND'S AUDITOR. On November 19, 2003, based on the recommendation
of the Audit Committee of the Fund, the Board of Directors voted to appoint
Ernst & Young LLP as the Fund's independent auditor for the current fiscal year
ending December 31, 2003, replacing Grant Thornton LLP ("GT"). During the two
most recent fiscal years, GT audit reports contained no adverse opinion or
disclaimer of opinion; nor were the reports qualified or modified as to
uncertainty, audit scope, or accounting principles. Further, there were no
disagreements between the Fund and GTon accounting principles, financial
statement disclosure or audit scope, which if not resolved to the satisfaction
of GT would have caused it to make reference to the disagreements in connection
with its report.
10
THE GABELLI ABC FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
2003 2002 2001 2000 1999
-------- -------- -------- ------- -------
OPERATING PERFORMANCE:
Net asset value, beginning of period ............... $ 9.64 $ 9.65 $ 9.45 $ 9.44 $ 9.59
-------- -------- -------- ------- -------
Net investment income .............................. 0.05 0.07 0.10 0.19 0.26
Net realized and unrealized gain on investments .... 0.43 0.01 0.33 0.83 0.59
-------- -------- -------- ------- -------
Total from investment operations ................... 0.48 0.08 0.43 1.02 0.85
-------- -------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income .............................. (0.01) (0.05) (0.09) (0.12) (0.14)
Net realized gain on investments ................... (0.28) (0.04) (0.14) (0.89) (0.86)
-------- -------- -------- ------- -------
Total distributions ................................ (0.29) (0.09) (0.23) (1.01) (1.00)
-------- -------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD ..................... $ 9.83 $ 9.64 $ 9.65 $ 9.45 $ 9.44
======== ======== ======== ======= =======
Total return+ ...................................... 4.9% 0.9% 4.6% 10.9% 9.0%
======== ======== ======== ======= =======
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $294,070 $261,014 $167,409 $62,372 $42,783
Ratio of net investment income to average net assets 0.59% 0.74% 1.43% 1.55% 1.37%
Ratio of operating expenses to average net assets
before fees waived ............................... 1.40% 1.39% 1.46%(a) 1.50%(a) 1.47%
Ratio of operating expenses
to average net assets net of fees waived ......... 0.65% 0.99% 1.46%(a) 1.50%(a) 1.47%
Portfolio turnover rate ............................ 244% 252% 308% 312% 672%
- --------------------------------
+ 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) The fund incurred interest expense during the years ended December 31, 2001
and 2000. If interest expense had not been incurred, the ratios of
operating expenses to average net assets would have been 1.44% and 1.45%,
respectively.
See accompanying notes to financial statements.
11
THE GABELLI ABC FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Shareholders and Board of Directors of
The Gabelli ABC Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The Gabelli ABC Fund (the "Fund"), a series of
Gabelli Investor Funds, Inc., as of December 31, 2003, and the related statement
of operations, the statement of changes in net assets, and financial highlights
for the year 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
audits. The statement of changes in net assets of the Fund for the year ended
December 31, 2002 and the financial highlights for each of the four years in the
period then ended were audited by other auditors whose report dated January 31,
2003, expressed an unqualified opinion on those statements and financial
highlights.
We conducted our audit 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 Fund's 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
audit provides 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 ABC Fund at December 31, 2003, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended,
in conformity with accounting principles generally accepted in the United
States.
/s/ERNST & YOUNG LLP
New York, New York
February 10, 2004
- --------------------------------------------------------------------------------
2003 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2003, the Fund paid to shareholders, on
December 27, 2003, an ordinary income dividend (comprised of net investment
income and short term capital gains) totaling $0.286. For the fiscal year
ended December 31, 2003, 4.90% of the ordinary income dividend qualifies for
the dividend received deduction available to corporations, and 7.39% of the
ordinary income distribution was qualifying dividend income.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2003 which was derived from U.S. Treasury securities was 12.71%. Such
income is exempt from state and local tax in all states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government
securities. The Gabelli ABC Fund met this strict requirement in 2003. Due to
the diversity in state and local tax law, it is recommended that you consult
your personal tax advisor as to the applicability of the information provided
to your specific situation.
- --------------------------------------------------------------------------------
12
THE GABELLI ABC 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 Gabelli ABC Fund Directors and is
available, without charge, upon request, by calling 800-GABELLI (800-422-3554)
or by writing to The Gabelli ABC 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 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR
- ---------------- ------------- ----------------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
MARIO J. GABELLI Since 1993 24 Chairman of the Board and Director of Morgan Group
Director and Chief Executive Officer of Holdings, Inc. (holding
Chief Investment Officer Gabelli Asset Management Inc. company); Vice Chairman of
Age: 61 and Chief Investment Officer Lynch Corporation (diversified
of Gabelli Funds, LLC manufacturing)
and GAMCO Investors, Inc.;
Vice Chairman and Chief Executive
Officer of Lynch Interactive
Corporation (multimedia and
services)
KARL OTTO POHL Since 1993 33 Member of the Shareholder Committee Director of Gabelli Asset
Director of Sal Oppenheim Jr. & Cie Management Inc. (investment
Age: 74 (private investment bank); management), Chairman,
Former President of the Deutsche Incentive Capital and Incentive
Bundesbank and Chairman of its Asset Management (Zurich);
Central Bank Council (1980-1991) Director at Sal Oppenheim Jr.
& Cie, Zurich
NON-INTERESTED DIRECTORS:
- ------------------------
ANTHONY J. COLAVITA Since 1993 35 President and Attorney at Law in --
Director the law firm of Anthony J.
Age: 68 Colavita, P.C.
VINCENT D. ENRIGHT Since 1993 12 Former Senior Vice President and --
Director Chief Financial Officer of KeySpan
Age: 60 Energy Corporation
MARY E. HAUCK Since 2000 6 Retired Senior Manager of the Gabelli --
Director O'Connor Fixed Income Mutual Funds
Age: 61 Management Company
WERNER J. ROEDER, MD Since 1993 26 Vice President/Medical Affairs, Lawrence --
Director Hospital Center and practicing private physician
Age: 63
OFFICERS:
BRUCE N. ALPERT Since 2003 -- Executive Vice President and Chief Operating --
President Officer of Gabelli Funds, LLC since 1988 and
Age: 52 an officer of all mutual funds advised by
Gabelli Funds, LLC and its affiliates.
Director and President of Gabelli Advisers, Inc.
JAMES E. MCKEE Since 1995 -- Vice President, General Counsel and Secretary --
Vice President and of Gabelli Asset Management Inc. since 1999
Secretary and GAMCO Investors, Inc. since 1993;
Age: 40 Secretary of all mutual funds advised by
Gabelli Advisers, Inc. and Gabelli Funds, LLC
- --------------------------------------------------------------------------------
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.
3 "Interested person" of the Fund as defined in the Investment Company Act of
1940. Messrs. Gabelli and Pohl are each considered an "interested person"
because of their affiliation with Gabelli Funds, LLC which acts as the
Fund's investment adviser.
13
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
- --------------------------------------------------------------------------------
WHO ARE WE?
The Gabelli Funds are investment companies registered with the Securities
and Exchange Commission under the Investment Company Act of 1940. We are
managed by Gabelli Funds LLC, Gabelli Advisers, Inc. and Gabelli Fixed
Income, LLC, which are affiliated with Gabelli Asset Management Inc.
Gabelli Asset Management is a publicly-held company that has subsidiaries
that provide investment advisory or brokerage services for a variety of
clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?
If you apply to open an account directly with us, you will be giving us
some non-public information about yourself. The non-public information we
collect about you is:
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include
your name, address, telephone number, social security number, bank
account number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR
AFFILIATES AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE
SERVICES TO YOU. This would include information about the shares that
you buy or redeem, and the deposits and withdrawals that you make. If we
hire someone else to provide services--like a transfer agent--we will
also have information about the transactions that you conduct through
them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
- --------------------------------------------------------------------------------
GABELLI FAMILY OF FUNDS
VALUE ________________________________________
GABELLI ASSET FUND
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND
Seeks long term growth of capital through investment primarily in the common
stocks of established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
GABELLI WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well-seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE ______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE ____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $1 billion) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations less than $1.5 billion) believed to be undervalued with
shareholder oriented management teams that are employing strategies to grow the
company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
GABELLI GROWTH FUND
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GABELLI INTERNATIONAL GROWTH FUND
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH _________________________
GABELLI GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing on
the globalization and interactivity of the world's marketplace. The Fund invests
in companies at the forefront of accelerated growth. The Fund's primary
objective is capital appreciation. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
GABELLI WESTWOOD MIGHTY MITES(SM) FUND
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI WESTWOOD BALANCED FUND
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
GABELLI WESTWOOD REALTY FUND
Seeks to invest in securities that are primarily engaged in or related to the
real estate industry. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
SPECIALTY EQUITY ____________________________
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is total return through a combination of current income and capital
appreciation. (MULTICLASS) TEAM MANAGED
GABELLI GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in revenues
and earnings and potential for above average capital appreciation or are
undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
SECTOR ______________________________________
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world - targeting
undervalued companies with strong earnings and cash flow dynamics. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GABELLI GOLD FUND
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of world-wide economic, financial and political factors. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE _____________________
GABELLI ABC FUND
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss.
(NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
CONTRARIAN_________________________________
Gabelli Mathers Fund
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of the debt instrument. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
QUANTITATIVE_________________________________
NED DAVIS RESEARCH ASSET ALLOCATION FUND
Seeks to achieve returns greater then the weighted composite benchmark
consisting of 60% in the S&P 500 Index and 40% in the Lehman Long Term U.S.
Government Bond Index through a flexible asset allocation strategy. The Fund's
primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
SMALL CAP GROWTH __________________________
GABELLI WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $1.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS)
CO-PORTFOLIO MANAGERS: CHRISTOPHER J. MACDONALD, CFA
FIXED INCOME ________________________________
GABELLI WESTWOOD INTERMEDIATE BOND FUND
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET __________
GABELLI U.S. TREASURY MONEY MARKET FUND
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
THE TREASURER'S FUND
Three money market portfolios designed to generate superior returns without
compromising portfolio safety. U.S. Treasury Money Market seeks to invest in
U.S. Treasury securities and repurchase agreements. Tax Exempt Money Market
seeks to invest in municipal securities. Domestic Prime Money Market seeks to
invest in prime quality, domestic money market instruments.
(NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI
THE GLOBAL FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC AND POLITICAL RISKS.
AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). THE PROSPECTUS GIVES A
MORE COMPLETE DESCRIPTION OF THE FUND, INCLUDING FEES AND EXPENSES. READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
THE GABELLI ABC 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 DIRECTORS
Mario J. Gabelli, CFA Mary E. Hauck
CHAIRMAN AND CHIEF (RETIRED) SENIOR PORTFOLIO MANAGER
INVESTMENT OFFICER GABELLI-O'CONNOR FIXED INCOME
GABELLI ASSET MANAGEMENT INC. MUTUAL FUND MANAGEMENT CO.
Anthony J. Colavita Karl Otto Pohl
ATTORNEY-AT-LAW FORMER PRESIDENT
ANTHONY J. COLAVITA, P.C. DEUTSCHE BUNDESBANK
Vincent D. Enright Werner J. Roeder, MD
FORMER SENIOR VICE PRESIDENT VICE PRESIDENT/MEDICAL AFFAIRS
AND CHIEF FINANCIAL OFFICER LAWRENCE HOSPITAL CENTER
KEYSPAN ENERGY CORP.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT SECRETARY
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]
GABELLI PHOTO
THE
GABELLI
ABC
FUND
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This report is submitted for the general information of the shareholders of The
Gabelli ABC Fund. It is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus.
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GAB408Q403SR
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
directors has determined that Vincent D. Enright is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by 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 $25,000 in 2003 and $31,238 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 $3,400 in 2003 and
$0 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 $62,400 in 2003 and $0 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) Gabelli Investor Funds, Inc.
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive
Officer
Date March 9, 2004
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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
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Bruce N. Alpert, Principal Executive
Officer and Principal Financial
Officer
Date March 9, 2004
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* Print the name and title of each signing officer under his or her signature