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
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The Gabelli Mathers 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: June 30, 2005
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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 Report to Shareholders is attached herewith.
THE GABELLI MATHERS FUND
SEMI-ANNUAL REPORT
JUNE 30, 2005
TO OUR SHAREHOLDERS,
In our June 30, 2003 report, we noted a change in the way we provide the
portfolio manager's commentary to shareholders of our Funds. Our shareholder
reports have typically contained commentary on each portfolio manager's
assessment of the stock market, individual stocks and how economic events affect
their thinking in managing a specific Fund. We have always provided details
about performance and presented returns, both good and bad, hopefully in a clear
and concise fashion. These comments have been included as part of each Fund's
quarterly, semi-annual, and annual financial statements.
The Sarbanes-Oxley Act's corporate governance regulations require 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 covers the portfolio
manager's commentary and subjective opinions if they are attached to or a part
of the financial statements.
Rather than ask our portfolio managers to eliminate their opinions and/or
restrict their commentary to historical facts only, we separated their
commentary from the financial statements and investment portfolio and sent it to
you separately to ensure that its content is complete and unrestricted. Both the
commentary and the financial statements, including the portfolio of investments,
are also available on our website at www.gabelli.com/funds.
We trust that you understand that our approach is an unintended
consequence of the ever-increasing regulatory requirements affecting public
companies generally. We hope the specific certification requirements of these
regulations will be modified as they relate to mutual funds, since investment
companies have different corporate structures and objectives than other public
companies.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
Chief Operating Officer
Gabelli Funds
August 18, 2005
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The financial
statements and investment portfolio are mailed separately. Both the commentary
and the financial statements, including the portfolio of investments, will be
available on our website at www.gabelli.com/funds.
- --------------------------------------------------------------------------------
THE GABELLI MATHERS FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2005 through June 30, 2005
EXPENSE TABLE
- --------------------------------------------------------------------------------
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case -- because the hypothetical return used is NOT
the Fund's actual return -- the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the six months ended June 30, 2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/05 06/30/05 Ratio Period*
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THE GABELLI MATHERS FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Gabelli Mathers $1,000.00 $1,006.70 2.08% $10.35
HYPOTHETICAL 5% RETURN
Gabelli Mathers $1,000.00 $1,014.48 2.08% $10.39
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half-year, then divided by 365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following tables present portfolio holdings as a percent of total net
assets.
THE GABELLI MATHERS FUND -
LONG POSITIONS PERCENT
U.S. Government Obligations ....................... 89.5%
Repurchase Agreements ............................. 3.6%
Computer Software and Services .................... 1.4%
Health Care ....................................... 1.4%
Environmental Services ............................ 0.7%
Financial Services ................................ 0.7%
Metals and Mining ................................. 0.7%
Telecommunications ................................ 0.6%
Broadcasting ...................................... 0.5%
Energy and Utilities .............................. 0.4%
Equipment ......................................... 0.2%
Food and Beverage ................................. 0.2%
Transportation .................................... 0.1%
Aerospace ......................................... 0.1%
Entertainment ..................................... 0.1%
THE GABELLI MATHERS FUND -
SHORT POSITIONS PERCENT
Exchange Traded Funds ............................. (9.0)%
Equipment ......................................... (4.3)%
Retail ............................................ (3.4)%
Consumer Products ................................. (2.8)%
Restaurants ....................................... (1.5)%
Financial Services ................................ (0.9)%
Diversified Industrial ............................ (0.7)%
Home Furnishings .................................. (0.7)%
Automotive ........................................ (0.6)%
Entertainment ..................................... (0.4)%
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDING MARCH 31, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies and procedures are available without charge, upon
request, (i) by calling 800-GABELLI (800-422-3554); (ii) by writing to The
Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting
the Securities and Exchange Commission's website at www.sec.gov.
3
THE GABELLI MATHERS FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS -- 7.1%
AEROSPACE -- 0.1%
1,000 Titan Corp.+ .............. $ 22,420 $ 22,740
----------- -----------
BROADCASTING -- 0.5%
4,000 Liberty Global Inc., Cl. A+ 142,331 186,680
----------- -----------
COMPUTER SOFTWARE AND SERVICES -- 1.4%
9,000 CACI International Inc.,
Cl. A+ .................. 482,400 568,440
----------- -----------
ENERGY AND UTILITIES -- 0.4%
500 Cinergy Corp. ............. 18,045 22,410
1,000 Duquesne Light
Holdings Inc. ........... 15,295 18,680
3,000 Veolia Environnement, ADR.. 101,550 112,200
----------- -----------
134,890 153,290
----------- -----------
ENTERTAINMENT -- 0.1%
6,000 Gemstar-TV Guide
International Inc.+ ..... 35,273 21,540
----------- -----------
ENVIRONMENTAL SERVICES -- 0.7%
10,000 Waste Management Inc. ..... 291,362 283,400
----------- -----------
EQUIPMENT -- 0.2%
5,000 Ultratech Inc.+ ........... 79,836 91,500
----------- -----------
FINANCIAL SERVICES -- 0.7%
15,000 New York Community
Bancorp Inc. ............ 274,039 271,800
----------- -----------
FOOD AND BEVERAGE -- 0.2%
4,000 Hain Celestial Group Inc.+ 68,261 78,000
----------- -----------
HEALTH CARE -- 1.4%
1,500 Abbott Laboratories ....... 69,119 73,515
8,000 Baxter International Inc... 265,459 296,800
2,000 Eon Labs Inc.+ ............ 61,260 61,280
2,000 Guidant Corp. ............. 125,000 134,600
----------- -----------
520,838 566,195
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METALS AND MINING -- 0.7%
40,000 AK Steel Holding Corp.+ ... 312,828 256,400
----------- -----------
TELECOMMUNICATIONS -- 0.6%
7,142 ADC
Telecommunications Inc.+ 133,533 155,481
1,000 BellSouth Corp. ........... 24,080 26,570
1,000 SBC Communications Inc. ... 22,310 23,750
1,000 Verizon
Communications Inc. ..... 32,920 34,550
----------- -----------
212,843 240,351
----------- -----------
TRANSPORTATION -- 0.1%
1,000 Overnite Corp. ............ 42,980 42,980
----------- -----------
TOTAL COMMON STOCKS ....... 2,620,301 2,783,316
----------- -----------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -----
SHORT-TERM OBLIGATIONS -- 93.1%
REPURCHASE AGREEMENTS -- 3.6%
$ 1,406,905 State Street Bank & Trust Co.,
2.720%, dated 06/30/05,
due 07/01/05, proceeds at
maturity, $1,407,011 (b) $ 1,406,905 $ 1,406,905
----------- -----------
U.S. GOVERNMENT OBLIGATIONS -- 89.5%
35,000,000 U.S. Treasury Bill,
2.791%++, 07/07/05 (a) .. 34,983,958 34,983,958
----------- -----------
TOTAL SHORT-TERM
OBLIGATIONS ............. 36,390,863 36,390,863
----------- -----------
TOTAL
INVESTMENTS -- 100.2% ... $39,011,164 39,174,179
===========
OTHER ASSETS AND LIABILITIES (NET) -- (0.2)% (94,026)
-----------
NET ASSETS -- 100.0% ................... $39,080,153
===========
SECURITIES SOLD SHORT -- (24.3)%
MARKET
SHARES PROCEEDS VALUE
------ -------- -----
COMMON STOCKS -- (24.3)%
AUTOMOTIVE -- (0.6)%
24,000 Ford Motor Co. ............ $ 301,071 $ 245,760
----------- -----------
CONSUMER PRODUCTS -- (2.8)%
6,000 Harley-Davidson Inc. ...... 348,694 297,600
15,000 Polaris Industries Inc. ... 721,408 810,000
----------- -----------
1,070,102 1,107,600
----------- -----------
DIVERSIFIED INDUSTRIAL -- (0.7)%
8,000 Briggs & Stratton Corp. ... 261,580 276,960
----------- -----------
ENTERTAINMENT -- (0.4)%
3,000 Carnival Corp. ............ 137,442 163,650
----------- -----------
EQUIPMENT -- (4.3)%
15,000 Black & Decker Corp. ...... 1,194,494 1,347,750
8,000 Toro Co. .................. 306,987 308,880
----------- -----------
1,501,481 1,656,630
----------- -----------
EXCHANGE TRADED FUNDS -- (9.0)%
24,000 iShares S&P Smallcap
600 Index ............... 1,216,296 1,320,480
8,000 Midcap SPDR Trust,
Series 1 ................ 926,841 1,002,000
10,000 Standard & Poor's
Depository Receipts ..... 1,156,576 1,191,800
----------- -----------
3,299,713 3,514,280
----------- -----------
See accompanying notes to financial statements.
4
THE GABELLI MATHERS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES PROCEEDS VALUE
------ -------- -----
SECURITIES SOLD SHORT (CONTINUED)
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES -- (0.9)%
12,000 Morningstar Inc. .......... $ 280,962 $ 337,800
----------- -----------
HOME FURNISHINGS -- (0.7)%
4,000 Ethan Allen Interiors Inc. 157,125 134,040
9,000 La-Z-Boy Inc. ............. 187,298 131,130
----------- -----------
344,423 265,170
----------- -----------
RESTAURANTS -- (1.5)%
7,000 Cheesecake Factory Inc. ... 179,921 243,110
5,000 McDonald's Corp. .......... 125,858 138,750
4,000 Starbucks Corp. ........... 213,283 206,640
----------- -----------
519,062 588,500
----------- -----------
RETAIL -- (3.4)%
3,000 Kohl's Corp. .............. 142,902 167,730
5,000 The Home Depot Inc. ....... 161,867 194,500
15,000 Tiffany & Co. ............. 443,496 491,400
15,000 Zale Corp. ................ 427,593 475,350
----------- -----------
1,175,858 1,328,980
----------- -----------
TOTAL SECURITIES
SOLD SHORT $ 8,891,694 $ 9,485,330
=========== ===========
- ----------------
(a) At June 30, 2005, $25,000,000 of the principal amount was pledged as
collateral for securities sold short.
(b) Collateralized by U.S. Treasury Bond, 8.00%, due 11/15/21, market value
$1,447,725.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
SPDR Standard & Poor's Depository Receipts
See accompanying notes to financial statements.
5
THE GABELLI MATHERS FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $39,011,164) .......... $ 39,174,179
Deposit at brokers ................................ 692,703
Dividends and interest receivable ................. 7,184
Receivable for investments sold ................... 8,891,694
Other assets ...................................... 1,691
------------
TOTAL ASSETS ...................................... 48,767,451
------------
LIABILITIES:
Securities sold short (proceeds $8,891,694) ....... 9,485,330
Payable for investments purchased ................. 104,240
Dividends payable on securities sold short ........ 10,449
Payable for investment advisory fees .............. 32,373
Payable for distribution fees ..................... 8,093
Other accrued expenses and liabilities ............ 46,813
------------
TOTAL LIABILITIES ................................. 9,687,298
------------
NET ASSETS applicable to 3,700,496
shares outstanding .............................. $ 39,080,153
============
NET ASSETS CONSIST OF:
Shares of beneficial interest,
at $0.001 par value ............................. $ 3,700
Additional paid-in capital ........................ 60,294,652
Accumulated net investment income ................. 128,073
Accumulated net realized loss on investments
and securities sold short ....................... (20,915,651)
Net unrealized depreciation on securities
sold short ...................................... (593,636)
Net unrealized appreciation on investments ........ 163,015
------------
NET ASSETS ........................................ $ 39,080,153
============
NET ASSET VALUE, offering and redemption price
per share ($39,080,153 / 3,700,496 shares
outstanding; unlimited number of shares
authorized of $0.001 par value) ................. $10.56
======
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $373) .......... $ 16,972
Interest .......................................... 446,042
Other income ...................................... 79,027
---------
TOTAL INVESTMENT INCOME ........................... 542,041
---------
EXPENSES:
Investment advisory fees .......................... 199,198
Distribution fees ................................. 49,800
Dividends on securities sold short ................ 45,380
Trustees' fees .................................... 28,137
Shareholder services fees ......................... 24,321
Shareholder communications expenses ............... 19,832
Legal and audit fees .............................. 17,354
Custodian fees .................................... 16,316
Registration fees ................................. 8,418
Miscellaneous expenses ............................ 5,288
---------
TOTAL EXPENSES .................................... 414,044
Less: Custodian fee credits ....................... (76)
---------
TOTAL NET EXPENSES ................................ 413,968
---------
NET INVESTMENT INCOME ............................. 128,073
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND SECURITIES SOLD SHORT:
Net realized gain on investments .................. 415,050
Net realized loss on securities sold short ........ (84,799)
Net change in unrealized appreciation/depreciation
on investments and securities sold short ........ (184,192)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND SECURITIES SOLD SHORT ........... 146,059
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 274,132
=========
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
---------------- -----------------
OPERATIONS:
Net investment income (loss) ............................................................ $ 128,073 $ (292,952)
Net realized gain on investments ........................................................ 415,050 300,236
Net realized loss on securities sold short .............................................. (84,799) (575,794)
Net change in unrealized appreciation/depreciation on investments and securities sold short (184,192) 1,130
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......................... 274,132 (567,380)
----------- ------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Net decrease in net assets from shares of beneficial interest transactions .............. (2,451,844) (19,020,306)
----------- ------------
REDEMPTION FEES ......................................................................... 26 --
----------- ------------
NET DECREASE IN NET ASSETS .............................................................. (2,177,686) (19,587,686)
NET ASSETS:
Beginning of period ..................................................................... 41,257,839 60,845,525
----------- ------------
End of period (including undistributed net investment income of
$128,073 and $0, respectively) ........................................................ $39,080,153 $ 41,257,839
=========== ============
See accompanying notes to financial statements.
6
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli Mathers Fund (the "Fund") was organized on June 17,
1999 as a Delaware statutory 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 U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments that are not credit impaired with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be valued at their fair value as determined by the
Board. 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. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
7
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
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 in 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 June 30, 2005, 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. 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
June 30, 2005 are reflected in the Schedule 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.
EXPENSES. Certain administrative expenses are common to, and allocated among,
various affiliated funds. Such allocations are made on the basis of each Fund's
average net assets or other criteria directly affecting the expenses as
determined by the Adviser pursuant to procedures established by the Board.
8
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on ordinary income and long-term capital gains as determined in
accordance with Federal income tax regulations, which may differ from income and
capital gains as determined under U.S. generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
No distributions were made in the six months ended June 30, 2005 and the fiscal
year ended December 31, 2004.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
equity accounts in the period that the differences arise.
For the year ended December 31, 2004, reclassifications were made to decrease
accumulated net investment loss by $292,952 and to decrease accumulated net
realized loss on investments by $22,226,886, with an offsetting adjustment to
additional paid-in capital. These reclassifications have no impact on the net
asset value of the Fund and the calculation of net investment income per share
in the financial highlights excludes these adjustments.
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
As of December 31, 2004, the components of earnings/(losses) on a tax basis were
as follows:
Capital loss carryforward ................................ $(21,245,902)
Net unrealized appreciation/(depreciation) of investments 515,810
Net unrealized appreciation/(depreciation) of securities
sold short ............................................. (762,239)
------------
Total accumulated loss ................................... $(21,492,331)
============
The Fund has a net capital loss carryforward for Federal income tax purposes at
December 31, 2004 of $21,245,902. This capital loss carryforward is available to
reduce future required distributions of net capital gains to shareholders.
$22,226,886 of the loss carryforward expired in 2004; $7,869,968 is available
through 2006; $12,430,175 is available through 2010; $670,201 is available
through 2011; and $275,558 is available through 2012.
The following summarizes the tax cost of investments, proceeds of short sales
and related unrealized appreciation (depreciation) at June 30, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST/PROCEEDS APPRECIATION DEPRECIATION (DEPRECIATION)
------------- ------------ ------------ --------------
Investments ............ $39,011,164 $243,377 $ (80,362) $ 163,015
Short sales ............ 8,891,694 192,301 (785,937) (593,636)
-------- --------- ---------
$435,678 $(866,299) $(430,621)
======== ========= =========
9
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
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 its 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 Trustees of the Fund who are the Adviser's affiliates.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months ended June
30, 2005, the Fund incurred distribution costs payable to Gabelli & Company,
Inc., an affiliate of the Adviser, of $49,800, 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 six months ended June 30, 2005, other than short term securities, aggregated
$1,323,311 and $1,776,163, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2005, the
Fund paid brokerage commissions of $7,655 to Gabelli & Company, Inc.
7. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
------------------------ ----------------------------
SHARES AMOUNT SHARES AMOUNT
-------- -------- -------- --------
Shares sold .............................. 31,242 $ 329,845 239,007 $ 2,532,625
Shares redeemed .......................... (264,549) (2,781,689) (2,043,820) (21,552,931)
-------- ----------- ---------- ------------
Net decrease ........................... (233,307) $(2,451,844) (1,804,813) $(19,020,306)
======== =========== ========== ============
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on shares
that are redeemed or exchanged on or before the seventh day after the date of a
purchase. (Prior to June 15, 2005, the Fund imposed a redemption fee on shares
that were redeemed or exchanged within the sixtieth day after the date of a
purchase.) The redemption fee is deducted from the proceeds otherwise payable to
the redeeming shareholders and is retained by the Fund.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
8. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. The Fund does not believe that these matters will have a material
adverse effect on the Fund's financial position or the results of its
operations.
9. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
10
THE GABELLI MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
10. FINANCIAL HIGHLIGHTS. Selected data for a share of beneficial interest
outstanding throughout each period:
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2005 -----------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
---------------- ------ ------ ------ ------ ------
OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 10.49 $ 10.60 $ 10.81 $ 12.25 $ 12.05 $ 11.94
------- ------- ------- ------- ------- -------
Net investment income (loss) ............. 0.03 (0.06) (0.07) (0.00)(a) 0.30 0.49
Net realized and unrealized
gain (loss) on investments ............. 0.04 (0.05) (0.14) (1.44) 0.21 0.11
------- ------- ------- ------- ------- -------
Total from investment operations ......... 0.07 (0.11) (0.21) (1.44) 0.51 0.60
------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income .................... -- -- -- -- (0.31) (0.49)
------- ------- ------- ------- ------- -------
Total distributions ...................... -- -- -- -- (0.31) (0.49)
------- ------- ------- ------- ------- -------
REDEMPTION FEES ............................. 0.00(a) -- -- -- -- --
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ........... $ 10.56 $ 10.49 $ 10.60 $ 10.81 $ 12.25 $ 12.05
======= ======= ======== ======= ======= =======
Total return+ ............................ 0.67% (1.04)% (1.94)% (11.76)% 4.25% 5.02%
======= ======= ======== ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $39,080 $41,258 $60,846 $80,827 $97,893 $99,855
Ratio of net investment income
to average net assets .................. 0.64%(b) (0.61)% (0.61)% (0.00)% 2.45% 3.79%
Ratio of operating expenses
to average net assets (c) .............. 2.08%(b) 1.77% 1.67% 1.63% 1.35% 1.34%
Ratio of operating expenses to average
net assets excluding the effect of
dividends on securities sold short (c).. 1.85%(b) 1.64% 1.64% 1.61% 1.33% 1.30%
Portfolio turnover rate .................. 39% 176% 244% 776% 1013% 977%
- ----------
+ 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. Total return for the period of less
than one year is not annualized.
(a) Amount is less than $0.005 per share.
(b) Annualized.
(c) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian.
For the six months ended June 30, 2005, the effect of the custodian fee
credits was minimal.
See accompanying notes to financial statements.
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
EXECUTIVE OFFICER PROFESSOR EMERITUS,
GABELLI ASSET MANAGEMENT INC. PACE UNIVERSITY
E. Val Cerutti Werner J. Roeder, MD
CHIEF EXECUTIVE OFFICER MEDICAL DIRECTOR
CERUTTI CONSULTANTS, INC. LAWRENCE HOSPITAL
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
FORMER SENIOR VICE PRESIDENT Anthonie C. van Ekris
AND CHIEF FINANCIAL OFFICER MANAGING DIRECTOR
KEYSPAN ENERGY CORP. BALMAC INTERNATIONAL, INC.
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
Heidi M. Koontz
Bruce N. Alpert VICE PRESIDENT
EXECUTIVE VICE PRESIDENT
AND TREASURER Edith L. Cook
VICE PRESIDENT
James E. McKee
VICE PRESIDENT Peter D. Goldstein
AND SECRETARY CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
GAB1726Q205SR
[GRAPHIC OMITED]
Mario J. Gabelli
THE
GABELLI
MATHERS
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2005
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Mathers Fund
--------------------------------------------------------------------
By (Signature and Title)* /s/ Henry G. Van der Eb
-------------------------------------------------------
Henry G. Van der Eb, Chief Executive Officer
Date September 7, 2005
----------------------------------------------------------------------------
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/ Henry G. Van der Eb
-------------------------------------------------------
Henry G. Van der Eb, Chief Executive Officer
Date September 7, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Treasurer &
Principal Financial Officer
Date September 7, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.