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
---------
Gabelli Investor Funds, Inc.
-------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
-------------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
-------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
--------------
Date of fiscal year end: December 31
-------------
Date of reporting period: December 31, 2005
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GABELLI ABC FUND
ANNUAL REPORT
DECEMBER 31, 2005
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 schedule 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, 2005 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION
The Gabelli ABC Fund gained 1.38% during the fourth quarter and 4.98% for
full year 2005. We note that 2005 was the 12th consecutive calendar year during
which the Fund had positive performance.
Merger and acquisition (M&A) activity in the U.S. exceeded $1.1 trillion
during 2005, a 33% increase from 2004's announced total of $849 billion.
Announced worldwide M&A volume was over $2.7 trillion, making 2005 the third
best year ever for M&A and the best year since 2000. The premium buyers were
willing to pay for acquisitions hit a record low of 20 percent compared to the
peak of 29 percent reached in 2000.
During the year, the U.S. accounted for approximately 40% of global
transactions. Private equity acquisitions of U.S. companies rose to record level
in 2005. Sectors that led in M&A activity in the U.S. in the past twelve months
were Energy and Power, Financials, and Media and Entertainment.
The three largest deals of the year in which the Fund participated were:
PROCTER & GAMBLE (PG - $57.88 - NYSE) $57 billion acquisition of Gillette.
BANK OF AMERICA (BAC - $46.15 - NYSE) announcement on June 30th to acquire
MBNA Corp for $35.8 billion.
GAS NATURAL SDG, S.A. (GAS.MC - [EURO] 23.66 - MADRID STOCK EXCHANGE) of
Spain announced on September 5th that it intends to acquire 100% of Endesa S.A.
for approximately $51.4 billion.
The Fund invests in "event" driven situations such as announced mergers,
acquisitions, and reorganizations. When a company agrees to be acquired by
another company, its stock price often quickly rises to just below the stated
acquisition price. If the Adviser, through extensive research, determines that
the acquisition is likely to be consummated on schedule at the stated
acquisition price, then the Fund may purchase the selling company's securities,
offering the Fund the possibility of generous returns relative to cash
equivalents with a limited risk of capital. Among the deals that the Fund
participated in during the year were Alamosa Holdings Inc., Anteon International
Corp., Chiron Corp., Dofasco Inc., Georgia-Pacific, Guidant Corp., La Quinta
Corp., Endesa SA, Reebok International Ltd., E-Loan Inc., Imagistics
International Inc., PalmSource Inc., Vicuron Pharmaceuticals Inc., Ameritrade
Holding Corp., Kaman Corp., Cuno Inc., Overnite Corp., Retek Inc., Accredo
Health Inc., United Defense Industries Inc., and Insurance Auto Auctions.
Some of the best performers in 2005 from the long-term holdings in the ABC
Fund include Kaman Corp. +55.7%, Argonaut Group Inc. +55.09%, Mirant Corp.
+48.1%, Gold Fields Ltd. +41.3%, Revlon Inc. +34.8%, and Gold Banc Corp. Inc.
+24.6%. Positions that the Fund had at the beginning of 2005 that hurt
performance during the year were Dana Corp. -58.6%, Packaging Dynamics Corp.
- -22.2%, Las Vegas Sands Corp. -17.8%, Grupo Continental SA -17.5%, Monolithic
System Technology Inc. -11.7%, Provide Commerce Inc. -10.9%, and Guidant Corp.
- -10.2. The Fund's cash and cash equivalents at the end of 2005 was slightly over
18% or approximately 46 percentage points less than the level at the end of
2004. Higher short-term interest rates from our short-term U.S.Treasury Bill
investments during the year also bolstered our return.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
February 13, 2006
2
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
COMPARISON OF CHANGE IN VALUE OF A $50,000 INVESTMENT IN THE GABELLI ABC FUND,
THE LIPPER U.S. TREASURY MONEY MARKET AVERAGE AND THE S&P 500 INDEX
Gabelli ABC Lipper U.S. Treasury S&P 500
Fund Money Market Average Index
5/14/93 $ 50,000 $50,000 $ 50,000
12/31/93 54,550 50,815 54,045
12/31/94 57,021 52,649 54,753
12/31/95 63,396 55,456 75,302
12/31/96 68,335 58,090 92,584
12/31/97 77,047 60,692 123,460
12/31/98 85,630 63,527 158,770
12/31/99 93,337 66,233 192,159
12/31/00 103,464 69,902 174,673
12/31/01 108,182 72,251 153,904
12/31/02 109,123 72,995 119,907
12/31/03 114,514 73,302 154,284
12/31/04 116,724 73,734 171,054
12/31/05 122,537 75,445 179,453
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, 2005 (A)
----------------------------------------------------
Since
Inception
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR (5/14/93)
- -----------------------------------------------------------------------------------------------------------------
GABELLI ABC FUND .............................. 1.38% 4.98% 3.94% 3.44% 6.81% 7.35%
S&P 500 Index ................................. 2.08 4.91 14.38 0.54 9.07 10.64
Lipper U.S. Treasury Money Market Avg. ........ 0.77 2.32 1.11 1.54 3.20 3.37(b)
(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. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA PRESENTED. RETURNS WOULD HAVE BEEN LOWER IF CERTAIN
EXPENSES OF THE FUND HAD NOT BEEN WAIVED OR REIMBURSED SINCE APRIL 2002.
VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT
MONTH-END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS,
CHARGES, AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS
CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ
CAREFULLY BEFORE INVESTING. 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.
(b) FROM APRIL 30, 1993, THE DATE CLOSEST TO THE FUND'S INCEPTION FOR WHICH DATA
IS AVAILABLE.
- --------------------------------------------------------------------------------
3
THE GABELLI ABC FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2005 through December 31, 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 would be
described in the Prospectus. If these costs were applied to your account, your
costs would be higher. Therefore, the 5% hypothetical return is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. The "Annualized Expense Ratio" represents the
actual expenses for the last six months and may be different from the expense
ratio in the Financial Highlights which is for the year ended December 31, 2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/05 12/31/05 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI ABC FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Gabelli ABC Fund $1,000.00 $1,032.00 0.62% $3.18
HYPOTHETICAL 5% RETURN
Gabelli ABC Fund $1,000.00 $1,022.08 0.62% $3.16
* 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.
4
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2005:
THE GABELLI ABC FUND
Health Care ................................... 14.4%
Food and Beverage ............................. 12.8%
U.S. Government Obligations ................... 11.4%
Computer Software and Services ................ 9.8%
Wireless Communications ....................... 9.4%
Telecommunications ............................ 9.1%
Energy and Utilities .......................... 4.1%
Hotels and Gaming ............................. 4.1%
Real Estate ................................... 3.6%
Metals and Mining ............................. 2.3%
Financial Services ............................ 2.2%
Automotive: Parts and Accessories ............. 1.3%
Business Services ............................. 0.9%
Consumer Products ............................. 0.9%
Diversified Industrial ........................ 0.8%
Broadcasting .................................. 0.7%
Cable and Satellite ........................... 0.6%
Consumer Services ............................. 0.5%
Publishing .................................... 0.5%
Electronics ................................... 0.4%
Transportation ................................ 0.4%
Equipment and Supplies ........................ 0.3%
Retail ........................................ 0.2%
Aviation: Parts and Services .................. 0.1%
Entertainment ................................. 0.1%
Computer Hardware ............................. 0.0%
Communications Equipment ...................... 0.0%
Home Furnishings .............................. 0.0%
Other Assets and Liabilities - (Net) .......... 9.1%
--------
100.0%
========
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 ENDED SEPTEMBER 30, 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, procedures, and how the Fund voted proxies
relating to portfolio securities 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.
5
THE GABELLI ABC FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 78.4%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.3%
26,537 BERU AG ................... $ 2,328,889 $ 2,230,607
15,000 Dana Corp. ................ 191,574 107,700
5,000 Federal-Mogul Corp.+ ...... 14,938 1,800
------------ ------------
2,535,401 2,340,107
------------ ------------
AVIATION: PARTS AND SERVICES -- 0.1%
500 Aviall Inc.+ .............. 4,419 14,400
14,000 Fairchild Corp.,
Cl. A+ .................. 83,210 35,700
8,000 Kaman Corp. ............... 140,332 157,520
------------ ------------
227,961 207,620
------------ ------------
BROADCASTING -- 0.7%
10,000 Cogeco Inc. ............... 194,809 206,461
53,500 Crown Media Holdings
Inc., Cl. A+ ............ 566,521 490,595
10,000 Liberty Corp. ............. 457,248 468,100
500 Salem Communications
Corp., Cl. A+ ........... 3,895 8,745
------------ ------------
1,222,473 1,173,901
------------ ------------
BUSINESS SERVICES -- 0.0%
1,000 CCC Information Services
Group Inc.+ ............. 26,209 26,220
------------ ------------
CABLE AND SATELLITE -- 0.6%
30,000 Cablevision Systems
Corp., Cl. A+ ........... 721,067 704,100
12,000 PanAmSat Holding
Corp. ................... 288,600 294,000
------------ ------------
1,009,667 998,100
------------ ------------
COMPUTER HARDWARE -- 0.0%
1,000 Maxtor Corp.+ ............. 6,910 6,940
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 9.8%
31,000 Anteon International
Corp.+ .................. 1,677,741 1,684,850
300,000 Micromuse Inc.+ ........... 2,969,700 2,967,000
1,000 NEON Systems Inc.+ ........ 6,130 6,170
1,200,000 Siebel Systems Inc. ....... 12,514,981 12,696,000
1,215,000 StorageNetworks Inc.
Escrow+ (a) ............. 0 36,450
------------ ------------
17,168,552 17,390,470
------------ ------------
CONSUMER PRODUCTS -- 0.9%
60,000 Levcor International
Inc.+ ................... 140,640 45,000
3,000 Maytag Corp. .............. 56,249 56,460
33,000 Packaging Dynamics
Corp. ................... 210,615 368,610
15,000 Reebok International
Ltd. .................... 851,878 873,450
61,035 Revlon Inc., Cl. A+ ....... 120,178 189,208
270 Vector Group Ltd. ......... 4,270 4,906
------------ ------------
1,383,830 1,537,634
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
CONSUMER SERVICES -- 0.5%
14,000 IAC/InterActiveCorp+ ...... $ 342,813 $ 396,340
15,000 Provide Commerce
Inc.+ ................... 500,091 496,650
------------ ------------
842,904 892,990
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.7%
6,000 Ampco-Pittsburgh
Corp. ................... 69,606 87,060
55,120 Harbor Global Co.
Ltd.+ ................... 267,922 496,080
3,000 Honeywell
International Inc. ...... 109,642 111,750
3,000 Katy Industries
Inc.+ ................... 17,440 9,300
50,000 WHX Corp.+ ................ 782,112 507,500
------------ ------------
1,246,722 1,211,690
------------ ------------
ELECTRONICS -- 0.4%
4,000 Integrated Device
Technology Inc.+ ........ 44,659 52,720
500 Leica Geosystems AG ....... 220,139 218,789
80,000 Monolithic System
Technology Inc.+ ........ 393,644 440,000
1,140 Safran SA ................. 21,363 27,263
------------ ------------
679,805 738,772
------------ ------------
ENERGY AND UTILITIES -- 4.0%
10,000 Burlington Resources
Inc. .................... 860,010 862,000
165,000 Endesa SA ................. 4,202,008 4,340,512
664 Kerr-McGee Corp. .......... 32,506 60,331
23,000 Northeast Utilities ....... 412,975 452,870
715 Petrohawk Energy
Corp.+ .................. 7,894 9,452
25,000 Progress Energy
Inc., CVO+ .............. 13,000 1,812
44,000 Suez SA ................... 1,487,811 1,368,961
44,000 Suez SA, Strips+ .......... 0 521
1,000 Vintage Petroleum
Inc. .................... 49,160 53,330
------------ ------------
7,065,364 7,149,789
------------ ------------
ENTERTAINMENT -- 0.1%
1,001 Chestnut Hill
Ventures+ (a) ........... 3,750 21,501
5,000 Dave & Buster's
Inc.+ ................... 88,350 88,050
1,000 Discovery Holding
Co., Cl. A+ ............. 12,527 15,150
10,000 Liberty Media Corp.,
Cl. A+ .................. 76,951 78,700
------------ ------------
181,578 203,401
------------ ------------
EQUIPMENT AND SUPPLIES -- 0.3%
1,000 Ault Inc.+ ................ 2,863 2,860
25,000 Baldwin Technology
Co. Inc., Cl. A+ ........ 59,500 101,250
4,500 HeidelbergCement AG ....... 327,161 400,949
------------ ------------
389,524 505,059
------------ ------------
FINANCIAL SERVICES -- 2.2%
3,000 Amvescap plc, ADR ......... 43,670 46,170
16,900 Argonaut Group Inc.+ ...... 384,000 553,813
22,000 Banca Antonveneta
SpA ..................... 694,349 684,741
20,000 Collegiate Funding
Services Inc.+ .......... 393,300 395,000
See accompanying notes to financial statements.
6
THE GABELLI ABC FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
1,000 Cornerstone
Bancorp Inc. ............ $ 33,900 $ 35,200
16,000 Fifth Third Bancorp ....... 751,840 603,520
1,000 First Data Corp. .......... 28,875 43,010
25,000 Gold Banc Corp. Inc. ...... 375,646 455,500
1,500 Leucadia
National Corp. .......... 30,175 71,190
36,000 MBNA Corp. ................ 934,760 977,400
------------ ------------
3,670,515 3,865,544
------------ ------------
FOOD AND BEVERAGE -- 12.8%
12,100 Cruzan International
Inc.+ ................... 340,571 338,921
20,000 Denny's Corp.+ ............ 49,969 80,600
260,000 Dreyer's Grand Ice
Cream Holdings Inc.,
Cl. A ................... 20,321,677 21,548,800
500 Genesee Corp.,
Cl. A+ .................. 750 812
12,200 Genesee Corp.,
Cl. B+ .................. 4,466 20,740
142,100 Grupo Continental
SA ...................... 218,331 235,887
10,000 Pernod Ricard
SA, ADR ................. 417,494 434,665
1,000 Vincor International
Inc.+ ................... 26,291 26,642
------------ ------------
21,379,549 22,687,067
------------ ------------
HEALTH CARE -- 14.4%
120,000 Animas Corp.+ ............. 2,885,600 2,898,000
182,500 Beverly
Enterprises Inc.+ ....... 2,326,250 2,129,775
250,000 Chiron Corp.+ ............. 11,067,519 11,115,000
45,000 Guidant Corp. ............. 3,046,113 2,913,750
70,000 IDX Systems Corp.+ ........ 3,024,057 3,074,400
25,000 IMS Health Inc. ........... 641,065 623,000
1,000 INAMED Corp.+ ............. 69,444 87,680
1,000 OSI Pharmaceuticals
Inc.+ ................... 25,690 28,040
50,000 Renal Care Group
Inc.+ ................... 2,308,185 2,365,500
10,000 Serono SA, ADR ............ 182,570 198,600
------------ ------------
25,576,493 25,433,745
------------ ------------
HOTELS AND GAMING -- 4.1%
22,000 GTECH Holdings Corp. ...... 724,970 698,280
530,000 La Quinta Corp.+ .......... 5,812,625 5,904,200
17,000 Las Vegas Sands
Corp.+ .................. 626,367 670,990
------------ ------------
7,163,962 7,273,470
------------ ------------
METALS AND MINING -- 2.3%
39,000 Alcan Inc. ................ 1,520,654 1,597,050
7,500 Dofasco Inc. .............. 387,655 419,244
40,000 Falconbridge Ltd. ......... 963,328 1,187,148
20,000 Gold Fields Ltd.,
ADR ..................... 255,907 352,600
12,500 Novelis Inc. .............. 288,976 261,125
10,000 Placer Dome Inc. .......... 207,279 229,300
10,000 Royal Oak
Mines Inc.+ ............. 11,858 23
------------ ------------
3,635,657 4,046,490
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
PUBLISHING -- 0.5%
25,000 Dow Jones & Co. Inc. ...... $ 993,336 $ 887,250
------------ ------------
REAL ESTATE -- 3.6%
10,000 Amli Residential
Properties Trust ........ 376,591 380,500
50,000 Arden Realty Inc. ......... 2,261,750 2,241,500
20,000 CenterPoint
Properties Trust ........ 991,877 989,600
5,000 CRIIMI MAE Inc.+ .......... 97,570 99,000
72,000 Griffin Land &
Nurseries Inc.+ ......... 1,662,413 1,879,560
316 HomeFed Corp. ............. 566 21,172
500 ProLogis .................. 11,325 23,360
20,000 Town & Country Trust ...... 676,480 676,200
------------ ------------
6,078,572 6,310,892
------------ ------------
RETAIL -- 0.2%
20,000 Albertson's Inc. .......... 448,536 427,000
1,000 Hudson's Bay Co. .......... 13,134 12,749
1,000 Saks Inc.+ ................ 17,450 16,860
------------ ------------
479,120 456,609
------------ ------------
TELECOMMUNICATIONS -- 9.1%
20,000 Corning Inc.+ ............. 264,342 393,200
31,900 MCI Inc. .................. 760,002 629,387
210,000 Scientific-
Atlanta Inc. ............ 8,897,201 9,044,700
100,000 TDC A/S ................... 5,802,070 5,990,162
3,000 Telegroup Inc.+ ........... 31 1
1,000 Telindus Group NV+ ........ 19,395 20,008
------------ ------------
15,743,041 16,077,458
------------ ------------
TRANSPORTATION -- 0.4%
80,000 Peninsular & Oriental
Steam Navigation Co. .... 605,141 641,398
------------ ------------
WIRELESS COMMUNICATIONS -- 9.4%
450,000 Alamosa Holdings
Inc.+ ................... 8,310,210 8,374,500
500 American Tower Corp.,
Cl. A+ .................. 7,707 13,550
14,000 Metricom Inc.+ ............ 1,680 28
200,000 Nextel Partners Inc.,
Cl. A+ .................. 5,572,220 5,588,000
650,000 O2 plc .................... 2,304,041 2,211,474
10,000 Telesystem International
Wireless Inc. ........... 0 80
10,000 United States
Cellular Corp.+ ......... 466,745 494,000
50,000 Winstar Communications
Inc.+ (a) ............... 2,125 50
------------ ------------
16,664,728 16,681,682
------------ ------------
TOTAL COMMON STOCKS ....... 135,977,014 138,744,298
------------ ------------
See accompanying notes to financial statements.
7
THE GABELLI ABC FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2005
================================================================================
MARKET
SHARES COST VALUE
------ ---- ------
PREFERRED STOCKS -- 0.0%
COMMUNICATIONS EQUIPMENT -- 0.0%
RSL Communications Ltd.,
2,000 7.500% Cv. Pfd.,
Ser. A+ (a)(b) .......... $ 185 $ 0
1,000 7.500% Cv.
Pfd.+ (a)(b) ............ 93 0
------------ ------------
278 0
------------ ------------
HOME FURNISHINGS -- 0.0%
8,000 O'Sullivan Industries
Holdings Inc.,
12.000% Pfd.+ ........... 4,750 2
------------ ------------
TOTAL PREFERRED
STOCKS .................. 5,028 2
------------ ------------
PRINCIPAL
AMOUNT
------
CORPORATE BONDS -- 0.7%
BUSINESS SERVICES -- 0.6%
$1,500,000 GP Strategies Corp.,
Sub. Deb., 6.000%,
08/14/08 (a)(c) ......... 1,181,701 1,001,931
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
100,000 Exodus Communications
Inc., Sub. Deb. Cv.,
5.250%,
02/15/08+ (a)(b) ........ 2,250 0
------------ ------------
ENERGY AND UTILITIES -- 0.1%
250,000 Mirant Corp., Deb. Cv.,
2.500%,
06/15/21+ (b) ........... 188,752 268,906
------------ ------------
RETAIL -- 0.0%
200,000 RDM Sports Group Inc.,
Sub. Deb.,8.000%,
08/15/03+ (a)(b) ........ 4,000 0
------------ ------------
TRANSPORTATION -- 0.0%
850,000 Builders Transport Inc.,
Sub. Deb. Cv., 6.500%,
05/01/11+ (a)(b) ........ 8,500 0
------------ ------------
TOTAL CORPORATE
BONDS ................... 1,385,203 1,270,837
------------ ------------
SHARES
------
WARRANTS -- 0.4%
BUSINESS SERVICES -- 0.3%
196,823 GP Strategies Corp.,
expire
08/14/08+ (a)(c) ........ 477,799 635,421
------------ ------------
CONSUMER PRODUCTS -- 0.0%
10,396 Pillowtex Corp.,
expire 11/24/09+ ........ 45,461 1
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
DIVERSIFIED INDUSTRIAL -- 0.1%
284,777 National Patent
Development Corp.,
expire
08/14/08+ (a)(c) ........ $ 0 $ 111,295
6,533 WHX Corp.,
expire 02/28/08+ ........ 53,205 11,923
------------ ------------
53,205 123,218
------------ ------------
TOTAL WARRANTS ............ 576,465 758,640
------------ ------------
PRINCIPAL
AMOUNT
------
U.S. GOVERNMENT OBLIGATIONS -- 11.4%
$20,308,000 U.S. Treasury Bills,
3.506% to 3.947%++,
01/12/06 to
03/23/06 ................ 20,186,577 20,184,430
------------ ------------
TOTAL
INVESTMENTS --
90.9% ................... $158,130,287 160,958,207
============
OTHER ASSETS AND
LIABILITIES
(NET) -- 9.1% ........... 16,031,130
------------
NET ASSETS -- 100.0% ...... $176,989,337
============
- ----------------
(a) Security fair valued under procedures established by the Board of Directors.
The procedures may include reviewing available financial information about
the company and reviewing valuation of comparable securities and other
factors on a regular basis. At December 31, 2005, the market value of fair
valued securities amounted to $1,806,648 or 1.02% of total net assets.
(b) Security in default.
(c) At December 31, 2005, the Fund held investments in restricted and illiquid
securities amounting to $1,748,647 or 0.99% of net assets, which were valued
under methods approved by the Board as follows:
ACQUISITION 12/31/05
SHARES/ CARRYING
PRINCIPAL ACQUISITION ACQUISITION VALUE
AMOUNT ISSUER DATE COST PER UNIT
------ ------ ----------- ----------- --------
284,777 National Patent Development Corp.
warrants expire 08/14/08 ........ 11/24/04 $ 0.00 $ 0.3908
196,823 GP Strategies Corp.
warrants expire 08/14/08 ........ 08/08/03 477,799 3.2284
$1,500,000 GP Strategies Corp., Sub. Deb.,
6.000%, 08/14/08 ................ 08/08/03 1,022,201 66.7954
+ 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.
8
THE GABELLI ABC FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
================================================================================
ASSETS:
Investments, at value (cost $158,130,287) ................ $ 160,958,207
Foreign currency, at value (cost $15,488,010) ............ 15,381,344
Cash ..................................................... 817
Receivable for investments sold .......................... 698,023
Dividends and interest receivable ........................ 107,267
Receivable for Fund shares sold .......................... 150
Other assets ............................................. 7,483
-------------
TOTAL ASSETS ............................................. 177,153,291
-------------
LIABILITIES:
Payable for investment advisory fees ..................... 78,206
Payable for shareholder communications expenses .......... 36,405
Payable for legal and audit fees ......................... 26,069
Other accrued expenses ................................... 23,274
-------------
TOTAL LIABILITIES ........................................ 163,954
-------------
NET ASSETS applicable to 17,969,190
shares outstanding .................................... $ 176,989,337
=============
NET ASSETS CONSIST OF:
Capital stock, at $0.001 par value ....................... $ 17,969
Additional paid-in capital ............................... 174,606,633
Accumulated distributions in excess
of net investment income ............................... (133,555)
Accumulated distributions in excess
of net realized gain on investments and
foreign currency transactions .......................... (213,927)
Net unrealized appreciation on investments ............... 2,827,920
Net unrealized depreciation on
foreign currency translations ........................ (115,703)
-------------
NET ASSETS ............................................... $ 176,989,337
=============
NET ASSET VALUE, offering and redemption price per
share ($176,989,337 / 17,969,190 shares outstanding;
1,000,000,000 shares authorized) ...................... $9.85
=====
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $11,876) ............... $ 1,008,800
Interest .................................................. 3,463,391
------------
TOTAL INVESTMENT INCOME ................................... 4,472,191
------------
EXPENSES:
Investment advisory fees .................................. 2,369,551
Shareholder communications expenses ....................... 66,063
Shareholder services fees ................................. 51,258
Custodian fees ............................................ 44,573
Legal and audit fees ...................................... 39,984
Registration fees ......................................... 24,689
Directors' fees ........................................... 9,655
Miscellaneous expenses .................................... 87,007
------------
TOTAL EXPENSES ............................................ 2,692,780
Less:
Custodian fee credits ..................................... (27,751)
Fees waived (see Note 3) .................................. (1,184,775)
------------
NET EXPENSES .............................................. 1,480,254
------------
NET INVESTMENT INCOME ..................................... 2,991,937
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments .......................... 6,808,595
Net realized loss on foreign currency transactions ........ (57,649)
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations ........ 862,232
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ........................ 7,613,178
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... $ 10,605,115
============
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
OPERATIONS:
Net investment income ............................................... $ 2,991,937 $ 2,577,778
Net realized gain on investments and foreign currency transactions .. 6,750,946 2,617,205
Net change in unrealized appreciation/depreciation on
investments and foreign currency translations ..................... 862,232 620,592
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ 10,605,115 5,815,575
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ............................................... (2,627,453) (2,296,707)
Net realized gain on investments .................................... (5,954,327) (2,840,663)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................. (8,581,780) (5,137,370)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net increase (decrease) in net assets from capital share transactions (126,289,556) 6,506,698
------------- -------------
REDEMPTION FEES ..................................................... 332 27
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ............................... (124,265,889) 7,184,930
NET ASSETS:
Beginning of period ................................................. 301,255,226 294,070,296
------------- -------------
End of period (including undistributed net investment
income of $0 and $0, respectively) ................................ $ 176,989,337 $ 301,255,226
============= =============
See accompanying notes to financial statements.
9
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 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 Directors (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on 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 with remaining maturities of 60 days or less that
are not credit impaired are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be 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 average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. 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.
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
10
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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, 2005, there were no open 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.
There are several risks in connection with the use of futures contracts as a
hedging instrument. 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. At December 31, 2005, there were no
open futures contracts.
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. The Fund did not hold any
short positions as of December 31, 2005.
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 translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. At December 31, 2005, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. 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 current exchange
rates. Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and
11
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable, based upon its current
interpretation of tax rules and regulations that exist in the markets in which
it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its net
assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely salable among qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission (the "SEC") may be treated as liquid if they satisfy
liquidity standards established by the Board. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and
accordingly the Board will monitor their liquidity.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
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.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody account,
the Fund receives credits which are used to offset custodian fees. The gross
expenses paid under the custody arrangement are included in custodian fees in
the Statement of Operations with the corresponding expense offset shown as
"custodian fee credits".
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on income and capital gains as determined in accordance with Federal
income tax regulations, which may differ from income and capital gains as
determined under U.S. generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities and foreign currency transactions held by the
Fund, timing differences, and differing characterizations of distributions made
by the Fund. Distributions from net investment income include net realized gains
on foreign currency transactions. 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 when the
differences arise. These reclassifications have no impact on the net asset value
("NAV") of the Fund, including the Fund's use of the tax accounting practice
known as equalization, and the calculation of net
12
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
investment income per share in the Financial Highlights excludes these
adjustments. For the year ended December 31, 2005, reclassifications were made
to increase accumulated distributions in excess of net investment income by
$420,539 and to increase accumulated distributions in excess of net realized
gain on investments by $916,684, with an offsetting adjustment to additional
paid-in capital.
The tax character of distributions paid during the fiscal years ended December
31, 2005 and December 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income (inclusive of
short-term capital gains) ...... $9,621,608 $5,386,566
Net long-term capital gains ...... 191,573 --
---------- ----------
Total distributions paid ......... $9,813,181 $5,386,566
========== ==========
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, 2005, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Net unrealized appreciation ............. $2,519,735
Other temporary differences ............. (155,000)
----------
Total accumulated gain .................. $2,364,735
==========
The following summarizes the tax cost of investments and related unrealized
appreciation/depreciation at December 31, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ...$158,322,769 $4,919,474 $(2,284,036) $2,635,438
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 Directors of the Fund who are affiliated persons of the Adviser.
Since April 1, 2002, the Adviser has voluntarily agreed to reduce its advisory
fee by 0.50%, but may increase or decrease the advisory fee rate reduction at
any time. The Fund's expenses were reduced by $1,184,775 for the year ended
December 31, 2005. Such amounts are not recoverable in future years.
4. DISTRIBUTION PLAN. The Board of Directors of the Fund approved the
elimination of the Fund's distribution and service plan (the "Plan") adopted by
the Fund pursuant to rule 12b-1 under the 1940 Act effective as of February 25,
2004.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2005, other than short-term securities, aggregated
$380,133,040 and $149,151,427, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 2005, the
Fund paid brokerage commissions of $226,313 to Gabelli & Company.
13
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the year ended
December 31, 2005, the Fund reimbursed the Adviser $45,000 in connection with
the cost of computing the Fund's NAV, which is included in miscellaneous
expenses in the Statement of Operations.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit of 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. During the year ended December 31, 2005, there were no
borrowings from the line of credit.
8. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as
follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------
Shares sold ................... 593,644 $ 5,899,245 5,283,745 $ 52,102,231
Shares issued upon
reinvestment of dividends .. 640,813 6,305,599 396,288 3,899,474
Shares redeemed ............... (13,838,307) (138,494,400) (5,013,498) (49,495,007)
----------- ------------- ---------- ------------
Net increase (decrease) ..... (12,603,850) $(126,289,556) 666,535 $ 6,506,698
=========== ============= ========== ============
Effective June 15, 2005 the Fund imposed a redemption fee of 2.00% on Fund
shares that are redeemed or exchanged on or before the seventh day after the
date of a purchase. (From November 1, 2004 through June 14, 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 fees retained by the Fund during the years ended
December 31, 2005 and December 31, 2004 amounted to $332 and $27, respectively.
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.
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. 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 trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc., the Adviser's parent company, is responding to these
requests for documents and testimony. On a separate matter, in September 2005,
the Adviser was informed by the staff of the SEC that the staff may recommend to
the Commission that an administrative remedy and a monetary penalty be sought
from the Adviser in connection with the actions of two of seven closed-end funds
managed by the Adviser relating to Section 19(a) and Rule 19a-1 of the 1940 Act.
These provisions require registered investment companies to provide written
statements to shareholders when a dividend is made from a source other than net
investment income. While the two closed-end funds sent annual statements and
provided other materials containing this information, the funds did not send
written statements to shareholders with each distribution in 2002 and 2003. The
Adviser believes that all of the funds are now in compliance. The Adviser
believes that these matters would have no effect on the Fund or any material
adverse effect on the Adviser or its ability to manage the Fund.
14
THE GABELLI ABC FUND
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2005 2004 2003 2002 2001
------ ------ ------ ------ ------
OPERATING PERFORMANCE:
Net asset value, beginning of period .................. $ 9.85 $ 9.83 $ 9.64 $ 9.65 $ 9.45
-------- -------- -------- -------- --------
Net investment income ................................. 0.17 0.08 0.05 0.07 0.10
Net realized and unrealized gain on investments ....... 0.32 0.11 0.43 0.01 0.33
-------- -------- -------- -------- --------
Total from investment operations ...................... 0.49 0.19 0.48 0.08 0.43
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ................................. (0.15) (0.08) (0.01) (0.05) (0.09)
Net realized gain on investments ...................... (0.34) (0.09) (0.28) (0.04) (0.14)
-------- -------- -------- -------- --------
Total distributions ................................... (0.49) (0.17) (0.29) (0.09) (0.23)
-------- -------- -------- -------- --------
REDEMPTION FEES .......................................... 0.00(b) 0.00(b) -- -- --
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ........................ $ 9.85 $ 9.85 $ 9.83 $ 9.64 $ 9.65
======== ======== ======== ======== ========
Total return+ ......................................... 5.0% 1.9% 4.9% 0.9% 4.6%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .................. $176,989 $301,255 $294,070 $261,014 $167,409
Ratio of net investment income to
average net assets ................................. 1.26% 0.83% 0.59% 0.74% 1.43%
Ratio of operating expenses to average
net assets before fees waived ....................... 1.14% 1.15% 1.40% 1.39% 1.46%(a)
Ratio of operating expenses to average
net assets net of fees waived ....................... 0.64%(c) 0.61% 0.65% 0.99% 1.46%(a)
Portfolio turnover rate ............................... 127% 141% 244% 252% 308%
- ---------
+ 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 year ended December 31, 2001.
If interest expense had not been incurred, the ratio of operating expenses
to average net assets would have been 1.44%.
(b) Amount represents less than $0.005 per share.
(c) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian fee
credits, the expense ratio for the year ended December 31, 2005 would be
0.62%.
See accompanying notes to financial statements.
15
THE GABELLI ABC FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Directors of
Gabelli Investor Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The Gabelli ABC Fund (the "Fund"), a series of
Gabelli Investor Funds, Inc., as of December 31, 2005, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and financial highlights for
each of the three years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each of
the two years in the period ended December 31, 2002 were audited by other
auditors whose report dated January 31, 2003, expressed an unqualified opinion
on those financial statements.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the Fund's
custodian. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Gabelli ABC Fund, a series of Gabelli Investor Funds, Inc., at December 31,
2005, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 14, 2006
16
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 4
- ----------------- ------------- ---------------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
- ----------------------
MARIO J. GABELLI Since 1993 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of GAMCO Investors, Inc. and Holdings, Inc. (holding
Chief Investment Officer Chief Investment Officer - Value company)
Age: 63 Portfolios of Gabelli Funds, LLC
and GAMCO Asset Management Inc.;
Chairman and Chief Executive
Officer of Lynch Interactive
Corporation (multimedia and
services)
NON-INTERESTED DIRECTORS:
- ------------------------
ANTHONY J. COLAVITA Since 1993 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 70
VINCENT D. ENRIGHT Since 1993 14 Former Senior Vice President and Director of Aphton
Director Chief Financial Officer of Corporation
Age: 62 KeySpan Energy Corporation (biopharmaceuticals)
MARY E. HAUCK Since 2000 3 Retired Senior Manager of the Gabelli --
Director O'Connor Fixed Income Mutual Funds
Age: 63 Management Company
WERNER J. ROEDER, MD Since 1993 23 Medical Director of Lawrence Hospital and --
Director practicing private physician
Age: 65
17
THE GABELLI ABC FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS 1 LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED 2 DURING PAST FIVE YEARS
- ----------------- ------------- ----------------------
OFFICERS:
- --------
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating
President and Treasurer Officer of Gabelli Funds, LLC since 1988 and
Age: 54 an officer of all of the registered investment
companies in the Gabelli Funds complex. Director
and President of Gabelli Advisers, Inc. since
1998.
JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of
Vice President and GAMCO Investors, Inc. since 1999 and GAMCO
Secretary Asset Management Inc. since 1993; Secretary of
Age:42 all of the registered investment companies in
the Gabelli Funds complex.
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs for GAMCO Investors, Inc.
Chief Compliance Officer since 2004; Chief Compliance Officer of all of the
Age: 52 registered investment companies in the Gabelli
Funds complex; Vice President of Goldman Sachs
Asset Management from 2000 through 2004.
- ---------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Fund's By-Laws and Articles of Incorporation. Each officer will hold office
for an indefinite term until the date he or she resigns or retires or until
his or her successor is elected and qualified. Effective November 16, 2005,
Mr. Karl Otto Pohl resigned from the Board of Directors and now serves as
Director Emeritus.
3 "Interested person" of the Fund as defined in the Investment Company Act of
1940. Mr. Gabelli is considered an "interested person" because of his
affiliation with Gabelli Funds, LLC which acts as the Fund's investment
adviser.
4 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934 (i.e. public companies) or
other investment companies registered under the 1940 Act.
- --------------------------------------------------------------------------------
2005 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2005, the Fund paid to shareholders an
ordinary income dividend (comprised of net investment income and short-term
capital gains) totaling $0.48 and a distribution from long-term capital gain
totaling $0.01 per share which is designated as a capital gain dividend. For
the fiscal year ended December 31, 2005, 6.46% of the ordinary income dividend
qualifies for the dividend received deduction available to corporations, and
11.06% of the ordinary income distribution was qualified dividend income.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
year 2005 which was derived from U.S. Treasury securities was 22.94%. 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 did not meet this strict requirement in 2005.
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.
- --------------------------------------------------------------------------------
18
- --------------------------------------------------------------------------------
GABELLI FUNDS AND YOUR PERSONAL PRIVACY
================================================================================
WHO ARE WE?
The Gabelli/GAMCO 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 and Gabelli Advisers, Inc.,
which are affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. 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.
- --------------------------------------------------------------------------------
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 FORMER SENIOR PORTFOLIO MANAGER
EXECUTIVE OFFICER GABELLI-O'CONNOR FIXED INCOME
GAMCO INVESTORS, INC. MUTUAL FUND MANAGEMENT CO.
Anthony J. Colavita Werner J. Roeder, MD
ATTORNEY-AT-LAW MEDICAL DIRECTOR
ANTHONY J. COLAVITA, P.C. LAWRENCE HOSPITAL
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
KEYSPAN ENERGY CORP.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter D. Goldstein
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 ABC Fund. It is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB408Q405AR
[GRAPHIC OMITTED]
TRIANGLE ART
THE
GABELLI
ABC
FUND
ANNUAL REPORT
DECEMBER 31, 2005
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that 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 Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$28,900 in 2005 and $26,300 in 2004.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 in 2005 and $0 in 2004.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $3,600 in 2005 and $3,400
in 2004.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
in 2005 and $0 in 2004.
(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 the Adviser, Gabelli
Funds, LLC, and any affiliate of Gabelli Funds, LLC ("Gabelli") that
provides services to the registrant (a "Covered Services Provider") if
the independent auditors' engagement related directly to the operations
and financial reporting of the registrant. The Committee may delegate
its responsibility to pre-approve any such audit and permissible
non-audit services to the Chairperson of the Committee, and the
Chairperson must report to the Committee, at its next regularly
scheduled meeting after the Chairperson's pre-approval of such
services, his or her decision(s). The Committee may also establish
detailed pre-approval policies and procedures for pre-approval of such
services in accordance with applicable laws, including the delegation
of some or all of the Committee's pre-approval responsibilities to the
other persons (other than Gabelli or the registrant's officers).
Pre-approval by the Committee of any permissible non-audit services is
not required so long as: (i) the 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 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 $68,600 in 2005 and $68,400 in 2004.
(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. 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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
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.
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date March 8, 2006
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert,
Principal Executive Officer & Principal
Financial Officer
Date March 8, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.