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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GAMCO 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, 2006
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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, 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.
GAMCO MATHERS FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
TO OUR SHAREHOLDERS,
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 14, 2006
GAMCO MATHERS FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2006 through June 30, 2006
EXPENSE TABLE
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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 six months ended June 30,
2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/06 06/30/06 Ratio Period*
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GAMCO MATHERS FUND
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ACTUAL FUND RETURN
GAMCO Mathers $1,000.00 $1,019.20 2.18% $10.91
HYPOTHETICAL 5% RETURN
GAMCO Mathers $1,000.00 $1,013.98 2.18% $10.89
* 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
as of June 30, 2006:
GAMCO MATHERS FUND -
LONG POSITIONS PERCENT
U.S. Government Obligations ....................... 76.1
Repurchase Agreements ............................. 6.0
Computer Software and Services .................... 4.1
Environmental Services ............................ 3.2
Aerospace ......................................... 2.3
Health Care ....................................... 2.2
Financial Services ................................ 1.8
Diversified Industrial ............................ 1.7
Food and Beverage ................................. 1.6
Telecommunications ................................ 0.5
Publishing ........................................ 0.5
Broadcasting ...................................... 0.2
Equipment ......................................... 0.2
Energy and Utilities .............................. 0.2
Other Assets and Liabilities (Net) ................ 23.4
GAMCO MATHERS FUND -
SHORT POSITIONS PERCENT
Exchange Traded Funds ............................. (8.7)
Retail ............................................ (3.8)
Automotive ........................................ (2.6)
Entertainment ..................................... (2.4)
Consumer Products ................................. (1.3)
Computer Software and Services .................... (1.3)
Equipment ......................................... (1.1)
Restaurants ....................................... (1.0)
Home Furnishings .................................. (0.8)
Real Estate ....................................... (0.8)
Metals and Mining ................................. (0.2)
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 MARCH 31, 2006. 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 is 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
GAMCO MATHERS FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED)
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MARKET
SHARES COST VALUE
------- ---- -------
COMMON STOCKS -- 18.5%
AEROSPACE -- 2.3%
10,000 L-3 Communications
Holdings Inc. ..................$ 771,908 $ 754,200
----------- -----------
BROADCASTING -- 0.2%
5,000 DIRECTV Group Inc.+ .............. 71,730 82,500
----------- -----------
COMPUTER SOFTWARE AND SERVICES -- 4.1%
20,000 CACI International Inc.,
Cl. A+ ......................... 1,171,105 1,166,600
3,000 ManTech International Corp.,
Cl. A+ ......................... 87,098 92,580
3,000 SRA International Inc., Cl. A+ ... 85,240 79,890
----------- -----------
1,343,443 1,339,070
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DIVERSIFIED INDUSTRIAL -- 1.7%
20,000 Tyco International Ltd. .......... 526,463 550,000
----------- -----------
ENERGY AND UTILITIES -- 0.2%
1,000 Murphy Oil Corp. ................. 45,793 55,860
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ENVIRONMENTAL SERVICES -- 3.2%
3,000 Veolia Environnement, ADR ........ 101,550 155,160
25,000 Waste Management Inc. ............ 746,510 897,000
----------- -----------
848,060 1,052,160
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EQUIPMENT -- 0.2%
5,000 Ultratech Inc.+ .................. 79,836 78,700
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FINANCIAL SERVICES -- 1.8%
35,000 New York Community
Bancorp Inc. ................... 616,562 577,850
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FOOD AND BEVERAGE -- 1.6%
20,000 Hain Celestial Group Inc.+ ....... 388,061 515,200
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HEALTH CARE -- 2.2%
10,000 Abbott Laboratories .............. 427,750 436,100
8,000 Baxter International Inc. ........ 265,459 294,080
----------- -----------
693,209 730,180
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PUBLISHING -- 0.5%
5,000 Tribune Co. ...................... 154,849 162,150
----------- -----------
TELECOMMUNICATIONS -- 0.5%
10,000 ADC Telecommunications Inc.+ ..... 187,019 168,600
----------- -----------
TOTAL COMMON STOCKS .............. 5,726,933 6,066,470
----------- -----------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -------
SHORT-TERM OBLIGATIONS -- 82.1%
REPURCHASE AGREEMENTS -- 6.0%
$ 1,973,770 State Street Bank & Trust Co.,
4.500%, dated 06/30/06,
due 07/03/06, proceeds at
maturity, $1,974,510 (a) .......$ 1,973,770 $ 1,973,770
----------- -----------
U.S. GOVERNMENT OBLIGATIONS -- 76.1%
25,000,000 U.S. Treasury Bill,
4.736%++, 07/20/06 (b) ......... 24,938,646 24,938,646
----------- -----------
TOTAL SHORT-TERM
OBLIGATIONS .................... 26,912,416 26,912,416
----------- -----------
TOTAL
INVESTMENTS -- 100.6% ..........$32,639,349 32,978,886
===========
SECURITIES SOLD SHORT -- (24.0)%
(Proceeds received $7,993,861) .............. (7,873,050)
-----------
OTHER ASSETS AND LIABILITIES (NET) -- 23.4% ... 7,689,579
-----------
NET ASSETS -- 100.0% ..........................$32,795,415
===========
SHARES PROCEEDS
------ --------
COMMON STOCKS SOLD SHORT -- (24.0)%
AUTOMOTIVE -- (2.6)%
80,000 Ford Motor Co. ................... 712,788 554,400
10,000 General Motors Corp. ............. 266,910 297,900
----------- -----------
979,698 852,300
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COMPUTER SOFTWARE AND SERVICES -- (1.3)%
6,000 Research in Motion Ltd. .......... 416,031 418,620
----------- -----------
CONSUMER PRODUCTS -- (1.3)%
10,000 Polaris Industries Inc. .......... 530,660 433,000
----------- -----------
ENTERTAINMENT -- (2.4)%
10,000 Carnival Corp. ................... 412,973 417,400
10,000 Royal Caribbean Cruises Ltd. ..... 397,800 382,500
----------- -----------
810,773 799,900
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EQUIPMENT -- (1.1)%
8,000 Toro Co. ......................... 403,359 373,600
----------- -----------
See accompanying notes to financial statements.
4
GAMCO MATHERS FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2006 (UNAUDITED)
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MARKET
SHARES PROCEEDS VALUE
------ -------- -------
COMMON STOCKS SOLD SHORT (CONTINUED)
EXCHANGE TRADED FUNDS -- (8.7)%
15,000 iShares Russell 2000 Index .......$ 1,008,119 $ 1,075,950
15,000 iShares S&P SmallCap
600 Index ...................... 877,175 931,500
6,000 MidCap SPDR Trust, Ser. 1 ........ 788,102 835,020
----------- -----------
2,673,396 2,842,470
----------- -----------
HOME FURNISHINGS -- (0.8)%
4,000 Ethan Allen Interiors Inc. ....... 165,395 146,200
9,000 La-Z-Boy Inc. .................... 187,298 126,000
----------- -----------
352,693 272,200
----------- -----------
METALS AND MINING -- (0.2)%
5,000 AK Steel Holding Corp. ........... 65,381 69,150
----------- -----------
REAL ESTATE -- (0.8)%
10,000 CB Richard Ellis Services Inc. ... 231,457 249,000
----------- -----------
RESTAURANTS -- (1.0)%
10,000 McDonald's Corp. ................. 291,901 336,000
----------- -----------
MARKET
SHARES PROCEEDS VALUE
------ -------- -------
RETAIL -- (3.8)%
3,000 Kohl's Corp. .....................$ 142,900 $ 177,360
10,000 The Home Depot Inc. .............. 363,776 357,900
10,000 Tiffany & Co. .................... 304,243 330,200
15,000 Zale Corp. ....................... 427,593 361,350
----------- -----------
1,238,512 1,226,810
----------- -----------
TOTAL COMMON STOCKS
SOLD SHORT .....................$ 7,993,861 $ 7,873,050
=========== ===========
- -----------------
(a) Collateralized by U.S. Treasury Bond, 5.250%, due 02/15/29, market value
$2,013,844.
(b) At June 30, 2006, $25,000,000 of the principal amount was pledged as
collateral for securities sold short.
+ 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
GAMCO MATHERS FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $32,639,349) ................. $ 32,978,886
Dividends and interest receivable ........................ 9,349
Receivable for investments sold .......................... 7,993,861
Other assets ............................................. 1,614
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TOTAL ASSETS ............................................. 40,983,710
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LIABILITIES:
Securities sold short (proceeds $7,993,861) .............. 7,873,050
Payable for investment advisory fees ..................... 27,287
Payable for Fund shares redeemed ......................... 20,671
Dividends payable on securities sold short ............... 4,152
Payable for distribution fees ............................ 6,822
Payable to custodian ..................................... 198,880
Other accrued expenses ................................... 57,433
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TOTAL LIABILITIES ........................................ 8,188,295
------------
NET ASSETS applicable to 3,082,713
shares outstanding ..................................... $ 32,795,415
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at $0.001 par value ....... $ 3,083
Additional paid-in capital ............................... 53,646,035
Accumulated net investment income ........................ 489,617
Accumulated net realized loss on investments
and securities sold short .............................. (21,803,668)
Net unrealized appreciation on securities sold short ..... 120,811
Net unrealized appreciation on investments ............... 339,537
------------
NET ASSETS ............................................... $ 32,795,415
============
NET ASSET VALUE, offering and redemption price
per share ($32,795,415 / 3,082,713 shares
outstanding; unlimited number of
shares authorized) ...................................... $10.64
======
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $492) ................. $ 41,039
Interest ................................................. 648,738
Other income ............................................. 180,483
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TOTAL INVESTMENT INCOME .................................. 870,260
----------
EXPENSES:
Investment advisory fees ................................. 174,371
Distribution fees ........................................ 43,593
Dividends on securities sold short ....................... 53,091
Trustees' fees ........................................... 27,825
Shareholder services fees ................................ 21,739
Shareholder communications expenses ...................... 20,841
Legal and audit fees ..................................... 15,491
Registration expenses .................................... 11,901
Custodian fees ........................................... 5,748
Interest expense ......................................... 59
Miscellaneous expenses ................................... 6,326
----------
TOTAL EXPENSES ........................................... 380,985
Less: Custodian fee credits .............................. (342)
----------
TOTAL NET EXPENSES ....................................... 380,643
----------
NET INVESTMENT INCOME .................................... 489,617
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND SECURITIES SOLD SHORT:
Net realized gain on investments ......................... 92,974
Net realized loss on securities sold short ............... (982,310)
----------
Net realized loss on investments
and securities sold short .............................. (889,336)
Net change in unrealized appreciation/depreciation
on investments and securities sold short ............... 1,072,820
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND SECURITIES SOLD SHORT .................. 183,484
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ $ 673,101
==========
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
---------------- -----------------
OPERATIONS:
Net investment income .......................................................... $ 489,617 $ 501,742
Net realized gain on investments ............................................... 92,974 460,950
Net realized loss on securities sold short ..................................... (982,310) (124,472)
Net change in unrealized appreciation/depreciation on
investments and securities sold short ........................................ 1,072,820 (366,043)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... 673,101 472,177
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income .......................................................... -- (633,197)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............................................ -- (633,197)
----------- -----------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Net decrease in net assets from shares of beneficial interest transactions ..... (5,491,816) (3,482,717)
----------- -----------
REDEMPTION FEES ................................................................ -- 28
----------- -----------
NET DECREASE IN NET ASSETS ..................................................... (4,818,715) (3,643,709)
NET ASSETS:
Beginning of period ............................................................ 37,614,130 41,257,839
----------- -----------
End of period (including undistributed net investment income of
$489,617 and $0, respectively) ............................................... $32,795,415 $37,614,130
=========== ===========
See accompanying notes to financial statements.
6
GAMCO MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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1. ORGANIZATION. GAMCO Mathers Fund (the "Fund"), formerly the Gabelli Mathers
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 United States ("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 a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 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 fair valued 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
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and 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
GAMCO MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
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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. At June 30,
2006, the Fund had an investment of $1,973,770 in a repurchase agreement.
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 fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and future contracts. 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 June 30, 2006, there were no open
futures contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions. Short
selling involves selling securities that may or may not be owned and, at times,
borrowing the same securities for delivery to the purchaser, with an obligation
to replace such borrowed securities at a later date. The proceeds received from
short sales are recorded as liabilities and the Fund records an unrealized gain
or loss to the extent of the difference between the proceeds received and the
value of an open short position on the day of determination. The Fund records a
realized gain or loss when the short position is closed out. By entering into a
short sale, the Fund bears the market risk of an unfavorable change in the price
of the security sold short. Dividends on short sales are recorded as an expense
by the Fund on the ex-dividend date and interest expense is recorded on the
accrual basis. Securities sold short at June 30, 2006 are reported 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 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.
8
GAMCO MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
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, if any, shown
as "custodian fee credits".
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with Federal income tax regulations, which may
differ from income and capital gains as determined under 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. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on the net asset value of the Fund. For the
fiscal year ended December 31, 2005, reclassifications were made to decrease
accumulated net investment loss by $131,455 and to increase accumulated net
realized loss on investments by $4,908, with an offsetting adjustment to
additional paid-in capital.
The tax character of distributions of $633,197 paid during the year ended
December 31, 2005 was ordinary income.
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:
Accumulated capital loss carryforward ................... $(20,914,332)
Net unrealized appreciation on investments .............. 124,779
Net unrealized depreciation on short sales .............. (737,251)
------------
Total ................................................... $(21,526,804)
============
At December 31, 2005, the Fund had net capital loss carryforwards for Federal
income tax purposes of $20,914,332, which are available to reduce future
required distributions of net capital gains to shareholders. $7,533,490 is
available through 2006; $12,430,175 is available through 2010; $670,201 is
available through 2011; and $280,466 is available through 2012. For the year
ended December 31, 2005, the Fund utilized capital loss carryforwards of
$336,478.
9
GAMCO MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
The following summarizes the tax cost of investments, proceeds of short sales,
and the related unrealized appreciation/depreciation at June 30, 2006:
GROSS GROSS NET UNREALIZED
COST/ UNREALIZED UNREALIZED APPRECIATION/
(PROCEEDS) APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------- ------------- ---------------
Investments ............ $ 32,647,559 $425,367 $ (94,040) $331,327
Short sales ............ (7,993,861) 453,719 (332,908) 120,811
-------- --------- --------
$879,086 $(426,948) $452,138
======== ========= ========
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 affiliated persons of the Adviser.
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, 2006, the Fund incurred distribution costs payable to Gabelli & Company,
Inc., an affiliate of the Adviser, of $43,593, 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, 2006, other than short-term securities, aggregated
$3,978,122 and $2,176,946, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2006, the
Fund paid brokerage commissions of $11,140 to Gabelli & Company, Inc.
7. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
======== =========== ======== ===========
Shares sold .......................................... 20,006 $ 210,452 75,743 $ 802,570
Shares issued upon reinvestment of dividends ......... -- -- 49,507 515,369
Shares redeemed ...................................... (541,518) (5,702,268) (454,828) (4,800,656)
-------- ----------- -------- -----------
Net decrease ....................................... (521,512) $(5,491,816) (329,578) $(3,482,717)
======== =========== ======== ===========
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 on or before 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 six months ended June 30, 2006 and the fiscal
year ended December 31, 2005 amounted to $0 and $28, 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.
10
GAMCO MATHERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
8. 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.
9. 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. ("GAMCO"), the Adviser's parent company, is responding to
these requests for documents and testimony. In June 2006, GAMCO began
discussions with the SEC regarding a possible resolution of their inquiry. Since
these discussions are ongoing, it cannot be determined at this time whether they
will ultimately result in a settlement of this matter. 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.
10. FINANCIAL HIGHLIGHTS. Selected data for a share of beneficial interest
outstanding throughout each period:
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2006 ---------------------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001
---------------- -------- ------- ------ ------ ------
OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 10.44 $ 10.49 $ 10.60 $ 10.81 $ 12.25 $ 12.05
------- ------- ------- ------- ------- -------
Net investment income (loss) ............ 0.15 0.13 (0.06) (0.07) (0.00)(b) 0.30
Net realized and unrealized gain (loss)
on investments ........................ 0.05 -- (0.05) (0.14) (1.44) 0.21
------- ------- ------- ------- ------- -------
Total from investment operations ........ 0.20 0.13 (0.11) (0.21) (1.44) 0.51
------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ................... -- (0.18) -- -- -- (0.31)
------- ------- ------- ------- ------- -------
Total distributions ..................... -- (0.18) -- -- -- (0.31)
------- ------- ------- ------- ------- -------
REDEMPTION FEES ......................... -- 0.00(b) -- -- -- --
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD .......... $ 10.64 $ 10.44 $ 10.49 $ 10.60 $ 10.81 $ 12.25
======= ======= ======= ======= ======= =======
Total return + .......................... 1.92% 1.23% (1.04)% (1.94)% (11.76)% 4.25%
======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .... $32,795 $37,614 $41,258 $60,846 $80,827 $97,893
Ratio of net investment income to
average net assets .................... 2.81%(a) 1.27% (0.61)% (0.61)% (0.00)% 2.45%
Ratio of operating expenses to
average net assets .................... 2.18%(a) 2.14% 1.90% 1.67% 1.63% 1.35%
Ratio of operating expenses to average
net assets excluding the effect of
dividends on securities sold short .... 1.88%(a) 1.85% 1.77% 1.64% 1.61% 1.33%
Portfolio turnover rate ................. 41% 149% 176% 244% 776% 1,013%
- -----------------
+ 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 distributions. Total return for the period of less
than one year is not annualized.
(a) Annualized.
(b) Amount is less than $0.005 per share.
11
GAMCO 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,
GAMCO INVESTORS, 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
GAMCO MATHERS FUND
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT Anthonie C. van Ekris
AND CHIEF FINANCIAL OFFICER CHAIRMAN
KEYSPAN ENERGY CORP. BALMAC INTERNATIONAL, INC.
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
Edith L. Cook
Agnes Mullady VICE PRESIDENT
TREASURER
Peter D. Goldstein
James E. McKee CHIEF COMPLIANCE OFFICER
VICE PRESIDENT
AND SECRETARY
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
GAMCO Mathers Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB1726Q206SR
GAMCO
GAMCO
MATHERS
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
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 Trustees, 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) GAMCO Mathers Fund
--------------------------------------------------------------------
By (Signature and Title)* /s/ Henry G. Van der Eb
-------------------------------------------------------
Henry G. Van der Eb, Chief Executive Officer
Date September 1, 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/ Henry G. Van der Eb
-------------------------------------------------------
Henry G. Van der Eb, Chief Executive Officer
Date September 1, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady, Principal Financial Officer & Treasurer
Date September 1, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.