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 811-22041

 

Gabelli 787 Fund, 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:   October 31

 

Date of reporting period:   April 30, 2022

 

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. § 3507.

 

 

 

 

Item 1. Reports to Stockholders.

 

(a)The Report to Shareholders is attached herewith.

 

Gabelli Enterprise Mergers and Acquisitions Fund

 

Semiannual Report

 

April 30, 2022

 

To Our Shareholders,

 

For the six months ended April 30, 2022, the net asset value (NAV) total return per Class A Share of the Gabelli Enterprise Mergers and Acquisitions Fund was (6.2)% compared with a total return of (9.7)% for the Standard & Poor’s (S&P) 500 Index. The performance of the ICE BofA 3 Month U.S. Treasury Bill Index for the six months ended April 30, 2022 was 0.1%. Other classes of shares are available. See page 3 for additional performance information for all classes.

 

Enclosed are the financial statements, including the schedule of investments as of April 30, 2022.

 

Investment Objective and Strategy (Unaudited)

 

The Fund’s primary investment objective is capital appreciation. Under normal circumstances, the Fund intends to invest primarily in equity securities of companies believed to be likely acquisition targets within twelve to eighteen months. The Fund also may engage in arbitrage transactions by investing in the equity securities of companies that are involved in publicly announced mergers, takeovers, tender offers, leveraged buyouts, spinoffs, liquidations, and other corporate reorganizations.

 

Performance Discussion (Unaudited)

 

Global deal merger and acquisition activity (M&A) totaled $5.9 trillion in 2021, a year over year increase of 64% and the most active year on record. The deal flow throughout the year was notably consistent, capped off with $1.5 trillion in deals in the fourth quarter. The total number of deals worldwide increased to an all time high for the year, including fifty-five deals greater than $10 billion, which is also a record. Deals with a value between $1-5 billion accounted for $1.9 trillion during the year, more than doubling year over year.

 

In the fourth quarter of 2021, we realized gains on deals including Kansas City Southern, an operator of railways in the U.S. and Mexico, which was acquired by Canadian Pacific Railway for $31 billion in cash and stock; PPD, Inc., a global contract research organization for pharmaceutical companies, was acquired by Thermo Fisher Scientific for $17.4 billion in cash; Acceleron Pharma, Inc., a developer of therapeutics to treat serious and rare diseases, which was acquired by Merck & Co. for $11.5 billion in cash; and Hill-Rom Holdings, Inc., a medical technology company that offers patient beds and monitoring and diagnostics products, which was acquired by Baxter International for $12.5 billion in cash.

 

Merger and acquisition activity remained robust in the first quarter of 2022, with global M&A exceeding $1.0 trillion for the seventh consecutive quarter. Technology was the most active sector for dealmaking, accounting for 25% of all deal activity in the first quarter for a total of $259 billion. Technology was followed by Financials and Real Estate as the most active sectors, accounting for 13% and 12% of deal activity, respectively. Following years

 

 

 

 

of record fundraising, private equity remained very active announcing $291 billion of acquisitions, an increase of 18% compared with 2021, and accounting for 29% of M&A in the first quarter.

 

Some notable deals that closed in the first quarter of 2022 included:

 

Vocera Communications Inc., a provider of voice communication systems for medical facilities, agreed to be acquired by Stryker Corporation on January 6, 2022 in a $79.25 per share cash tender offer, valuing the deal at a $3.1 billion total enterprise value. The deal required U.S. regulatory approvals and a majority shareholder tender. The deal closed in 48 days on February 23, 2022.

 

McAfee Corporation is a provider of antivirus, cloud, and endpoint security solutions that agreed on November 8, 2021 to be acquired by a private equity consortium led by Advent International and Permira for $26 cash per share or a $14 billion total enterprise value. The deal was subject to several global regulatory approvals, as well as a shareholder vote, and closed on March 1, 2022.

 

On July 12, 2021, State Auto Financial, a super regional property and casualty insurer, agreed to be acquired by privately held Liberty Mutual Holdings for $52 per share in cash, or $1 billion. The deal required regulatory approvals, including the receipt of state insurance regulatory approvals, as well as a shareholder vote and closed on March 1, 2022.

 

Del Taco Restaurants Inc. is a fast food restaurant chain serving American and Mexican cuisines which operates locations across 16 states. Jack in the Box Inc. offered to acquire TACO on December 6, 2021 for $12.51 cash per share, or a total deal value of $585 million. The deal was only subject to U.S. regulatory approval and a shareholder vote, which was received on March 7, with the deal consummating one day later.

 

On February 14, 2022, BioDelivery Sciences International Inc., a developer of pain and neurological therapies that address debilitating conditions, agreed to be acquired in a cash tender offer by Collegium Pharmaceuticals Inc. for $5.60 cash, or a total deal value of $604 million following Hart Scott Rodino clearance and a majority tender of shares.

 

Looking ahead, we believe the drivers remain in place for another year of robust deal activity. We continue to find attractive investment opportunities in newly announced and pipeline deals. We remain focused on investing in highly strategic, well financed deals with an added focus on near term catalysts about our prospects and are upbeat about our prospects to generate absolute returns in 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The views expressed reflect the opinions of the Fund’s portfolio manager and Gabelli Funds, LLC, the Adviser, as of the date of this report and are subject to change without notice based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

  

2

 

 

Comparative Results

 

Average Annual Returns through April 30, 2022 (a)(b) (Unaudited)

 

Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.

Performance returns for periods of less than one year are not annualized.

 

   Six Months  1 Year  5 Year  10 Year  15 Year  Since
Inception
(2/28/01)
Class A (EMAAX)  (6.24)%  (6.13)%  2.64%  4.16%  2.91%  4.13%
With sales charge (c)  (11.63)  (11.52)  1.44   3.55   2.50   3.84 
Class AAA (EAAAX) (d)  (6.25)  (6.13)  2.78   4.33   3.05   4.23 
Class C (EMACX)  (6.60)  (6.86)  2.02   3.56   2.32   3.54 
With contingent deferred sales charge (e)  (7.54)  (7.79)  2.02   3.56   2.32   3.54 
Class Y (EMAYX)  (5.96)  (5.53)  3.16   4.66   3.39   4.61 
S&P 500 Index (f)  (9.65)  0.21   13.66   13.67   9.28   7.93 
Lipper U.S. Treasury Money Market Fund Average (f)  0.01   0.02   0.81   0.42   0.55   1.01 
ICE BofA 3 Month U.S. Treasury Bill Index (f)  0.07   0.08   1.12   0.63   0.80   1.38 

_____________ 

(a)The Fund’s fiscal year ends on October 31.

(b)The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase.

(c)Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period.

(d)The Class A Share NAVs are used to calculate the performance for the periods prior to the issuance of Class AAA Shares on February 26, 2010. The actual performance for the Class AAA Shares would have been higher due to lower expenses associated with this share class.

(e)Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase.

(f)The S&P 500 Index is a market capitalization weighted index of 500 large capitalization stocks commonly used to represent the U.S. equity market. The Lipper U.S. Treasury Money Market Fund Average reflects the average performance of mutual funds classified in this particular category. Dividends are considered reinvested. The ICE BofA 3 Month U.S. Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month, that issue is sold and rolled into the outstanding Treasury Bill that matures closest to, but not beyond three months from the rebalancing date. To qualify for selection, an issue must have settled on or before the rebalancing (month end) date. You cannot invest directly in an index.

 

In the current prospectuses dated February 28, 2022, the Fund’s gross expense ratios are 1.69%, 1.69%, 2.44%, and 1.44% for the Class AAA, A, C, and Y Shares, respectively, and the net expense ratio for class Y shares after contractual reimbursements by the Adviser is 1.04%. See page 13 for the expense ratios for the six months ended April 30, 2022. Class AAA and Class Y Shares have no sales charge. The maximum sales charge for Class A Shares and Class C Shares is 5.75% and 1.00%, respectively.

 

Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end.

 

3

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

Disclosure of Fund Expenses (Unaudited)

For the Six Month Period from November 1, 2021 through April 30, 2022 Expense Table
 

 

We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

 

The Expense Table below illustrates your Fund’s costs in two ways:

 

Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.

 

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.

 

Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case – because the hypothetical return used is not the Fund’s actual return – the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you

paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

 

  Beginning Ending Annualized Expenses
  Account Value Account Value Expense Paid During
  11/01/21 04/30/22 Ratio Period *
The Gabelli Enterprise Mergers and Acquisitions Fund  
Actual Fund Return        
Class AAA $1,000.00 $937.50 1.65% $ 7.93
Class A $1,000.00 $937.60 1.65% $ 7.93
Class C $1,000.00 $934.00 2.40% $ 11.51
Class Y $1,000.00 $940.40 1.01% $ 4.86
Hypothetical 5% Return        
Class AAA $1,000.00 $1,016.61 1.65% $ 8.25
Class A $1,000.00 $1,016.61 1.65% $ 8.25
Class C $1,000.00 $1,012.89 2.40% $ 11.98
Class Y $1,000.00 $1,019.79 1.01% $ 5.06

_____________ 

*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 (181 days), then divided by 365.


 

4

 

 

Summary of Portfolio Holdings (Unaudited)

 

The following table presents portfolio holdings as a percent of net assets as of April 30, 2022:

 

Gabelli Enterprise Mergers and Acquisitions Fund

    
Long Positions 
Computer Software and Services  8.8%
Energy and Utilities  8.6%
U.S. Government Obligations  8.6%
Health Care  8.0%
Diversified Industrial  7.3%
Financial Services  7.1%
Cable and Satellite  5.6%
Building and Construction  4.9%
Aerospace and Defense  3.7%
Machinery  3.5%
Materials  3.3%
Wireless Communications  2.9%
Semiconductors  2.8%
Telecommunications  2.6%
Media  2.5%
Entertainment  2.5%
Consumer Services  2.2%
Business Services  2.1%
Retail  1.7%
     
Food and Beverage  1.7%
Real Estate  1.6%
Automotive: Parts and Accessories  1.4%
Metals and Mining  1.3%
Broadcasting  1.2%
Specialty Chemicals  0.9%
Containers and Packaging  0.9%
Hotels and Gaming  0.6%
Communications Equipment  0.6%
Transportation  0.5%
Electronics  0.2%
Closed-End Funds  0.2%
Consumer Products  0.2%
Publishing  0.0%*
Other Assets and Liabilities (Net)  0.1%
     
Short Positions    
Semiconductors  (0.1)%
   100.0%

_____________ 

*Amount represents less than 0.05%.


The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year on Form N-PORT. 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-PORT is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.

 

Proxy Voting

 

The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 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, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.

 

5

 

 

Gabelli Enterprise Mergers and Acquisitions Fund
Schedule of Investments — April 30, 2022 (Unaudited)

 

 

Shares      Cost   Market
Value
 
    COMMON STOCKS — 90.7%        
     Aerospace and Defense — 3.7%          
 40,000   Aerojet Rocketdyne Holdings Inc.†  $1,729,033   $1,599,200 
 18,000   Kaman Corp.   682,781    702,180 
 3,000   L3Harris Technologies Inc.   570,589    696,780 
 7,500   Meggitt plc†   79,683    73,089 
 500   Ultra Electronics Holdings plc   22,695    20,522 
         3,084,781    3,091,771 
                
     Automotive: Parts and Accessories — 1.4%      
 15,000   Haldex AB†   154,741    62,325 
 13,000   Iveco Group NV†   83,182    77,459 
 20,500   Meritor Inc.†   728,652    736,155 
 19,000   Tenneco Inc., Cl. A†   239,417    326,230 
         1,205,992    1,202,169 
                
     Broadcasting — 1.2%          
 4,500   Sinclair Broadcast Group Inc., Cl. A   134,647    100,080 
 42,000   TEGNA Inc.   937,688    926,100 
         1,072,335    1,026,180 
                
     Building and Construction — 4.9%          
 16,000   Armstrong Flooring Inc.†   43,291    26,240 
 6,000   Carrier Global Corp.   86,866    229,620 
 10,500   Cornerstone Building Brands Inc.†   237,621    256,095 
 38,000   Griffon Corp.   323,000    710,980 
 400   Huttig Building Products Inc.†   4,280    4,272 
 3,000   Lennar Corp., Cl. B   253,404    195,600 
 11,110   Nobility Homes Inc.   158,041    361,075 
 8,000   Skyline Champion Corp.†   37,951    408,320 
 11,000   Vulcan Materials Co.   432,608    1,895,190 
         1,577,062    4,087,392 
                
     Business Services — 2.1%          
 3,000   Atlantia SpA†   74,233    72,254 
 10,000   Bottomline Technologies DE Inc.†   561,961    566,200 
 275,000   Clear Channel Outdoor Holdings Inc.†   907,984    676,500 
 75,000   Dawson Geophysical Co.†   173,675    136,500 
 2,000   eWork Group AB   16,512    24,156 
 6,500   Nielsen Holdings plc   174,725    174,265 
 2,000   Stagwell Inc.†   4,570    13,560 
 9,000   Zynga Inc., Cl. A†   81,411    74,430 
         1,995,071    1,737,865 
                
     Cable and Satellite — 5.6%          
 26,000   DISH Network Corp., Cl. A†   601,410    741,260 
Shares      Cost   Market
Value
 
 3,500   Liberty Broadband Corp., Cl. A†  $15,669   $376,810 
 3,500   Liberty Broadband Corp., Cl. C†   94,710    391,370 
 24,000   Liberty Global plc, Cl. A†   784,574    546,240 
 3,000   Liberty Media Corp.-Liberty Formula One, Cl. A†   7,487    172,260 
 3,000   Liberty Media Corp.-Liberty Formula One, Cl. C†   9,444    186,990 
 30,000   Shaw Communications Inc., Cl. B   929,161    893,473 
 45,000   Shaw Communications Inc., New York, Cl. B   1,042,914    1,340,100 
         3,485,369    4,648,503 
                
     Communications Equipment — 0.6%      
 20,000   Digi International Inc.†   199,946    378,400 
 6,000   NeoPhotonics Corp.†   92,908    90,840 
         292,854    469,240 
                
     Computer Software and Services — 8.8%      
 2,500   Activision Blizzard Inc.   203,467    189,000 
 3,500   Anaplan Inc.†   226,290    227,465 
 8,000   Aspen Technology Inc.†   1,207,398    1,268,320 
 44,000   Avast plc   350,092    312,049 
 9,000   CDK Global Inc.   490,861    489,690 
 3,000   Cerner Corp.   273,367    280,920 
 9,000   Change Healthcare Inc.†   206,850    212,040 
 10,000   Citrix Systems Inc.   1,020,426    1,001,000 
 14,500   Datto Holding Corp.†   503,035    503,150 
 5,000   Fiserv Inc.†   410,594    489,600 
 2,500   Mandiant Inc.†   55,205    54,950 
 12,500   Mimecast Ltd.†   993,921    996,000 
 6,000   Playtech plc†   55,108    39,534 
 1,000   Rockwell Automation Inc.   184,999    252,670 
 15,000   Sailpoint Technologies Holdings Inc.†   962,325    957,450 
         7,143,938    7,273,838 
                
     Consumer Products — 0.2%      
 2,000   Accell Group NV†   127,484    121,108 
 5,000   Bang & Olufsen A/S†   13,540    12,048 
         141,024    133,156 
                
     Consumer Services — 2.1%      
 75,000   MoneyGram International Inc.†   677,809    759,750 
 2,000   Rollins Inc.   1,781    67,080 
 20,000   Terminix Global Holdings Inc.†   871,929    917,800 
         1,551,519    1,744,630 
                
     Containers and Packaging — 0.9%          
 5,000   Ardagh Group SA   126,792    89,125 


See accompanying notes to financial statements.

 

6

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

Schedule of Investments (Continued) — April 30, 2022 (Unaudited)

 

 

Shares      Cost   Market
Value
 
    COMMON STOCKS (Continued)        
     Containers and Packaging (Continued)          
 4,000   Greif Inc., Cl. A  $170,138   $242,720 
 1,400   Greif Inc., Cl. B   60,489    81,704 
 10,000   Intertape Polymer Group Inc.   312,577    309,423 
         669,996    722,972 
                
     Diversified Industrial — 7.3%          
 800   Coherent Inc.†   175,257    214,320 
 8,000   Hexcel Corp.   452,170    434,880 
 160,000   Myers Industries Inc.   2,898,244    3,508,800 
 40,000   US Ecology Inc.†   1,909,793    1,919,600 
         5,435,464    6,077,600 
                
     Electronics — 0.2%          
 5,000   Plantronics Inc.†   195,350    199,300 
                
     Energy and Utilities — 8.6%          
 6,000   Alerion Cleanpower SpA   16,449    186,093 
 133,333   Alvopetro Energy Ltd.   372,741    560,462 
 1,000   Avangrid Inc.   38,750    44,350 
 10,000   Avista Corp.   421,237    405,700 
 35,000   Endesa SA   965,019    739,573 
 7,087   Energy Transfer LP   48,293    78,524 
 1,000   Etablissements Maurel et Prom SA†   4,222    4,584 
 160,000   Gulf Coast Ultra Deep Royalty Trust   94,045    6,400 
 4,800   Iberdrola SA   47,133    55,752 
 3,500   KLX Energy Services Holdings Inc.†   19,467    17,255 
 8,000   NorthWestern Corp.   221,528    453,520 
 43,000   PNM Resources Inc.   2,117,330    2,006,380 
 4,000   Portland General Electric Co.   216,041    189,320 
 8,000   Renewable Energy Group Inc.†   485,525    488,480 
 27,000   Severn Trent plc   749,892    1,068,103 
 3,300   South Jersey Industries Inc.   107,566    112,827 
 1,500   Southwest Gas Holdings Inc.   71,090    132,165 
 12,500   UGI Corp.   544,202    428,750 
 10,000   Vidler Water Resouces Inc.†   158,295    157,400 
 16,000   Vivo Energy plc   28,337    29,133 
         6,727,162    7,164,771 
                
     Entertainment — 2.5%          
 41,000   Fox Corp., Cl. B   1,620,270    1,362,840 
 20,000   Liberty Media Corp.-Liberty Braves, Cl. A†   494,865    525,400 
Shares      Cost   Market
Value
 
 11,600   Warner Bros Discovery Inc.†  $67,590   $210,540 
         2,182,725    2,098,780 
                
     Financial Services — 7.1%          
 16,500   Aareal Bank AG   536,935    566,065 
 1,500   Alleghany Corp.†   1,258,755    1,254,750 
 8,000   American National Group Inc.   1,514,126    1,508,880 
 2,800   Brookfield Asset Management Inc., Cl. A   141,120    139,608 
 17,500   Cadence Bank   492,550    438,200 
 7,000   Fanhua Inc., ADR   56,075    42,560 
 10,000   First Horizon Corp.   234,471    223,800 
 10,000   Intertrust NV†   219,443    206,770 
 45,500   Macquarie Infrastructure Holdings LLC   1,820,788    170,625 
 30,000   Navient Corp.   281,837    476,700 
 1,800   SouthState Corp.   121,769    139,392 
 8,500   Synovus Financial Corp.   295,747    353,090 
 400   Topdanmark AS   11,381    22,510 
 7,000   Webster Financial Corp.   157,842    349,930 
         7,142,839    5,892,880 
                
     Food and Beverage — 1.7%          
 6,000   Campbell Soup Co.   202,409    283,320 
 4,500   Flowers Foods Inc.   10,669    119,340 
 12,000   GrainCorp Ltd., Cl. A   137,407    87,669 
 10,000   Primo Water Corp.   146,627    146,400 
 3,800   Sanderson Farms Inc.   735,789    719,606 
 14,000   United Malt Group Ltd.   29,008    41,149 
         1,261,909    1,397,484 
                
     Health Care — 7.9%          
 52,500   Antares Pharma Inc.†   292,945    292,163 
 2,000   AstraZeneca plc, ADR   116,300    132,800 
 1,200   Bio-Rad Laboratories Inc., Cl. A†   116,459    614,472 
 8,400   Bioventus Inc., Cl. A†   132,886    101,052 
 9,000   Checkmate Pharmaceuticals Inc.†   93,606    93,420 
 7,000   Grifols SA, ADR   46,970    75,110 
 2,000   Healthcare Trust of America Inc., Cl. A, REIT   60,242    60,920 
 100   ICU Medical Inc.†   6,058    21,399 
 11,000   Idorsia Ltd.†   137,592    189,411 
 1,000   Illumina Inc.†   67,837    296,650 
 29,500   Intersect ENT Inc.†   764,564    807,415 
 35,000   IntriCon Corp.†   837,255    840,350 
 1,000   Natus Medical Inc.†   33,460    33,270 
 3,000   Ortho Clinical Diagnostics Holdings plc†   62,468    52,830 
 9,000   Perrigo Co. plc   379,125    308,700 


See accompanying notes to financial statements.

 

7

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

Schedule of Investments (Continued) — April 30, 2022 (Unaudited)

 

 

Shares      Cost   Market
Value
 
     COMMON STOCKS (Continued)          
     Health Care (Continued)          
 6,000   QIAGEN NV†  $270,234   $272,220 
 10,000   Sierra Oncology Inc.†   545,890    545,100 
 6,000   Tivity Health Inc.†   193,500    192,780 
 75,000   Viatris Inc.   1,067,521    774,750 
 4,700   Vifor Pharma AG   814,097    831,288 
         6,039,009    6,536,100 
                
     Hotels and Gaming — 0.6%          
 5,500   Ryman Hospitality  Properties Inc., REIT†   250,927    514,140 
                
     Machinery — 3.5%          
 25,000   CFT SpA†   138,180    121,319 
 6,000   CIRCOR International Inc.†   102,219    117,900 
 35,000   CNH Industrial NV   317,062    506,956 
 30,000   CNH Industrial NV, Borsa Italiana   236,978    425,700 
 2,000   Otis Worldwide Corp.   96,351    145,680 
 6,553   Valmet Oyj   210,132    177,390 
 60,000   Welbilt Inc.†   1,399,910    1,417,200 
         2,500,832    2,912,145 
                
     Materials — 3.3%          
 500   Neenah Inc.   20,235    17,700 
 10,000   Rogers Corp.†   2,696,973    2,707,200 
         2,717,208    2,724,900 
                
     Media — 2.6%          
 49,000   Telenet Group Holding NV   2,207,005    1,462,899 
 40,000   The E.W. Scripps Co., Cl. A†   643,440    658,400 
         2,850,445    2,121,299 
                
     Metals and Mining — 0.9%          
 38,000   Alamos Gold Inc., Cl. A   478,500    294,880 
 4,257   Kinross Gold Corp.   22,197    21,506 
 15,000   Pan American Silver Corp., Toronto   210,416    371,891 
 50,000   Sierra Metals Inc.   156,265    50,500 
 1,500   Turquoise Hill Resources Ltd.†   40,039    40,926 
         907,417    779,703 
                
     Publishing — 0.0%          
 1,500   Lee Enterprises Inc.†   35,657    36,150 
                
     Real Estate — 1.6%          
 16,000   American Campus Communities Inc., REIT   1,037,790    1,034,720 
 5,000   Bluerock Residential Growth REIT Inc.   132,269    133,050 
 5,000   Corem Property Group AB, Cl. B   11,505    10,622 
 10,000   Hibernia REIT plc   17,930    17,111 
Shares      Cost   Market
Value
 
 200   PS Business Parks Inc., REIT  $37,571   $37,440 
 1,000   S IMMO AG   22,816    24,000 
 37,629   Trinity Place Holdings Inc.†   128,205    49,670 
         1,388,086    1,306,613 
                
     Retail — 1.7%          
 7,500   Marshall Motor Holdings plc   39,926    37,157 
 3,600   SpartanNash Co.   51,142    123,408 
 60,000   Sportsman’s Warehouse Holdings Inc.†   950,025    576,600 
 29,000   Village Super Market Inc., Cl. A   662,715    672,510 
 12,400   Yamada Holdings Co. Ltd.†   36,458    36,978 
         1,740,266    1,446,653 
                
     Semiconductors — 2.8%          
 8,500   CMC Materials Inc.   1,603,535    1,520,735 
 8,500   Siltronic AG   1,236,130    804,347 
         2,839,665    2,325,082 
                
     Specialty Chemicals — 0.9%          
 10,000   Atotech Ltd.†   246,364    213,000 
 15,000   GCP Applied Technologies Inc.†   377,584    470,550 
 15,000   SGL Carbon SE†   198,385    83,236 
 800   Tronox Holdings plc, Cl. A   18,847    13,760 
         841,180    780,546 
                
     Telecommunications — 2.6%          
 100   Gilat Satellite Networks Ltd.†   955    735 
 200,000   Koninklijke KPN NV   605,309    693,102 
 15,000   Liberty Latin America Ltd., Cl. A†   224,803    138,600 
 16,456   Liberty Latin America Ltd., Cl. C†   209,886    152,053 
 8,000   Orange Belgium SA   189,833    155,457 
 11,000   Parrot SA†   39,890    58,719 
 1,000   Rogers Communications Inc., Cl. B   2,955    54,460 
 20,600   Telesat Corp.†   757,707    231,544 
 3,500   Telesat Corp.†   110,883    39,340 
 30,000   Vonage Holdings Corp.†   618,244    598,800 
         2,760,465    2,122,810 
                
     Transportation — 0.5%          
 2,375   DSV A/S   217,955    394,082 
                
     Wireless Communications — 2.9%      
 70,000   Lumen Technologies Inc.   1,146,944    704,200 
 34,000   Millicom International Cellular SA, SDR†   1,511,457    771,449 
 380,321   NII Holdings Inc., Escrow†   129,309    114,096 


See accompanying notes to financial statements.

 

8

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

Schedule of Investments (Continued) — April 30, 2022 (Unaudited)

 

 

Shares      Cost   Market
Value
 
    COMMON STOCKS (Continued)        
     Wireless Communications (Continued)      
 8,000   Telephone and Data Systems Inc.  $200,381   $146,560 
 23,000   United States Cellular Corp.†   971,407    661,940 
         3,959,498    2,398,245 
     TOTAL COMMON STOCKS   74,214,000    75,366,999 
                
     CLOSED-END FUNDS — 0.2%          
 30,000   Altaba Inc., Escrow†   40,224    172,500 
                
     RIGHTS — 0.5%          
     Health Care — 0.1%          
 45,000   Achillion Pharmaceuticals Inc., CVR†   0    22,500 
 52,000   Adamas Pharmaceuticals Inc., CVR†   0    2,600 
 52,000   Adamas Pharmaceuticals Inc., CVR†   0    2,600 
 13,000   Ambit Biosciences Corp., CVR†(a)   0    21,970 
 5,000   Flexion Therapeutics Inc., CVR†   0    3,250 
 75,000   Innocoll, CVR†(a)   45,000    0 
 14,000   Ipsen SA/Clementia, CVR†(a)   18,900    0 
 11,000   Ocera Therapeutics, CVR†(a)   2,970    1,870 
 2,000   Prevail Therapeutics Inc., CVR†(a)   0    1,000 
 156,000   Teva Pharmaceutical Industries Ltd., CCCP, expire 02/20/23†(a)   74,375    0 
 7,000   Tobira Therapeutics Inc., CVR†(a)   420    0 
 1,500   Zogenix Inc., CVR†   0    1,125 
         141,665    56,915 
                
     Media — 0.0%          
 40,000   Media General Inc., CVR†(a)   0    0 
                
     Metals and Mining — 0.4%          
 10,000   Kinross Gold Corp., CVR†   0    0 
 400,000   Pan American Silver Corp., CVR†   92,000    328,000 
         92,000    328,000 
     TOTAL RIGHTS   233,665    384,915 
Shares      Cost   Market
Value
 
    WARRANTS — 0.0%        
     Business Services — 0.0%          
 6   Internap Corp., expire 05/08/24†  $0   $3,912 

 

Principal
Amount
            
                
     U.S. GOVERNMENT OBLIGATIONS — 8.6%          
$7,165,000   U.S. Treasury Bills, 0.310% to 0.801%††, 06/02/22 to 07/21/22(b)   7,159,085    7,158,853 
                
     TOTAL INVESTMENTS BEFORE SECURITIES  SOLD SHORT — 100.0%  $81,646,974    83,087,179 
                
     SECURITIES SOLD SHORT — (0.1)%      
     (Proceeds received $46,137)        (42,847)
                
     Other Assets and Liabilities (Net) — 0.1%    24,198 
                
     NET ASSETS — 100.0%       $83,068,530 

 

Shares      Proceeds   Market
Value
 
                
     SECURITIES SOLD SHORT — (0.1)%          
     Semiconductors — (0.1)%          
 700   II-VI Inc.  $46,137   $42,847 
                
     TOTAL SECURITIES SOLD SHORT(a)  $46,137   $42,847 


See accompanying notes to financial statements.

 

9

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

Schedule of Investments (Continued) — April 30, 2022 (Unaudited)

 

 

_____________ 

(a)Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.
(b)At April 30, 2022, $3,600,000 of the principal amount was pledged as collateral for securities sold short.
(c)At April 30, 2022, these proceeds are being held at Pershing LLC.
Non-income producing security.
††Represents annualized yields at dates of purchase.

 

ADRAmerican Depositary Receipt
CCCPContingent Cash Consideration Payment
CVRContingent Value Right
REITReal Estate Investment Trust
SDRSwedish Depositary Receipt


See accompanying notes to financial statements.

 

10

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

 

Statement of Assets and Liabilities

April 30, 2022 (Unaudited)

 
Assets:    
Investments, at value (cost $81,646,974)  $83,087,179 
Cash   12,618 
Foreign currency, at value (cost $2,302)   2,293 
Deposit at brokers for securities sold short   227,884 
Receivable for investments sold   41,425 
Receivable for Fund shares sold   10,257 
Receivable from Adviser   14,452 
Dividends and interest receivable   90,549 
Prepaid expenses   37,005 
Total Assets   83,523,662 
Liabilities:     
Securities sold short, at value (proceeds $46,137)   42,847 
Payable for investments purchased   78,800 
Payable for Fund shares redeemed   143,584 
Payable for investment advisory fees   66,579 
Payable for distribution fees   12,194 
Payable for accounting fees   7,500 
Payable for chief compliance officer compensation   656 
Payable for shareholder communications   52,898 
Payable for legal and audit fees   31,089 
Other accrued expenses   18,985 
Total Liabilities   455,132 
Net Assets     
(applicable to 5,664,397 shares outstanding)  $83,068,530 
Net Assets Consist of:     
Paid-in capital  $80,648,653 
Total distributable earnings   2,419,877 
Net Assets  $83,068,530 
Shares of Capital Stock, each at $0.001 par value:     
Class AAA:     
Net Asset Value, offering, and redemption price per share ($5,956,142 ÷ 412,499 shares outstanding; 100,000,000 shares authorized)  $14.44 
Class A:     
Net Asset Value and redemption price per share ($28,465,971 ÷ 2,013,534 shares outstanding; 200,000,000 shares authorized)  $14.14 
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price)  $15.00 
Class C:     
Net Asset Value and offering price per share ($5,514,181 ÷ 442,577 shares outstanding; 100,000,000 shares authorized)  $12.46(a)
Class Y:     
Net Asset Value, offering, and redemption price per share ($43,132,236 ÷ 2,795,787 shares outstanding; 100,000,000 shares authorized)  $15.43 

Statement of Operations

For the Six Months Ended April 30, 2022 (Unaudited)

 
Investment Income:    
Dividends (net of foreign withholding taxes of $33,665)  $612,433 
Interest   8,567 
Total Investment Income   621,000 
Expenses:     
Investment advisory fees   412,499 
Distribution fees - Class AAA   8,740 
Distribution fees - Class A   38,319 
Distribution fees - Class C   31,004 
Directors’ fees   32,728 
Registration expenses   32,468 
Legal and audit fees   32,464 
Shareholder services fees   31,223 
Shareholder communications expenses   26,912 
Accounting fees   22,500 
Custodian fees   11,698 
Service fees for securities sold short(See Note 2)   2,932 
Chief compliance officer compensation   1,221 
Interest expense   630 
Dividend expense on securities sold short   460 
Miscellaneous expenses   10,461 
Total Expenses   696,259 
Less:     
Expense reimbursements (See Note 3)   (86,428)
Expenses paid indirectly by broker (See Note 6)   (1,049)
Total Credits and Reimbursements   (87,477)
Net Expenses   608,782 
Net Investment Income   12,218 
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, and Foreign Currency:     
Net realized gain on investments   2,088,786 
Net realized gain on securities sold short   21,196 
Net realized loss on foreign currency transactions   (8,421)
Net realized gain on investments, securities sold short, and foreign currency transactions   2,101,561 
Net change in unrealized appreciation/depreciation:     
on investments   (7,739,566)
on securities sold short   198,873 
on foreign currency translations   (3,968)
Net change in unrealized appreciation/depreciation on investments, securities sold short, and foreign currency translations   (7,544,661)
Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short, and Foreign Currency   (5,443,100)
Net Decrease in Net Assets Resulting from Operations  $(5,430,882)


_____________ 

(a)Redemption price varies based on the length of time held.

 

See accompanying notes to financial statements.

 

11

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

 

Statement of Changes in Net Assets

 
         
   Six Months Ended
April 30, 2022
(Unaudited)
   Year Ended
October 31, 2021
 
         
Operations:          
Net investment income  $12,218   $43,697 
Net realized gain on investments in securities, securities sold short, and foreign currency transactions   2,101,561    6,310,064 
Net change in unrealized appreciation/depreciation on investments, securities sold short, and foreign currency translations   (7,544,661)   8,769,219 
Net Increase/(Decrease) in Net Assets Resulting from Operations   (5,430,882)   15,122,980 
Distributions to Shareholders:          
Accumulated earnings          
Class AAA   (466,219)    
Class A   (2,144,199)    
Class C   (482,326)    
Class Y   (2,678,147)   (102,080)
Total Distributions to Shareholders   (5,770,891)   (102,080)
           
Capital Share Transactions:          
Class AAA   320,104    1,113,371 
Class A   265,397    (1,019,907)
Class C   (340,388)   (2,224,680)
Class Y   1,871,111    (2,657,959)
Net Increase/(Decrease) in Net Assets from Capital Share Transactions   2,116,224    (4,789,175)
           
Redemption Fees   2    8 
           
Net Increase/(Decrease) in Net Assets   (9,085,547)   10,231,733 
Net Assets:          
Beginning of year   92,154,077    81,922,344 
End of period  $83,068,530   $92,154,077 

 

See accompanying notes to financial statements.

 

12

 

 

Gabelli Enterprise Mergers and Acquisitions Fund

Financial Highlights

 

Selected data for a share of capital stock outstanding throughout each year:

 

       Income (Loss) from Investment
Operations
   Distributions               Ratios to Average Net Assets/Supplemental Data 
Year Ended
October 31
  Net Asset Value,
Beginning of Year
   Net Investment
Income (Loss)(a)
   Net Realized
and Unrealized
Gain (Loss) on
Investments
   Total from
Investment
Operations
   Net Investment
Income
   Net Realized Gain on
Investments
   Total
Distributions
   Redemption
Fees(a)(b)
   Net Asset Value,
End of Period
   Total
Return†
   Net Assets, End of Period
(in 000’s)
   Net Investment
Income (Loss)
   Operating Expenses(c)(d)  Portfolio
Turnover
Rate
 
Class AAA                                                                      
2022(e)  $16.48   $(0.02)  $(0.95)  $(0.97)  $   $(1.07)  $(1.07)  $0.00   $14.44    (6.25)%  $5,956    (0.26)%(f)   1.65%(f)(g)   71%
2021   13.83    (0.03)   2.68    2.65                0.00    16.48    19.16    6,553    (0.21)   1.69(g)   173 
2020   14.47    (0.01)   (0.35)   (0.36)       (0.28)   (0.28)   0.00    13.83    (2.60)   4,565    (0.07)   1.73(g)   150 
2019   14.75    0.01    0.47    0.48    (0.08)   (0.68)   (0.76)   0.00    14.47    3.54    5,697    0.06    1.50(g)   195 
2018   14.96    0.12    (0.14)   (0.02)       (0.19)   (0.19)   0.00    14.75    (0.12)   6,974    0.80    1.50    159 
2017   13.52    (0.04)   1.48    1.44                0.00    14.96    10.65    6,201    (0.28)   1.51    113 
Class A                                                                      
2022(e)  $16.15   $(0.02)  $(0.92)  $(0.94)  $   $(1.07)  $(1.07)  $0.00   $14.14    (6.24)%  $28,466    (0.25)%(f)   1.65%(f)(g)   71%
2021   13.56    (0.03)   2.62    2.59                0.00    16.15    19.10    32,286    (0.20)   1.69(g)   173 
2020   14.22    (0.04)   (0.34)   (0.38)       (0.28)   (0.28)   0.00    13.56    (2.79)   27,976    (0.26)   1.91(g)   150 
2019   14.49    (0.02)   0.47    0.45    (0.04)   (0.68)   (0.72)   0.00    14.22    3.39    34,529    (0.14)   1.70(g)   195 
2018   14.73    0.07    (0.12)   (0.05)       (0.19)   (0.19)   0.00    14.49    (0.33)   37,070    0.51    1.70    159 
2017   13.35    (0.07)   1.45    1.38                0.00    14.73    10.34    46,887    (0.46)   1.71    113 
Class C                                                                      
2022(e)  $14.41   $(0.07)  $(0.81)  $(0.88)  $   $(1.07)  $(1.07)  $0.00   $12.46    (6.60)%  $5,514    (1.00)%(f)   2.40%(f)(g)   71%
2021   12.19    (0.13)   2.35    2.22                0.00    14.41    18.21    6,753    (0.95)   2.44(g)   173 
2020   12.88    (0.09)   (0.32)   (0.41)       (0.28)   (0.28)   0.00    12.19    (3.33)   7,683    (0.77)   2.48(g)   150 
2019   13.22    (0.09)   0.43    0.34        (0.68)   (0.68)   0.00    12.88    2.86    16,154    (0.68)   2.25(g)   195 
2018   13.53    (0.00)(b)   (0.12)   (0.12)       (0.19)   (0.19)   0.00    13.22    (0.88)   35,211    (0.01)   2.24    159 
2017   12.33    (0.13)   1.33    1.20                0.00    13.53    9.73    38,628    (1.01)   2.26    113 
Class Y                                                                      
2022(e)  $17.53   $0.03   $(1.00)  $(0.97)  $(0.06)  $(1.07)  $(1.13)  $0.00   $15.43    (5.96)%  $43,133    0.41%(f)   1.01%(f)(g)(h)   71%
2021   14.66    0.08    2.83    2.91    (0.04)       (0.04)   0.00    17.53    19.87    46,562    0.45    1.04(g)(h)   173 
2020   15.28    0.04    (0.38)   (0.34)       (0.28)   (0.28)   0.00    14.66    (2.33)   41,698    0.24    1.47(g)(h)   150 
2019   15.53    0.05    0.50    0.55    (0.12)   (0.68)   (0.80)   0.00    15.28    3.86    73,999    0.30    1.25(g)   195 
2018   15.71    0.16    (0.15)   0.01        (0.19)   (0.19)   0.00    15.53    0.08    85,655    1.04    1.24    159 
2017   14.17    (0.00)(b)   1.54    1.54                0.00    15.71    10.87    69,801    (0.02)   1.26    113 

_____________ 

Total return represents aggregate total return of a hypothetical investment at the beginning of the year and sold at the end of the period including reinvestment of distributions and does not reflect the applicable sales charges. Total return for a period of less than one year is not annualized.

(a)Per share amounts have been calculated using the average shares outstanding method.

(b)Amount represents less than $0.005 per share.

(c)The Fund incurred interest expense during all years presented. For the years ended October 31, 2021 and 2017, if interest expense had not been incurred, the ratio of operating expenses to average net assets would have been 1.69% and 1.50% (Class AAA), 1.69% and 1.70% (Class A), 2.44% and 2.25% (Class C), and 1.03% and 1.25% (Class Y). For the six months ended April 30, 2022 and the years ended October 31, 2020, 2019, and 2018, there was no impact on the expense ratios.

(d)The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For all periods presented, there was no impact on the expense ratios.

(e)For the six months ended April 30, 2022, unaudited.

(f)Annualized.

(g)The Fund incurred dividend expense and service fees on securities sold short. If these expenses and fees had not been incurred, the ratios of operating expenses to average net assets for the six months ended April 30, 2022 and the years ended October 31, 2021 and 2020 would have been 1.64%, 1.65%, and 1.59% (Class AAA), 1.64%, 1.66%, and 1.77% (Class A), 2.39%, 2.41%, and 2.34% (Class C), 1.00%, 1.00%, and 1.33% (Class Y). For the year ended October 31, 2019, there was no impact on the expense ratios.

(h)Under an expense reimbursement agreement with the Adviser, the Adviser reimbursed certain Class Y expenses to the Fund. For the six months ended April 30, 2022 and the years ended October 31, 2021 and 2020, these reimbursements amounted to $86,428, $167,545, and $8,086, respectively. Without these reimbursements, the operating expenses would have been 1.40%,1.44%, and 1.47%, respectively.

 

See accompanying notes to financial statements.

 

13

 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited)

 

1. Organization. The Gabelli Enterprise Mergers and Acquisitions Fund, the sole series of the Gabelli 787 Fund, Inc. (the Corportion), is incorporated in Maryland. The Fund is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act). Its primary objective is capital appreciation. The Fund commenced investment operations on February 28, 2001.

 

2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the preparation of its 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.

 

The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies, sectors, nations, regions, and the markets in general, and may continue for an unpredictable duration. The effects of this pandemic may materially impact the value and performance of the Fund, its ability to buy and sell fund investments at appropriate valuations, and its ability to achieve its investment objectives.

 

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 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 obligations 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, 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. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one of more dealers in the instrument in question by the Adviser.

 

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 with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt 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.

 

14 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:

Level 1 — quoted prices in active markets for identical securities;

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and

Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments).

 

A  financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities by inputs used to value the Fund’s investments as of April 30, 2022 is as follows:

 

   Valuation Inputs     
   Level 1
Quoted Prices
  Level 2 Other
Significant
Observable Inputs
  Level 3 Significant
Unobservable
Inputs (a)
  Total Market Value
at 04/30/22
INVESTMENTS IN SECURITIES:                
ASSETS (Market Value):                    
Common Stocks:                    
Building and Construction  $3,726,317   $361,075       $4,087,392 
Containers and Packaging   633,847    89,125        722,972 
Machinery   2,790,826    121,319        2,912,145 
Telecommunications   1,891,266    231,544        2,122,810 
Wireless Communications   2,284,149    114,096        2,398,245 
Other Industries (b)   63,123,435            63,123,435 
Total Common Stocks   74,449,840    917,159        75,366,999 
Closed-End Funds       172,500        172,500 
Rights (b)   328,000    32,075   $24,840    384,915 
Warrants (b)       3,912        3,912 
U.S. Government Obligations       7,158,853        7,158,853 
TOTAL INVESTMENTS IN SECURITIES – ASSETS  $74,777,840   $8,284,499   $24,840   $83,087,179 
LIABILITIES (Market Value):                    
Common Stocks Sold Short (b)  $(42,847)          $(42,847)
TOTAL INVESTMENTS IN SECURITIES – LIABILITIES  $(42,847)          $(42,847)

_____________ 

(a)The inputs for these securities are not readily available and are derived based on the judgment of the Adviser according to procedures approved by the Board of Trustees.

(b)Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings.

 

During the six months ended April 30, 2022, the Fund did not have material transfers into or out of Level 3.

 

15 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

 

Additional Information to Evaluate Qualitative Information.

 

General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

 

Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.

 

The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.

 

Investments in Other Investment Companies. The Fund may invest, from time to time, in shares of other investment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the Acquired Funds) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the six months ended April 30, 2022, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was less than one basis point.

 

Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in derivative financial instruments for the purposes of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions

 

16 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.

 

Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded derivatives, while collateral terms are contract specific for derivatives traded over-the-counter. Securities pledged to cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported separately in the Statement of Assets and Liabilities.

 

The Fund’s derivative contracts held at April 30, 2022, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.

 

Swap Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the Fund’s portfolio securities at the time an equity contract for difference swap transaction reaches its scheduled termination date, there is a risk that the Fund will not be able to obtain a replacement transaction or that the terms of the replacement will not be as favorable as on the expiring transaction.

 

Unrealized gains related to swaps are reported as an asset and unrealized losses are reported as a liability in the Statement of Assets and Liabilities. The change in value of swaps, including the accrual of periodic amounts of interest to be received or paid on swaps, is reported as unrealized gain or loss in the Statement of Operations. A realized gain or loss is recorded upon receipt or payment of a periodic payment or termination of swap agreements. During the six months ended April 30, 2022, the Fund held no investments in equity contract for difference swap agreements.

 

Forward Foreign Exchange Contracts. The Fund may engage in forward foreign exchange contracts for the purpose of 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 forward foreign exchange contracts. 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. During the six months ended April 30, 2022, the Fund held no investments in forward foreign exchange contracts.

 

Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange

 

17 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

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 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 purchase 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 inability 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 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.

 

Securities Sold Short. The Fund entered 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. The broker retains collateral for the value of the open positions, which is adjusted periodically as the value of the position fluctuates. Securities sold short and details of collateral at April 30, 2022 are reflected within the Schedule of Investments. For the six months ended April 30, 2022, the Fund incurred $2,932 in service fees related to its investment positions sold short and held by the broker. These amounts are included in the Statement of Operations under Expenses, Service fees for securities sold short.

 

Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than 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 saleable among qualified institutional investors under special rules adopted by 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. At April 30, 2022, the Fund did not hold any restricted securities.

 

18 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on an accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date, if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.

 

Determination of Net Asset Value and Calculation of 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.

 

In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.

 

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 GAAP. These differences are primarily due to differing treatments of income and gains as determined under GAAP. Distributions from net investment income for federal income tax purposes 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 capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.

 

The tax character of distributions paid during the year ended October 31, 2021 was as follows:

 

Distributions paid from:    
Ordinary income  $98,437 
Net long term capital gains   3,643 
Total distributions paid  $102,080 

 

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.

 

The following summarizes the tax cost of investments and the related net unrealized appreciation at April 30, 2022:

 

   Cost/
(Proceeds)
  Gross
Unrealized
Appreciation
  Gross
Unrealized
Depreciation
  Net Unrealized
Appreciation
Investments  $82,758,773  $10,294,367  $(10,008,808)  $285,559

 

19 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended April 30, 2022, the Fund did not incur any income tax, interest, or penalties. As of April 30, 2022, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

 

3.  Investment Advisory Agreement and Other Transactions. 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 annual rates as follows:

 

First $1 Billion  0.935%
Next $1 Billion  0.910%
Next $3 Billion  0.885%
Next $5 Billion  0.860%
Thereafter    0.835%

 

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.

 

The Adviser has contractually agreed to waive its investment advisory fee and/or reimburse expenses of Class Y to the extent necessary to maintain Class Y’s total operating expenses (excluding brokerage, acquired fund fees and expenses, interest, taxes, and extraordinary expenses) until at least September 30, 2023 at no more than 1.00% of the value of its average daily net assets. In addition, the Fund has agreed, during the two year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent, that after giving the effect to the repayment, such adjusted annualized total operating expenses of the Fund would not exceed 1.00% of the value of the Fund’s average daily net assets. During the period ended April 30, 2022, the Adviser reimbursed certain expenses in the amount of $86,428. At April 30, 2022, the cumulative amount which the Fund may repay the Adviser, subject to the terms above, is $262,059:

 

For the fiscal year ended October 31, 2020, expiring October 31, 2022   $8,086 
For the fiscal year ended October 31, 2021, expiring October 31, 2023    167,545 
For the six months ended April 30, 2022, expiring October 31, 2024    86,428 
    $262,059 

 

4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the Plan) for each class of shares, except for Class Y Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, and Class C Share Plans, payments are authorized to G.distributors, LLC (the Distributor), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly. Class Y Shares do not participate in the Plan and pay no distribution fees.

 

20 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

5. Portfolio Securities. Purchases and sales of securities during the six months ended April 30, 2022, other than short term securities and U.S. Government obligations, aggregated $63,937,594 and $55,152,918, respectively.

 

6. Transactions with Affiliates and Other Arrangements. During the six months ended April 30, 2022, the Fund paid $4,640 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally, the Distributor retained a total of $454 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.

 

During the six months ended April 30, 2022, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $1,049.

 

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended April 30, 2022, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.

 

As per the approval of the Board, the Fund is allocated a portion of the chief compliance officer’s cost. For the six months ended April 30, 2022, the Fund paid or accrued $1,221 in chief compliance officer compensation in the Statement of Operations.

 

The Corporation pays retainer and per meeting fees to Directors not affiliated with the Adviser, plus specified amounts to the Lead Director and Audit Committee Chairman. Directors are also reimbursed for out of pocket expenses incurred in attending meetings. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Corporation.

 

7. Line of Credit. The Fund participates in an unsecured line of credit, which expires on March 1, 2023 and may be renewed annually, of up to $75,000,000 under which it may borrow up to 10% of its net assets from the bank for temporary borrowing purposes. Borrowings under this arrangement bear interest at a floating rate equal to the higher of the Overnight Federal Funds Rate plus 135 basis points or the Overnight Bank Funding Rate plus 135 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. During the six months ended April 30, 2022, there were no borrowings under the line of credit.

 

8. Capital Stock. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class Y Shares. Class AAA and Class Y Shares are offered without a sales charge. Class A Shares are subject to a maximum front-end sales charge of 5.75%. Class C Shares are subject to a 1.00% contingent deferred sales charge for one year after purchase.

 

The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh 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 as an increase in paid-in capital. The redemption fees retained by the Fund during the six months ended April 30, 2022 and the fiscal year ended October 31, 2021, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.

 

21 

 

 

The Gabelli Enterprise Mergers and Acquisitions Fund

Notes to Financial Statements (Unaudited) (Continued)

 

Transactions in shares of capital stock were as follows:

 

   Six Months Ended
April 30, 2022
(Unaudited)
   Year Ended
October 31, 2021
 
   Shares   Amount   Shares   Amount 
Class AAA                    
Shares sold   97,638   $1,554,630    104,530   $1,705,906 
Shares issued upon reinvestment of distributions   29,721    460,670         
Shares redeemed   (112,578)   (1,695,196)   (36,847)   (592,535)
Net increase   14,781   $320,104    67,683   $1,113,371 
Class A                    
Shares sold   83,704   $1,261,399    221,753   $3,446,011 
Shares issued upon reinvestment of distributions   120,836    1,833,081         
Shares redeemed   (189,572)   (2,829,083)   (285,586)   (4,465,918)
Net increase/(decrease)   14,968   $265,397    (63,833)  $(1,019,907)
Class C                    
Shares sold   12,191   $160,080    51,804   $740,966 
Shares issued upon reinvestment of distributions   34,843    467,238         
Shares redeemed   (72,967)   (967,706)   (213,332)   (2,965,646)
Net decrease   (25,933)  $(340,388)   (161,528)  $(2,224,680)
Class Y                    
Shares sold   645,671   $10,540,756    608,112   $10,554,845 
Shares issued upon reinvestment of distributions   158,390    2,616,597    5,774    92,206 
Shares redeemed   (663,937)   (11,286,242)   (802,134)   (13,305,010)
Net increase/(decrease)   140,124   $1,871,111    (188,248)  $(2,657,959)

 

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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

 

10. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.

 

22 

 

 

Gabelli Enterprise Mergers and Acquisitions Fund  

Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)

 

Section 15(c) of the Investment Company Act of 1940, as amended (the 1940 Act), contemplates that the Board of Gabelli Enterprise Mergers and Acquisitions Fund (the Fund), including a majority of the Directors who have no direct or indirect interest in the investment advisory agreement and are not interested persons of the Fund, as defined in the 1940 Act (the Independent Board Members), are required annually to review and re-approve the terms of the Fund’s existing investment advisory agreement and approve any newly proposed terms therein. In this regard, the Board reviewed and re-approved, during the most recent six month period covered by this report, the Investment Advisory Agreement (the Advisory Agreement) with the Adviser for the Fund.

 

More specifically, at a meeting held on February 7, 2022, the Board, including the Independent Board Members, considered the factors and reached the conclusions described below relating to the selection of the Adviser and the re-approval of the Advisory Agreement.

 

1) The nature, extent, and quality of services provided by the Adviser.

The Board Members reviewed in detail the nature and extent of the services provided by the Adviser under the Advisory Agreement and the quality of those services over the past year. The Board noted that these services included managing the investment program of the Fund, including the purchase and sale of portfolio securities, and overseeing all of the Fund’s third party service providers as well as providing general corporate services.

 

The Board Members considered that the Adviser also provided, at its expense, office facilities for use by the Fund and supervisory personnel responsible for supervising the performance of administrative, accounting, and related services for the Fund, including monitoring to assure compliance with stated investment policies and restrictions under the 1940 Act and related securities regulations. The Board Members noted that, in addition to managing the investment program for the Fund, the Adviser provided certain non-advisory and compliance services, including services under the Fund’s Rule 38a-1 compliance program.

 

The Board Members also considered that the Adviser paid for all compensation of officers and Board Members of the Fund that are affiliated with the Adviser and that the Adviser further provided services to shareholders of the Fund who had invested through various programs offered by third party financial intermediaries. The Board Members evaluated these factors based on their direct experience with the Adviser and in consultation with Fund Counsel. The Board noted that the Adviser had engaged, at its expense, BNY to assist it in performing certain of its administrative functions. The Board Members concluded that the nature and extent of the services provided were reasonable and appropriate in relation to the advisory fee, that the level of services provided by the Adviser, either directly or through BNY, had not diminished over the past year, and that the quality of service continued to be high.

 

The Board Members reviewed the personnel responsible for providing services to the Fund and concluded, based on their experience and interaction with the Adviser, that (i) the Adviser was able to retain quality personnel, (ii) the Adviser and its agents exhibited a high level of diligence and attention to detail in carrying out their advisory and administrative responsibilities under the Advisory Agreement, (iii) the Adviser was responsive to requests of the Board, (iv) the scope and depth of the Adviser’s resources was adequate, and (v) the Adviser had kept the Board apprised of developments relating to the Fund and the industry in general. The Board Members also focused on the Adviser’s reputation and longstanding relationship with the Fund. The Board Members also believed that the Adviser had devoted substantial resources and made substantial commitments to address new regulatory compliance requirements applicable to the Fund.

 

23 

 

 

Gabelli Enterprise Mergers and Acquisitions Fund 

Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)

 

2) The performance of the Fund and the Adviser.

The Board Members reviewed the investment performance of the Fund, on an absolute basis, as compared with its Broadridge peer group of other SEC registered funds, and against the Fund’s broad based securities market benchmark as reflected in the Fund’s prospectus and annual report. The Board Members considered the Fund’s one, three, five, and ten year average annual total returns for the periods ended December 31, 2021. The peer group considered by the Board Members was developed by Broadridge and was comprised of the Fund and all retail and institutional alternative event driven funds, regardless of asset size or primary channel of distribution (the “Performance Peer Group”). The Board considered these comparisons helpful in their assessment as to whether the Adviser was obtaining for the Fund’s shareholders the total return performance that was available in the marketplace, given the Fund’s objectives, strategies, limitations, and restrictions. In reviewing the performance of the Fund, the Board Members noted that the Fund’s performance was above the median for the one, three, five, and ten year periods. The Board Members concluded that the Fund’s performance was reasonable in comparison with that of the Performance Peer Group.

 

In connection with its assessment of the performance of the Adviser, the Board Members considered the Adviser’s financial condition and whether it had the resources necessary to continue to carry out its functions under the Advisory Agreement. The Board Members concluded that the Adviser had the financial resources necessary to continue to perform its obligations under the Advisory Agreement and to continue to provide the high quality services that it has provided to the Fund to date.

 

3) The cost of the advisory services and the profits to the Adviser and its affiliates from the relationship with the Fund.

In connection with the Board Members’ consideration of the cost of the advisory services and the profits to the Adviser and its affiliates from the relationship with the Fund, the Board Members considered a number of factors. First, the Board Members compared the level of the advisory fee for the Fund against the comparative Broadridge expense peer group (Expense Peer Group). The Board Members also considered comparative non-management fee expenses and comparative total fund expenses of the Fund and the Expense Peer Group. The Board Members considered this information useful in assessing whether the Adviser was providing services at a cost that was competitive with other similar funds. In assessing this information, the Board Members considered both the comparative contract rates as well as the level of the total expense ratio, with respect to the Expense Peer Group. The Board Members noted that the Fund’s advisory fee and total expense ratios were below the median when compared with those of the Expense Peer Group.

 

The Board Members also reviewed the fees charged by the Adviser to provide similar advisory services to other RICs or accounts with similar investment objectives, noting that the fees charged by the Adviser were the same or lower than the fees charged to the Fund.

 

The Board Members also considered an analysis prepared by the Adviser of the estimated profitability to the Adviser of its relationship with the Fund and reviewed with the Adviser its cost allocation methodology in connection with its profitability. In this regard, the Board Members reviewed Pro-forma Income Statements of the Adviser for the year ended December 31, 2021. The Board Members considered one analysis for the Adviser as a whole and a second analysis for the Adviser with respect to the Fund. With respect to the Fund analysis, the Board Members received an analysis based on the Fund’s average net assets during the period as well as

 

24 

 

 

Gabelli Enterprise Mergers and Acquisitions Fund 

Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited) (Continued)

 

a Pro-forma analysis of profitability at higher and lower asset levels. The Board Members concluded that the profitability of the Fund to the Adviser under either analysis was not excessive.

 

4) The extent to which economies of scale will be realized as the Fund grows and whether fee levels reflect those economies of scale.

With respect to the Board Members’ consideration of economies of scale, the Board Members discussed whether economies of scale would be realized by the Fund at higher asset levels. The Board Members also reviewed data from the Expense Peer Group to assess whether the Expense Peer Group funds had advisory fee breakpoints and, if so, at what asset levels. The Board Members also assessed whether certain of the Adviser’s costs would increase if asset levels rise. The Board Members noted the Fund’s current size and concluded that under foreseeable conditions, they were unable to assess at this time whether economies of scale would be realized if the Fund were to experience significant asset growth. In the event there were to be significant asset growth in the Fund, the Board Members determined to reassess whether the advisory fee appropriately took into account any economies of scale that had been realized as a result of that growth.

 

5) Other Factors.

In addition to the above factors, the Board Members also discussed other benefits received by the Adviser from its management of the Fund. The Board Members considered that the Adviser does use soft dollars in connection with its management of the Fund.

 

6) Conclusion.

Based on a consideration of all these factors in their totality, the Board Members, including all of the Independent Board Members, determined that the Fund’s advisory fee was fair and reasonable with respect to the quality of services provided and in light of the other factors described above that the Board deemed relevant. Accordingly, the Board Members determined to approve the continuation of the Fund’s Advisory Agreement. The Board Members based their decision on evaluations of all these factors as a whole and did not consider any one factor as all important or controlling.

 

25 

 

 

 

Gabelli Funds and Your Personal Privacy

 

Who are we?

 

The Gabelli Funds are investment companies registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc., a publicly held company with subsidiaries and affiliates that provide investment advisory services for a variety of clients.

 

What kind of non-public information do we collect about you if you become a fund shareholder?

 

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:

 

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.

 

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. 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 website, www.sec.gov.

 

What do we do to protect your personal information?

 

We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential.

 

 

 

 

GABELLI ENTERPRISE MERGERS AND ACQUISITIONS FUND

One Corporate Center

Rye, NY 10580-1422

 

 

 

Portfolio Manager’s Biography

 

Mario J. Gabelli, CFA, is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.

 

 

 

 

 

GABELLI ENTERPRISE MERGERS AND
ACQUISITIONS FUND
A Portfolio of the Gabelli 787 Fund, Inc.

One Corporate Center

Rye, New York 10580-1422

 

t800-GABELLI (800-422-3554)
f914-921-5118
einfo@gabelli.com

GABELLI.COM

 

Net Asset Values per share available daily

by calling 800-GABELLI after 7:00 P.M.

 

BOARD OF DIRECTORS

Anthony J. Colavita
President,
Anthony J. Colavita, P.C.

 

James P. Conn
Former Managing Director and
Chief Investment Officer,
Financial Security Assurance
Holdings Ltd.

 

Vincent D. Enright
Former Senior Vice President
and Chief Financial Officer,
KeySpan Corporation

 

Kuni Nakamura
President,
Advanced Polymer, Inc.

 

Regina M. Pitaro
Managing Director,
GAMCO Asset Management, Inc.

 

Salvatore M. Salibello
Senior Partner,
Bright Side Consulting

 

Salvatore J. Zizza

Chairman,
Zizza & Associates Corp.

OFFICERS
Bruce N. Alpert
President

 

John C. Ball

Treasurer

 

Peter Goldstein

Secretary and Vice President

 

Richard J. Walz

Chief Compliance Officer

 

Daniel Plourde

Vice President

 

DISTRIBUTOR

G.distributors, LLC

 

CUSTODIAN

State Street Bank and Trust

Company

 

TRANSFER AGENT AND

DIVIDEND DISBURSING

AGENT

DST Asset Manager

Solutions, Inc.

 

LEGAL COUNSEL

Paul Hastings LLP

 

 

 

 

This report is submitted for the general information of the shareholders of the Gabelli Enterprise Mergers and Acquisitions Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.

 

 

 

 

 

 

 

 

 

 

 

 

 

GAB208Q222SR

(GRAPHIC)



 

 

 

 

(b)Not applicable.

 

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. Investments.

 

(a)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.

 

(b)Not applicable.

 

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 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) 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”)) are

 

 

 

 

  

effective as of a date within 90 days of the filing of this report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

(b)The registrant’s certifying officers are not aware of any changes in the registrant’s internal control over financial reporting (as defined in rule 30a-3(d) under the 1940 Act) that occurred during 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

 

Not applicable.

 

Item 13. 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)(2)(1)Not applicable.

 

(a)(2)(2)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 787 Fund, Inc.

 

By (Signature and Title)*  

/s/ Bruce N. Alpert

Bruce N. Alpert, Principal Executive Officer

 

Date  

June 30, 2022

 

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

 

Date  

June 30, 2022

 

By (Signature and Title)*  

/s/ John C. Ball

John C. Ball, Principal Financial Officer and Treasurer


Date  

June 30, 2022

 

* Print the name and title of each signing officer under his or her signature.

 

 


 

 

Gabelli 787 Fund Inc. N-CSRS

Exhibit 99.(a)(2)

 

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act

 

I, Bruce N. Alpert, certify that:

 

1.I have reviewed this report on Form N-CSR of Gabelli 787 Fund, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 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; and

 

5.The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 30, 2022   /s/ Bruce N. Alpert  
      Bruce N. Alpert, Principal Executive Officer  

 

 

 

 

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act

 

I, John C. Ball, certify that:

 

1.I have reviewed this report on Form N-CSR of Gabelli 787 Fund, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 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; and

 

5.The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 30, 2022   /s/ John C. Ball  
      John C. Ball, Principal Financial Officer and Treasurer

  

 


 

 

Gabelli 787 Fund Inc. N-CSRS

Exhibit 99.(b)

 

Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act

 

I, Bruce N. Alpert, Principal Executive Officer of Gabelli 787 Fund, Inc. (the “Registrant”), certify that:

 

1.The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date: June 30, 2022   /s/ Bruce N. Alpert  
      Bruce N. Alpert, Principal Executive Officer

 

I, John C. Ball, Principal Financial Officer and Treasurer of Gabelli 787 Fund, Inc. (the “Registrant”), certify that:

 

1.The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date: June 30, 2022   /s/ John C. Ball  
      John C. Ball, Principal Financial Officer and Treasurer