<PAGE> 1
- -------------------------------------------------------------------------------
MATHERS FUND, INC.
100 Corporate North - Bannockburn, Illinois 60015
800-962-FUND - 847-295-7400
[email protected]
DIRECTORS
KARL M. BECKER
TYLER R. CAIN
CHARLES G. FREUND
ROBERT J. REYNOLDS
HENRY G. VAN DER EB, JR.
OFFICERS MATHERS
FUND
HENRY G. VAN DER EB, JR., CFA
Chairman
ROBERT J. REYNOLDS, CFA
President
ANNE E. MORRISSY, CFA
Executive Vice President and Secretary
LAWRENCE A. KENYON
Senior Vice President and
Chief Financial Officer
EDITH L. COOK
Vice President and Treasurer
MARY ANNE KINNUCAN
Vice President
HEIDI M. STUBNER
Vice President
Investment Adviser
MATHERS AND COMPANY, INC.
Bannockburn, Illinois
ANNUAL REPORT
Custodian
STATE STREET BANK AND TRUST CO. 1997
Boston, Massachusetts
Transfer Agent
DST SYSTEMS, INC.
Kansas City, Missouri
Counsel
SIDLEY & AUSTIN
Chicago, Illinois
Auditors
ARTHUR ANDERSEN LLP
Chicago, Illinois
This report is submitted for the information of
shareholders of the Fund. It is not authorized
for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
- -------------------------------------------------------------------------------
<PAGE> 2
MATHERS FUND $400,000
[GRAPH] $390,000
- ---------------------------------------------------------------------- $380,000
Growth of a $10,000 Investment in the $370,000
Mathers Fund since August 19, 1965* $360,000
$350 000
Compound 12-31-97 $340,000
Annual Return Value of $330,000
From 8-19-65 $1 Invested $320,000
To 12-31-97 8-19-65 $310,000
$300,000
$290,000
MATHERS FUND...................... 12.09% $40.24 $280,000
Standard & Poor's 500............. 11.81 37.06 $270,000
Value Line Composite.............. 7.80 11.38 $260,000
Dow Jones Industrial Average...... 11.42 33.07 $250,000
Long Term U.S. Treasury Bonds..... 7.72 11.12 $240,000
U.S. Treasury Bills............... 6.57 7.84 $230,000
Consumer Price Index.............. 5.17 5.10 $220,000
$210,000
*Date of public offering $200,000
Income Dividends and Capital Gains Distributions Reinvested $190,000
- ---------------------------------------------------------------------- $180,000
- --------------------------------- --------------------------------- $170,000
MATHERS FUND MATHERS FUND $160,000
RANKED #1 RANKED #1 $150,000
GROWTH FUND GROWTH FUND $140,000
1 YEAR ENDED 1 YEAR ENDED $130,000
12-31-87 6-30-88 $120,000
$110,000
Source Lipper Analytical Services Source Lipper Analytical Services $100,000
12-31-87 "Growth Fund" Category 6-30-88 "Growth Fund" Category $ 90,000
Consists of 236 funds. Consists of 235 funds. $ 80,000
- --------------------------------- --------------------------------- $ 70,000
- ---------------------------------
MATHERS FUND $ 60,000
RANKED #1 $ 50,000
GROWTH FUND $ 40,000
1 YEAR ENDED $ 30,000
9-30-90 $ 20,000
$ 10,000
Source Lipper Analytical Services
9-30-90 "Growth Fund" Category
Consists of 257 funds.
- ---------------------------------
$10,000
initial 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
investment 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
8-19-65 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9
5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7
Full calender years ending December 31,
<PAGE> 3
- -------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS JANUARY 23, 1998
===============================================================================
The Mathers Fund maintained a conservative and, at times, very defensive
portfolio structure during 1997 and continues to do so in 1998 in anticipation
of a long overdue major bear market. This position reflects extraordinarily
high-risk stock valuations in the U.S. and the spreading impact of Asian
financial and economic meltdowns. For the year, the portfolio averaged 25% in
stocks, 70.5% in U.S. Treasury securities and 4.5% in cash equivalents and
earned a total return of 3.0%.
It is unrealistic to expect a defensively structured portfolio to outperform in
a bear market and also keep pace on the upside during a classic manic advance
driven by the irrational expectations of crowd psychology. The unpredictable
timing of the trend reversal and steep price decline which inevitably follows
such bull market bubbles was recently demonstrated by the panic collapse of
various "Asian miracle" stock markets. To avoid large losses, a portfolio must
be appropriately positioned prior to the downside break.
In a March '97 Business Week article titled "Bear Funds are Licking Their
Chops", the Mathers Fund was selected as one of a universe of six well-known
funds positioned for a market decline. For the one and two-year periods ended
12-31-97, the total return of the other five funds averaged -20.9% and -18.7%
vs. +3.0% and +2.9% respectively for the Mathers Fund.
The Fund's equities remained partially to fully hedged for almost the entire
year in order to protect the Fund's assets from potential loss in a down
market. While gaining 33% overall, the S&P 500 had ten declines of over 3% in
1997, each lasting at least four days, ranging from -3.1% to -9.8%, and one of
- -5.1% so far in 1998. During these eleven periods, the sum of the losses by
the S&P 500 was -53.5% while the Mathers Fund gained 2.8%. Stocks ranged from
a low of 8.7% to a high of 39.4% of the Fund's total assets and posted a total
return of 13.51% for the year. This gain was more than offset by the hedge
position. Generally, most stocks held in the portfolio during the year were
small to medium capitalization U.S. companies selected for their special
situation features which create the potential for appreciation in a declining
market.
Secular deflationary forces suppressed the U.S. CPI increase to 1.7% in 1997.
As interest rates fell, the U.S. Treasury note segment of the portfolio
contributed both an increase in market value as well as interest income for a
total return of 9.94%. At year-end 1997, the weighted average maturity of the
fixed income portfolio segment was 5.55 years, the duration 4.30 years, the
current yield 6.66% and the yield to maturity 5.41%.
In an effort to increase returns and minimize the risk of loss, the Fund has
been conservatively managed for many years using the discipline of historical
precedent valuation analysis. This approach is based on the long-term
statistical record of numerous time-tested fundamental stock valuation
benchmarks which show that stocks fluctuate from overvaluation to
under-valuation over varying time periods. Central to the success of this
approach are the assumptions that stock valuations are unlikely to
significantly overshoot and/or stay at historical extremes for an extended
period and that portfolio risk levels should be periodically adjusted to take
more risk when stocks are undervalued and less risk when stocks are overvalued.
To assume that virtually all fundamental benchmarks would substantially exceed
their 71-year old upper limits, for more than a short time, would seem
imprudent. However unlikely, over the last several years those measures have
far surpassed all previous records in both degree and duration. Despite this
recent experience, investing for the long term does not mean buying or holding
stocks at prices that far exceed their intrinsic economic worth.
The challenge is to control portfolio risk to at least break even when wrong
and make profits when right. The loss of opportunity is preferable to the loss
of capital. This approach worked exceptionally well in '87 and '90, but has
thus far severely penalized performance during the Great Baby Boomer Stock
Mania of '95-'97.
Four classic value ratios which continue to make a compelling bearish case are
shown in the chart and inset table on the next page. S&P 500 Index Fund
investors are currently paying a sky-high $62.50 for $1.00 of dividends, $24.00
for $1.00 of earnings and $5.40 for $1.00 of book value. Even after adjusting
these ratios for various "New Era" rationalizations, the S&P 500 is excessively
expensive. Both dividend and earnings growth rates are slowing sharply, and
earnings could easily decline 20% or more as the deflationary tsunami of Asian
currency devaluations and financial shocks pressure corporate pricing power and
profit margins, tilting the global economy toward contraction. Additionally,
as shown on the chart, the market value of the U.S. stock bubble now exceeds
GDP by an unprecedented 24%, so a 60% market drop would just return this ratio
to its 71-year average.
The ripple effects of the disparate Asian insolvency crises are far from over.
IMF bailout resources are inadequate relative to the Asian task so risk-averse
investors must consider the consequences of a prolonged period of global
financial uncertainty. If crisis creates opportunity in 1998, the Fund will
actively seek investments to generate capital appreciation.
/s/ Henry Van Der Eb Chairman
- -------------------------------------------------------------------------------
<PAGE> 4
- -------------------------------------------------------------------------------
[Contained here in paper format is a chart reflecting the Stock Market
Capitalization as a Percentage of Nominal GDP. This chart was prepared for
Mathers Fund by Topline Investment Graphics, Boulder CO. A hard copy is
available by calling the Fund at 800-962-3863. The line is the ratio of stock
market capitalization divided by nominal GDP. The chart's X-axis represents
years, from 1926 through 1997 and its Y-axis shows percentage points, from 0 to
120. The average, since 1926, has been 49.3%. The high points (August 1929,
81.4%; November 1968, 77.8% and December 1972, 78.1%) were all followed by
severe bear markets. The Sept. 1997 value is a record high, 124.6%.
Contained within the chart is a table of data as follows:
<TABLE>
<CAPTION>
1928 to 1997 Price/Book Dividend Yield P/E Ratio
- ------------ ---------- -------------- ---------
<S> <C> <C> <C>
Avg. of Six
Major Bottoms 0.9 7.14 7.8
Avg. of Five
Major Tops 2.4 2.94 20.2
Sept. 1929 Top 3.6 2.86 21.1
Current:1/5/98 5.4 1.60 24.0]
</TABLE>
===============================================================================
SCHEDULE OF INVESTMENTS December 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS 19.7%
Shares Market Value
- --------- ------------
<S> <C> <C>
COMPUTER SOFTWARE 2.7%
2,260,000 Syncronys Softcorp * ...................... $ 3,672,500
FARM EQUIPMENT 1.1%
50,000 AGCO Corporation .......................... 1,462,500
FERTILIZER 3.5%
400,000 Agrium, Inc. .............................. 4,875,000
SEMICONDUCTORS 2.0%
300,000 Integrated Device Technology, Inc.*........ 2,831,250
TECHNOLOGY 10.4%
2,600,000 Aura Systems, Inc. * ...................... 8,531,250
400,000 Newcom, Inc. * ............................ 5,900,000
------------
14,431,250
------------
Total Common Stocks (Cost $31,889,582) ...................... $ 27,272,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM NOTES 1.4%
Par Value Market Value
- ---------- ------------
<S> <C> <C>
$ 1,942,000 State Street Bank Repo,
5.00%, due 1-2-98**
Total Short-Term Notes (Cost $1,942,000) .................... $ 1,942,000
-------------
U.S. TREASURIES 78.9%
Par Value
- ----------
$80,000,000 U.S. Treasury Notes
7 7/8% due 11-15-04...................... $ 89,375,000
5,000,000 U.S. Treasury Bills
due 2-19-98.............................. 4,963,924
15,000,000 U.S. Treasury Bills
due 1-8-98 + ............................ 14,885,350
-------------
Total U.S. Treasuries (Cost $99,774,274) .................... $ 109,224,274
-------------
TOTAL INVESTMENTS (Cost $133,605,856) ...................... $ 138,438,774
-------------
FUTURES 0.1%
Contracts
- ----------
110 Short, S&P 500 Stock Index
Futures, Expiration 3-20-98 174,617
OTHER ASSETS (Net) (0.1%) ................................... ( 209,576)
-------------
TOTAL NET ASSETS - 100% ..................................... $ 138,403,815
=============
</TABLE>
* Non-Income Producing ** Collateralized by a U.S. Treasury Note
+ $5 million pledged to cover S&P Futures margin
The accompanying Notes to Financial Statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
<PAGE> 5
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET STATEMENT OF OPERATIONS
December 31, 1997 Year Ended December 31, 1997
======================================================== =================================================================
<S> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS AT MARKET VALUE: INVESTMENT INCOME:
Common Stocks
(Cost $31,889,582)... $27,272,500 INCOME:
U.S. Treasuries:
Notes Interest................... $7,493,055
(Cost $79,925,000)... 89,375,000
Bills (Amortized Dividends.................. 115,012 $ 7,608,067
Cost $19,849,274).... 19,849,274 -------------
Repurchase Agreement
(Cost $1,942,000).... 1,942,000 $138,438,774 OPERATING EXPENSES:
----------- ------------
CASH..................... 530 Management Fee............. $1,123,610
RECEIVABLES FOR: Transfer Agent............. 203,853
Subscriptions to Capital Legal and Auditing......... 125,124
Stock.................. $4,006,772
Dividends and Accrued Other...................... 63,048
Interest............... 916,819
Other Assets............. 5,500 4,929,091 Custodian.................. 38,008
---------- -----------
Printing................... 30,948
TOTAL ASSETS.............. $143,368,395
============ Registration............... 23,856
LIABILITIES: Taxes...................... 8,126 1,616,573
--------- -----------
PAYABLES FOR:
NET INVESTMENT INCOME................... $ 5,991,494
Redemptions of Capital Stock $ 4,277,582 -------------
Dividends Payable........... 559,998
Accrued Expenses............ 127,000
------------
TOTAL LIABILITIES............ $ 4,964,580
------------
CAPITAL: REALIZED AND UNREALIZED
GAINS ON INVESTMENTS:
Capital Stock, $1.00 par value;
10,594,606 shares outstanding Net Realized Gain on Investments Sold..... $ 3,088,393
(100 million shares authorized)... $ 10,594,606
Paid-In Surplus...................... 156,654,313 Net Change in Unrealized Appreciation on
Accumulated Undistributed Net Investment Investments.............................. (4,616,313)
Income ........................... 201,267 -------------
Accumulated Undistributed Net Realized Net Realized and Unrealized Loss on .....
Loss on Investments............... (34,053,906) Investments.............................. (1,527,920)
Net Unrealized Appreciation on Investments 5,007,535 -----------
----------- Net Increase in Net Assets Resulting from
Operations............................... $ 4,463,574
TOTAL CAPITAL (NET ASSETS)........... $138,403,815 =============
------------
TOTAL LIABILITIES AND CAPITAL........ $143,368,395
============
Net Asset Value (Capital) Per Share at
December 31, 1997................ $ 13.06
============
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
statements.
- -------------------------------------------------------------------------------
<PAGE> 6
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net Investment Income ........................... $ 5,991,494 $ 5,838,134
Net Realized Gain/(Loss) on Investments Sold .... 3,088,393 (20,317,145)
Net Change in Unrealized Appreciation
on Investments ................................ (4,616,313) 13,749,425
------------ ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations ................... 4,463,574 (729,586)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from Net Investment Income ............ (6,033,168) (5,756,774)
Distribution of Realized Capital Gains .......... 0 0
------------ ------------
Total Distributions to Shareholders ........... (6,033,168) (5,756,774)
------------ ------------
CAPITAL STOCK ISSUED AND REDEEMED:
Net Proceeds from Sales of Shares, 752,707
and 620,300 shares, respectively .............. 9,989,029 8,338,600
Net Proceeds from Dividend Reinvestment Plan,
419,098 and 397,258 shares, respectively ...... 5,473,417 5,271,615
Cost of Shares Redeemed, 3,507,039 and
4,983,552 shares, respectively ................ (47,084,701) (67,831,082)
------------ ------------
Decrease in Net Assets Derived from Capital
Stock Transactions, (2,335,234) and
(3,965,994) shares, respectively ............ (31,622,255) (54,220,867)
------------ ------------
Net Decrease in Net Assets .................... (33,191,849) (60,707,227)
TOTAL NET ASSETS:
Beginning of Year ............................... 171,595,664 232,302,891
------------ ------------
End of Year (including undistributed net
investment income of $201,267 and
$242,940 respectively) ........................ $138,403,815 $171,595,664
============ ============
</TABLE>
The accompanying Notes to Financial Statements are an integral part
of these statements.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. The Fund is registered under the Investment Company Act of 1940 as
a diversified, open-end investment company. The primary objective
of the Fund is capital appreciation over the long term principally
through investment in common stocks. However, the Fund may invest
all or any portion of its assets in securities other than common
stocks when the adviser believes that the risk of owning equity
securities is high. The following is a summary of the significant
accounting policies of the Fund:
(a) The Fund intends to distribute all taxable income to its
shareholders and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment
companies. Therefore, no provision has been made for Federal
income taxes since the Fund has elected to be taxed as a
regulated investment company. The Fund intends to utilize
provisions of the Federal income tax laws which allow it to carry
a realized capital loss forward to eight years following the year
of the loss and offset such losses against any future realized
gains. At December 31, 1997, the Fund had total capital loss
carryforwards of $33,885,284, of which $11,658,398 expire on
December 31, 2003 and $22,226,886 expire on December 31, 2004.
(b) Common stocks traded on securities exchanges and stocks traded
on the NASDAQ National Market are valued at the last sales price
as of the close of the New York Stock Exchange on the day of
valuation. In the event a security does not trade on a given
date, the current bid price is used as the valuation. Fixed
income securities with a maturity of greater than 60 days are
valued at the current bid price, and those of 60 days or less are
carried at amortized cost which approximates market value.
Financial futures are valued at the settlement price established
each day by the exchange on which they are traded.
(c) During the year ended December 31, 1997, the Fund entered into
S&P 500 index futures contracts to hedge against possible
declines of its portfolio securities. Risks of entering into
futures contracts include the possibility that changes in the
value of the futures contract may not correlate with changes in
the value of the portfolio securities being hedged. Upon
entering into a futures contract, the Fund deposits with its
custodian, in a segregated account, a U.S. Treasury Bill to cover
margin requirements. Subsequent payments are made or received by
the Fund equal to the daily change in the contract value and are
recorded as unrealized gains or losses. The Fund recognizes a
realized gain or loss when the contract is closed or expires.
(d) Realized gains or losses are determined on the specific
identification method. Dividends from investments are recognized
as income on the ex-dividend date.
(e) Dividends to shareholders are recorded on the declaration date
which coincides with the ex-dividend date.
(f) The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
in these financial statements. Actual results could differ from
those estimates.
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
===============================================================================
2. The Fund has an agreement dated May 1, 1988 with Mathers and
Company, Inc., of which certain officers and directors of the Fund
are officers, directors and shareholders, to serve as its
investment adviser and manager. Under the agreement, the Fund pays
an annual management fee of 0.75% of the first $200,000,000 of the
Fund's average monthly net asset value plus 0.625% of any excess
over $200,000,000 but not exceeding $500,000,000, plus 0.50% of any
excess over $500,000,000. The adviser is required to reimburse the
Fund to the extent expenses, other than taxes but including the
management fee, in any year exceed the sum of 1 1/2% of the first
$30,000,000 of the Fund's average monthly net asset value plus 1%
of such value in excess of $30,000,000. Under the agreement,
Mathers and Company, Inc. also provides office facilities and
bookkeeping services to the Fund.
3. Cost of U.S. Treasury obligations and of other investment
securities purchased during the year ended December 31, 1997,
amounted to $183,993,677 and $64,582,684, respectively. Proceeds
of U.S. Treasury obligations and other investment securities sold
or matured during the year were $179,038,867 and $112,361,376,
respectively. The cost of investments is the same for financial
statement and Federal income tax purposes. At December 31, 1997,
gross unrealized appreciation on investments was $11,097,447 and
gross unrealized depreciation on investments was $6,089,912.
4. During 1997, the Board of Directors declared a distribution of
$0.61 per share from net investment income. The ex-dividend and
record date were December 31,1997. The dividend reinvestment price
was $13.06 per share, which was the Net Asset Value per share on
December 31, 1997. The payable date was December 31,1997, and the
dividend is taxable income for 1997. The aggregate dividend was
$6,033,168.
5. Financial highlights based on the average number of shares of
capital stock outstanding throughout each year are presented below:
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE - BEGINNING OF PERIOD ............. $13.27 $13.75 $13.55 $15.11 $15.02
-------- -------- -------- -------- --------
Net investment income ....................................... 0.53 0.40 0.601 0.563 0.21
Net realized and unrealized gains/(losses) on investments.... (0.13) (0.41) 0.349 (1.448) 0.11
-------- -------- -------- -------- --------
Total from investment operations ......................... 0.40 (0.01) 0.950 (0.885) 0.32
-------- -------- -------- -------- --------
Dividends from net investment income ........................ (0.61) (0.47) (0.719) (0.675) (0.23)
Distribution from net realized capital gains ................ 0.00 0.00 (0.031) 0.000 0.00
-------- -------- -------- -------- --------
Total distributions ...................................... (0.61) (0.47) (0.750) (0.675) (0.23)
-------- -------- -------- -------- --------
NET ASSET VALUE PER SHARE - END OF PERIOD ................... $13.06 $13.27 $13.75 $13.55 $15.11
======== ======== ======== ======== ========
Ratio of total expenses to average net assets ............... 1.07% 1.03% 0.98% 0.93% 0.89%
Ratio of net investment income to average net assets ........ 3.96% 2.96% 4.25% 3.86% 1.39%
Portfolio turnover .......................................... 50% 38% 58% 211% 136%
Average commission rate paid per share ...................... $0.048 $0.051 -- -- --
Total return ................................................ 3.01% (0.07%) 7.01% (5.89%) 2.13%
Net assets, end of period (000s omitted) .................... $138,404 $171,596 $232,303 $293,285 $435,862
Number of shares outstanding (000s omitted) ................. 10,595 12,930 16,896 21,651 28,854
</TABLE>
===============================================================================
AUDITORS' REPORT
To the Board of Directors and Shareholders of Mathers Fund, Inc.:
We have audited the accompanying balance sheet of Mathers Fund,
Inc. (a Maryland corporation), including the schedule of investments, as
of December 31, 1997, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 1997 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Mathers Fund, Inc. as of December 31, 1997, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
Chicago, Illinois
January 13, 1998 ARTHUR ANDERSEN LLP
<PAGE> 8
MATHERS FUND
TOTAL RETURN INVESTMENT PERFORMANCE
(ALL PERIODS ENDED 12-31-97)
<TABLE>
<CAPTION>
PERCENT CHANGE
1 YR. 5 YR. 10 YR. 20 YR. 32 YR.+
----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
MATHERS FUND ................... 3.01 5.87 65.68 767.43 3923.50
Standard & Poor's 500 .......... 33.36 151.44 424.67 2076.38 3606.17
Value Line Composite * ......... 23.42 91.54 195.71 846.65 1038.32
Dow Jones Industrial Average ... 24.87 170.76 452.26 2056.70 3207.20
Long-Term U.S. Treasury Bonds .. 16.21 65.30 193.08 624.41 1011.65
30-Day U.S. Treasury Bills ..... 4.88 24.58 69.18 306.98 684.06
Consumer Price Index ........... 1.70 13.66 39.76 159.60 410.40
COMPOUND ANNUAL RETURNS
1 YR. 5 YR. 10 YR. 20 YR. 32 YR.+
----- ------ ------ ------- -------
MATHERS FUND ................... 3.01 1.15 5.18 11.41 12.09
Standard & Poor's 500........... 33.36 20.27 18.05 16.65 11.81
Value Line Composite * ......... 23.42 13.88 11.45 11.89 7.80
Dow Jones Industrial Average ... 24.87 22.01 18.55 16.60 11.42
Long-Term U.S. Treasury Bonds .. 16.21 10.57 11.35 10.41 7.72
30-Day U.S. Treasury Bills ..... 4.88 4.49 5.40 7.27 6.57
Consumer Price Index ........... 1.70 2.59 3.40 4.89 5.17
</TABLE>
* Unweighted average of 1600 stocks
+ From date of initial public offering: 8-19-65
10 YEAR TOTAL RETURN COMPARISON
[Contained here is a chart showing performance of an investment of $10,000 ten
years ago in both Mathers Fund and the Standard & Poors 500 stock index. The
X-axis contains the years from 1987 through 1997, and the Y-axis contains
dollar values from zero to $55,000. The lines on the chart reflect the
numbers below:
<TABLE>
<CAPTION>
YEAR MATHERS FUND S&P 500 INDEX
<S> <C> <C>
'87 10,000 10,000
'88 11,373 11,655
'89 12,556 15,347
'90 13,865 14,872
'91 15,176 19,391
'92 15,648 20,867
'93 15,981 22,966
'94 15,040 23,267
'95 16,094 31,999
'96 16,083 39,342
'97 16,567 52,467]
</TABLE>
THE FUND'S DAILY PRICE AND ASSET MIX PERCENTAGES ARE AVAILABLE VIA
RECORDED MESSAGE (AFTER 4:30 P.M. CENTRAL TIME)
MONDAY THROUGH FRIDAY AT 800-962-FUND.
SHAREHOLDER ACCOUNT BALANCES MAY BE OBTAINED FROM THE FUND'S TRANSFER
AGENT AT 800-235-7458 BETWEEN 8:00 A.M. AND 4:30 P.M. CENTRAL TIME.
THE RESULTS SHOWN REFLECT PAST PERFORMANCE AND SHOULD NOT BE CONSIDERED
REPRESENTATIVE OF FUTURE PERFORMANCE. THE INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RESULTS
REFLECT INCOME DIVIDENDS REINVESTED AND CAPITAL GAINS DISTRIBUTIONS ACCEPTED
IN SHARES.