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 811-09397
The Gabelli Utilities Fund
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: June 30, 2018
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
The Gabelli Utilities Fund
Semiannual Report — June 30, 2018
Mario J. Gabelli, CFA Chief Investment Officer |
Timothy M. Winter, CFA Portfolio Manager BA, Rollins College MBA, Notre Dame |
To Our Shareholders,
For the six months ended June 30, 2018, the net asset value (“NAV”) per Class AAA Share of The Gabelli Utilities Fund decreased 0.7% compared with an increase of 0.3% for the Standard & Poor’s (“S&P”) 500 Utilities Index (SPU). Other classes of shares are available. See page 2 for performance information for all classes of shares.
Enclosed are the financial statements, including the schedule of investments, as of June 30, 2018.
Comparative Results
Average Annual Returns through June 30, 2018 (a) (Unaudited) | Since Inception (8/31/99) | |||||||||||
Six Months | 1 Year | 5 Year | 10 Year | 15 Year | ||||||||
Class AAA (GABUX) | (0.66)% | 2.74% | 6.89% | 6.41% | 8.23% | 7.52% | ||||||
S&P 500 Utilities Index | 0.32 | 3.41 | 10.57 | 6.64 | 9.98 | 6.69 | ||||||
S&P 500 Index | 2.65 | 14.37 | 13.42 | 10.17 | 9.30 | 5.93 | ||||||
Lipper Utility Fund Average | 2.15 | 5.96 | 8.35 | 6.25 | 9.74 | 6.57 | ||||||
Class A (GAUAX) | (0.65) | 2.59 | 6.89 | 6.42 | 8.23 | 7.53 | ||||||
With sales charge (b) | (6.36) | (3.31) | 5.63 | 5.79 | 7.80 | 7.20 | ||||||
Class C (GAUCX) | (1.09) | 1.80 | 5.78 | 5.61 | 7.42 | 6.86 | ||||||
With contingent deferred sales charge (c) | (2.08) | 0.80 | 5.78 | 5.61 | 7.42 | 6.86 | ||||||
Class I (GAUIX) | (0.52) | 2.95 | 7.16 | 6.67 | 8.40 | 7.67 | ||||||
Class T (GAUTX) | (0.66) | 2.63 | 6.87 | 6.40 | 8.22 | 11.44 | ||||||
With sales charge (d) | (3.14) | 0.06 | 6.33 | 6.13 | 8.03 | 7.51 | ||||||
In the current prospectuses dated April 30, 2018, as amended, the expense ratios for Class AAA, A, C, I, and T Shares are 1.37%, 1.37%, 2.12%, 1.12%, and 1.37%, respectively. See page 12 for the expense ratios for the six months ended June 30, 2018. Class AAA and Class I Shares do not have a sales charge. The maximum sales charge for Class A, Class C, and Class T Shares is 5.75%, 1.00%, and 2.50%, respectively.
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(a) | Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. 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. Returns would have been lower had Gabelli Funds, LLC, the Adviser, not reimbursed certain expenses of the Fund for periods prior to December 31, 2002. The Fund imposes a 2% redemption fee on shares sold or exchanged within seven days of purchase. Performance returns for periods of less than one year are not annualized. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectuses contain information about these and other matters and should be read carefully before investing. To obtain a prospectus, please visit our website at www.gabelli.com. The value of utility stocks generally changes as long term interest rates change. Funds investing in a single sector, such as utilities, may be subject to more volatility than funds that invest more broadly. The utilities industry can be significantly affected by government regulation, financing difficulties, supply or demand of services or fuel, and natural resources conservation. The Class AAA Share NAVs are used to calculate performance for the periods prior to the issuance of Class A Shares and Class C Shares on December 31, 2002, Class I Shares on January 11, 2008, and Class T Shares on July 5, 2017. The actual performance of the Class A Shares, Class C Shares, and Class T Shares would have been lower due to the additional fees and expenses associated with these classes of shares. The actual performance of the Class I Shares would have been higher due to lower expenses related to this class of shares. The S&P 500 Utilities Index is an unmanaged market capitalization weighted index of large capitalization stocks that may include facilities generation and transmission or distribution of electricity, gas, or water. 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 Utility Fund Average reflects the average performance of mutual funds classified in this particular category. Dividends are considered reinvested. You cannot invest directly in an index. |
(b) | Performance results include the effect of the maximum 5.75% sales charge at the beginning of the period. |
(c) | Assuming payment of the 1% maximum contingent deferred sales charge imposed on redemptions made within one year of purchase. |
(d) | Performance results include the effect of the maximum 2.50% sales charge at the beginning of the period. |
2
The Gabelli Utilities Fund
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from January 1, 2018 through June 30, 2018 | 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 Account Value 01/01/18 | Ending Account Value 06/30/18 | Annualized Expense Ratio | Expenses Period* | |||||
The Gabelli Utilities Fund | ||||||||
Actual Fund Return | ||||||||
Class AAA | $1,000.00 | $ 993.40 | 1.38% | $ 6.82 | ||||
Class A | $1,000.00 | $ 993.50 | 1.38% | $ 6.82 | ||||
Class C | $1,000.00 | $ 989.10 | 2.13% | $10.50 | ||||
Class I | $1,000.00 | $ 994.80 | 1.13% | $ 5.59 | ||||
Class T | $1,000.00 | $ 993.40 | 1.38% | $ 6.82 | ||||
Hypothetical 5% Return | ||||||||
Class AAA | $1,000.00 | $1,017.95 | 1.38% | $ 6.90 | ||||
Class A | $1,000.00 | $1,017.95 | 1.38% | $ 6.90 | ||||
Class C | $1,000.00 | $1,014.23 | 2.13% | $10.64 | ||||
Class I | $1,000.00 | $1,019.19 | 1.13% | $ 5.66 | ||||
Class T | $1,000.00 | $1,017.95 | 1.38% | $ 6.90 |
* | 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. |
3
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of June 30, 2018:
The Gabelli Utilities Fund
Energy and Utilities | 74.5 | % | ||
Communications | 17.2 | % | ||
Other | 7.8 | % | ||
U.S. Government Obligations | 0.4 | % | ||
Other Assets and Liabilities (Net) | 0.1 | % | ||
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100.0 | % | |||
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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-Q. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the 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.
4
The Gabelli Utilities Fund
Schedule of Investments — June 30, 2018 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS — 99.3% |
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ENERGY AND UTILITIES — 74.3% |
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Alternative Energy — 0.4% |
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370,000 | Algonquin Power & Utilities Corp. | $ | 2,068,158 | $ | 3,574,335 | |||||||
36,000 | NextEra Energy Partners LP | 831,843 | 1,680,120 | |||||||||
63,261 | Ormat Technologies Inc., New York | 1,599,251 | 3,364,853 | |||||||||
6,739 | Ormat Technologies Inc., Tel Aviv | 196,537 | 355,164 | |||||||||
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4,695,789 | 8,974,472 | |||||||||||
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Electric Integrated — 46.0% |
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303,000 | ALLETE Inc. | 10,886,040 | 23,455,230 | |||||||||
174,000 | Alliant Energy Corp. | 3,065,132 | 7,363,680 | |||||||||
550,000 | Ameren Corp. | 16,055,895 | 33,467,500 | |||||||||
690,000 | American Electric Power Co. Inc. | 27,812,792 | 47,782,500 | |||||||||
6,000 | Atlantic Power Corp.† | 36,882 | 13,235 | |||||||||
178,000 | Avangrid Inc. | 6,659,633 | 9,421,540 | |||||||||
290,000 | Avista Corp. | 7,089,367 | 15,271,400 | |||||||||
474,000 | Black Hills Corp. | 12,124,989 | 29,013,540 | |||||||||
60,000 | CMS Energy Corp. | 402,675 | 2,836,800 | |||||||||
165,000 | Dominion Energy Inc. | 7,995,789 | 11,249,700 | |||||||||
4,000 | DTE Energy Co. | 151,595 | 414,520 | |||||||||
297,000 | Duke Energy Corp. | 16,259,163 | 23,486,760 | |||||||||
620,000 | Edison International | 22,591,991 | 39,227,400 | |||||||||
811,500 | El Paso Electric Co. | 18,015,530 | 47,959,650 | |||||||||
1,400 | Entergy Corp. | 96,612 | 113,106 | |||||||||
1,368,000 | Evergy Inc. | 37,746,336 | 76,813,200 | |||||||||
795,000 | Eversource Energy | 18,436,099 | 46,594,950 | |||||||||
345,000 | Exelon Corp. | 10,862,157 | 14,697,000 | |||||||||
380,000 | FirstEnergy Corp. | 11,038,618 | 13,645,800 | |||||||||
78,960 | Fortis Inc. | 2,450,129 | 2,517,245 | |||||||||
111,040 | Fortis Inc., Toronto | 3,472,604 | 3,549,158 | |||||||||
915,000 | Hawaiian Electric Industries Inc. | 21,821,324 | 31,384,500 | |||||||||
42,000 | IDACORP Inc. | 1,703,782 | 3,874,080 | |||||||||
311,000 | MGE Energy Inc. | 9,537,543 | 19,608,550 | |||||||||
616,000 | NextEra Energy Inc. | 38,607,594 | 102,890,480 | |||||||||
260,000 | NiSource Inc. | 2,319,251 | 6,832,800 | |||||||||
434,000 | NorthWestern Corp. | 11,726,586 | 24,846,500 | |||||||||
785,000 | OGE Energy Corp. | 13,193,046 | 27,639,850 | |||||||||
710,000 | Otter Tail Corp. | 17,030,125 | 33,796,000 | |||||||||
138,000 | PG&E Corp. | 5,251,349 | 5,873,280 | |||||||||
320,000 | Pinnacle West Capital Corp. | 13,092,833 | 25,779,200 | |||||||||
1,610,000 | PNM Resources Inc. | 20,018,302 | 62,629,000 | |||||||||
572,000 | PPL Corp. | 17,657,112 | 16,330,600 | |||||||||
190,000 | Public Service Enterprise Group Inc. | 5,490,935 | 10,286,600 | |||||||||
466,000 | SCANA Corp. | 18,360,115 | 17,950,320 | |||||||||
430,000 | The Southern Co. | 15,474,375 | 19,913,300 | |||||||||
51,125 | Unitil Corp. | 1,483,755 | 2,609,420 |
Shares | Cost | Market Value | ||||||||||
440,000 | Vectren Corp. | $ | 12,163,963 | $ | 31,438,000 | |||||||
597,000 | WEC Energy Group Inc. | 16,121,112 | 38,596,050 | |||||||||
310,000 | Xcel Energy Inc. | 6,350,159 | 14,160,800 | |||||||||
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480,653,289 | 945,333,244 | |||||||||||
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Electric Transmission and Distribution — 0.6% |
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67,000 | Consolidated Edison Inc. | 2,745,224 | 5,224,660 | |||||||||
360,000 | Red Electrica Corp. SA | 4,191,840 | 7,331,924 | |||||||||
3,400 | Uniper SE | 38,231 | 101,407 | |||||||||
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6,975,295 | 12,657,991 | |||||||||||
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Global Utilities — 2.2% |
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11,352 | AES Tiete Energia SA | 155,996 | 28,411 | |||||||||
40,000 | Chubu Electric Power Co. Inc. | 671,887 | 600,099 | |||||||||
28,000 | E.ON SE | 524,216 | 299,321 | |||||||||
20,800 | EDF SA | 308,177 | 286,139 | |||||||||
5,000 | EDP - Energias de Portugal SA, ADR | 134,159 | 199,350 | |||||||||
200,000 | Electric Power Development Co. Ltd. | 4,991,198 | 5,166,418 | |||||||||
10,000 | Eletropaulo Metropolitana | |||||||||||
Eletricidade de Sao Paulo SA† | 32,332 | 109,656 | ||||||||||
185,000 | Emera Inc. | 4,545,769 | 6,022,896 | |||||||||
35,000 | Enagas SA | 916,226 | 1,023,461 | |||||||||
100,000 | Endesa SA | 2,186,478 | 2,206,561 | |||||||||
265,000 | Enel SpA | 1,382,306 | 1,472,136 | |||||||||
75,000 | Equinor ASA | 1,693,070 | 1,992,793 | |||||||||
4,000 | EuroSite Power Inc.† | 1,670 | 560 | |||||||||
550,000 | Hera SpA | 1,195,166 | 1,714,916 | |||||||||
66,000 | Hokkaido Electric Power Co. Inc. | 1,054,241 | 449,478 | |||||||||
40,000 | Hokuriku Electric Power Co.† | 661,406 | 402,114 | |||||||||
180,000 | Huaneng Power International Inc., ADR | 4,762,737 | 4,725,000 | |||||||||
45,000 | Iberdrola SA, ADR | 1,344,640 | 1,386,900 | |||||||||
295,589 | Iberdrola SA, Aquis | 2,311,303 | 2,286,534 | |||||||||
405,000 | Korea Electric Power Corp.,, ADR | 5,392,840 | 5,807,700 | |||||||||
110,000 | Kyushu Electric Power Co. Inc. | 1,563,463 | 1,228,018 | |||||||||
32,000 | Shikoku Electric Power Co. Inc. | 578,871 | 428,343 | |||||||||
2,000 | Snam SpA | 8,967 | 8,352 | |||||||||
28,000 | The Chugoku Electric Power Co. Inc. | 509,466 | 362,155 | |||||||||
305,000 | The Kansai Electric Power Co. Inc. | 4,106,512 | 4,451,791 | |||||||||
55,000 | The Tokyo Electric Power Co. Holdings Inc.† | 208,402 | 256,334 |
See accompanying notes to financial statements.
5
The Gabelli Utilities Fund
Schedule of Investments (Continued) — June 30, 2018 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
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ENERGY AND UTILITIES (Continued) |
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Global Utilities (Continued) |
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170,000 | Tohoku Electric Power Co. Inc. | $ | 2,793,879 | $ | 2,077,496 | |||||||
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44,035,377 | 44,992,932 | |||||||||||
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Merchant Energy — 2.2% |
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40,000 | GenOn Energy Inc. - Old, Escrow†(a) | 0 | 0 | |||||||||
15,000 | GenOn Energy Inc., | |||||||||||
Escrow†(a) | 0 | 0 | ||||||||||
120,000 | NRG Energy Inc. | 2,704,601 | 3,684,000 | |||||||||
3,090,000 | The AES Corp. | 31,910,668 | 41,436,900 | |||||||||
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34,615,269 | 45,120,900 | |||||||||||
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Natural Gas Integrated — 10.5% |
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14,500 | Apache Corp. | 761,285 | 677,875 | |||||||||
25,000 | Atlas Energy Group LLC† | 58,278 | 1,437 | |||||||||
65,000 | Devon Energy Corp. | 2,877,051 | 2,857,400 | |||||||||
5,000 | Dominion Energy Midstream Partners LP | 135,762 | 68,000 | |||||||||
20,000 | Energen Corp.† | �� | 239,277 | 1,456,400 | ||||||||
610,000 | Energy Transfer Equity LP | 210,797 | 10,522,500 | |||||||||
145,000 | Hess Corp. | 8,404,995 | 9,699,050 | |||||||||
300,000 | Kinder Morgan Inc. | 6,840,332 | 5,301,000 | |||||||||
1,916,877 | National Fuel Gas Co. | 92,615,006 | 101,517,806 | |||||||||
436,000 | Northwest Natural Gas Co. | 19,423,271 | 27,816,800 | |||||||||
520,000 | ONEOK Inc. | 6,975,466 | 36,311,600 | |||||||||
362,000 | UGI Corp. | 7,671,655 | 18,849,340 | |||||||||
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146,213,175 | 215,079,208 | |||||||||||
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Natural Gas Utilities — 5.9% |
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80,000 | Atmos Energy Corp. | 2,188,623 | 7,211,200 | |||||||||
94,000 | CenterPoint Energy Inc. | 1,812,563 | 2,604,740 | |||||||||
43,500 | Chesapeake Utilities Corp. | 786,141 | 3,477,825 | |||||||||
6,000 | CONSOL Energy Inc.† | 105,110 | 230,100 | |||||||||
388,800 | Corning Natural Gas Holding Corp.(b) | 3,685,398 | 6,815,664 | |||||||||
100,000 | Gulf Coast Ultra Deep Royalty Trust | 8,000 | 8,550 | |||||||||
5,000 | Italgas SpA | 21,959 | 27,572 | |||||||||
110,000 | National Grid plc | 1,583,477 | 1,217,125 | |||||||||
46,000 | National Grid plc, ADR | 3,018,911 | 2,569,100 | |||||||||
14,000 | New Jersey Resources Corp. | 328,068 | 626,500 | |||||||||
143,000 | ONE Gas Inc. | 1,132,190 | 10,687,820 | |||||||||
66,000 | RGC Resources Inc. | 701,712 | 1,925,880 | |||||||||
140,000 | South Jersey Industries Inc. | 1,982,945 | 4,685,800 | |||||||||
925,000 | Southwest Gas Holdings Inc. | 34,029,897 | 70,549,750 | |||||||||
119,500 | Spire Inc. | 3,777,981 | 8,442,675 | |||||||||
5,000 | WGL Holdings Inc. | 169,683 | 443,750 | |||||||||
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55,332,658 | 121,524,051 | |||||||||||
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Shares | Cost | Market Value | ||||||||||
Natural Resources — 2.0% |
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20,694 | Alliance Resource Partners LP | $ | 130,497 | $ | 379,735 | |||||||
75,000 | Anadarko Petroleum Corp. | 4,047,779 | 5,493,750 | |||||||||
168,000 | BP plc, ADR | 6,752,185 | 7,670,880 | |||||||||
14,058 | California Resources Corp.† | 143,825 | 638,796 | |||||||||
10,000 | Callon Petroleum Co.† | 124,400 | 107,400 | |||||||||
366,000 | Cameco Corp. | 4,023,873 | 4,117,500 | |||||||||
50,000 | CNX Resources Corp.† | 597,406 | 889,000 | |||||||||
8,000 | Compania de Minas Buenaventura SAA, ADR | 87,836 | 109,040 | |||||||||
710,000 | Mueller Industries Inc. | 15,410,694 | 20,952,100 | |||||||||
50,006 | Tullow Oil plc† | 247,281 | 161,689 | |||||||||
45,000 | Ultra Petroleum Corp.† | 365,464 | 103,950 | |||||||||
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31,931,240 | 40,623,840 | |||||||||||
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Services — 1.3% |
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22,000 | Baker Hughes, a GE Company | 980,838 | 726,660 | |||||||||
570,000 | Enbridge Inc. | 12,541,788 | 20,343,300 | |||||||||
20,000 | Halliburton Co. | 660,081 | 901,200 | |||||||||
34,000 | MDU Resources Group Inc. | 738,008 | 975,120 | |||||||||
50,000 | Patterson-UTI Energy Inc. | 737,566 | 900,000 | |||||||||
20,000 | Rowan Companies plc, Cl. A† | 251,815 | 324,400 | |||||||||
990,000 | Weatherford International plc† | 7,781,751 | 3,257,100 | |||||||||
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23,691,847 | 27,427,780 | |||||||||||
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Water — 2.5% |
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8,000 | American States Water Co. | 110,252 | 457,280 | |||||||||
113,000 | American Water Works Co. Inc. | 2,537,594 | 9,647,940 | |||||||||
526,000 | Aqua America Inc. | 9,085,339 | 18,504,680 | |||||||||
5,000 | California Water Service Group | 90,622 | 194,750 | |||||||||
10,000 | Connecticut Water Service Inc. | 251,353 | 653,200 | |||||||||
16,000 | Consolidated Water Co. Ltd. | 193,044 | 206,400 | |||||||||
20,000 | Middlesex Water Co. | 356,954 | 843,400 | |||||||||
276,700 | Severn Trent plc | 7,394,052 | 7,228,629 | |||||||||
143,700 | SJW Group | 3,305,025 | 9,515,814 | |||||||||
87,000 | The York Water Co. | 1,205,281 | 2,766,600 | |||||||||
52,000 | United Utilities Group plc, ADR | 1,399,310 | 1,064,960 | |||||||||
|
|
|
| |||||||||
25,928,826 | 51,083,653 | |||||||||||
|
|
|
| |||||||||
Diversified Industrial — 0.6% |
| |||||||||||
30,000 | AZZ Inc. | 1,212,304 | 1,303,500 | |||||||||
40,000 | General Electric Co. | 616,963 | 544,400 | |||||||||
100,000 | ITT Inc. | 2,056,300 | 5,227,000 | |||||||||
375,975 | Mueller Water | 2,154,278 | 4,406,427 |
See accompanying notes to financial statements.
6
The Gabelli Utilities Fund
Schedule of Investments (Continued) — June 30, 2018 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
ENERGY AND UTILITIES (Continued) |
| |||||||||||
Diversified Industrial (Continued) |
| |||||||||||
20,000 | Park-Ohio Holdings Corp. | $ | 381,858 | $ | 746,000 | |||||||
|
|
|
| |||||||||
6,421,703 | 12,227,327 | |||||||||||
|
|
|
| |||||||||
Environmental Services — 0.1% |
| |||||||||||
26,000 | Covanta Holding Corp. | 414,429 | 429,000 | |||||||||
80,000 | Veolia Environnement SA | 1,097,512 | 1,712,464 | |||||||||
|
|
|
| |||||||||
1,511,941 | 2,141,464 | |||||||||||
|
|
|
| |||||||||
TOTAL ENERGY AND UTILITIES | 862,006,409 | 1,527,186,862 | ||||||||||
|
|
|
| |||||||||
COMMUNICATIONS — 17.2% |
| |||||||||||
Cable and Satellite — 4.2% |
| |||||||||||
40,000 | Charter Communications Inc., Cl. A† | 3,815,229 | 11,728,400 | |||||||||
25,000 | Cogeco Communications Inc. | 684,204 | 1,238,352 | |||||||||
70,000 | Cogeco Inc. | 1,589,491 | 3,094,664 | |||||||||
40,000 | Comcast Corp., Cl. A | 402,190 | 1,312,400 | |||||||||
430,000 | DISH Network Corp., Cl. A† | 12,903,460 | 14,452,300 | |||||||||
308,000 | EchoStar Corp., Cl. A† | 10,215,374 | 13,675,200 | |||||||||
344,366 | Liberty Global plc, Cl. A† | 5,402,825 | 9,483,840 | |||||||||
600,000 | Liberty Global plc, Cl. C† | 10,353,788 | 15,966,000 | |||||||||
80,000 | Liberty Latin America Ltd., Cl. A† | 1,566,814 | 1,529,600 | |||||||||
150,000 | Liberty Latin America Ltd., Cl. C† | 3,323,789 | 2,907,000 | |||||||||
90,000 | Rogers Communications Inc., Cl. B | 2,426,676 | 4,271,400 | |||||||||
12,000 | Shaw Communications Inc., Cl. B | 148,195 | 244,200 | |||||||||
308,000 | Sky plc | 3,290,031 | 5,940,743 | |||||||||
50,000 | Tokyo Broadcasting System Holdings Inc. | 683,652 | 1,123,606 | |||||||||
|
|
|
| |||||||||
56,805,718 | 86,967,705 | |||||||||||
|
|
|
| |||||||||
Computer Services Software and Systems — 0.1% |
| |||||||||||
238,000 | Internap Corp.† | 3,404,667 | 2,479,960 | |||||||||
|
|
|
| |||||||||
Telecommunications — 9.4% |
| |||||||||||
25,000 | AT&T Inc. | 855,500 | 802,750 | |||||||||
552,000 | BCE Inc. | 15,437,273 | 22,350,480 | |||||||||
870,000 | CenturyLink Inc. | 18,025,127 | 16,216,800 | |||||||||
710,000 | Cincinnati Bell Inc.† | 11,173,644 | 11,147,000 | |||||||||
35,000 | Deutsche Telekom AG | 428,748 | 542,385 | |||||||||
515,000 | Deutsche Telekom AG, ADR | 6,311,945 | 7,949,025 | |||||||||
1,750,000 | Global Telecom Holding SAE, GDR† | 1,357,829 | 460,732 | |||||||||
26,000 | Harris Corp. | 2,003,049 | 3,758,040 | |||||||||
1,440,000 | Koninklijke KPN NV | 4,192,069 | 3,918,207 | |||||||||
10,000 | Koninklijke KPN NV, ADR | 44,711 | 26,800 |
Shares | Cost | Market Value | ||||||||||
135,000 | Loral Space & Communications Inc.† | $ | 5,575,246 | $ | 5,076,000 | |||||||
35,200 | NextGenTel Holding ASA† | 257,885 | 78,445 | |||||||||
290,000 | Nippon Telegraph & Telephone Corp. | 7,159,565 | 13,190,986 | |||||||||
2,200 | Orange Belgium SA | 33,392 | 37,150 | |||||||||
330,000 | Orascom Telecom Media and Technology Holding SAE, GDR | 534,301 | 66,660 | |||||||||
60,000 | Pharol SGPS SA† | 28,418 | 16,676 | |||||||||
220,000 | Pharol SGPS SA, ADR† | 182,432 | 54,978 | |||||||||
68,000 | PLDT Inc., ADR | 3,226,928 | 1,589,840 | |||||||||
140,000 | Proximus SA | 4,424,555 | 3,157,034 | |||||||||
2,000 | PT Indosat Tbk | 1,061 | 444 | |||||||||
2,300,000 | Singapore Telecommunications Ltd. | 5,695,042 | 5,199,266 | |||||||||
800,000 | Sprint Corp.† | 4,639,702 | 4,352,000 | |||||||||
121,000 | Swisscom AG, ADR | 4,440,719 | 5,395,390 | |||||||||
10,000 | Tele2 AB, Cl. B | 158,627 | 117,565 | |||||||||
170,000 | Telecom Italia SpA, ADR† | 2,206,728 | 1,247,800 | |||||||||
235,000 | Telefonica Brasil SA, ADR | 4,137,121 | 2,789,450 | |||||||||
53,000 | Telefonica Deutschland Holding AG | 280,618 | 208,952 | |||||||||
525,000 | Telefonica SA, ADR | 8,961,856 | 4,478,250 | |||||||||
1,000,000 | Telekom Austria AG | 7,767,364 | 8,338,102 | |||||||||
340,000 | Telenet Group Holding NV† | 15,333,232 | 15,882,099 | |||||||||
546,000 | Telephone & Data Systems Inc. | 14,762,101 | 14,971,320 | |||||||||
60,000 | Telesites SAB de CV† | 45,551 | 43,776 | |||||||||
867,100 | VEON Ltd., ADR | 3,594,064 | 2,063,698 | |||||||||
715,000 | Verizon Communications Inc. | 22,935,173 | 35,971,650 | |||||||||
60,000 | Windstream Holdings Inc. | 1,044,240 | 316,200 | |||||||||
|
|
|
| |||||||||
177,255,816 | 191,815,950 | |||||||||||
|
|
|
| |||||||||
Wireless Communications — 3.5% |
| |||||||||||
65,000 | America Movil SAB de CV, Cl. L, ADR | 1,049,728 | 1,082,900 | |||||||||
27,000 | ATN International Inc. | 883,543 | 1,424,790 | |||||||||
69,000 | China Mobile Ltd., ADR | 2,765,327 | 3,062,910 | |||||||||
53,000 | China Unicom Hong Kong Ltd., ADR | 665,499 | 663,030 | |||||||||
200 | Hutchison Telecommunications Hong Kong Holdings Ltd. | 19 | 71 | |||||||||
85,000 | Millicom International Cellular SA | 6,139,499 | 4,993,750 | |||||||||
252,000 | Millicom International Cellular SA, SDR | 17,797,413 | 14,883,524 | |||||||||
6,500 | Mobile TeleSystems PJSC, ADR | 86,498 | 57,395 | |||||||||
465,000 | NTT DoCoMo Inc. | 7,286,947 | 11,854,424 | |||||||||
135,000 | SK Telecom Co. Ltd., ADR | 2,383,798 | 3,148,200 |
See accompanying notes to financial statements.
7
The Gabelli Utilities Fund
Schedule of Investments (Continued) — June 30, 2018 (Unaudited)
Shares | Cost | Market Value | ||||||||||
COMMON STOCKS (Continued) |
| |||||||||||
COMMUNICATIONS (Continued) |
| |||||||||||
Wireless Communications (Continued) |
| |||||||||||
400 | SmarTone Telecommunications Holdings Ltd. | $ | 207 | $ | 413 | |||||||
35,000 | Tim Participacoes SA, ADR | 684,957 | 590,100 | |||||||||
390,000 | Turkcell Iletisim Hizmetleri A/S, ADR | 5,436,576 | 2,550,600 | |||||||||
367,000 | United States Cellular Corp.† | 16,064,751 | 13,593,680 | |||||||||
580,000 | Vodafone Group plc, ADR | 21,668,970 | 14,099,800 | |||||||||
|
|
|
| |||||||||
82,913,732 | 72,005,587 | |||||||||||
|
|
|
| |||||||||
TOTAL COMMUNICATIONS | 320,379,933 | 353,269,202 | ||||||||||
|
|
|
| |||||||||
OTHER — 7.8% |
| |||||||||||
Aerospace — 1.0% |
| |||||||||||
1,600,000 | Rolls-Royce Holdings plc | 12,308,445 | 20,866,811 | |||||||||
142,000,000 | Rolls-Royce Holdings plc, Cl. C†(a) | 197,799 | 187,404 | |||||||||
|
|
|
| |||||||||
12,506,244 | 21,054,215 | |||||||||||
|
|
|
| |||||||||
Building and Construction — 0.3% |
| |||||||||||
12,000 | Acciona SA | 1,140,701 | 993,846 | |||||||||
170,000 | Johnson Controls International plc | 4,577,647 | 5,686,500 | |||||||||
|
|
|
| |||||||||
5,718,348 | 6,680,346 | |||||||||||
|
|
|
| |||||||||
Business Services — 0.5% |
| |||||||||||
1,420,000 | Clear Channel Outdoor Holdings Inc., Cl. A | 5,708,815 | 6,106,000 | |||||||||
90,000 | Macquarie Infrastructure Corp. | 2,773,932 | 3,798,000 | |||||||||
17,500 | Vectrus Inc.† | 316,783 | 539,350 | |||||||||
|
|
|
| |||||||||
8,799,530 | 10,443,350 | |||||||||||
|
|
|
| |||||||||
Consumer Products — 0.0% |
| |||||||||||
10,000 | Essity AB, Cl. A | 130,732 | 247,858 | |||||||||
|
|
|
| |||||||||
Diversified Industrial — 0.3% |
| |||||||||||
1,000 | Alstom SA | 31,457 | 45,965 | |||||||||
40,000 | Bouygues SA | 1,406,190 | 1,724,142 | |||||||||
4,000 | Donaldson Co. Inc. | 133,040 | 180,480 | |||||||||
10,000 | Raven Industries Inc. | 219,638 | 384,500 | |||||||||
10,000 | Svenska Cellulosa AB, Cl. A | 34,751 | 109,303 | |||||||||
108,905 | Twin Disc Inc.† | 2,031,627 | 2,703,022 | |||||||||
|
|
|
| |||||||||
3,856,703 | 5,147,412 | |||||||||||
|
|
|
| |||||||||
Electronics — 1.4% |
| |||||||||||
90,000 | Corning Inc. | 1,005,890 | 2,475,900 | |||||||||
527,000 | Sony Corp., ADR | 9,267,892 | 27,014,020 | |||||||||
|
|
|
| |||||||||
10,273,782 | 29,489,920 | |||||||||||
|
|
|
| |||||||||
Entertainment — 0.6% |
| |||||||||||
628,000 | Grupo Televisa SAB, ADR | 15,396,249 | 11,900,600 | |||||||||
|
|
|
|
Shares | Cost | Market Value | ||||||||||
Financial Services — 0.3% |
| |||||||||||
168,000 | Kinnevik AB, Cl. A | $ | 3,583,754 | $ | 5,758,339 | |||||||
35,000 | Kinnevik AB, Cl. B | 755,509 | 1,199,263 | |||||||||
|
|
|
| |||||||||
4,339,263 | 6,957,602 | |||||||||||
|
|
|
| |||||||||
Health Care — 0.0% |
| |||||||||||
12,000 | Tsumura & Co. | 261,956 | 388,023 | |||||||||
|
|
|
| |||||||||
Machinery — 1.9% |
| |||||||||||
92,500 | Astec Industries Inc. | 3,264,589 | 5,531,500 | |||||||||
36,000 | Flowserve Corp. | 1,452,634 | 1,454,400 | |||||||||
79,000 | The Gorman-Rupp Co. | 1,815,066 | 2,765,000 | |||||||||
418,000 | Xylem Inc. | 11,265,001 | 28,164,840 | |||||||||
|
|
|
| |||||||||
17,797,290 | 37,915,740 | |||||||||||
|
|
|
| |||||||||
Metals and Mining — 0.4% |
| |||||||||||
200,000 | Freeport-McMoRan Inc. | 2,704,981 | 3,452,000 | |||||||||
44,500 | Haynes International Inc. | 2,063,189 | 1,634,930 | |||||||||
17,000 | Vulcan Materials Co. | 797,880 | 2,194,020 | |||||||||
|
|
|
| |||||||||
5,566,050 | 7,280,950 | |||||||||||
|
|
|
| |||||||||
Transportation — 1.1% |
| |||||||||||
311,000 | GATX Corp. | 8,998,435 | 23,085,530 | |||||||||
|
|
|
| |||||||||
TOTAL OTHER | 93,644,582 | 160,591,546 | ||||||||||
|
|
|
| |||||||||
TOTAL COMMON STOCKS | 1,276,030,924 | 2,041,047,610 | ||||||||||
|
|
|
| |||||||||
CONVERTIBLE PREFERRED STOCKS — 0.1% |
| |||||||||||
ENERGY AND UTILITIES — 0.1% |
| |||||||||||
Natural Gas Utilities — 0.1% |
| |||||||||||
54,000 | Corning Natural Gas Holding Corp., | 1,120,500 | 1,134,000 | |||||||||
|
|
|
| |||||||||
COMMUNICATIONS — 0.0% |
| |||||||||||
Telecommunications — 0.0% |
| |||||||||||
20,150 | Cincinnati Bell Inc., | 653,760 | 996,417 | |||||||||
|
|
|
| |||||||||
TOTAL CONVERTIBLE PREFERRED STOCKS | 1,774,260 | 2,130,417 | ||||||||||
|
|
|
| |||||||||
WARRANTS — 0.0% |
| |||||||||||
COMMUNICATIONS — 0.0% |
| |||||||||||
Telecommunications — 0.0% |
| |||||||||||
80,000 | Bharti Airtel Ltd., | 438,064 | 446,400 | |||||||||
|
|
|
|
See accompanying notes to financial statements.
8
The Gabelli Utilities Fund
Schedule of Investments (Continued) — June 30, 2018 (Unaudited)
Principal | Cost | Market Value | ||||||||||
CORPORATE BONDS — 0.1% |
| |||||||||||
Energy and Utilities — 0.1% |
| |||||||||||
$1,500,000 | Mueller Industries Inc., 6.000%, 03/01/27 | $ | 1,500,000 | $ | 1,477,500 | |||||||
|
|
|
| |||||||||
U.S. GOVERNMENT OBLIGATIONS — 0.4% |
| |||||||||||
7,785,000 | U.S. Treasury Bills, 1.863% to 1.897%††, 09/20/18 to 09/27/18 | 7,751,689 | 7,752,143 | |||||||||
|
|
|
| |||||||||
TOTAL INVESTMENTS — 99.9% | $ | 1,287,494,937 | 2,052,854,070 | |||||||||
|
| |||||||||||
Other Assets and Liabilities |
| 1,507,398 | ||||||||||
|
| |||||||||||
NET ASSETS — 100.0% |
| $ | 2,054,361,468 | |||||||||
|
|
(a) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(b) | Security considered an affiliated holding because the Fund owns at least 5% of its outstanding shares. |
(c) | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2018, the market value of the Rule 144A security amounted to $446,400 or 0.02% of total net assets. |
† | Non-income producing security. |
†† | Represents annualized yields at dates of purchase. |
ADR | American Depositary Receipt |
GDR | Global Depositary Receipt |
SDR | Swedish Depositary Receipt |
See accompanying notes to financial statements.
9
The Gabelli Utilities Fund
Statement of Assets and Liabilities | ||||
June 30, 2018 (Unaudited)
| ||||
Assets: | ||||
Investments, at value (cost $1,282,689,039) | $ | 2,044,904,406 | ||
Investments in affiliates, at value | 7,949,664 | |||
Cash | 136,515 | |||
Receivable for Fund shares sold | 1,767,231 | |||
Receivable for investments sold | 529,215 | |||
Dividends receivable | 4,496,139 | |||
Prepaid expenses | 87,400 | |||
|
| |||
Total Assets | 2,059,870,570 | |||
|
| |||
Liabilities: | ||||
Payable for Fund shares redeemed | 2,641,485 | |||
Payable for investment advisory fees | 1,664,613 | |||
Payable for distribution fees | 788,804 | |||
Payable for accounting fees | 11,250 | |||
Other accrued expenses | 402,950 | |||
|
| |||
Total Liabilities | 5,509,102 | |||
|
| |||
Net Assets | $ | 2,054,361,468 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 1,282,997,709 | ||
Accumulated net investment income | 5,397,799 | |||
Accumulated net realized gains on investments and foreign currency transactions | 603,067 | |||
Net unrealized appreciation on investments | 765,359,133 | |||
Net unrealized appreciation on foreign currency translations | 3,760 | |||
|
| |||
Net Assets | $ | 2,054,361,468 | ||
|
| |||
Shares of Beneficial Interest, each at $0.001 par value; unlimited number of shares authorized: |
| |||
Class AAA: | ||||
Net Asset Value, offering, and redemption price per share ($321,623,796 ÷ 36,816,200 shares outstanding) | $8.74 | |||
Class A: | ||||
Net Asset Value and redemption price per share ($774,291,202 ÷ 87,185,519 shares outstanding) | $8.88 | |||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $9.42 | |||
Class C: | ||||
Net Asset Value and offering price per share ($697,610,351 ÷ 114,702,946 shares outstanding) | $6.08 | (a) | ||
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($260,835,109 ÷ 28,451,896 shares outstanding) | $9.17 | |||
Class T: | ||||
Net Asset Value and redemption price per share ($1,009.78 ÷ 115.68 shares outstanding) | $8.73 | |||
Maximum offering price per share (NAV ÷ 0.975, based on maximum sales charge of 2.50% of the offering price) | $8.95 |
(a) | Redemption price varies based on the length of time held. |
Statement of Operations | ||||
For the Six Months Ended June 30, 2018 (Unaudited)
|
| |||
Investment Income: | ||||
Dividends - Unaffiliated (net of foreign withholding taxes of $828,329) | $ | 32,159,586 | ||
Dividends - Affiliated | 135,864 | |||
Interest | 298,756 | |||
|
| |||
Total Income | 32,594,206 | |||
|
| |||
Expenses: | ||||
Investment advisory fees | 10,304,071 | |||
Distribution fees - Class AAA | 403,567 | |||
Distribution fees - Class A | 972,303 | |||
Distribution fees - Class C | 3,532,890 | |||
Distribution fees - Class T | 1 | |||
Shareholder services fees | 805,005 | |||
Shareholder communications expenses | 144,280 | |||
Custodian fees | 110,960 | |||
Registration expenses | 69,018 | |||
Trustees’ fees | 67,937 | |||
Accounting fees | 22,500 | |||
Legal and audit fees | 16,202 | |||
Interest expense | 149 | |||
Miscellaneous expenses | 69,040 | |||
|
| |||
Total Expenses | 16,517,923 | |||
|
| |||
Less: | ||||
Expenses paid indirectly by broker (See Note 6) | (8,304 | ) | ||
|
| |||
Net Expenses | 16,509,619 | |||
|
| |||
Net Investment Income | 16,084,587 | |||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized gain on investments | 14,746,213 | |||
Net realized loss on foreign currency transactions | (26,726 | ) | ||
|
| |||
Net realized gain on investments and foreign currency transactions | 14,719,487 | |||
|
| |||
Net change in unrealized appreciation: | ||||
on investments | (52,624,773 | ) | ||
on foreign currency translations | (4,142 | ) | ||
|
| |||
Net change in unrealized appreciation on investments and foreign currency translations | (52,628,915 | ) | ||
|
| |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | (37,909,428 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (21,824,841 | ) | |
|
|
See accompanying notes to financial statements.
10
The Gabelli Utilities Fund
Statement of Changes in Net Assets
| ||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 16,084,587 | $ | 29,543,030 | ||||||
Net realized gain on investments and foreign currency transactions | 14,719,487 | 18,892,606 | ||||||||
Net change in unrealized appreciation on investments and foreign currency translations | (52,628,915 | ) | 131,897,182 | |||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | (21,824,841 | ) | 180,332,818 | |||||||
|
|
|
| |||||||
Distributions to Shareholders: | ||||||||||
Net investment income | ||||||||||
Class AAA | (1,338,317 | ) | (5,020,519 | ) | ||||||
Class A | (3,174,171 | ) | (11,262,972 | ) | ||||||
Class C | (4,148,773 | ) | (9,795,159 | ) | ||||||
Class I | (1,006,333 | ) | (3,875,959 | ) | ||||||
Class T | (3 | ) | (17 | ) | ||||||
|
|
|
| |||||||
(9,667,597 | ) | (29,954,626 | ) | |||||||
|
|
|
| |||||||
Net realized gain | ||||||||||
Class AAA | — | (2,839,155 | ) | |||||||
Class A | — | (6,375,891 | ) | |||||||
Class C | — | (8,501,854 | ) | |||||||
Class I | — | (1,855,631 | ) | |||||||
Class T | — | (8 | ) | |||||||
|
|
|
| |||||||
— | (19,572,539 | ) | ||||||||
|
|
|
| |||||||
Return of capital | ||||||||||
Class AAA | (14,275,378 | ) | (24,415,223 | ) | ||||||
Class A | (33,857,829 | ) | (54,425,845 | ) | ||||||
Class C | (44,253,573 | ) | (78,809,061 | ) | ||||||
Class I | (10,734,223 | ) | (14,720,187 | ) | ||||||
Class T | (45 | ) | (21 | ) | ||||||
|
|
|
| |||||||
(103,121,048 | ) | (172,370,337 | ) | |||||||
|
|
|
| |||||||
Total Distributions to Shareholders | (112,788,645 | ) | (221,897,502 | ) | ||||||
|
|
|
| |||||||
Shares of Beneficial Interest Transactions: | ||||||||||
Class AAA | (10,394,618 | ) | (12,582,880 | ) | ||||||
Class A | (19,043,476 | ) | 32,227,780 | |||||||
Class C | (20,561,179 | ) | 35,021,113 | |||||||
Class I | 1,831,498 | 114,337,169 | ||||||||
Class T | 32 | 1,046 | ||||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets from Shares of Beneficial Interest Transactions | (48,167,743 | ) | 169,004,228 | |||||||
|
|
|
| |||||||
Redemption Fees | 2,720 | 13,123 | ||||||||
|
|
|
| |||||||
Net Increase/(Decrease) in Net Assets | (182,778,509 | ) | 127,452,667 | |||||||
Net Assets: | ||||||||||
Beginning of year | 2,237,139,977 | 2,109,687,310 | ||||||||
|
|
|
| |||||||
End of period (including undistributed net investment income of $5,397,799 and $ 0, respectively) | $ | 2,054,361,468 | $ | 2,237,139,977 | ||||||
|
|
|
|
See accompanying notes to financial statements.
11
The Gabelli Utilities Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each period:
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (Loss) from Investment Operations | Distributions | Ratios to Average Net Assets/ Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31 | Net Asset Value, Beginning of Period | Net Investment Income(a) | Net Gain (Loss) on | Total from Operations | Net Investment Income | Net Realized Gain on Investments | Return of Capital | Total Distributions | Redemption Fees(a)(b) | Net Asset Value, | Total Return† | Net Assets End of Period (in 000’s) | Net Income | Operating Expenses | Portfolio Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class AAA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018(c) | $ | 9.23 | $ | 0.08 | $ | (0.15 | ) | $ | (0.07 | ) | $ | (0.04 | ) | — | $ | (0.38 | ) | $ | (0.42 | ) | $ | 0.00 | $ | 8.74 | (0.7 | )% | $ | 321,624 | 1.79 | %(d) | 1.38 | %(d)(e) | 0 | % | |||||||||||||||||||||||||||||||||||||||||
2017 | 9.26 | 0.15 | 0.66 | 0.81 | (0.13 | ) | $ | (0.07 | ) | (0.64 | ) | (0.84 | ) | 0.00 | 9.23 | 8.9 | 350,709 | 1.58 | 1.37 | (e) | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 8.70 | 0.15 | 1.28 | 1.43 | (0.14 | ) | (0.13 | ) | (0.60 | ) | (0.87 | ) | 0.00 | 9.26 | 17.0 | 364,411 | 1.65 | 1.38 | (e) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015†† | 10.50 | 0.11 | (1.07 | ) | (0.96 | ) | (0.09 | ) | (0.70 | ) | (0.05 | ) | (0.84 | ) | 0.00 | 8.70 | (8.3 | ) | 371,419 | 1.42 | 1.39 | (e) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2014†† | 11.24 | 0.18 | 0.76 | 0.94 | (0.14 | ) | (0.10 | ) | (1.44 | ) | (1.68 | ) | 0.00 | 10.50 | 8.9 | 820,328 | 1.64 | 1.36 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013†† | 10.86 | 0.18 | 1.88 | 2.06 | (0.14 | ) | (0.20 | ) | (1.34 | ) | (1.68 | ) | 0.00 | 11.24 | 20.2 | 738,742 | 1.60 | 1.37 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018(c) | $ | 9.37 | $ | 0.08 | $ | (0.15 | ) | $ | (0.07 | ) | $ | (0.04 | ) | — | $ | (0.38 | ) | $ | (0.42 | ) | $ | 0.00 | $ | 8.88 | (0.6 | )% | $ | 774,291 | 1.79 | %(d) | 1.38 | %(d)(e) | 0 | % | |||||||||||||||||||||||||||||||||||||||||
2017 | 9.40 | 0.15 | 0.66 | 0.81 | (0.13 | ) | $ | (0.07 | ) | (0.64 | ) | (0.84 | ) | 0.00 | 9.37 | 8.8 | 837,684 | 1.57 | 1.37 | (e) | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 8.82 | 0.15 | 1.30 | 1.45 | (0.13 | ) | (0.13 | ) | (0.61 | ) | (0.87 | ) | 0.00 | 9.40 | 17.0 | 808,349 | 1.64 | 1.38 | (e) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015†† | 10.64 | 0.12 | (1.10 | ) | (0.98 | ) | (0.09 | ) | (0.70 | ) | (0.05 | ) | (0.84 | ) | 0.00 | 8.82 | (8.3 | ) | 713,208 | 1.45 | 1.39 | (e) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2014†† | 11.36 | 0.18 | 0.78 | 0.96 | (0.14 | ) | (0.10 | ) | (1.44 | ) | (1.68 | ) | 0.00 | 10.64 | 9.0 | 1,231,349 | 1.64 | 1.36 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013†† | 10.96 | 0.18 | 1.90 | 2.08 | (0.14 | ) | (0.20 | ) | (1.34 | ) | (1.68 | ) | 0.00 | 11.36 | 20.2 | 1,109,532 | 1.60 | 1.37 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018(c) | $ | 6.58 | $ | 0.03 | $ | (0.11 | ) | $ | (0.08 | ) | $ | (0.04 | ) | — | $ | (0.38 | ) | $ | (0.42 | ) | $ | 0.00 | $ | 6.08 | (1.1 | )% | $ | 697,610 | 1.03 | %(d) | 2.13 | %(d)(e) | 0 | % | |||||||||||||||||||||||||||||||||||||||||
2017 | 6.88 | 0.06 | 0.48 | 0.54 | (0.09 | ) | $ | (0.07 | ) | (0.68 | ) | (0.84 | ) | 0.00 | 6.58 | 8.0 | 776,370 | 0.83 | 2.12 | (e) | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 6.71 | 0.06 | 0.98 | 1.04 | (0.09 | ) | (0.13 | ) | (0.65 | ) | (0.87 | ) | 0.00 | 6.88 | 16.2 | 776,780 | 0.89 | 2.13 | (e) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015†† | 8.40 | 0.05 | (0.90 | ) | (0.85 | ) | (0.09 | ) | (0.70 | ) | (0.05 | ) | (0.84 | ) | 0.00 | 6.71 | (9.1 | ) | 736,494 | 0.73 | 2.14 | (e) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2014†† | 9.38 | 0.08 | 0.62 | 0.70 | (0.14 | ) | (0.10 | ) | (1.44 | ) | (1.68 | ) | 0.00 | 8.40 | 8.1 | 1,111,695 | 0.89 | 2.11 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013†† | 9.36 | 0.08 | 1.62 | 1.70 | (0.14 | ) | (0.20 | ) | (1.34 | ) | (1.68 | ) | 0.00 | 9.38 | 19.5 | 1,037,073 | 0.85 | 2.12 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class I | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018(c) | $ | 9.65 | $ | 0.09 | $ | (0.15 | ) | $ | (0.06 | ) | $ | (0.04 | ) | — | $ | (0.38 | ) | $ | (0.42 | ) | $ | 0.00 | $ | 9.17 | (0.5 | )% | $ | 260,835 | 2.04 | %(d) | 1.13 | %(d)(e) | 0 | % | |||||||||||||||||||||||||||||||||||||||||
2017 | 9.63 | 0.18 | 0.68 | 0.86 | (0.15 | ) | $ | (0.07 | ) | (0.62 | ) | (0.84 | ) | 0.00 | 9.65 | 9.1 | 272,376 | 1.81 | 1.12 | (e) | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 8.99 | 0.18 | 1.33 | 1.51 | (0.16 | ) | (0.13 | ) | (0.58 | ) | (0.87 | ) | 0.00 | 9.63 | 17.4 | 160,147 | 1.89 | 1.13 | (e) | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015†† | 10.80 | 0.14 | (1.11 | ) | (0.97 | ) | (0.09 | ) | (0.70 | ) | (0.05 | ) | (0.84 | ) | 0.00 | 8.99 | (8.1 | ) | 141,325 | 1.70 | 1.14 | (e) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2014†† | 11.48 | 0.20 | 0.80 | 1.00 | (0.14 | ) | (0.10 | ) | (1.44 | ) | (1.68 | ) | 0.00 | 10.80 | 9.3 | 255,651 | 1.86 | 1.11 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013†† | 11.04 | 0.22 | 1.90 | 2.12 | (0.14 | ) | (0.20 | ) | (1.34 | ) | (1.68 | ) | 0.00 | 11.48 | 20.4 | 179,913 | 1.85 | 1.12 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class T | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018(c) | $ | 9.22 | $ | 0.08 | $ | (0.15 | ) | $ | (0.07 | ) | $ | (0.04 | ) | — | $ | (0.38 | ) | $ | (0.42 | ) | $ | 0.00 | $ | 8.73 | (0.7 | )% | $ | 1 | 1.77 | %(d) | 1.38 | %(d)(e) | 0 | % | |||||||||||||||||||||||||||||||||||||||||
2017(f) | 9.33 | 0.05 | 0.26 | 0.31 | (0.16 | ) | $ | (0.07 | ) | (0.19 | ) | (0.42 | ) | 0.00 | 9.22 | 3.3 | 1 | 0.98 | (d) | 1.37 | (d)(e) | 2 |
† | Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period and sold at the end of the period including reinvestment of distributions and does not reflect applicable sales charges. Total return for a period of less than one year is not annualized. |
†† | All per share amounts and net asset values have been adjusted as a result of the 1 for 2 reverse stock split on March 6, 2015. |
(a) | Per share amounts have been calculated using the average shares outstanding method. |
(b) | Amount represents less than $0.005 per share. |
(c) | For the six months ended June 30, 2018, unaudited. |
(d) | Annualized. |
(e) | The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, and 2015, there was no impact on the expense ratios. |
(f) | Class T Shares were initially offered on July 5, 2017 and are no longer offered for sale. |
See accompanying notes to financial statements.
12
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited)
1. Organization. The Gabelli Utilities Fund was organized on May 18, 1999 as a Delaware statutory trust and commenced operations on August 31, 1999. The Fund is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s primary objective is to provide a high level of total return through a combination of capital appreciation and current income.
The Fund invests a high percentage of its assets in the utilities sector. As a result, the Fund may be more susceptible to economic, political, and regulatory developments, positive or negative, and may experience increased volatility to the Fund’s NAV and a magnified effect in its total return.
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.
Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Trustees (the “Board”) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the “Adviser”).
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt 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 vale, 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 or 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.
13
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
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.
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 June 30, 2018 is as follows:
Valuation Inputs | ||||||||||||||||||||
Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total Market Value at 6/30/18 | |||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||
Common Stocks: | ||||||||||||||||||||
ENERGY AND UTILITIES | ||||||||||||||||||||
Merchant Energy | $ | 45,120,900 | — | $ | 0 | $ | 45,120,900 | |||||||||||||
Natural Gas Utilities | 114,708,387 | $ | 6,815,664 | — | 121,524,051 | |||||||||||||||
Other Industries (a) | 1,360,541,911 | — | — | 1,360,541,911 | ||||||||||||||||
COMMUNICATIONS (a) | 353,269,202 | — | — | 353,269,202 | ||||||||||||||||
OTHER | ||||||||||||||||||||
Aerospace | 20,866,811 | — | 187,404 | 21,054,215 | ||||||||||||||||
Other Industries (a) | 139,537,331 | 139,537,331 | ||||||||||||||||||
Total Common Stocks | 2,034,044,542 | 6,815,664 | 187,404 | 2,041,047,610 | ||||||||||||||||
Convertible Preferred Stocks (a) | 996,417 | 1,134,000 | — | 2,130,417 | ||||||||||||||||
Warrants (a) | 446,400 | — | 446,400 | |||||||||||||||||
Corporate Bonds(a) | — | 1,477,500 | — | 1,477,500 | ||||||||||||||||
U.S. Government Obligations | — | 7,752,143 | — | 7,752,143 | ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES – ASSETS | $ | 2,035,040,959 | $ | 17,625,707 | $ | 187,404 | $ | 2,052,854,070 |
(a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. |
The Fund did not have material transfers among Level 1, Level 2, and Level 3 during the six months ended June 30, 2018. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.
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.
14
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
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. Among the factors to be considered to fair value a security are 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 back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
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 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.
15
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
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 does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely 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. For the restricted securities the Fund held at June 30, 2018, refer to the Schedule of Investments.
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. 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 on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions made in excess of current earnings and profits on a tax basis are treated as a non-taxable return of capital. 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.
16
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
The tax character of distributions paid during the year ended December 31, 2017 was as follows:
Distributions paid from: | ||||
Ordinary income (inclusive of short term capital gains) | $ | 30,251,265 | ||
Long term capital gains | 19,275,900 | |||
Return of capital | 172,370,337 | |||
|
| |||
Total distributions paid | $ | 221,897,502 | ||
|
|
Since January 2000, the Fund has had a fixed distribution policy. Under the policy, the Fund declares and pays monthly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the year. Pursuant to this policy, distributions during the year may be made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. The Fund’s current distribution policy may restrict the Fund’s ability to pass through to shareholders all of its net realized long term capital gains as a Capital Gain Dividend, and may cause such gains to be treated as ordinary income. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board continues to evaluate the distribution policy in light of ongoing economic and market conditions and may change the amount of the monthly distributions in the future.
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 Fund is permitted to carry capital losses forward for an unlimited period. Capital losses that are carried forward will retain their character as either short term or long term capital losses.
The following summarizes the tax cost of investments and the related net unrealized appreciation at June 30, 2018:
Cost | Gross Unrealized | Gross Unrealized | Net Unrealized Appreciation | |||||
Investments | $1,295,090,119 | $817,950,360 | $(60,186,409) | $757,763,951 |
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. For the six months ended June 30, 2018, the Fund did not incur any income tax, interest, or penalties. As of June 30, 2018, 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 the annual rate of 1.00% of the value of its average daily
17
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
net assets. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio, oversees the administration of all aspects of the Fund’s business and affairs, and pays the compensation of all Officers and Trustees of the Fund who are affiliated persons of the Adviser.
The Fund pays each Trustee who is not considered an affiliated person an annual retainer of $18,000 plus $2,000 for each Board meeting attended and they are reimbursed for any out of pocket expenses incurred in attending meetings. All Board committee members receive $500 per meeting attended and the Chairman of the Audit Committee and the Lead Trustee each receives an annual fee of $2,000. A Trustee may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Trustees who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the “Plan”) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Class AAA, Class A, Class C, and Class T Share Plans, payments are authorized to G.distributors, LLC (the “Distributor”), an affiliate of the Adviser, at annual rates of 0.25%, 0.25%, 1.00%, and 0.25%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities during the six months ended June 30, 2018, other than short term securities and U.S. Government obligations, aggregated $8,208,029 and $64,777,900, respectively.
6. Transactions with Affiliates and Other Arrangements. During the six months ended June 30, 2018, the Fund paid $21,709 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser. Additionally the Distributor retained a total of $76,763 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
During the six months ended June 30, 2018, 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 $8,304.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended June 30, 2018, the Fund accrued $22,500 in accounting fees in the Statement of Operations.
7. Line of Credit. The Fund participates in an unsecured line of credit, which expires March 6, 2019 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 custodian 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 125 basis points or the 30 day LIBOR plus 125 basis points in effect on that day. This amount, if any, would be included in “Interest expense” in the Statement of Operations. At June 30, 2018, there were no borrowings outstanding under the line of credit.
The average daily amount of borrowings outstanding under the line of credit during the year six months ended June 30, 2018 was $25,387 with a weighted average interest rate of 3.35%. The maximum amount borrowed at any time during the six months ended June 30, 2018 was $2,213,000
18
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
8. Shares of Beneficial Interest. The Fund offers four classes of shares – Class AAA Shares, Class A Shares, Class C Shares, and Class I Shares. Class AAA Shares and Class I 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 June 30, 2018 and the year ended December 31, 2017, if any, can be found in the Statement of Changes in Net Assets under Redemption Fees.
Transactions in shares of beneficial interest were as follows:
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class AAA | ||||||||||||||||
Shares sold | 2,071,179 | $ | 18,051,189 | 4,891,720 | $ | 46,210,450 | ||||||||||
Shares issued upon reinvestment of distributions | 1,622,496 | 14,149,722 | 3,072,628 | 28,996,855 | ||||||||||||
Shares redeemed | (4,884,843 | ) | (42,595,529 | ) | (9,291,649 | ) | (87,790,185 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (1,191,168 | ) | $ | (10,394,618 | ) | (1,327,301 | ) | $ | (12,582,880 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class A | ||||||||||||||||
Shares sold | 6,705,480 | $ | 59,561,848 | 20,115,610 | $ | 193,210,651 | ||||||||||
Shares issued upon reinvestment of distributions | 3,861,013 | 34,224,669 | 6,308,397 | 60,419,407 | ||||||||||||
Shares redeemed | (12,749,171 | ) | (112,829,993 | ) | (23,064,626 | ) | (221,402,278 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase/(decrease) | (2,182,678 | ) | $ | (19,043,476 | ) | 3,359,381 | $ | 32,227,780 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 5,932,769 | $ | 36,645,301 | 17,834,104 | $ | 122,991,759 | ||||||||||
Shares issued upon reinvestment of distributions | 6,722,105 | 41,243,277 | 11,946,577 | 81,896,943 | ||||||||||||
Shares redeemed | (15,960,139 | ) | (98,449,757 | ) | (24,679,977 | ) | (169,867,589 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase/(decrease) | (3,305,265 | ) | $ | (20,561,179 | ) | 5,100,704 | $ | 35,021,113 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Class I | ||||||||||||||||
Shares sold | 4,380,702 | $ | 39,899,674 | 15,609,938 | $ | 153,940,468 | ||||||||||
Shares issued upon reinvestment of distributions | 909,394 | 8,309,888 | 1,495,658 | 14,720,067 | ||||||||||||
Shares redeemed | (5,063,126 | ) | (46,378,064 | ) | (5,511,547 | ) | (54,323,366 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 226,970 | $ | 1,831,498 | 11,594,049 | $ | 114,337,169 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Class T(a) | ||||||||||||||||
Shares sold | — | — | 107 | $ | 1,000 | |||||||||||
Shares issued upon reinvestment of distributions | 4 | $ | 32 | 5 | 46 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 4 | $ | 32 | 112 | $ | 1,046 | ||||||||||
|
|
|
|
|
|
|
|
(a) | Class T Shares were initially offered on July 5, 2017 and are no longer offered for sale. |
19
The Gabelli Utilities Fund
Notes to Financial Statements (Unaudited) (Continued)
9. Transactions in Securities of Affiliated Issuers. The 1940 Act defines affiliated issuers as those in which the Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the Fund’s transactions in the securities of these issuers during the six months ended June 30, 2018 is set forth below:
Beginning Shares | Stock Dividend | Ending Shares | Dividend Income | Realized Gain | Value at June 30, 2018 | Change in Appreciation | Percent Outstanding | |||||||||||||||||||||||||||||||||
Corning Natural Gas Holding Corp. | 388,800 | — | 388,800 | $108,864 | — | $6,815,664 | $(765,936 | ) | 12.87% | |||||||||||||||||||||||||||||||
Corning Natural Gas Holding Corp., 4.800%, Ser. B | 54,000 | — | 54,000 | 27,000 | — | 1,134,000 | 54,500 | 22.11% | ||||||||||||||||||||||||||||||||
Total | $135,864 | — | $7,949,664 | $(711,436 | ) |
10. 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.
11. Subsequent Events. Management has evaluated the impact on the Fund of all other 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.
20
The Gabelli Utilities Fund
Board Consideration and Re-Approval of Investment Advisory Agreements (Unaudited)
At its meeting on February 22, 2018, the Board of Trustees (“Board”) of the Fund approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the trustees who are not “interested persons” of the Fund (the “Independent Board Members”). The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio manager, the depth of the analyst pool available to the Adviser and the portfolio manager, the scope of supervisory, administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.
Investment Performance. he Independent Board Members reviewed the short, medium, and long term performance (as of December 31, 2017) of the Fund against a peer group of seven other comparable funds prepared by the Adviser (the “Adviser Peer Group”) and against a peer group prepared by Broadridge (the “Broadridge Performance Peer Group”) consisting of all retail and institutional utility funds, regardless of asset size or primary channel of distribution, as represented by the Lipper Utility Fund Index. The Independent Board Members noted that the Fund’s performance was in the fourth quartile for the one year period and in the third quartile for the three year and five year periods, as measured against the Adviser Peer Group. Against the Broadridge Performance Peer Group, the Independent Board Members noted that the Fund’s performance was within the fifth quintile for the one year period, the third quintile for the three year period, and the fourth quintile for the five year period. The Independent Board Members also noted that although the Fund’s performance was below average as compared to the Adviser Peer Group, its performance during the three and five year periods did not significantly depart from the median total return of the peer group, an observation the Independent Board Members noted generally held for the Broadridge Performance Peer Group as well.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without a charge. The Independent Board Members also noted that a substantial portion of the Fund’s portfolio transactions were executed by an affiliated broker, that the affiliated broker received distribution fees and minor amounts of sales commissions, and that the Adviser received a moderate amount of soft dollar benefits through the Fund’s portfolio brokerage.
Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale.
Sharing of Economies of Scale. The Independent Board Members noted that the investment advisory fee schedule for the Fund does not take into account any potential economies of scale that may develop or any historical losses or diminished profitability of the Fund to the Adviser.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the investment advisory fee, other expenses, and total expenses of the Fund to similar expense ratios of the Adviser Peer Group and a peer group of six other utility funds selected by Broadridge and noted that the advisory fee includes substantially all administrative services for the Fund as well as the investment advisory services of the Adviser. The Independent Board Members noted that the Fund’s expense ratios were roughly average within the Adviser Peer Group and above average within the peer group of funds selected by Broadridge and the Fund’s size was above average within these groups. The Independent Board Members also noted that the advisory fee
21
The Gabelli Utilities Fund
Board Consideration and Re-Approval of Investment Advisory Agreements (Unaudited) (Continued)
structure was the same as that in effect for most of the Gabelli funds. The Independent Board Members were presented with, but did not consider to be material to their decision, various information comparing the advisory fee to the fee for other types of accounts managed by affiliates of the Adviser.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services, good ancillary services, and an adequate performance record. The Independent Board Members also concluded that the Fund’s expense ratios and profitability to the Adviser of managing the Fund were reasonable and that economies of scale were not a significant factor in their thinking at this time. The Independent Board Members did not view the potential profitability of ancillary services as material to their decision. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the investment advisory agreement to the full Board.
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 its decision on evaluations of all these factors as a whole and did not consider any one factor as all-important or controlling.
22
THE GABELLI UTILITIES FUND
One Corporate Center
Rye, NY 10580-1422
Portfolio Manager 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.
Timothy M. Winter, CFA, joined Gabelli in 2009 and covers the utility industry. He has over 25 years of experience as an equity research analyst covering the industry. Currently, he continues to specialize in the utility industry and also serves as a portfolio manager of Gabelli Funds, LLC. Mr. Winter received his BA in Economics in 1991 from Rollins College and MBA in Finance from Notre Dame in 1992.
Monthly Distributions - $0.07 per share
The Gabelli Utilities Fund has a $0.07 per share monthly distribution policy. For more specific dividend and tax information, please visit our website at www.gabelli.com or call 800-GABELLI (800-422-3554). Shareholders should be aware that a portion of the distribution may represent a non-taxable return of capital. Distributions of capital reduce the cost basis of your shares if you hold them in a taxable account. The distributions should not be confused with the yield or total return of the Fund.
We have separated the portfolio managers’ commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio managers’ commentary is unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.
THE GABELLI UTILITIES FUND
One Corporate Center
Rye, New York 10580-1422
t 800-GABELLI (800-422-3554)
f 914-921-5118
e info@gabelli.com
GABELLI.COM
Net Asset Value per share available daily by calling 800-GABELLI after 7:00 P.M. | ||
BOARD OF TRUSTEES | OFFICERS | |
Mario J. Gabelli, CFA Chairman and Chief Executive Officer, GAMCO Investors, Inc. Executive Chairman, Associated Capital Group, Inc.
Anthony J. Colavita President, Anthony J. Colavita, P.C.
Vincent D. Enright Former Senior Vice President and Chief Financial Officer, KeySpan Corp.
Mary E. Hauck Former Senior Portfolio Manager, Gabelli-O’Connor Fixed Income Mutual Fund Management Co.
Kuni Nakamura President, Advanced Polymer, Inc.
Werner J. Roeder Former Medical Director, Lawrence Hospital |
Bruce N. Alpert President
John C. Ball Treasurer
Agnes Mullady Vice President
Andrea R. Mango Secretary
Richard J. Walz Chief Compliance Officer
DISTRIBUTOR
G.distributors, LLC
CUSTODIAN
State Street Bank and Trust Company
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
DST Asset Manager Solutions, Inc.
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP | |
This report is submitted for the general information of the shareholders of The Gabelli Utilities Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
GAB470Q218SR |
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 Trustees, 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”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the registrant’s last fiscal quarter 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)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Gabelli Utilities Fund | ||
By (Signature and Title)* /s/ Bruce N. Alpert | ||
Bruce N. Alpert, Principal Executive Officer | ||
Date 8/27/2018 |
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 8/27/2018 |
By (Signature and Title)* /s/ John C. Ball | ||
John C. Ball, Principal Financial Officer and Treasurer | ||
Date 8/27/2018 |
* Print the name and title of each signing officer under his or her signature.