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
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The Gabelli Utilities Fund
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GABELLI UTILITIES FUND
SEMI-ANNUAL REPORT
JUNE 30, 2005
TO OUR SHAREHOLDERS,
During the second quarter of 2005, the Gabelli Utilities Fund (the "Fund")
rose 6.6%, while the Standard & Poor's ("S&P") 500 Utility Index was up 9.3% and
the Lipper Utility Fund Average rose 7.30%. For the six month period ended June
30, 2005, the Fund was up 8.9% versus gains of 15.2% and 10.0% for the S&P 500
Utility Index and the Lipper Utility Fund Average, respectively.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2005.
COMPARATIVE RESULTS
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AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2005 (A)
------------------------------------------------
Since
Year to Inception
Quarter Date 1 Year 3 Year 5 Year (8/31/99)
------- ---- ------ ------ ------ ---------
GABELLI UTILITIES FUND CLASS AAA ............................ 6.57% 8.91% 21.42% 12.45% 5.63% 9.16%
S&P 500 Utility Index ....................................... 9.31 15.24 37.98 13.80 4.01 3.89
Lipper Utility Fund Average ................................. 7.30 10.00 30.25 14.50 1.83 3.84
Class A ..................................................... 6.43 8.88 21.35 12.51 5.66 9.19
0.31(b) 2.64(b) 14.41(b) 10.30(b) 4.42(b) 8.09(b)
Class B ..................................................... 6.34 8.59 20.52 11.70 5.20 8.78
1.34(c) 3.59(c) 15.52(c) 10.89(c) 4.87(c) 8.55(c)
Class C ..................................................... 6.32 8.55 20.60 11.80 5.26 8.83
5.32(c) 7.55(c) 19.60(c) 11.80(c) 5.26(c) 8.83(c)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND 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. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND
CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS
CONTAINS MORE COMPLETE INFORMATION ABOUT THIS AND OTHER MATTERS AND SHOULD
BE READ CAREFULLY BEFORE INVESTING. PERFORMANCE RETURNS FOR PERIODS LESS
THAN ONE YEAR ARE NOT ANNUALIZED. THE VALUE OF UTILITY STOCKS CHANGE 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 SHARES' NET ASSET VALUES
ARE USED TO CALCULATE PERFORMANCE FOR THE PERIODS PRIOR TO THE ISSUANCE OF
CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES ON DECEMBER 31, 2002. THE
ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C SHARES WOULD HAVE
BEEN LOWER DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH THESE CLASSES OF
SHARES. THE S&P 500 UTILITY INDEX IS AN UNMANAGED INDICATOR OF ELECTRIC AND
GAS UTILITY STOCK PERFORMANCE, WHILE THE LIPPER AVERAGE REFLECTS THE
AVERAGE PERFORMANCE OF MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR CATEGORY.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) INCLUDES THE EFFECT OF THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE AT
THE END OF THE PERIOD SHOWN FOR CLASS B AND CLASS C SHARES, RESPECTIVELY.
CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
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We have separated the portfolio manager's 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 manager's commentary is unrestricted. The financial
statements and investment portfolio are mailed separately. Both the commentary
and the financial statements, including the portfolio of investments, will be
available on our website at www.gabelli.com/funds.
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THE GABELLI UTILITIES FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2005 through June 30, 2005
EXPENSE TABLE
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We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case -- because the hypothetical return used is NOT
the Fund's actual return -- the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), and 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. The "Annualized Expense Ratio" represents the
actual expenses for the last six months and may be different from the expense
ratio in the Financial Highlights which is for the six months ended June 30,
2005.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/05 06/30/05 Ratio Period*
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GABELLI UTILITIES FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,089.10 1.47% $ 7.61
Class A $1,000.00 $1,088.80 1.47% $ 7.61
Class B $1,000.00 $1,085.90 2.22% $11.48
Class C $1,000.00 $1,085.50 2.22% $11.48
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.50 1.47% $ 7.35
Class A $1,000.00 $1,017.50 1.47% $ 7.35
Class B $1,000.00 $1,013.79 2.22% $11.08
Class C $1,000.00 $1,013.79 2.22% $11.08
* Expenses are equal to the Fund's annualized expense ratio for the last six
months multiplied by the average account value over the period, multiplied
by the number of days in the most recent fiscal half-year, then divided by
365.
2
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net
assets.
GABELLI UTILITIES FUND
Energy and Utilities: Integrated ................. 40.3%
Energy and Utilities: Electric ................... 19.7%
U.S. Government Obligations ...................... 12.0%
Energy and Utilities: Natural Gas ................ 10.0%
Cable and Satellite .............................. 4.8%
Telecommunications ............................... 4.0%
Entertainment .................................... 2.5%
Energy and Utilities: Oil ........................ 1.9%
Wireless Communications .......................... 1.5%
Computer Software and Services ................... 0.9%
Energy and Utilities: Water ...................... 0.5%
Transportation ................................... 0.4%
Metals and Mining ................................ 0.1%
Other Assets and Liabilities - Net ............... 1.4%
------
100.0%
======
THE FUND FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH WAS
FILED FOR THE QUARTER ENDING MARCH 31, 2005. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
MONTHLY DISTRIBUTIONS
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. The Fund continues to evaluate its
distribution policy in light of ongoing economic and market conditions and may
change the amount of the monthly distributions in the future. The current
annualized rate is $0.84 per share. Distributions for the year ended December
31, 2004 included a return of capital of $0.69, $0.72, $0.75 and $0.77 per share
for Class AAA, Class A, Class B and Class C, respectively.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies and procedures are available without charge, upon
request, (i) by calling 800-GABELLI (800-422-3554); (ii) by writing to The
Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting
the Securities and Exchange Commission's website at www.sec.gov.
3
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS -- 85.4%
CABLE AND SATELLITE -- 4.8%
30,000 Cablevision Systems Corp.,
Cl. A+ .................. $ 787,605 $ 966,000
12,000 Cogeco Cable Inc. ......... 248,655 265,426
40,000 Cogeco Inc. ............... 777,563 876,918
20,000 Comcast Corp., Cl. A+ ..... 638,470 614,000
50,000 DIRECTV Group Inc.+ ....... 861,324 775,000
77,000 EchoStar Communications
Corp., Cl. A ............ 2,396,899 2,321,550
25,000 Insight Communications
Co. Inc., Cl. A+ ........ 239,308 276,250
29,702 Liberty Global Inc., Cl A+ 1,254,626 1,386,179
6,000 Mediacom Communications
Corp., Cl. A+ ........... 35,001 41,220
75,000 Rogers Communications Inc.,
Cl. B ................... 2,008,921 2,466,000
1,000 Shaw Communications Inc.,
Cl. B, New York ......... 16,985 20,770
------------ ------------
9,265,357 10,009,313
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COMPUTER SOFTWARE AND SERVICES -- 0.9%
50,000 Storage Technology Corp.+ 1,820,396 1,814,500
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ENERGY AND UTILITIES: ELECTRIC -- 19.5%
90,000 AES Corp.+ ................ 434,950 1,474,200
205,000 Allegheny Energy Inc.+ .... 2,255,704 5,170,100
26,000 ALLETE Inc. ............... 865,004 1,297,400
60,000 American Electric
Power Co. Inc. .......... 2,101,931 2,212,200
30,000 Cleco Corp. ............... 608,816 647,100
120,000 DPL Inc. .................. 2,908,871 3,294,000
6,000 DTE Energy Co. ............ 240,835 280,620
70,000 Duquesne Light Holdings Inc. 1,131,131 1,307,600
52,000 Edison International ...... 671,304 2,108,600
80,000 El Paso Electric Co.+ ..... 963,137 1,636,000
160,000 Electric Power Development
Co. Ltd. ................ 4,680,039 4,630,782
148,000 FPL Group Inc. ............ 5,497,916 6,224,880
90,000 Great Plains Energy Inc. .. 2,583,899 2,870,100
30,000 Green Mountain Power Corp.. 682,200 895,200
100,000 Pepco Holdings Inc. ....... 2,029,206 2,394,000
35,000 Pinnacle West Capital Corp. 1,513,477 1,555,750
6,500 TXU Corp. ................. 110,193 540,085
3,000 UIL Holdings Corp. ........ 124,810 161,430
70,000 Unisource Energy Corp. .... 1,641,096 2,152,500
------------ ------------
31,044,519 40,852,547
------------ ------------
ENERGY AND UTILITIES: INTEGRATED -- 39.7%
25,000 Alliant Energy Corp. ...... 566,406 703,750
40,000 Ameren Corp. .............. 1,841,934 2,212,000
720,000 Aquila Inc.+ .............. 2,439,112 2,599,200
3,500 Areva ..................... 1,475,044 1,495,571
MARKET
SHARES COST VALUE
------ ---- -----
33,000 Black Hills Corp. ......... $ 973,139 $ 1,216,050
22,500 CH Energy Group Inc. ...... 983,888 1,094,175
24,000 Chubu Electric Power Co. Inc. 574,288 575,602
24,000 Chugoku Electric
Power Co. Inc. ......... 457,538 468,488
100,000 Cinergy Corp. ............. 4,024,413 4,482,000
110,000 CMS Energy Corp.+ ......... 735,229 1,656,600
42,000 Consolidated Edison Inc. .. 1,815,654 1,967,280
22,000 Constellation Energy Group 704,631 1,269,180
47,000 Duke Energy Corp. ......... 899,917 1,397,310
230,000 El Paso Corp. ............. 2,118,265 2,649,600
12,000 Empire District Electric Co. 278,855 287,520
130,000 Enel SpA .................. 888,729 1,132,706
2,000 Energias de Portugal SA, ADR 59,120 50,160
75,000 Energy East Corp. ......... 1,604,380 2,173,500
4,000 Entergy Corp. ............. 152,640 302,200
43,000 FirstEnergy Corp. ......... 1,531,999 2,068,730
28,200 Florida Public Utilities Co. 492,924 536,082
75,000 Hawaiian Electric
Industries Inc. ......... 1,929,553 2,010,750
100,000 Hera SpA .................. 174,312 278,638
12,000 Hokkaido Electric
Power Co. Inc. .......... 238,323 245,604
24,000 Hokuriku Electric Power Co. 442,615 457,668
2,000 Iberdrola SA .............. 46,240 52,811
96,000 Kansai Electric Power Co. Inc 1,925,246 1,930,214
45,000 Korea Electric Power
Corp., ADR ............. 669,628 705,150
24,000 Kyushu Electric Power Co. Inc 503,470 521,504
32,000 Maine & Maritimes Corp. ... 985,650 784,000
44,390 MGE Energy Inc. ........... 1,475,025 1,614,908
40,000 Mirant Corp.+ ............. 58,080 20,480
10,000 National Grid Transco plc,
ADR ..................... 386,405 487,700
40,500 NiSource Inc. ............. 879,696 1,001,565
105,000 Northeast Utilities ....... 1,980,479 2,190,300
83,000 NSTAR ..................... 1,905,618 2,558,890
140,000 OGE Energy Corp. .......... 3,661,255 4,051,600
1,000 Ormat Technologies Inc. ... 15,000 19,100
31,800 Otter Tail Corp. .......... 836,051 869,094
28,000 PG&E Corp. ................ 365,349 1,051,120
17,500 PPL Corp. ................. 669,063 1,039,150
85,000 Progress Energy Inc. ...... 3,636,699 3,845,400
50,000 Public Service Enterprise
Group Inc. ............. 2,522,462 3,041,000
30,000 SCANA Corp. ............... 1,223,194 1,281,300
90,000 Scottish Power plc ........ 691,224 800,620
40,000 Scottish Power plc, ADR ... 1,267,354 1,424,000
24,000 Shikoku Electric Power
Co. Inc. ................ 473,574 478,226
80,800 Southern Co. .............. 2,598,025 2,801,336
30,000 TECO Energy Inc. .......... 458,758 567,300
140,000 Tohoku Electric Power
Co. Inc. ................ 2,470,795 2,985,303
32,000 Tokyo Electric Power
Co. Inc. ................ 782,090 763,141
See accompanying notes to financial statements.
4
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2005 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: INTEGRATED (CONTINUED)
60,000 Vectren Corp. ............. $ 1,645,112 $ 1,723,800
130,000 Westar Energy Inc. ........ 2,558,013 3,123,900
70,000 Wisconsin Energy Corp. .... 2,224,841 2,730,000
50,000 WPS Resources Corp. ....... 2,661,155 2,812,500
140,000 Xcel Energy Inc. .......... 2,370,239 2,732,800
------------ ------------
71,348,698 83,338,576
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS -- 10.0%
95,000 Atmos Energy Corp. ........ 2,568,047 2,736,000
16,000 Cascade Natural Gas Corp. . 329,312 328,000
38,300 Chesapeake Utilities Corp. 981,460 1,170,065
20,000 Energen Corp. ............. 239,277 701,000
38,000 KeySpan Corp. ............. 1,374,217 1,546,600
40,000 Laclede Group Inc. ........ 1,200,335 1,270,400
77,000 National Fuel Gas Co. ..... 1,950,116 2,226,070
15,000 Nicor Inc. ................ 388,552 617,550
67,000 ONEOK Inc. ................ 1,555,299 2,187,550
32,000 Peoples Energy Corp. ...... 1,382,676 1,390,720
35,000 Piedmont Natural Gas Co. Inc. 833,090 840,700
27,200 SEMCO Energy Inc.+ ........ 146,023 162,928
2,000 Snam Rete Gas SpA ......... 10,804 10,710
4,000 South Jersey Industries Inc. 191,860 244,480
50,000 Southern Union Co.+ ....... 871,322 1,227,500
170,000 Southwest Gas Corp. ....... 4,213,198 4,336,700
----------- ----------
18,235,588 20,996,973
----------- ----------
ENERGY AND UTILITIES: OIL -- 1.9%
50,000 Kaneb Services LLC ........ 2,160,520 2,164,000
6,000 Murphy Oil Corp. .......... 269,557 313,380
25,000 Unocal Corp. .............. 1,417,511 1,626,250
------------ ------------
3,847,588 4,103,630
------------ ------------
ENERGY AND UTILITIES: WATER -- 0.5%
3,000 American States Water Co... 75,431 88,110
3,000 Aqua America Inc. ......... 78,190 89,220
1,000 California Water Service
Group .................. 34,715 37,540
5,333 Middlesex Water Co. ....... 91,735 103,567
16,000 Pennichuck Corp. .......... 286,405 305,920
6,000 SJW Corp. ................. 219,961 282,060
2,000 Veolia Environnement ...... 68,803 75,199
1,100 York Water Co. ............ 20,544 23,254
------------ ------------
875,784 1,004,870
------------ ------------
ENTERTAINMENT -- 2.5%
50,000 Time Warner Inc.+ ......... 898,799 835,500
140,000 Vivendi Universal SA, ADR.. 4,377,460 4,386,200
------------ ------------
5,276,259 5,221,700
------------ ------------
MARKET
SHARES COST VALUE
------ ---- -----
METALS AND MINING -- 0.1%
11,000 Compania de Minas
Buenaventura SA, ADR .... $ 260,300 $ 252,890
------------ ------------
TELECOMMUNICATIONS -- 3.6%
150,000 AT&T Corp. ................ 2,852,150 2,856,000
16,000 BellSouth Corp. ........... 476,849 425,120
200 Hutchison Telecommunications
International Ltd.+ ..... 163 198
100,000 MCI Inc. .................. 2,508,103 2,571,000
200 Mobistar SA ............... 18,055 16,724
200 PT Indosat Tbk ............ 128 113
10,000 SBC Communications Inc. ... 267,899 237,500
20,000 Sprint Corp. .............. 474,697 501,800
600 Tele2 AB, Cl. B ........... 8,180 5,645
4,000 Telecom Italia SpA, ADR ... 137,085 125,240
4,500 Telephone & Data Systems Inc. 184,848 183,645
7,500 Telephone & Data Systems Inc.,
Special ................ 300,104 287,550
8,000 Verizon Communications Inc. 296,320 276,400
------------ ------------
7,524,581 7,486,935
------------ ------------
TRANSPORTATION -- 0.4%
20,000 Overnite Corp. ............ 851,660 859,600
------------ ------------
WIRELESS COMMUNICATIONS -- 1.5%
5,000 America Movil SA de CV,
Cl. L, ADR .............. 253,766 298,050
7,000 China Mobile (Hong Kong)
Ltd., ADR ............... 115,527 130,130
7,000 China Unicom Ltd., ADR .... 58,187 58,660
2,000 Cosmote Mobile
Telecommunications SA ... 36,555 36,547
2,400 Mobile TeleSystems, ADR ... 79,902 80,760
190 MobileOne Ltd. ............ 218 246
20,000 O2 plc+ ................... 45,106 48,824
10,000 SK Telecom Co. Ltd., ADR .. 204,963 204,000
200 SmarTone Telecommunications
Holdings Ltd. ........... 207 220
2,000 Telefonica Moviles SA, ADR 23,200 21,220
200 Tim Hellas Telecommunications
SA, ADR ................. 3,316 3,794
200 Total Access
Communication plc+ ....... 715 640
41,000 United States Cellular Corp.+ 1,906,494 2,047,540
4,000 Vimpel-Communications,
ADR+ ..................... 123,051 136,120
1,000 Virgin Mobile Holdings plc 4,222 4,622
6,000 Vodafone Group plc, ADR ... 156,362 145,920
------------ ------------
3,011,791 3,217,293
------------ ------------
TOTAL COMMON STOCKS ....... 153,362,521 179,158,827
------------ ------------
See accompanying notes to financial statements.
5
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2005 (UNAUDITED)
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MARKET
SHARES COST VALUE
------ ---- -----
CONVERTIBLE PREFERRED STOCKS -- 0.8%
ENERGY AND UTILITIES: INTEGRATED -- 0.6%
800 El Paso Corp.,
4.990% Cv. Pfd.+ (b) .... $ 758,731 $ 849,654
15,000 Mirant Trust I, 6.250% Cv.
Pfd., Ser. A+ (a) ....... 432,655 318,750
------------ ------------
1,191,386 1,168,404
------------ ------------
TELECOMMUNICATIONS -- 0.2%
11,400 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B 477,317 514,140
------------ ------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ........ 1,668,703 1,682,544
------------ ------------
PRINCIPAL
AMOUNT
------
CONVERTIBLE BONDS -- 0.4%
ENERGY AND UTILITIES: ELECTRIC -- 0.2%
$ 450,000 AES Corp., Sub. Deb. Cv.,
4.500%, 08/15/05 ........ 442,602 452,250
------------ ------------
TELECOMMUNICATIONS -- 0.2%
400,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ........ 384,704 375,000
------------ ------------
TOTAL CONVERTIBLE BONDS ... 827,306 827,250
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- -----
U.S. GOVERNMENT OBLIGATIONS -- 12.0%
$25,227,000 U.S. Treasury Bills,
2.637% to 3.221%++,
07/07/05 to 10/20/05 .... $ 25,101,139 $ 25,100,657
------------ ------------
TOTAL INVESTMENTS
-- 98.6% ............... $180,959,669 206,769,278
============
OTHER ASSETS AND LIABILITIES (NET) -- 1.4% 3,036,509
------------
NET ASSETS -- 100.0% .................... $209,805,787
============
- ----------
(a) Security in default.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30,
2005, the Rule 144A securities are considered liquid and the market value
amounted to $849,654 or 0.4% of total net assets.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
See accompanying notes to financial statements.
6
THE GABELLI UTILITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $180,959,669) ................ $206,769,278
Cash ..................................................... 29,516
Dividends and interest receivable ........................ 531,420
Receivable from investments sold ......................... 259
Receivable for Fund shares sold .......................... 3,074,396
Other assets ............................................. 2,492
------------
TOTAL ASSETS ............................................. 210,407,361
------------
LIABILITIES:
Payable for investments purchased ........................ 309,127
Payable for Fund shares redeemed ......................... 43,260
Payable for investment advisory fees ..................... 157,906
Payable for distribution fees ............................ 68,469
Other accrued expenses and liabilities ................... 22,812
------------
TOTAL LIABILITIES ........................................ 601,574
------------
NET ASSETS applicable to 24,347,362
shares outstanding ..................................... $209,805,787
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at $0.001
par value .............................................. $ 24,347
Additional paid-in capital ............................... 185,970,280
Accumulated net realized loss on
investments and foreign currency
transactions ........................................... (1,992,153)
Net unrealized appreciation on investments ............... 25,809,609
Net unrealized depreciation on foreign
currency translations .................................. (6,296)
------------
NET ASSETS ............................................... $209,805,787
============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption price
per share ($116,222,746 / 13,426,341 shares
outstanding; unlimited number of shares
authorized of $0.001 par value) ........................ $8.66
=====
CLASS A:
Net Asset Value and redemption price per
share ($39,397,283 / 4,536,738 shares
outstanding; unlimited number of shares
authorized of $0.001 par value) ........................ $8.68
=====
Maximum offering price per share (NAV / 0.9425,
based on maximum sales charge of 5.75%
of the offering price) ................................. $9.21
=====
CLASS B:
Net Asset Value and offering price per share
($329,439 / 38,958 shares outstanding;
unlimited number of shares authorized of
$0.001 par value) ...................................... $8.46(a)
=====
CLASS C:
Net Asset Value and offering price per share
($53,856,319 / 6,345,325 shares outstanding;
unlimited number of shares authorized of
$0.001 par value) ...................................... $8.49(a)
=====
- ----------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $43,911) .............. $ 2,017,073
Interest ................................................. 287,873
-----------
TOTAL INVESTMENT INCOME .................................. 2,304,946
-----------
EXPENSES:
Investment advisory fees ................................. 740,038
Distribution fees -- Class AAA ........................... 120,521
Distribution fees -- Class A ............................. 26,794
Distribution fees -- Class B ............................. 1,638
Distribution fees -- Class C ............................. 149,138
Shareholder services fees ................................ 40,804
Shareholder communications expenses ...................... 25,194
Registration fees ........................................ 21,016
Custodian fees ........................................... 16,573
Legal and audit fees ..................................... 14,439
Trustees' fees ........................................... 12,146
Miscellaneous expenses ................................... 29,793
-----------
TOTAL EXPENSES ........................................... 1,198,094
Less: Custodian fee credits .............................. (550)
-----------
TOTAL NET EXPENSES ....................................... 1,197,544
-----------
NET INVESTMENT INCOME .................................... 1,107,402
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ......................... 1,189,129
Net realized loss on foreign currency
transactions ........................................... (688)
Net change in unrealized appreciation/
depreciation on investments and foreign
currency translations .................................. 11,753,987
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ....................... 12,942,428
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ $14,049,830
===========
See accompanying notes to financial statements.
7
THE GABELLI UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
--------------- -----------------
OPERATIONS:
Net investment income ..................................................... $ 1,107,402 $ 1,161,129
Net realized gain on investments and foreign currency transactions ........ 1,188,441 163,412
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations ........................................... 11,753,987 8,946,173
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... 14,049,830 10,270,714
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ............................................................... (700,007) (1,083,750)
Class A ................................................................. (167,812) (39,396)
Class B ................................................................. (2,367) (5,664)
Class C ................................................................. (237,216) (32,816)
------------ ------------
(1,107,402) (1,161,626)
------------ ------------
Net realized gains
Class AAA ............................................................... (751,234)* (125,338)
Class A ................................................................. (180,092)* (4,556)
Class B ................................................................. (2,540)* (655)
Class C ................................................................. (254,575)* (3,795)
------------ ------------
(1,188,441) (134,344)
------------ ------------
Return of capital
Class AAA ............................................................... (3,510,518)* (5,119,985)
Class A ................................................................. (841,572)* (186,117)
Class B ................................................................. (11,872)* (26,759)
Class C ................................................................. (1,189,629)* (155,031)
------------ ------------
(5,553,591) (5,487,892)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................... (7,849,434) (6,783,862)
------------ ------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Class AAA ............................................................... 30,881,664 34,873,967
Class A ................................................................. 28,155,348 9,616,331
Class B ................................................................. (13,488) 255,354
Class C ................................................................. 42,348,986 9,765,972
------------ ------------
NET INCREASE IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST TRANSACTIONS 101,372,510 54,511,624
------------ ------------
REDEMPTION FEES ........................................................... 18,725 4,853
------------ ------------
NET INCREASE IN NET ASSETS ................................................ 107,591,631 58,003,329
NET ASSETS:
Beginning of period ....................................................... 102,214,156 44,210,827
------------ ------------
End of period ............................................................. $209,805,787 $102,214,156
============ ============
- ----------
* Based on fiscal year to date book income. Amounts are subject to change and
recharacterization at fiscal year end.
See accompanying notes to financial statements.
8
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli Utilities Fund (the "Fund") was organized on May
18, 1999 as a Delaware statutory trust. 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 commenced operations on August 31,
1999. The Fund's primary objective is to provide a high level of total return
through a combination of capital appreciation and current income.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of 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 foreign markets are generally valued at
the preceding closing values of such securities on their respective exchanges or
if after the close of the foreign markets, but prior to the close of business on
the day the securities are being valued, market conditions change significantly,
certain foreign securities may be fair valued pursuant to procedures established
by the Board. Debt instruments that are not credit impaired with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board
determines such amount does not reflect the securities' fair value, in which
case these securities will be valued at their fair value as determined by the
Board. Debt instruments having a maturity greater than 60 days for which market
quotations are readily available are valued at the latest average of the bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an
9
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
agreed-upon price and time, thereby determining the yield during the Fund's
holding period. The Fund will always receive and maintain securities as
collateral whose market value, including accrued interest, will be at least
equal to 102% of the dollar amount invested by the Fund in each agreement. The
Fund will make payment for such securities only upon physical delivery or upon
evidence of book entry transfer of the collateral to the account of the
custodian. To the extent that any repurchase transaction exceeds one business
day, the value of the collateral is marked-to-market on a daily basis to
maintain the adequacy of the collateral. If the seller defaults and the value of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
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 net asset value 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 solely borne by the class incurring the expense.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Distributions to shareholders
are based on ordinary income and long-term capital gains as determined in
accordance with Federal income tax regulations, which may differ from income and
capital gains as determined under U.S. generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, adjustments are made to the appropriate
equity accounts in the period that the differences arise.
For the year ended December 31, 2004, reclassifications were made to decrease
accumulated net investment loss by $497 and decrease accumulated net realized
loss on investments by $133,847 with an offsetting adjustment to additional
paid-in capital. These reclassifications have no impact on the net asset value
of the Fund and the calculation of net investment income per share in the
financial highlights excludes these adjustments.
The tax character of distributions paid during the year ended December 31, 2004
was as follows:
YEAR ENDED
DECEMBER 31, 2004
-----------------
DISTRIBUTIONS PAID FROM:
Ordinary income (inclusive of gains) ...... $1,295,970
Non-taxable return of capital ............. 5,487,892
----------
Total distributions paid .................. $6,783,862
==========
10
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
As of December 31, 2004, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Capital loss carryforward .................. $(1,753,335)
Net unrealized appreciation on investments
and foreign payables and receivables ..... 13,810,508
-----------
Total accumulated gain ..................... $12,057,173
===========
The Fund has a net capital loss carryforward for Federal income tax purposes at
December 31, 2004 of $1,753,335. This capital loss carryforward is available to
reduce future required distributions of net capital gains to shareholders.
However, to the extent that distributions are in excess of net investment
company taxable income and/or net capital gain, a portion of such excess may be
deemed taxable to the extent of the Fund's earnings and profits for the taxable
year. $954,200 of the loss carryforward is available through 2008; $655,271 is
available through 2009; $54,818 is available through 2010; and $89,046 is
available through 2011. For the year ended December 31, 2004, the Fund utilized
net capital loss carryforwards of $134,344.
The following summarizes the tax cost of investments and related unrealized
appreciation (depreciation) at June 30, 2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments .......... $181,217,973 $26,659,884 $(1,108,579) $25,551,305
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of its average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Trustees of the Fund who are the Adviser's affiliates. The Adviser
contractually agreed to waive management fees and/or reimburse expenses of the
Fund to the extent necessary to maintain the annualized total operating expenses
for Class AAA, Class A, Class B and Class C at 2.00%, 2.00%, 2.75% and 2.75%,
respectively, of average daily net assets. The Fund is obliged to repay the
Adviser for a period of two fiscal years following the fiscal year in which the
Adviser reimbursed the Fund only to the extent that the operating expenses of
the Fund fall below 2.00%, 2.00%, 2.75% and 2.75% of average daily net assets
for Class AAA, Class A, Class B and Class C Shares, respectively.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares pursuant to Rule 12b-1 under the 1940 Act.
Gabelli & Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser,
serves as distributor of the Fund. Under the Class AAA, Class A, Class B and
Class C Share Plans, payments are authorized to Gabelli & Company at annual
rates of 0.25%, 0.25%, 1.00% and 1.00%, respectively, of the average daily net
assets of those classes, the annual limitations under each Plan. Such payments
are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended June 30, 2005, other than short term securities, aggregated
$97,754,816 and $10,422,394, respectively.
11
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST. The Fund offers four classes of shares --
Class AAA Shares, Class A Shares, Class B Shares and Class C Shares. Class AAA
Shares are offered only to investors who acquire them directly from Gabelli &
Company or through selected broker/dealers without a sales charge. Class A
Shares are subject to a maximum front-end sales charge of 5.75%. Class B Shares
are subject to a contingent deferred sales charge ("CDSC") upon redemption
within six years of purchase. The applicable CDSC is equal to a declining
percentage of the lesser of the net asset value per share at the date of
original purchase or at the date of redemption, based on the length of time
held. Class C Shares are subject to a 1% CDSC for one year after purchase. As of
July 27, 2004, Class B Shares are available only through exchange of Class B
Shares of other Funds distributed by Gabelli & Company. The Board has approved
Class I Shares which have not been offered publicly.
Effective June 15, 2005, the Fund imposed a redemption fee of 2.00% on Class
AAA, Class A, Class B and Class C Shares that are redeemed or exchanged on or
before the seventh day after the date of a purchase. (Prior to June 15, 2005,
the Fund imposed a redemption fee on shares that were redeemed or exchanged
within the sixtieth day after the date of a purchase.) The redemption fee is
deducted from the proceeds otherwise payable to the redeeming shareholders and
is retained by the Fund. The redemption fees retained by the Fund during the six
months ended June 30, 2005 amounted to $18,725.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
-------- -------- -------- --------
CLASS AAA CLASS AAA
---------------------------- ----------------------------
Shares sold ....................................... 4,721,206 $ 39,599,873 6,962,962 $ 55,861,448
Shares issued upon reinvestment of dividends ...... 387,963 3,243,790 577,703 4,627,738
Shares redeemed ................................... (1,431,556) (11,961,999) (3,209,195) (25,615,219)
---------- ------------ ---------- ------------
Net increase .................................... 3,677,613 $ 30,881,664 4,331,470 $ 34,873,967
========== ============ ========== ============
CLASS A CLASS A
---------------------------- ----------------------------
Shares sold ....................................... 3,326,476 $ 28,172,970 1,196,763 $ 9,794,869
Shares issued upon reinvestment of dividends ...... 61,577 518,100 13,991 114,955
Shares redeemed ................................... (63,702) (535,722) (36,423) (293,493)
---------- ------------ ---------- ------------
Net increase .................................... 3,324,351 $ 28,155,348 1,174,331 $ 9,616,331
========== ============ ========== ============
CLASS B CLASS B
---------------------------- ----------------------------
Shares sold ....................................... 955 $ 8,016 37,151 $ 299,078
Shares issued upon reinvestment of dividends ...... 221 1,797 535 4,218
Shares redeemed ................................... (2,852) (23,301) (5,937) (47,942)
---------- ------------ ---------- ------------
Net increase (decrease) ......................... (1,676) $ (13,488) 31,749 $ 255,354
========== ============ ========== ============
CLASS C CLASS C
---------------------------- ----------------------------
Shares sold ....................................... 5,151,157 $ 42,760,404 1,213,943 $ 9,827,615
Shares issued upon reinvestment of dividends ...... 77,001 634,317 12,114 97,528
Shares redeemed ................................... (127,476) (1,045,735) (19,910) (159,171)
---------- ------------ ---------- ------------
Net increase .................................... 5,100,682 $ 42,348,986 1,206,147 $ 9,765,972
========== ============ ========== ============
12
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
7. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2005, the
Fund paid brokerage commissions of $136,065 to Gabelli & Company. Gabelli &
Company has informed the Fund that it received commissions (sales charges and
underwriting fees) from investors on sales and redemptions of Fund shares during
the six months ended June 30, 2005 in the amount of $181,913.
The cost of calculating the Fund's net asset value per share is a Fund expense
pursuant to the Advisory Agreement between the Fund and the Adviser. During the
six months ended June 30, 2005, the Fund reimbursed the Adviser $22,500 in
connection with the cost of computing the Fund's net asset value, which is
included in miscellaneous expenses in the Statement of Operations.
8. CONCENTRATION RISKS. 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 net asset value and a magnified effect in its
total return.
9. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. The Fund does not believe that these matters will have a material
adverse effect on the Fund's financial position or the results of its
operations.
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 and expects the risk of loss to be remote.
13
THE GABELLI UTILITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period:
INCOME
FROM INVESTMENT OPERATIONS DISTRIBUTIONS
---------------------------------------------------- ----------------------------------------------------
Net
Net Asset Realized and Total Net
Period Value, Net Unrealized from Net Realized
Ended Beginning Investment Gain (Loss) on Investment Investment Gain on Return of Total
December 31 of Period Income (a) Investments Operations Income Investments Capital Distributions
- ----------- --------- ------------ ----------- ---------- ---------- ----------- ------- -------------
CLASS AAA
2005 (d) $8.36 $0.07 $0.65 $0.72 $(0.06) $ (0.06) $(0.30) $(0.42)
2004 8.03 0.15 1.02 1.17 (0.13) (0.02) (0.69) (0.84)
2003 6.96 0.14 1.77 1.91 (0.14) -- (0.70) (0.84)
2002 9.13 0.22 (1.55) (1.33) (0.22) -- (0.62) (0.84)
2001 11.72 0.11 (1.86) (1.75) (0.11) -- (0.73) (0.84)
2000 10.89 0.89 0.83 1.72 (0.89) -- -- (0.89)
CLASS A +
2005 (d) $8.38 $0.07 $0.65 $0.72 $(0.06) $ (0.06) $(0.30) $(0.42)
2004 8.06 0.19 0.97 1.16 (0.11) (0.01) (0.72) (0.84)
2003 6.96 0.13 1.81 1.94 (0.13) -- (0.71) (0.84)
CLASS B +
2005 (d) $8.20 $0.03 $0.65 $0.68 $(0.06) $ (0.06) $(0.30) $(0.42)
2004 7.96 0.08 1.00 1.08 (0.08) (0.01) (0.75) (0.84)
2003 6.96 0.12 1.72 1.84 (0.12) -- (0.72) (0.84)
CLASS C +
2005 (d) $8.23 $0.04 $0.64 $0.68 $(0.06) $ (0.06) $(0.30) $(0.42)
2004 7.98 0.11 0.98 1.09 (0.06) (0.01) (0.77) (0.84)
2003 6.96 0.08 1.78 1.86 (0.08) -- (0.76) (0.84)
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Net Asset Net Assets Operating Operating
Period Value, End of Net Expenses Expenses Portfolio
Ended Redemption End of Total Period Investment Net of Before Turnover
December 31 Fees(a) Period Return++ (in 000's) Income Reimbursements(e) Reimbursements(f) Rate
- ----------- ------- ------ -------- ---------- ------ ----------------- ----------------- -------
CLASS AAA
2005 (d) $0.00(c) $8.66 8.9% $116,223 1.62%(b) 1.47%(b) 1.47%(b) 8%
2004 0.00(c) 8.36 15.6 81,471 1.85 1.82 1.82 17
2003 -- 8.03 29.5 43,526 1.92 2.00 2.00 39
2002 -- 6.96 (15.1) 13,215 2.91 2.00 2.64 41
2001 -- 9.13 (15.4) 9,727 1.02 2.00 2.49 110
2000 -- 11.72 16.4 13,281 8.31 2.00 2.88 215
CLASS A +
2005 (d) $0.00(c) $8.68 8.9% $ 39,397 1.69%(b) 1.47%(b) 1.47%(b) 8%
2004 0.00(c) 8.38 15.4 10,165 2.30 1.82 1.82 17
2003 -- 8.06 29.9 307 1.67 2.00 2.00 39
CLASS B +
2005 (d) $0.00(c) $8.46 8.6% $ 330 0.84%(b) 2.22%(b) 2.22%(b) 8%
2004 0.00(c) 8.20 14.5 333 1.08 2.57 2.57 17
2003 -- 7.96 28.4 71 1.72 2.75 2.75 39
CLASS C +
2005 (d) $0.00(c) $8.49 8.6% $ 53,856 0.98%(b) 2.22%(b) 2.22%(b) 8%
2004 0.00(c) 8.23 14.6 10,245 1.33 2.57 2.57 17
2003 -- 7.98 28.7 307 1.11 2.75 2.75 39
+ Class A, B and C Shares commenced operations on December 31, 2002.
++ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends and does not reflect applicable sales
charges. Total return for the period of less than one year is not
annualized.
(a) Per share data is calculated using the average shares outstanding method.
(b) Annualized.
(c) Amount represents less than $0.005 per share.
(d) For the six months ended June 30, 2005, unaudited.
(e) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. For the six months ended
June 30, 2005, the effect of the custodian fee credits was minimal.
(f) Under an expense deferral agreement with the Adviser, the Fund repaid the
Adviser $66,719 during 2004, representing previously reimbursed expenses
from the Adviser. During the fiscal year ended December 31, 2004, had such
payment not been made, the expense ratio would have been 1.71%, 1.71%,
2.46% and 2.46% for Class AAA, Class A, Class B and Class C, respectively.
14
THE GABELLI UTILITIES FUND
BOARD CONSIDERATION AND RE-APPROVAL OF MANAGEMENT AGREEMENT
At its meeting on February 16, 2005, 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 (the
"independent trustees") who are not "interested persons" of the Fund. The
following paragraphs summarize the material information and factors considered
by the independent trustees as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent trustees considered
information regarding the Adviser's portfolio managers, the depth of the analyst
pool available to the Adviser and the portfolio managers, 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 trustees noted the experience, length of service
and reputation of the portfolio managers.
INVESTMENT PERFORMANCE. The independent trustees reviewed the short, medium and
long-term performance of the Fund since inception against a peer group of sector
funds. The trustees noted that the Fund's performance had been declining in
comparison to its peer group from top quartile over medium and long term periods
to lowest quartile in the most recent period.
PROFITABILITY. The independent trustees reviewed summary data regarding the low
level of profitability after years of profitability of the Fund to the Adviser.
The trustees also noted that an affiliated broker of the Adviser received
distribution fees and minor amounts of sales commissions.
ECONOMIES OF SCALE. The independent trustees discussed the major elements of the
Adviser's cost structure and the relationship of those elements to potential
economies of scale. The independent trustees noted that the Fund needed
significantly more assets before economies of scale could be realized. The
independent trustees agreed that the Adviser should gather and provide them with
information regarding possible ways of measuring potential economies of scale so
that they would be in a position to review this potential issue in greater
detail if the Fund grew substantially.
SHARING OF ECONOMIES OF SCALE. The independent trustees noted that the
investment management fee schedule for the Fund does not take into account any
potential economies of scale that may develop or any losses or diminished
profitability to the Adviser in prior years.
SERVICE AND COST COMPARISONS. The independent trustees compared the expense
ratios of the investment management fee, other expenses and total expenses of
the Fund to similar expense ratios of the peer group of sector funds and noted
that the Adviser's management fee includes substantially all administrative
services of the Fund as well as investment Advisory services of the Adviser. The
trustees noted that the Fund's expense ratios were average and the Fund's size
was below average within this group. The trustees also noted that the management
fee waiver structure was the same as that in effect for most of the Gabelli
funds. The trustees did not compare the management fee to the fee for other
types of accounts managed by an affiliated adviser.
CONCLUSIONS. The independent trustees concluded that the Fund enjoyed highly
experienced portfolio management services, good ancillary services and an
acceptable performance record. The independent trustees also concluded that the
Fund's expense ratios were reasonable in light of the Fund's size, and that
economies of scale were not a significant factor in their thinking at this time.
The trustees 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 trustees determined
to recommend continuation of the investment management agreement to the full
Board of Trustees.
15
THE GABELLI UTILITIES FUND
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
FAX: 914-921-5118
WEBSITE: WWW.GABELLI.COM
E-MAIL: INFO@GABELLI.COM
Net Asset Value available daily by
calling 800-GABELLI after 6:00 P.M.
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Mary E. Hauck
CHAIRMAN AND CHIEF FORMER SENIOR PORTFOLIO MANAGER
EXECUTIVE OFFICER GABELLI-O'CONNOR FIXED INCOME
GABELLI ASSET MANAGEMENT INC. MUTUAL FUND MANAGEMENT CO.
Anthony J. Colavita Karl Otto Pohl
ATTORNEY-AT-LAW FORMER PRESIDENT
ANTHONY J. COLAVITA, P.C. DEUTSCHE BUNDESBANK
Vincent D. Enright Werner J. Roeder, MD
FORMER SENIOR VICE PRESIDENT MEDICAL DIRECTOR
AND CHIEF FINANCIAL OFFICER LAWRENCE HOSPITAL
KEYSPAN ENERGY CORP.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT AND TREASURER SECRETARY
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Utilities Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
GAB470Q205SR
[GRAPGHIC OMITTED]
Mario J. Gabelli
THE
GABELLI
UTILITIES
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2005
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Utilities Fund
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date September 7, 2005
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer &
Principal Financial Officer
Date September 7, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.