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, 2007
--------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GABELLI UTILITIES FUND
SEMI-ANNUAL REPORT
JUNE 30, 2007
TO OUR SHAREHOLDERS,
During the second quarter of 2007, The Gabelli Utilities Fund (the "Fund")
rose 0.1%, while the Standard & Poor's ("S&P") 500 Utilities Index was down 0.4%
and the Lipper Utility Fund Average rose 3.4%. For the six month period ended
June 30, 2007, the Fund was up 4.7% versus advances of 8.9% and 11.5% for the
S&P 500 Utilities Index and the Lipper Utility Fund Average, respectively.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2007.
COMPARATIVE RESULTS
- ----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2007 (A)
------------------------------------------------
Since
Year to Inception
Quarter Date 1 Year 3 Year 5 Year (8/31/99)
- ----------------------------------------------------------------------------------------------------------------------
GABELLI UTILITIES FUND CLASS AAA ............ 0.07% 4.70% 19.11% 15.90% 12.76% 10.20%
S&P 500 Utilities Index ..................... (0.38) 8.87 26.09 22.60 14.50 6.76
Lipper Utility Fund Average ................. 3.43 11.50 30.86 23.53 17.29 8.28
Class A ..................................... (0.04) 4.68 19.04 15.89 12.80 10.22
(5.78)(b) (1.34)(b) 12.19(b) 13.62(b) 11.48(b) 9.39(b)
Class B ..................................... (0.26) 4.31 18.13 15.01 11.96 9.69
(5.25)(c) (0.69)(c) 13.13(c) 14.25(c) 11.70(c) 9.69
Class C ..................................... (0.26) 4.29 18.19 15.04 12.02 9.73
(1.26)(d) 3.29(d) 17.19(d) 15.04 12.02 9.73
THE CURRENT EXPENSE RATIO FOR CLASS AAA, A, B, AND C SHARES IS 1.44%, 1.44%,
2.19%, AND 2.19%, RESPECTIVELY. CLASS AAA SHARES DO NOT HAVE A SALES CHARGE.
THE MAXIMUM SALES CHARGE FOR CLASS A, B, AND C SHARES IS 5.75%, 5.00%, AND
1.00%, RESPECTIVELY.
(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 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.
PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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 CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE
PROSPECTUS CONTAINS MORE INFORMATION ABOUT THIS AND OTHER MATTERS AND
SHOULD BE READ CAREFULLY BEFORE INVESTING.
THE VALUE OF UTILITY STOCKS 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 SHARES' NET ASSET VALUES ("NAV'S")PER SHARE 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 UTILITIES 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.
DIVIDENDS ARE CONSIDERED REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN
INDEX.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.75% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS
B SHARES UPON REDEMPTION AT THE END OF THE QUARTER, YEAR TO DATE, ONE YEAR,
THREE YEAR, AND FIVE YEAR PERIODS OF 5%, 5%, 5%, 3%, AND 2%, RESPECTIVELY,
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
CLASS B SHARES ARE NOT AVAILABLE FOR NEW PURCHASES.
(d) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS
C SHARES UPON REDEMPTION AT THE END OF THE QUARTER, YEAR TO DATE, AND ONE
YEAR PERIODS OF 1% OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE,
WHICHEVER IS LOWER.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 from the
commentary. Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com/funds.
- --------------------------------------------------------------------------------
THE GABELLI UTILITIES FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from January 1, 2007 through June 30, 2007
EXPENSE TABLE
================================================================================
We believe it is important for you to understand the impact of fees and expenses
regarding your investment. All mutual funds have operating expenses. As a
shareholder of a fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of a fund. When a fund's
expenses are expressed as a percentage of its average net assets, this figure is
known as the expense ratio. The following examples are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The Expense Table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section provides information about actual account
values and actual expenses. You may use this section to help you to estimate the
actual expenses that you paid over the period after any fee waivers and expense
reimbursements. The "Ending Account Value" shown is derived from the Fund's
ACTUAL return during the past six months, and the "Expenses Paid During Period"
shows the dollar amount that would have been paid by an investor who started
with $1,000 in the Fund. You may use this information, together with the amount
you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your Fund under the heading "Expenses Paid During Period" to estimate
the expenses you paid during this period.
HYPOTHETICAL 5% RETURN: This section provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio. It assumes a hypothetical annualized return of 5% before expenses during
the period shown. In this case - because the hypothetical return used is NOT the
Fund's actual return - the results do not apply to your investment and you
cannot use the hypothetical account value and expense to estimate the actual
ending account balance or expenses you paid for the period. This example is
useful in making comparisons of the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees, if any, which are described
in the Prospectus. If these costs were applied to your account, your costs would
be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
01/01/07 06/30/07 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI UTILITIES FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class AAA $1,000.00 $1,047.00 1.38% $ 7.04
Class A $1,000.00 $1,046.80 1.38% $ 7.04
Class B $1,000.00 $1,043.10 2.13% $10.85
Class C $1,000.00 $1,042.90 2.13% $10.85
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,018.05 1.38% $ 6.94
Class A $1,000.00 $1,018.05 1.38% $ 6.94
Class B $1,000.00 $1,014.31 2.13% $10.70
Class C $1,000.00 $1,014.31 2.13% $10.70
* 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
as of June 30, 2007:
THE GABELLI UTILITIES FUND
Energy and Utilities: Electric Integrated ...... 37.9%
Telecommunications ............................. 7.8%
Energy and Utilities:
Electric Transmission and Distribution ...... 7.7%
Energy and Utilities:
Natural Gas Integrated ...................... 7.2%
Energy and Utilities: Natural Gas Utilities .... 6.3%
Energy and Utilities: Global Utilities ......... 6.1%
Wireless Communications ........................ 5.4%
Cable and Satellite ............................ 5.0%
U.S. Government Obligations .................... 3.7%
Diversified Industrial ......................... 3.2%
Energy and Utilities: Services ................. 2.1%
Aviation: Parts and Services ................... 2.0%
Exchange Traded Funds .......................... 1.4%
Business Services .............................. 0.7%
Transportation ................................. 0.7%
Energy and Utilities: Merchant Energy .......... 0.7%
Energy and Utilities: Water .................... 0.6%
Metals and Mining .............................. 0.6%
Entertainment .................................. 0.6%
Publishing ..................................... 0.0%
Health Care .................................... 0.0%
Environmental Services ......................... 0.0%
Energy and Utilities: Alternative Energy ....... 0.0%
Energy and Utilities:
Contractors and Suppliers ................... 0.0%
Other Assets and Liabilities (Net) ............. 0.3%
-------
100.0%
=======
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, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED MARCH 31,
2007. 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 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, 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.
3
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- 94.9%
AVIATION: PARTS AND SERVICES -- 2.0%
1,000,000 Rolls-Royce Group plc+ ........... $ 8,943,176 $ 10,813,689
53,280,000 Rolls-Royce Group plc, Cl. B ..... 104,394 109,132
23,000 Sequa Corp., Cl. A+ .............. 2,650,721 2,576,000
1,400 Sequa Corp., Cl. B+ .............. 153,774 158,459
------------ ------------
11,852,065 13,657,280
------------ ------------
BUSINESS SERVICES -- 0.7%
80,000 aQuantive Inc.+ .................. 5,094,360 5,104,000
------------ ------------
CABLE AND SATELLITE -- 5.0%
320,000 Cablevision Systems Corp.,
Cl. A+ ......................... 9,372,640 11,580,800
50,000 Charter Communications Inc.,
Cl. A+ ......................... 192,800 202,500
240,000 Clear Channel
Communications Inc. ............ 9,070,334 9,076,800
10,000 Cogeco Cable Inc. ................ 207,213 431,824
40,000 Cogeco Inc. ...................... 777,563 1,494,860
65,000 Comcast Corp., Cl. A+ ............ 1,668,614 1,827,800
55,000 EchoStar Communications
Corp., Cl. A+ .................. 1,632,988 2,385,350
84,000 Liberty Global Inc., Cl. A+ ...... 2,050,591 3,447,360
6,000 Mediacom Communications
Corp., Cl. A+ .................. 35,001 58,140
50,000 Rogers Communications Inc.,
Cl. B .......................... 712,299 2,124,500
6,000 Shaw Communications Inc.,
Cl. B .......................... 148,195 252,240
20,000 The DIRECTV Group Inc.+ .......... 296,642 462,200
35,000 Time Warner Cable Inc., Cl. A+ ... 1,344,570 1,370,950
10,000 Tokyo Broadcasting
System Inc. .................... 334,920 306,193
------------ ------------
27,844,370 35,021,517
------------ ------------
DIVERSIFIED INDUSTRIAL -- 3.2%
170,000 General Electric Co. ............. 6,173,890 6,507,600
10,000 Mueller Water Products Inc.,
Cl. A .......................... 146,342 170,600
200,000 Rinker Group Ltd., ADR ........... 15,747,598 15,920,000
------------ ------------
22,067,830 22,598,200
------------ ------------
ENERGY AND UTILITIES: ALTERNATIVE ENERGY -- 0.0%
1,000 Ormat Technologies Inc. .......... 15,000 37,680
------------ ------------
ENERGY AND UTILITIES: CONTRACTORS AND SUPPLIERS -- 0.0%
1,000 Pike Electric Corp.+ ............. 14,000 22,380
------------ ------------
ENERGY AND UTILITIES: ELECTRIC INTEGRATED -- 37.9%
232,000 Allegheny Energy Inc.+ ........... 3,002,101 12,003,680
30,000 ALLETE Inc. ...................... 1,050,425 1,411,500
68,000 Alliant Energy Corp. ............. 1,889,326 2,641,800
78,000 Ameren Corp. ..................... 3,869,366 3,822,780
MARKET
SHARES COST VALUE
------ ---- -------
185,000 American Electric
Power Co. Inc. ................. $ 7,231,411 $ 8,332,400
3,800,000 Aquila Inc.+ ..................... 15,707,348 15,542,000
150,000 Avista Corp. ..................... 3,585,799 3,232,500
150,000 Black Hills Corp. ................ 5,593,896 5,962,500
17,000 Central Vermont Public
Service Corp. .................. 302,720 640,560
35,000 Cleco Corp. ...................... 721,890 857,500
75,000 CMS Energy Corp. ................. 523,966 1,290,000
55,000 Constellation Energy
Group Inc. ..................... 2,718,966 4,794,350
402,000 DPL Inc. ......................... 10,528,880 11,392,680
6,000 DTE Energy Co. ................... 240,835 289,320
350,000 Duke Energy Corp. ................ 5,416,587 6,405,000
52,000 Edison International ............. 671,304 2,918,240
132,000 El Paso Electric Co.+ ............ 2,149,667 3,241,920
3,000 Entergy Corp. .................... 114,480 322,050
50,000 FirstEnergy Corp. ................ 1,882,372 3,236,500
64,000 Florida Public Utilities Co. ..... 805,543 787,200
215,000 FPL Group Inc. ................... 8,340,909 12,199,100
200,000 Great Plains Energy Inc. ......... 5,958,268 5,824,000
305,000 Hawaiian Electric
Industries Inc. ................ 7,870,073 7,225,450
265,000 Integrys Energy Group Inc. ....... 13,324,981 13,443,450
425,000 LSI Corp.+ ....................... 3,809,318 3,191,750
37,700 Maine & Maritimes Corp.+ ......... 1,008,254 1,012,245
225,000 MGE Energy Inc. .................. 7,306,692 7,350,750
175,000 NiSource Inc. .................... 3,909,441 3,624,250
145,000 NorthWestern Corp. ............... 4,887,503 4,612,450
110,000 NRG Energy Inc.+ ................. 2,627,937 4,572,700
190,000 OGE Energy Corp. ................. 5,070,751 6,963,500
115,000 Otter Tail Corp. ................. 3,288,426 3,688,050
28,000 PG&E Corp. ....................... 365,349 1,268,400
135,000 Pinnacle West Capital Corp. ...... 5,982,737 5,379,750
46,000 PPL Corp. ........................ 1,030,117 2,152,340
170,000 Progress Energy Inc. ............. 7,496,031 7,750,300
58,000 Public Service Enterprise
Group Inc. ..................... 3,105,545 5,091,240
100,000 Puget Energy Inc. ................ 2,419,485 2,418,000
150,000 SCANA Corp. ...................... 6,162,890 5,743,500
130,000 TECO Energy Inc. ................. 2,277,826 2,233,400
125,000 The Empire District Electric Co. . 2,893,444 2,796,250
240,000 The Southern Co. ................. 8,350,234 8,229,600
260,000 TXU Corp. ........................ 16,940,351 17,498,000
70,000 Unisource Energy Corp. ........... 1,641,096 2,302,300
100,000 Unitil Corp. ..................... 2,636,614 2,720,000
310,000 Vectren Corp. .................... 8,725,769 8,348,300
610,000 Westar Energy Inc. ............... 14,005,699 14,810,800
200,000 Wisconsin Energy Corp. ........... 8,199,206 8,846,000
210,000 Xcel Energy Inc. ................. 3,695,022 4,298,700
------------ ------------
231,336,850 264,719,055
------------ ------------
See accompanying notes to financial statements.
4
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES:
ELECTRIC TRANSMISSION AND DISTRIBUTION -- 7.7%
240,000 CH Energy Group Inc. ............. $ 11,391,813 $ 10,792,800
160,000 Consolidated Edison Inc. ......... 7,389,504 7,219,200
350,000 Energy East Corp. ................ 8,438,093 9,131,500
130,000 Exelon Corp. ..................... 7,887,294 9,438,000
165,000 Northeast Utilities .............. 3,282,854 4,679,400
270,000 NSTAR ............................ 7,344,112 8,761,500
110,000 Pepco Holdings Inc. .............. 2,267,877 3,102,000
16,666 UIL Holdings Corp. ............... 490,122 551,645
------------ ------------
48,491,669 53,676,045
------------ ------------
ENERGY AND UTILITIES: GLOBAL UTILITIES -- 6.1%
4,000 Areva SA ......................... 1,690,915 4,296,894
24,000 Chubu Electric Power Co. Inc. .... 574,288 637,401
190,000 Electric Power Development
Co. Ltd. ....................... 4,633,698 7,561,421
300 Electricite de France ............ 11,619 32,597
230,000 Endesa SA ........................ 12,301,139 12,517,155
130,000 Enel SpA ......................... 888,729 1,403,194
4,000 Energias de Portugal SA, ADR ..... 112,064 220,950
100,000 Hera SpA ......................... 174,312 419,233
12,000 Hokkaido Electric
Power Co. Inc. ................. 238,323 260,711
24,000 Hokuriku Electric Power Co. ...... 442,615 464,893
26,000 Huaneng Power
International Inc., ADR ........ 1,107,053 1,207,700
13,757 Iberdrola SA ..................... 645,050 773,270
20,901 Iberdrola SA, ADR ................ 1,042,437 1,172,301
100,000 Korea Electric Power Corp., ADR .. 1,697,461 2,190,000
35,000 Kyushu Electric Power Co. Inc. ... 765,331 918,172
8,775 National Grid plc, ADR ........... 386,383 647,419
2,000 Niko Resources Ltd. .............. 111,679 182,117
24,000 Shikoku Electric
Power Co. Inc. ................. 473,574 566,254
2,000 Snam Rete Gas SpA ................ 10,803 11,870
24,000 The Chugoku Electric
Power Co. Inc. ................. 457,538 475,614
100,000 The Kansai Electric
Power Co. Inc. ................. 2,021,741 2,367,513
34,000 The Tokyo Electric
Power Co. Inc. ................. 847,546 1,093,523
140,000 Tohoku Electric Power Co. Inc. ... 2,470,795 3,143,959
------------ ------------
33,105,093 42,564,161
------------ ------------
ENERGY AND UTILITIES: MERCHANT ENERGY -- 0.5%
40,000 Mirant Corp.+ .................... 708,818 1,706,000
40,000 Mirant Escrow Shares+ (a) ........ 0 0
15,000 Mirant Escrow Shares+ ............ 0 0
90,000 The AES Corp.+ ................... 434,950 1,969,200
------------ ------------
1,143,768 3,675,200
------------ ------------
MARKET
SHARES COST VALUE
------ ---- -------
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 7.1%
450,000 El Paso Corp. .................... $ 5,157,910 $ 7,753,500
20,000 Energen Corp. .................... 239,277 1,098,800
85,000 EnergySouth Inc. ................. 3,049,192 4,335,000
300,000 National Fuel Gas Co. ............ 11,073,507 12,993,000
178,000 ONEOK Inc. ....................... 4,741,203 8,972,980
2,000 Questar Corp. .................... 99,250 105,700
284,000 Southern Union Co. ............... 7,327,357 9,255,560
188,350 Spectra Energy Corp. ............. 4,228,422 4,889,566
------------ ------------
35,916,118 49,404,106
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS UTILITIES -- 6.3%
110,000 Atmos Energy Corp. ............... 2,949,039 3,306,600
100,000 Cascade Natural Gas Corp. ........ 2,432,372 2,641,000
51,000 Chesapeake Utilities Corp. ....... 1,373,627 1,747,260
56,700 Corning Natural Gas Corp.+ ....... 930,786 1,020,600
350,000 KeySpan Corp. .................... 13,864,598 14,693,000
27,000 Nicor Inc. ....................... 889,090 1,158,840
60,000 Piedmont Natural Gas Co. Inc. .... 1,446,871 1,479,000
640,000 SEMCO Energy Inc.+ ............... 4,835,379 4,972,800
65,000 South Jersey Industries Inc. ..... 1,827,745 2,299,700
170,000 Southwest Gas Corp. .............. 4,364,825 5,747,700
150,000 The Laclede Group Inc. ........... 4,681,467 4,782,000
------------ ------------
39,595,799 43,848,500
------------ ------------
ENERGY AND UTILITIES: SERVICES -- 2.1%
230,000 ABB Ltd., ADR .................... 3,067,767 5,198,000
3,000 Cameron International Corp.+ ..... 103,313 214,410
200,000 Halliburton Co. .................. 6,236,628 6,900,000
35,000 Weatherford International Ltd.+ .. 1,462,423 1,933,400
------------ ------------
10,870,131 14,245,810
------------ ------------
ENERGY AND UTILITIES: WATER -- 0.6%
3,000 American States Water Co. ........ 75,431 106,710
35,000 Aqua America Inc. ................ 776,139 787,150
2,000 California Water Service Group ... 70,055 74,980
2,000 Consolidated Water Co. Ltd. ...... 40,211 58,620
10,000 Middlesex Water Co. .............. 177,803 192,100
20,000 Pennichuck Corp. ................. 364,494 505,000
71,000 SJW Corp. ........................ 1,888,339 2,364,300
61,600 Suez SA, Strips+ ................. 0 834
10,000 United Utilities plc, ADR ........ 266,181 284,700
1,650 York Water Co. ................... 20,544 29,287
------------ ------------
3,679,197 4,403,681
------------ ------------
ENTERTAINMENT -- 0.6%
90,000 Vivendi .......................... 2,733,312 3,886,986
------------ ------------
ENVIRONMENTAL SERVICES -- 0.0%
2,250 Veolia Environnement ............. 85,492 176,717
------------ ------------
EXCHANGE TRADED FUNDS -- 1.4%
70,000 Utilities HOLDRS Trust ........... 7,858,119 9,975,000
------------ ------------
See accompanying notes to financial statements.
5
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2007 (UNAUDITED)
================================================================================
MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
HEALTH CARE -- 0.0%
12,000 Tsumura & Co. .................... $ 261,956 $ 221,726
------------ ------------
METALS AND MINING -- 0.6%
16,000 Alliance Holdings GP LP .......... 319,893 476,160
5,000 Alliance Resource Partners LP .... 173,755 209,500
10,000 Compania de Minas
Buenaventura SA, ADR ........... 232,654 374,600
45,000 James River Coal Co.+ ............ 641,574 583,200
38,000 Peabody Energy Corp. ............. 1,570,793 1,838,440
19,000 Uranium One Inc.+ ................ 267,672 242,037
50,000 Uranium Resources Inc.+ .......... 263,029 551,500
------------ ------------
3,469,370 4,275,437
------------ ------------
PUBLISHING -- 0.0%
7,000 Idearc Inc. ...................... 205,612 247,310
------------ ------------
TELECOMMUNICATIONS -- 7.0%
190,000 AT&T Inc. ........................ 5,903,746 7,885,000
50,000 BCE Inc. ......................... 1,731,545 1,889,500
400,000 Cincinnati Bell Inc.+ ............ 1,918,430 2,312,000
170,000 Deutsche Telekom AG, ADR ......... 3,024,508 3,129,700
200 Hutchison Telecommunications
International Ltd. ............. 163 258
600 Mobistar SA ...................... 50,761 51,323
1,400 Nippon Telegraph &
Telephone Corp. ................ 7,049,638 6,219,695
230,000 Nortel Networks Corp.,
New York+ ...................... 6,011,918 5,531,500
45,000 Philippine Long Distance
Telephone Co., ADR ............. 2,332,725 2,574,000
300,000 Portugal Telecom SGPS SA ......... 3,809,892 4,153,752
50,000 Portugal Telecom SGPS SA,
ADR ............................ 580,702 694,500
200 PT Indosat Tbk ................... 128 144
300,000 Sprint Nextel Corp. .............. 6,158,831 6,213,000
600 Tele2 AB, Cl. B .................. 8,180 9,848
35,000 Telecom Italia SpA, ADR .......... 1,036,446 961,100
1,066 Telefonica SA, ADR ............... 43,831 71,166
16,000 Telephone & Data Systems Inc. .... 726,980 1,001,120
30,000 Time Warner Telecom Inc.,
Cl. A+ ......................... 599,130 603,000
130,000 Verizon Communications Inc. ...... 4,600,438 5,352,100
------------ ------------
45,587,992 48,652,706
------------ ------------
TRANSPORTATION -- 0.7%
100,000 GATX Corp. ....................... 4,238,404 4,925,000
------------ ------------
WIRELESS COMMUNICATIONS -- 5.4%
150,000 Alltel Corp. ..................... 9,518,684 10,132,500
8,000 America Movil SAB de CV,
Cl. L, ADR ..................... 137,627 495,440
17,000 China Mobile Ltd., ADR ........... 304,837 916,300
MARKET
SHARES COST VALUE
------ ---- -------
17,000 China Unicom Ltd., ADR ........... $ 141,622 $ 292,910
14,000 Clearwire Corp., Cl. A+ .......... 286,454 342,020
2,000 Cosmote Mobile
Telecommunications SA .......... 36,556 61,934
19,000 Millicom International
Cellular SA+ ................... 1,469,631 1,741,160
2,600 Mobile TeleSystems OJSC, ADR ..... 86,498 157,482
171 MobileOne Ltd. ................... 218 246
3,300 NTT DoCoMo Inc. .................. 5,363,266 5,226,396
165,000 Price Communications Corp. ....... 3,086,843 3,667,950
28,000 SK Telecom Co. Ltd., ADR ......... 593,203 765,800
200 SmarTone Telecommunications
Holdings Ltd. .................. 207 231
75,000 United States Cellular Corp.+ .... 3,766,476 6,795,000
20,000 Vimpel-Communications, ADR ....... 1,253,553 2,107,200
150,000 Vodafone Group plc, ADR .......... 4,286,659 5,044,500
------------ ------------
30,332,334 37,747,069
------------ ------------
TOTAL COMMON STOCKS .............. 565,798,841 663,085,566
------------ ------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 0.1%
800 El Paso Corp.,
4.990% Cv. Pfd. (b) ............ 758,731 1,169,008
------------ ------------
TELECOMMUNICATIONS -- 0.1%
11,400 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ........ 477,317 545,490
------------ ------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ............... 1,236,048 1,714,498
------------ ------------
PRINCIPAL
AMOUNT
------
CONVERTIBLE BONDS -- 0.7%
TELECOMMUNICATIONS -- 0.7%
$5,000,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ............... 4,883,873 4,956,250
------------ ------------
SHARES
------
WARRANTS -- 0.2%
ENERGY AND UTILITIES: MERCHANT ENERGY -- 0.2%
3,480 Mirant Corp., Ser. A,
expire 01/03/11+ ............... 33,641 80,110
38,363 Mirant Corp., Ser. B,
expire 01/03/11+ ............... 190,367 932,988
------------ ------------
224,008 1,013,098
------------ ------------
TELECOMMUNICATIONS -- 0.0%
3,000 Bharti Airtel Ltd.,
expire 12/15/16+ (b) ........... 61,247 59,144
------------ ------------
TOTAL WARRANTS ................... 285,255 1,072,242
------------ ------------
See accompanying notes to financial statements.
6
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- JUNE 30, 2007 (UNAUDITED)
================================================================================
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- -------
U.S. GOVERNMENT OBLIGATIONS -- 3.7%
U.S. TREASURY BILLS -- 0.9%
$ 6,267,000 U.S. Treasury Bills,
4.351% to 5.126%++,
07/12/07 to 09/27/07 ........... $ 6,228,367 $ 6,228,374
------------ ------------
U.S. TREASURY NOTES -- 2.8%
20,000,000 U.S. Treasury Notes,
4.625%, 03/31/08 ............... 19,933,150 19,946,880
------------ ------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS .................... 26,161,517 26,175,254
------------ ------------
TOTAL
INVESTMENTS -- 99.7% ........... $598,365,534 697,003,810
============
OTHER ASSETS AND LIABILITIES (NET) -- 0.3% ....... 1,887,615
------------
NET ASSETS -- 100.0% ............................. $698,891,425
============
- ----------------
(a) Security fair valued under procedures established by the Board of Trustees.
The procedures may include reviewing available financial information about
the company and reviewing valuation of comparable securities and other
factors on a regular basis. At June 30, 2007, the market value of fair
valued securities amounted to $0 or 0.00% of total net assets.
(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,
2007, the Rule 144A securities are considered liquid and their market value
amounted to $1,228,152 or 0.18% 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.
7
THE GABELLI UTILITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2007 (UNAUDITED)
================================================================================
ASSETS:
Investments, at value (cost $598,365,534) ................. $697,003,810
Foreign currency, at value (cost $103,469) ................ 101,965
Cash ...................................................... 1,744
Receivable for Fund shares sold ........................... 2,948,472
Receivable for investments sold ........................... 2,065,012
Dividends and interest receivable ......................... 1,862,194
Prepaid expense ........................................... 8,923
------------
TOTAL ASSETS ................................................ 703,992,120
------------
LIABILITIES:
Payable for Fund shares redeemed .......................... 1,227,323
Payable for investments purchased ......................... 2,843,724
Payable for investment advisory fees ...................... 597,212
Payable for distribution fees ............................. 329,791
Payable for accounting fees ............................... 3,872
Other accrued expenses .................................... 98,773
------------
TOTAL LIABILITIES ........................................... 5,100,695
------------
NET ASSETS applicable to 77,415,903
shares outstanding ........................................ $698,891,425
============
NET ASSETS CONSIST OF:
Paid-in capital, each class at
$0.001 par value .......................................... $600,793,721
Accumulated distributions in excess of net
realized gain on investments and foreign
currency transactions ..................................... (531,568)
Net unrealized appreciation on investments .................. 98,638,276
Net unrealized depreciation on foreign
currency translations ..................................... (9,004)
------------
NET ASSETS .................................................. $698,891,425
============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering and redemption price per
share ($165,975,739 / 18,106,881 shares
outstanding; unlimited number of
shares authorized) ...................................... $9.17
=====
CLASS A:
Net Asset Value and redemption price per share
($248,888,362 / 27,042,880 shares outstanding;
unlimited number of shares authorized) .................. $9.20
=====
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) .................................. $9.76
=====
CLASS B:
Net Asset Value and offering price per share
($346,857 / 39,590 shares outstanding;
unlimited number of shares authorized) .................. $8.76(a)
=====
CLASS C:
Net Asset Value and offering price per share
($283,680,467 / 32,226,552 shares outstanding;
unlimited number of shares authorized) .................. $8.80(a)
=====
- ----------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $144,059) ................ $ 8,716,462
Interest .................................................... 1,401,865
------------
TOTAL INVESTMENT INCOME ..................................... 10,118,327
------------
EXPENSES:
Investment advisory fees .................................... 3,250,959
Distribution fees - Class AAA ............................... 207,403
Distribution fees - Class A ................................. 289,995
Distribution fees - Class B ................................. 1,766
Distribution fees - Class C ................................. 1,259,602
Shareholder services fees ................................... 196,471
Custodian fees .............................................. 63,611
Shareholder communications expenses ......................... 55,717
Registration expenses ....................................... 28,314
Legal and audit fees ........................................ 23,714
Accounting fees ............................................. 22,621
Trustees' fees .............................................. 11,478
Interest expense ............................................ 1,507
Miscellaneous expenses ...................................... 23,818
------------
TOTAL EXPENSES .............................................. 5,436,976
Less: Custodian fee credits ................................. (18,708)
------------
NET EXPENSES ................................................ 5,418,268
------------
NET INVESTMENT INCOME ....................................... 4,700,059
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ............................ 10,431,375
Net realized loss on foreign currency
transactions .............................................. (7,297)
------------
Net realized gain on investments and foreign
currency transactions ..................................... 10,424,078
------------
Net change in unrealized appreciation/
depreciation on investments ............................... 11,262,650
Net change in unrealized appreciation/
depreciation on foreign currency translations ............. (9,402)
------------
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations ............................. 11,253,248
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ....................... 21,677,326
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................... $ 26,377,385
============
See accompanying notes to financial statements.
8
THE GABELLI UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
SIX MONTHS ENDED
JUNE 30, 2007 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2006
------------- -----------------
OPERATIONS:
Net investment income ............................... $ 4,700,059 $ 7,014,436
Net realized gain on investments and
foreign currency transactions ..................... 10,424,078 8,467,331
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations ..................... 11,253,248 67,951,195
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 26,377,385 83,432,962
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ......................................... (1,407,952)* (2,308,317)
Class A ........................................... (1,976,865)* (2,185,523)
Class B ........................................... (1,809)* (5,798)
Class C ........................................... (1,325,490)* (2,410,821)
------------- -------------
(4,712,116) (6,910,459)
------------- -------------
Net realized gain on investments
Class AAA ......................................... (2,602,208)* (2,935,678)
Class A ........................................... (3,651,731)* (2,779,512)
Class B ........................................... (5,760)* (7,374)
Class C ........................................... (4,164,379)* (3,066,042)
------------- -------------
(10,424,078) (8,788,606)
------------- -------------
Return of capital
Class AAA ......................................... (3,485,366)* (8,013,734)
Class A ........................................... (4,890,027)* (7,587,434)
Class B ........................................... (9,022)* (20,129)
Class C ........................................... (6,505,408)* (8,369,597)
------------- -------------
(14,889,823) (23,990,894)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................. (30,026,017) (39,689,959)
------------- -------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Class AAA ........................................... 8,454,365 17,936,265
Class A ............................................. 48,479,447 104,765,509
Class B ............................................. 1,342 (17,311)
Class C ............................................. 76,800,402 101,620,276
------------- -------------
NET INCREASE IN NET ASSETS FROM SHARES OF
BENEFICIAL INTEREST TRANSACTIONS ................ 133,735,556 224,304,739
------------- -------------
REDEMPTION FEES ..................................... (2,616) 4,084
------------- -------------
NET INCREASE IN NET ASSETS .......................... 130,084,308 268,051,826
NET ASSETS:
Beginning of period ................................. 568,807,117 300,755,291
------------- -------------
End of period (including undistributed net investment
income of $0 and $12,057, respectively) ........... $ 698,891,425 $ 568,807,117
============= =============
- ----------------
* 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.
9
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 United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, unless the Board determines such amount
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value ADR securities at the
close of the U.S. exchange; and evaluation of any other information that could
be indicative of the value of the security.
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price
10
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. SFAS
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. At this
time, management is in the process of reviewing the requirements of SFAS 157
against its current valuation policies to determine future applicability.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At June 30,
2007, there were no open repurchase agreements.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. At June 30, 2007, there were no open forward foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the 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
11
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
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 ability 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
those of 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.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its net
assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid 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.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
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.
12
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are maintained in
the custody account, the Fund receives credits which are used to offset
custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits". When cash balances are
overdrawn, the Fund is charged an overdraft fee of 2.00% above the Federal Funds
rate on outstanding balances. This amount, if any, would be shown as "interest
expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital
gains as determined in accordance with federal income tax regulations, which may
differ from income and capital gains as determined under U.S. generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities 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 include
net realized gains on foreign currency transactions. These book/tax differences
are either temporary or permanent in nature. To the extent these differences are
permanent, adjustments are made to the appropriate capital accounts in the
period when the differences arise. These reclassifications have no impact on the
NAV of the Fund.
The tax character of distributions paid during the fiscal year ended December
31, 2006 was as follows:
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ................. $13,241,480
Net long-term capital gains ............................... 2,457,585
Non-taxable return of capital ............................. 23,990,894
-----------
Total distributions paid .................................. $39,689,959
===========
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 are 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, subject to the maximum federal income tax rate of 15%, and may cause
such gains to be treated as ordinary income subject to a maximum federal income
tax rate of 35%. 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.
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.
13
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at June 30, 2007:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments ......... $598,864,879 $105,363,927 $(7,224,996) $98,138,931
Foreign currency .... 103,469 521 (2,025) (1,504)
------------ ------------ ----------- -----------
$598,968,348 $105,364,448 $(7,227,021) $98,137,427
============ ============ =========== ===========
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation established for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
required certain expanded tax disclosures. The Interpretation was implemented by
the Fund on June 29, 2007 and applied to all open tax years as of the effective
date. Management has evaluated the application of the Interpretation to the
Fund, and the adoption of the Interpretation had no impact on the amounts
reported in the financial statements.
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
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 that is not considered to be an affiliated person an
annual retainer of $3,000 plus $500 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. 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 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, 2007, other than short-term securities, aggregated
$339,628,475 and $63,330,809, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2007, the
Fund paid brokerage commissions of $341,953 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it received $466,475 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
14
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
The cost of calculating the Fund's NAV per share is a Fund expense pursuant to
the Advisory Agreement between the Fund and the Adviser. During the six months
ended June 30, 2007, the Fund paid or accrued $22,621 to the Adviser in
connection with the cost of computing the Fund's NAV.
7. LINE OF CREDIT. Effective June 20, 2007, the Fund participates in an
unsecured line of credit of up to $75,000,000 and may borrow up to 10% of its
net assets from the custodian for temporary borrowing purposes. Borrowings under
this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. This amount, if any, would be shown as "interest expense"
in the Statement of Operations. At June 30, 2007, there were no borrowings
outstanding under the line of credit.
8. SHARES OF BENEFICIAL INTEREST. The Fund currently 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, or the transfer agent
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 and automatically
convert to Class A Shares approximately eight years after the original purchase.
The applicable CDSC is equal to a declining percentage of the lesser of the NAV
per share at the date of the original purchase or at the date of redemption,
based on the length of time held. Class C Shares are subject to a 1.00% CDSC for
one year after purchase. 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.
The Fund imposes a redemption fee of 2.00% on Class AAA Shares, Class A Shares,
Class B Shares, and Class C 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. The redemption fees retained by the Fund during the six
months ended June 30, 2007 and the fiscal year ended December 31, 2006 amounted
to $(2,616) and $4,084, respectively.
The redemption fee does not apply to redemptions of shares where (i) the shares
were purchased through automatic reinvestment of dividends or other
distributions, (ii) the redemption was initiated by the Fund, (iii) the shares
were purchased through programs that collect the redemption fee at the program
level and remit them to the Fund, or (iv) the shares were purchased through
programs that the Adviser determines to have appropriate anti-short-term trading
policies in place or as to which the Adviser has received assurances that
look-through redemption fee procedures or effective anti-short-term trading
policies and procedures are in place.
15
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
================================================================================
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2007 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2006
-------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------
CLASS AAA CLASS AAA
-------------------------- -----------------------------
Shares sold ........................................ 2,975,037 $ 27,843,637 5,875,882 $ 50,756,488
Shares issued upon reinvestment of distributions ... 560,095 5,231,440 1,069,699 9,241,750
Shares redeemed .................................... (2,644,525) (24,620,712) (4,900,496) (42,061,973)
---------- ------------ ---------- ------------
Net increase ..................................... 890,607 $ 8,454,365 2,045,085 $ 17,936,265
========== ============ ========== ============
CLASS A CLASS A
-------------------------- -----------------------------
Shares sold ........................................ 7,405,297 $ 69,664,452 13,214,411 $115,924,654
Shares issued upon reinvestment of distributions ... 637,141 5,975,829 782,960 6,845,088
Shares redeemed .................................... (2,881,052) (27,160,834) (2,063,924) (18,004,233)
---------- ------------ ---------- ------------
Net increase ..................................... 5,161,386 $ 48,479,447 11,933,447 $104,765,509
========== ============ ========== ============
CLASS B CLASS B
-------------------------- -----------------------------
Shares sold ........................................ -- -- -- $ 1
Shares issued upon reinvestment of distributions ... 151 $ 1,352 440 3,709
Shares redeemed .................................... (1) (10) (2,553) (21,021)
---------- ------------ ---------- ------------
Net increase (decrease) .......................... 150 $ 1,342 (2,113) $ (17,311)
========== ============ ========== ============
CLASS C CLASS C
-------------------------- -----------------------------
Shares sold ........................................ 8,914,065 $ 80,483,777 12,536,121 $106,410,918
Shares issued upon reinvestment of distributions ... 832,657 7,485,083 860,486 7,280,950
Shares redeemed .................................... (1,236,848) (11,168,458) (1,440,491) (12,071,592)
---------- ------------ ---------- ------------
Net increase ..................................... 8,509,874 $ 76,800,402 11,956,116 $101,620,276
========== ============ ========== ============
9. 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 NAV and a magnified effect in its total
return.
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.
11. OTHER MATTERS. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. On a
separate matter, in September 2005, the Adviser was informed by the staff of the
SEC that the staff may recommend to the Commission that an administrative remedy
and a monetary penalty be sought from the Adviser in connection with the actions
of two of seven closed-end funds managed by the Adviser relating to Section
19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered
investment companies to provide written statements to shareholders when a
dividend is made from a source other than net investment income. While the two
closed-end funds sent annual statements and provided other materials containing
this information, the funds did not send written statements to shareholders with
each distribution in 2002 and 2003. The Adviser believes that all of the funds
are now in compliance. The Adviser believes that these matters would have no
effect on the Fund or any material adverse effect on the Adviser or its ability
to manage the Fund.
16
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
2007(b) $9.16 $0.08 $ 0.35 $ 0.43 $(0.08)* $(0.15)* $(0.19)* $(0.42)
2006 8.20 0.17 1.63 1.80 (0.16) (0.18) (0.50) (0.84)
2005 8.36 0.15 0.53 0.68 (0.15) (0.09) (0.60) (0.84)
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)
CLASS A ++
2007(b) $9.19 $0.08 $ 0.35 $ 0.43 $(0.08)* $(0.15)* $(0.19)* $(0.42)
2006 8.23 0.18 1.62 1.80 (0.16) (0.18) (0.50) (0.84)
2005 8.38 0.16 0.53 0.69 (0.15) (0.09) (0.60) (0.84)
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 ++
2007(b) $8.80 $0.04 $ 0.34 $ 0.38 $(0.05)* $(0.15)* $(0.22)* $(0.42)
2006 7.97 0.11 1.56 1.67 (0.12) (0.18) (0.54) (0.84)
2005 8.20 0.08 0.53 0.61 (0.09) (0.09) (0.66) (0.84)
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 ++
2007(b) $8.84 $0.04 $ 0.34 $ 0.38 $(0.05)* $(0.15)* $(0.22)* $(0.42)
2006 8.00 0.11 1.57 1.68 (0.12) (0.18) (0.54) (0.84)
2005 8.23 0.09 0.52 0.61 (0.09) (0.09) (0.66) (0.84)
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 Reimbursements Rate
- ----------- ---------- --------- ------- ---------- ---------- -------------- -------------- ----------
CLASS AAA
2007(b) $(0.00)(c) $9.17 4.7% $165,976 1.73%(d) 1.38%(d) 1.38%(d) 11%
2006 0.00(c) 9.16 23.1 157,645 2.02 1.44 1.44 24
2005 0.00(c) 8.20 8.4 124,437 1.79 1.50 1.50 18
2004 0.00(c) 8.36 15.6 81,471 1.85 1.82 1.82(e) 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
CLASS A ++
2007(b) $(0.00)(c) $9.20 4.7% $248,888 1.74%(d) 1.38%(d) 1.38%(d) 11%
2006 0.00(c) 9.19 23.0 201,124 2.02 1.44 1.44 24
2005 0.00(c) 8.23 8.5 81,869 1.88 1.50 1.50 18
2004 0.00(c) 8.38 15.4 10,165 2.30 1.82 1.82(e) 17
2003 -- 8.06 29.9 307 1.67 2.00 2.00 39
CLASS B ++
2007(b) $(0.00)(c) $8.76 4.3% $ 347 0.98%(d) 2.13%(d) 2.13%(d) 11%
2006 0.00(c) 8.80 22.1 347 1.28 2.19 2.19 24
2005 0.00(c) 7.97 7.6 331 1.01 2.25 2.25 18
2004 0.00(c) 8.20 14.5 333 1.08 2.57 2.57(e) 17
2003 -- 7.96 28.4 71 1.72 2.75 2.75 39
CLASS C ++
2007(b) $(0.00)(c) $8.80 4.3% $283,680 0.99%(d) 2.13%(d) 2.13%(d) 11%
2006 0.00(c) 8.84 22.1 209,691 1.27 2.19 2.19 24
2005 0.00(c) 8.00 7.6 94,118 1.14 2.25 2.25 18
2004 0.00(c) 8.23 14.6 10,245 1.33 2.57 2.57(e) 17
2003 -- 7.98 28.7 307 1.11 2.75 2.75 39
- ---------------
+ 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.
++ Class A, B, and C Shares commenced operations on December 31, 2002.
* Based on fiscal year to date book income. Amounts are subject to change and
recharacterization at fiscal year end.
(a) Per share data is calculated using the average shares outstanding method.
(b) For the period ended June 30, 2007, unaudited.
(c) Amount represents less than $0.005 per share.
(d) Annualized
(e) 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.
See accompanying notes to financial statements.
17
THE GABELLI UTILITIES FUND
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
At its meeting on May 15, 2007, 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. The Independent Board Members reviewed the short,
medium, and longer-term performance of the Fund against a peer group of
utilities funds and against the customized peer group selected by Lipper. The
Independent Board Members noted that the Fund's performance was within the
bottom third of its peer group in short, medium, and longer-term performance.
The Independent Board Members also noted that performance was excellent on an
absolute basis and that the Fund had suffered in comparative rankings due to its
more intensive focus on smaller-capitalization companies.
PROFITABILITY. The Independent Board Members reviewed summary data regarding the
lack of 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. The Independent Board Members noted that the Fund
needed significantly more assets before potential economies of scale that the
Fund did not share in would be likely to be realized.
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 peer group of utilities funds and the
customized Lipper group and noted that the advisory fee includes substantially
all administrative services of the Fund as well as the investment advisory
services of the Adviser. The Independent Board Members noted that the Fund's
expense ratios were above average and the Fund's size was average within these
groups. 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 the Adviser.
CONCLUSIONS. The Independent Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and
an excellent 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.
18
GABELLI FAMILY OF FUNDS
VALUE _______________________________________
GABELLI ASSET FUND
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND
Seeks long term growth of capital through investment primarily in the common
stocks of established companies which are temporarily out of favor. The fund's
objective is to identify a catalyst or sequence of events that will return the
company to a higher value.
(MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
GAMCO WESTWOOD EQUITY FUND
Seeks to invest primarily in the common stock of well seasoned companies that
have recently reported positive earnings surprises and are trading below
Westwood's proprietary growth rate estimates. The Fund's primary objective is
capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: SUSAN M. BYRNE
FOCUSED VALUE _______________________________
GABELLI VALUE FUND
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
SMALL CAP VALUE _____________________________
GABELLI SMALL CAP FUND
Seeks to invest primarily in common stock of smaller companies (market
capitalizations at the time of investment of $2 billion or less) believed to
have rapid revenue and earnings growth potential. The Fund's primary objective
is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GAMCO WESTWOOD SMALLCAP EQUITY FUND
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $2.5 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GABELLI WOODLAND SMALL CAP VALUE FUND
Seeks to invest primarily in the common stocks of smaller companies (market
capitalizations generally less than $3.0 billion) believed to be undervalued
with shareholder oriented management teams that are employing strategies to grow
the company's value. The Fund's primary objective is capital appreciation.
(MULTICLASS) PORTFOLIO MANAGER: ELIZABETH M. LILLY, CFA
GROWTH ______________________________________
GAMCO GROWTH FUND
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (MULTICLASS) PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GAMCO INTERNATIONAL GROWTH FUND
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS) PORTFOLIO MANAGER: CAESAR BRYAN
AGGRESSIVE GROWTH ___________________________
GAMCO GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing on
the globalization and interactivity of the world's marketplace. The Fund invests
in companies at the forefront of accelerated growth. The Fund's primary
objective is capital appreciation. (MULTICLASS) TEAM MANAGED
MICRO-CAP ___________________________________
GAMCO WESTWOOD MIGHTY MITES(SM) FUND
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS) TEAM MANAGED
EQUITY INCOME _______________________________
GABELLI EQUITY INCOME FUND
Seeks to invest primarily in equity securities with above average market yields.
The Fund pays monthly dividends and seeks a high level of total return with an
emphasis on income. (MULTICLASS) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GAMCO WESTWOOD BALANCED FUND
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS) CO-PORTFOLIO MANAGERS: SUSAN M. BYRNE
MARK FREEMAN, CFA
GAMCO WESTWOOD INCOME FUND
Seeks to provide a high level of current income as well as long-term capital
appreciation by investing in income producing equity and fixed income
securities. (MULTICLASS) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
SPECIALTY EQUITY ____________________________
GAMCO GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is total return through a combination of current income and capital
appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in revenues
and earnings and potential for above average capital appreciation or are
undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
GABELLI SRI FUND
Seeks to invest in common and preferred stocks of companies that meet the Fund's
guidelines for social responsibility at the time of investment, looking to avoid
companies in tobacco, alcohol, and gaming, defense/weapons contractors, and
manufacturers of abortifacients. The Fund's primary objective is capital
appreciation. (MULTICLASS) PORTFOLIO MANAGER: CHRISTOPHER C. DESMARAIS
SECTOR ______________________________________
GAMCO GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world - targeting
undervalued companies with strong earnings and cash flow dynamics. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GAMCO GOLD FUND
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of worldwide economic, financial, and political factors. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI UTILITIES FUND
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (MULTICLASS) TEAM MANAGED
MERGER AND ARBITRAGE ________________________
GABELLI ABC FUND
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss.
(NO-LOAD) PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
CONTRARIAN __________________________________
GAMCO MATHERS FUND
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
COMSTOCK CAPITAL VALUE FUND
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective.
(MULTICLASS) PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of debt instruments. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
FIXED INCOME ________________________________
GAMCO WESTWOOD INTERMEDIATE BOND FUND
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return.
(MULTICLASS) PORTFOLIO MANAGER: MARK FREEMAN, CFA
CASH MANAGEMENT-MONEY MARKET ________________
GABELLI U.S. TREASURY MONEY MARKET FUND
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
THE FUNDS MAY INVEST IN FOREIGN SECURITIES WHICH INVOLVE RISKS NOT ORDINARILY
ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY FLUCTUATION,
ECONOMIC, AND POLITICAL RISKS.
TO RECEIVE A PROSPECTUS, CALL 800-GABELLI (422-3554). INVESTORS SHOULD CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND
BEFORE INVESTING. THE PROSPECTUS CONTAINS MORE INFORMATION
ABOUT THIS AND OTHER MATTERS AND SHOULD BE READ CAREFULLY BEFORE INVESTING.
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 per share 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
GAMCO INVESTORS, INC. MUTUAL FUND MANAGEMENT CO.
Anthony J. Colavita Werner J. Roeder, MD
ATTORNEY-AT-LAW MEDICAL DIRECTOR
ANTHONY J. COLAVITA, P.C. LAWRENCE HOSPITAL
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
KEYSPAN ENERGY CORP.
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER 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.
- --------------------------------------------------------------------------------
GAB470Q207SR
[GRAPHIC OMITTED] E P
Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GABELLI
UTILITIES
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2007
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 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 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 August 31, 2007
----------------------------------------------------------------------------
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 August 31, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady, Principal Financial Officer
& Treasurer
Date August 31, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.