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: December 31, 2008
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
ANNUAL REPORT
DECEMBER 31, 2008
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission (the
"SEC") on Form N-CSR. This certification would cover the portfolio managers'
commentary and subjective opinions if they are attached to or a part of the
financial statements. Many of these comments and opinions would be difficult or
impossible to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2008 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION (UNAUDITED)
During 2008, The Gabelli Utilities Fund (the "Fund") (Class AAA) declined
in value by 20.90% comparing favorably with much larger declines in the S&P 500
Utilities Index and the Lipper Utility Fund Average of 28.98% and 33.52%,
respectively.
Below are a few factors and events from 2008 that affected the performance
of utility stocks and of the Fund:
- The Federal Reserve cut interest rates several times during 2008 in an
effort to stimulate the U.S. economy.
- The steady worsening of U.S. and worldwide economic conditions
resulted in a shift by investors away from utilities with significant
merchant power operations in favor of buying up shares of companies
whose businesses are mostly regulated.
- Iberdrola of Spain completed its all-cash takeover of Energy East, a
multi-state electric and gas distribution utility in the northeast
region of the U.S.
- Sempra Energy completed its all-cash takeover of Energy South Inc., a
gas utility in Alabama that owns significant amounts of underground
natural gas storage capacity.
- Oil and natural gas prices rose to record highs in the first half of
2008, peaking in July, and then steadily declined through the end of
the year. This caused volatility in the stock prices of utilities that
have natural gas reserves and gas production and similarly affected
the stock prices of electric companies that have large amounts of
merchant power to sell into wholesale markets.
Some of the best performers among the major holdings in the Fund during
2008 were CH Energy Group (up 15.4%) (2.3% of net assets as of December 31,
2008), South Jersey Industries (up 10.4%) (0.5%), and NSTAR (up 0.8%) (1.7%). CH
Energy Group, South Jersey Industries and NSTAR, all benefited from the fact
that most of their earnings are derived from regulated operations that are less
sensitive to falling energy prices and are more recession-resistant.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 20, 2009
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI UTILITIES FUND CLASS AAA SHARES AND THE S&P 500 UTILITIES INDEX
(PERFORMANCE GRAPH)
GABELLI S&P 500
UTILITIES FUND UTILITY
CLASS AAA SHARES INDEX
-------------- -----------
8/31/1999 10000 10000
12/31/1999 12225 9008
12/31/2000 14234 14160
12/31/2001 12047 9849
12/31/2002 10233 6896
12/31/2003 13249 8706
12/31/2004 15314 10820
12/31/2005 16594 12642
12/31/2006 20426 15296
12/31/2007 22179 18260
12/31/2008 17543 12998
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and
graph do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
COMPARATIVE RESULTS
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2008 (a)
Since
Inception
Quarter 1 Year 3 Year 5 Year (8/31/99)
------- ------ ------ ------ ---------
GABELLI UTILITIES FUND CLASS AAA..... (8.81)% (20.90)% 1.87% 5.77% 6.21%
S&P 500 Utilities Index.............. (10.92) (28.98) 0.85 8.29 2.85
Lipper Utility Fund Average.......... (13.43) (33.52) (0.19) 6.89 2.79
Class A.............................. (8.77) (20.92) 1.86 5.75 6.23
(14.02)(b) (25.47)(b) (0.13)(b) 4.51(b) 5.56(b)
Class B.............................. (8.94) (21.56) 1.09 4.95 5.67
(13.49)(c) (25.48)(c) 0.10(c) 4.62(c) 5.67
Class C.............................. (8.88) (21.45) 1.13 4.99 5.72
(9.79)(d) (22.24)(d) 1.13 4.99 5.72
Class I.............................. (8.79) (20.79) 1.92 5.81 6.22
IN THE CURRENT PROSPECTUS, THE EXPENSE RATIOS FOR CLASS AAA, A, B, C, AND
I SHARES ARE 1.41%, 1.41%, 2.16%, 2.16%, AND 1.16%, RESPECTIVELY. CLASS AAA AND
CLASS I 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 OF 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 VALUES OF UTILITY STOCKS CHANGE AS LONG-TERM INTEREST RATES CHANGE.
FUNDS INVESTING IN A SINGLE SECTOR, SUCH AS UTILITIES, MAY BE SUBJECT TO
MORE VOLATILITY THAN FUNDS THAT INVEST MORE BROADLY. THE UTILITIES INDUSTRY
CAN BE SIGNIFICANTLY AFFECTED BY GOVERNMENT REGULATION, FINANCING
DIFFICULTIES, SUPPLY OR DEMAND OF SERVICES OR FUEL, AND NATURAL RESOURCES
CONSERVATION. THE CLASS AAA SHARES NET ASSET VALUES ("NAVS") 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 AND
CLASS I SHARES ON JANUARY 11, 2008. THE ACTUAL PERFORMANCE OF THE CLASS B
SHARES AND CLASS C SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL
EXPENSES ASSOCIATED WITH THESE CLASSES OF SHARES. THE ACTUAL PERFORMANCE OF
THE CLASS I SHARES WOULD HAVE BEEN HIGHER DUE TO LOWER EXPENSES RELATED TO
THIS CLASS OF SHARES. THE S&P 500 UTILITIES INDEX IS AN UNMANAGED INDICATOR
OF ELECTRIC AND GAS UTILITY STOCK PERFORMANCE, WHILE THE LIPPER UTILITY
FUND AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF MUTUAL FUNDS CLASSIFIED IN
THIS PARTICULAR CATEGORY DIVIDENDS ARE CONSIDERED REINVESTED YOU CANNOT
INVEST DIRECTLY IN AN INDEX.
(b) 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, ONE YEAR, THREE YEAR, AND
FIVE YEAR PERIODS OF 5%, 5%, 3%, AND 2%, RESPECTIVELY, OF THE FUND'S NAV
PER SHARE 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 AND ONE YEAR PERIODS OF 1%
OF THE FUND'S NAV PER SHARE AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS
LOWER.
2
THE GABELLI UTILITIES FUND
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2008 through December 31, 2008
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. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the year ended December 31, 2008.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/08 12/31/08 Ratio Period*
------------- ------------- ---------- -----------
THE GABELLI UTILITIES FUND
ACTUAL FUND RETURN
Class AAA $1,000.00 $ 832.80 1.44% $ 6.63
Class A $1,000.00 $ 833.40 1.44% $ 6.64
Class B $1,000.00 $ 830.30 2.19% $10.08
Class C $1,000.00 $ 830.20 2.19% $10.08
Class I $1,000.00 $ 834.10 1.18% $ 5.44
HYPOTHETICAL 5% RETURN
Class AAA $1,000.00 $1,017.90 1.44% $ 7.30
Class A $1,000.00 $1,017.90 1.44% $ 7.30
Class B $1,000.00 $1,014.13 2.19% $11.09
Class C $1,000.00 $1,014.13 2.19% $11.09
Class I $1,000.00 $1,019.20 1.18% $ 5.99
* 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
366.
3
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2008:
THE GABELLI UTILITIES FUND
Energy and Utilities ................. 78.8%
Communications ....................... 13.5%
U.S. Government Obligations .......... 5.2%
Other ................................ 2.4%
Other Assets and Liabilities (Net) ... 0.1%
-----
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 SEPTEMBER
30, 2008. 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.
2008 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the year ended December 31, 2008, the Fund paid to shareholders ordinary
income distributions (comprised of net investment income) totaling $0.119 per
share for all classes, and long-term capital gains totaling $1,585,324. The
distributions of long-term capital gains have been designated as a capital gain
dividend by the Fund's Board of Trustees. For the year ended December 31, 2008,
100% of the ordinary income distribution qualifies for the dividends received
deduction available to corporations. The Fund designates 100% of the ordinary
income distribution as qualified dividend income pursuant to the Jobs and Growth
Tax Relief Reconciliation Act of 2003. The Fund designates 9.79% of the ordinary
income distribution as qualified interest income pursuant to the American Jobs
Creation Act of 2004.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income distribution paid by the Fund during 2008
which was derived from U.S. Treasury securities was 0.84%. Such income is exempt
from state and local tax in all states. However, many states, including New York
and California, allow a tax exemption for a portion of the income earned only if
a mutual fund has invested at least 50% of its assets at the end of each quarter
of the Fund's fiscal year in U.S. Government securities. The Gabelli Utilities
Fund did not meet this strict requirement in 2008. The percentage of net assets
of U.S. Government securities held as of December 31, 2008 was 5.20%. Due to the
diversity in state and local tax law, it is recommended that you consult your
personal tax adviser as to the applicability of the information provided to your
specific situation.
- ----------
All designations are based on financial information available as of the date of
this annual report and, accordingly, are subject to change. For each item, it is
the intention of the Fund to designate the maximum amount permitted under the
Internal Revenue Code and the regulations thereunder.
4
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2008
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
COMMON STOCKS -- 94.5%
ENERGY AND UTILITIES -- 78.7%
ENERGY AND UTILITIES: ALTERNATIVE ENERGY -- 0.3%
15,000 Ormat Industries Ltd. .............................. $ 131,982 $ 92,931
47,000 Ormat Technologies Inc. ............................ 1,724,885 1,497,890
------------- -------------
TOTAL ENERGY AND UTILITIES:
ALTERNATIVE ENERGY .............................. 1,856,867 1,590,821
------------- -------------
ENERGY AND UTILITIES: ELECTRIC INTEGRATED -- 45.1%
230,000 Allegheny Energy Inc. .............................. 3,080,623 7,787,800
50,000 ALLETE Inc. ........................................ 1,803,487 1,613,500
68,000 Alliant Energy Corp. ............................... 1,889,326 1,984,240
120,000 Ameren Corp. ....................................... 5,439,901 3,991,200
225,000 American Electric Power Co. Inc. ................... 8,590,671 7,488,000
205,000 Avista Corp. ....................................... 4,709,375 3,972,900
185,000 Black Hills Corp. .................................. 6,475,278 4,987,600
125,000 Central Vermont Public Service Corp. ............... 2,415,065 2,982,500
35,000 Cleco Corp. ........................................ 721,890 799,050
70,000 CMS Energy Corp. ................................... 490,736 707,700
275,000 Constellation Energy Group Inc. .................... 8,345,047 6,899,750
115,000 Dominion Resources Inc. ............................ 4,951,795 4,121,600
402,000 DPL Inc. ........................................... 10,528,880 9,181,680
6,000 DTE Energy Co. ..................................... 240,835 214,020
370,000 Duke Energy Corp. .................................. 5,723,387 5,553,700
6,000 E.ON AG ............................................ 392,495 237,198
100,000 Edison International ............................... 2,447,679 3,212,000
290,000 El Paso Electric Co.+ .............................. 5,117,124 5,246,100
140,000 Endesa SA .......................................... 5,893,217 5,565,749
3,000 Entergy Corp. ...................................... 114,480 249,390
55,000 FirstEnergy Corp. .................................. 2,143,013 2,671,900
140,000 Florida Public Utilities Co. ....................... 1,670,229 1,471,400
320,000 FPL Group Inc. ..................................... 14,734,298 16,105,600
590,000 Great Plains Energy Inc. ........................... 15,692,646 11,404,700
325,000 Hawaiian Electric Industries Inc. .................. 8,174,332 7,195,500
265,000 Integrys Energy Group Inc. ......................... 13,324,981 11,389,700
405,000 LSI Corp.+ ......................................... 3,631,337 1,332,450
62,600 Maine & Maritimes Corp. ............................ 1,823,298 2,432,010
250,000 MGE Energy Inc. .................................... 8,130,807 8,250,000
190,000 NiSource Inc. ...................................... 4,122,731 2,084,300
388,000 NorthWestern Corp. ................................. 11,329,553 9,106,360
245,000 NRG Energy Inc.+ ................................... 5,718,733 5,715,850
230,000 OGE Energy Corp. ................................... 6,159,655 5,929,400
125,000 Otter Tail Corp. ................................... 3,545,411 2,916,250
40,000 PG&E Corp. ......................................... 907,079 1,548,400
166,000 Pinnacle West Capital Corp. ........................ 6,956,880 5,333,580
870,000 PNM Resources Inc. ................................. 10,241,528 8,769,600
46,000 PPL Corp. .......................................... 1,030,117 1,411,740
202,000 Progress Energy Inc. ............................... 8,993,355 8,049,700
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
110,000 Public Service Enterprise Group Inc. ............... $ 2,965,081 $ 3,208,700
440,000 Puget Energy Inc. .................................. 11,807,526 11,998,800
176,000 SCANA Corp. ........................................ 7,150,016 6,265,600
240,000 Southern Co. ....................................... 8,350,234 8,880,000
130,000 TECO Energy Inc. ................................... 2,277,826 1,605,500
170,000 The Empire District Electric Co. ................... 3,744,432 2,992,000
139,400 Unisource Energy Corp. ............................. 3,418,500 4,092,784
105,000 Unitil Corp. ....................................... 2,766,576 2,168,250
310,000 Vectren Corp. ...................................... 8,725,769 7,753,100
700,000 Westar Energy Inc. ................................. 15,995,012 14,357,000
210,000 Wisconsin Energy Corp. ............................. 8,588,406 8,815,800
220,000 Xcel Energy Inc. ................................... 3,871,561 4,081,000
------------- -------------
287,362,213 266,132,651
------------- -------------
ENERGY AND UTILITIES:
ELECTRIC TRANSMISSION AND DISTRIBUTION -- 8.3%
265,000 CH Energy Group Inc. ............................... 12,309,569 13,618,350
232,000 Consolidated Edison Inc. ........................... 10,472,662 9,031,760
132,000 Exelon Corp. ....................................... 7,994,613 7,340,520
235,000 Northeast Utilities ................................ 4,848,346 5,654,100
280,000 NSTAR .............................................. 7,712,912 10,217,200
110,000 Pepco Holdings Inc. ................................ 2,267,878 1,953,600
16,000 Red Electrica Corporacion SA ....................... 790,378 800,667
16,666 UIL Holdings Corp. ................................. 490,122 500,480
------------- -------------
46,886,480 49,116,677
------------- -------------
ENERGY AND UTILITIES: GLOBAL UTILITIES -- 4.9%
4,000 Areva SA ........................................... 1,690,915 1,946,066
24,000 Chubu Electric Power Co. Inc. ...................... 574,288 724,104
195,000 Electric Power Development Co. Ltd. ................ 4,834,052 7,550,469
300 Electricite de France .............................. 11,619 17,306
120,000 Enel SpA ........................................... 825,681 754,379
4,000 Energias de Portugal SA, ADR ....................... 112,064 152,800
100,000 Hera SpA ........................................... 174,312 212,677
15,000 Hokkaido Electric Power Co. Inc. ................... 296,624 376,448
24,000 Hokuriku Electric Power Co. ........................ 442,615 675,124
72,000 Huaneng Power International Inc., ADR .............. 2,322,440 2,100,960
57,028 Iberdrola SA ....................................... 659,898 518,438
30,000 Iberdrola SA, ADR .................................. 1,306,186 1,080,000
165,000 Korea Electric Power Corp., ADR .................... 2,383,142 1,915,650
45,000 Kyushu Electric Power Co. Inc. ..................... 979,061 1,186,431
8,775 National Grid plc, ADR ............................. 386,383 442,787
2,000 Niko Resources Ltd. ................................ 111,680 68,838
24,000 Shikoku Electric Power Co. Inc. .................... 473,574 802,206
2,000 Snam Rete Gas SpA .................................. 10,804 11,009
24,000 The Chugoku Electric Power Co. Inc. ................ 457,538 627,468
See accompanying notes to financial statements.
5
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2008
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
ENERGY AND UTILITIES: GLOBAL UTILITIES (CONTINUED)
100,000 The Kansai Electric Power Co. Inc. ................. $ 2,021,741 $ 2,868,174
34,000 The Tokyo Electric Power Co. Inc. .................. 847,546 1,125,207
140,000 Tohoku Electric Power Co. Inc. ..................... 2,470,795 3,760,618
------------- -------------
23,392,958 28,917,159
------------- -------------
ENERGY AND UTILITIES: MERCHANT ENERGY -- 0.9%
40,000 Mirant Corp.+ ...................................... 708,818 754,800
40,000 Mirant Corp., Escrow+ (a) .......................... 0 0
15,000 Mirant Corp., Escrow+ (a) .......................... 0 0
550,000 The AES Corp.+ ..................................... 4,114,574 4,532,000
------------- -------------
4,823,392 5,286,800
------------- -------------
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 8.1%
920,000 El Paso Corp. ...................................... 9,625,855 7,203,600
20,000 Energen Corp. ...................................... 239,277 586,600
560,000 National Fuel Gas Co. .............................. 21,594,457 17,544,800
190,000 ONEOK Inc. ......................................... 5,082,868 5,532,800
710,000 Southern Union Co. ................................. 14,131,671 9,258,400
480,000 Spectra Energy Corp. ............................... 10,163,707 7,555,200
------------- -------------
60,837,835 47,681,400
------------- -------------
ENERGY AND UTILITIES: NATURAL GAS UTILITIES -- 5.1%
1,500 Atlas America Inc. ................................. 48,644 22,275
114,000 Atmos Energy Corp. ................................. 3,036,505 2,701,800
51,000 Chesapeake Utilities Corp. ......................... 1,373,626 1,605,480
120,000 Corning Natural Gas Corp.+ ......................... 1,946,424 1,800,000
14,000 Delta Natural Gas Co. Inc. ......................... 347,271 339,500
27,000 Enagas ............................................. 749,656 583,987
58,800 GDF Suez, Strips+ .................................. 0 82
27,000 Nicor Inc. ......................................... 889,090 937,980
65,000 Piedmont Natural Gas Co. Inc. ...................... 1,571,813 2,058,550
2,500 RGC Resources Inc. ................................. 73,150 63,750
70,000 South Jersey Industries Inc. ....................... 1,982,945 2,789,500
420,000 Southwest Gas Corp. ................................ 11,126,991 10,592,400
145,000 The Laclede Group Inc. ............................. 4,552,003 6,791,800
------------- -------------
27,698,118 30,287,104
------------- -------------
ENERGY AND UTILITIES: NATURAL RESOURCES -- 0.3%
14,000 Alliance Holdings GP LP ............................ 276,626 207,200
20,000 Compania de Minas Buenaventura SA, ADR ............. 232,653 398,400
33,000 Peabody Energy Corp. ............................... 1,124,729 750,750
35,000 Uranium One Inc.+ .................................. 304,749 50,749
60,000 Uranium Resources Inc.+ ............................ 273,179 46,200
------------- -------------
2,211,936 1,453,299
------------- -------------
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
ENERGY AND UTILITIES: SERVICES -- 1.9%
250,000 ABB Ltd., ADR ...................................... $ 3,319,929 $ 3,752,500
6,000 Cameron International Corp.+ ....................... 103,313 123,000
310,000 Halliburton Co. .................................... 8,371,570 5,635,800
1,000 Pike Electric Corp.+ ............................... 14,000 12,300
44,000 Tenaris SA, ADR .................................... 1,706,659 923,120
4,000 Transocean Ltd.+ ................................... 334,240 189,000
65,000 Weatherford International Ltd.+ .................... 1,155,384 703,300
------------- -------------
15,005,095 11,339,020
------------- -------------
ENERGY AND UTILITIES: WATER -- 1.3%
3,000 American States Water Co. .......................... 75,431 98,940
90,000 American Water Works Co. Inc. ...................... 1,935,000 1,879,200
47,000 Aqua America Inc. .................................. 1,033,207 967,730
2,000 California Water Service Group ..................... 70,055 92,860
3,000 Consolidated Water Co. Ltd. ........................ 54,031 37,500
12,000 Middlesex Water Co. ................................ 211,233 206,760
78,000 Pennichuck Corp. ................................... 1,694,485 1,601,340
78,000 SJW Corp. .......................................... 2,078,729 2,335,320
7,727 United Utilities Group plc, ADR .................... 217,129 143,722
1,650 York Water Co. ..................................... 20,543 20,031
------------- -------------
7,389,843 7,383,403
------------- -------------
DIVERSIFIED INDUSTRIAL -- 1.0%
16,000 Bouygues SA ........................................ 861,186 671,671
330,000 General Electric Co. ............................... 9,874,076 5,346,000
17,000 Mueller Water Products Inc., Cl. A ................. 215,678 142,800
------------- -------------
10,950,940 6,160,471
------------- -------------
ENVIRONMENTAL SERVICES -- 0.0%
4,250 Veolia Environnement ............................... 134,159 131,151
------------- -------------
EXCHANGE TRADED FUNDS -- 1.5%
95,000 Utilities HOLDRS Trust ............................. 10,765,093 9,073,450
------------- -------------
TOTAL ENERGY AND UTILITIES ......................... 499,314,929 464,553,406
------------- -------------
COMMUNICATIONS -- 13.4%
CABLE AND SATELLITE -- 2.8%
375,000 Cablevision Systems Corp., Cl. A ................... 10,024,630 6,315,000
200,000 Charter Communications Inc., Cl. A+ ................ 378,595 16,360
10,000 Cogeco Cable Inc. .................................. 207,213 279,546
40,000 Cogeco Inc. ........................................ 777,563 806,804
100,000 DISH Network Corp., Cl. A+ ......................... 2,036,558 1,109,000
11,000 EchoStar Corp., Cl. A+ ............................. 293,938 163,570
120,000 Liberty Global Inc., Cl. A+ ........................ 3,158,208 1,910,400
6,000 Mediacom Communications Corp., Cl. A+ .............. 35,001 25,800
40,000 Rogers Communications Inc., Cl. B .................. 572,504 1,203,200
See accompanying notes to financial statements.
6
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2008
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
COMMON STOCKS (CONTINUED)
COMMUNICATIONS (CONTINUED)
CABLE AND SATELLITE (CONTINUED)
12,000 Shaw Communications Inc., Cl. B .................... $ 148,195 $ 212,160
160,000 The DIRECTV Group Inc.+ ............................ 3,428,094 3,665,600
8,000 Time Warner Cable Inc., Cl. A+ ..................... 198,444 171,600
42,000 Tokyo Broadcasting System Inc. ..................... 1,041,505 631,969
42,396 Zon Multimedia Servicos de Telecomunicacoes e
Multimedia SGPS SA .............................. 416,753 218,639
4,700 Zon Multimedia Servicos de Telecomunicacoes e
Multimedia SGPS SA, ADR ......................... 67,445 24,238
------------- -------------
22,784,646 16,753,886
------------- -------------
TELECOMMUNICATIONS -- 7.0%
240,000 AT&T Inc. .......................................... 7,713,501 6,840,000
110,000 BCE Inc. ........................................... 3,361,657 2,253,900
40,000 CenturyTel Inc. .................................... 1,270,249 1,093,200
500,000 Cincinnati Bell Inc.+ .............................. 2,421,085 965,000
320,000 Deutsche Telekom AG, ADR ........................... 5,802,939 4,896,000
4,243 FairPoint Communications Inc. ...................... 39,936 13,917
200 Hutchison Telecommunications International Ltd. .... 163 54
600 Mobistar SA ........................................ 47,203 43,069
1,600 Nippon Telegraph & Telephone Corp. ................. 7,960,362 8,260,342
200,000 Nortel Networks Corp., New York+ ................... 242,570 52,000
42,000 Philippine Long Distance Telephone Co., ADR ........ 2,178,799 1,971,900
250,000 Portugal Telecom SGPS SA ........................... 3,058,329 2,109,397
45,000 Portugal Telecom SGPS SA, ADR ...................... 497,775 386,100
200 PT Indosat Tbk ..................................... 128 106
550,000 Sprint Nextel Corp.+ ............................... 6,248,886 1,006,500
600 Tele2 AB, Cl. B .................................... 8,180 5,235
30,000 Telecom Italia SpA, ADR ............................ 612,595 487,500
3,566 Telefonica SA, ADR ................................. 207,436 240,313
60,000 Telephone & Data Systems Inc. ...................... 2,288,630 1,905,000
40,000 tw telecom inc.+ ................................... 724,816 338,800
250,000 Verizon Communications Inc. ........................ 8,671,545 8,475,000
------------- -------------
53,356,784 41,343,333
------------- -------------
WIRELESS COMMUNICATIONS -- 3.6%
9,000 America Movil SAB de CV, Cl. L, ADR ................ 189,076 278,910
30,000 China Mobile Ltd., ADR ............................. 901,134 1,525,500
24,000 China Unicom Hong Kong Ltd., ADR ................... 236,276 292,800
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
25,000 Clearwire Corp., Cl. A+ ............................ $ 391,736 $ 123,250
35,000 Millicom International Cellular SA ................. 2,438,583 1,571,850
2,600 Mobile TeleSystems OJSC, ADR ....................... 86,498 69,368
180 MobileOne Ltd. ..................................... 210 185
4,800 NTT DoCoMo Inc. .................................... 7,554,348 9,340,541
165,000 Price Communications Corp., Escrow+ (a) ............ 0 0
28,000 SK Telecom Co. Ltd., ADR ........................... 593,203 509,040
200 SmarTone Telecommunications Holdings Ltd. .......... 207 148
84,000 United States Cellular Corp.+ ...................... 4,057,131 3,632,160
130,000 Vimpel-Communications, ADR ......................... 1,522,982 930,800
130,000 Vodafone Group plc, ADR ............................ 3,715,810 2,657,200
------------- -------------
21,687,194 20,931,752
------------- -------------
TOTAL COMMUNICATIONS ............................... 97,828,624 79,028,971
------------- -------------
OTHER -- 2.4%
AVIATION: PARTS AND SERVICES -- 0.9%
1,100,000 Rolls-Royce Group plc+ ............................. 9,461,009 5,306,027
62,920,000 Rolls-Royce Group plc, Cl. C+ ...................... 98,106 90,463
------------- -------------
9,559,115 5,396,490
------------- -------------
BUILDING AND CONSTRUCTION -- 0.1%
4,500 Acciona SA ......................................... 1,103,368 556,714
------------- -------------
BUSINESS SERVICES -- 0.1%
110,000 Clear Channel Outdoor Holdings Inc., Cl. A+ ........ 1,520,665 676,500
------------- -------------
ENTERTAINMENT -- 0.5%
100,000 Vivendi ............................................ 3,202,412 3,233,945
------------- -------------
EQUIPMENT AND SUPPLIES -- 0.2%
18,000 Flowserve Corp. .................................... 1,053,720 927,000
------------- -------------
HEALTH CARE -- 0.1%
12,000 Tsumura & Co. ...................................... 261,956 440,816
------------- -------------
TRANSPORTATION -- 0.5%
92,000 GATX Corp. ......................................... 3,507,111 2,849,240
------------- -------------
TOTAL OTHER ........................................ 20,208,347 14,080,705
------------- -------------
TOTAL COMMON STOCKS ................................ 617,351,900 557,663,082
------------- -------------
CONVERTIBLE PREFERRED STOCKS -- 0.1%
ENERGY AND UTILITIES -- 0.1%
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 0.1%
800 El Paso Corp.,
4.990% Cv. Pfd. (b) ............................. 758,731 511,224
------------- -------------
See accompanying notes to financial statements.
7
THE GABELLI UTILITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2008
MARKET
SHARES COST VALUE
- ----------- ------------- -------------
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
COMMUNICATIONS -- 0.0%
TELECOMMUNICATIONS -- 0.0%
11,400 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ......................... $ 477,317 $ 262,200
------------- -------------
TOTAL CONVERTIBLE PREFERRED STOCKS ................. 1,236,048 773,424
------------- -------------
WARRANTS -- 0.1%
ENERGY AND UTILITIES -- 0.0%
ENERGY AND UTILITIES: MERCHANT ENERGY -- 0.0%
3,480 Mirant Corp., Ser. A, expire 01/03/11+ ............. 33,641 12,180
38,363 Mirant Corp., Ser. B, expire 01/03/11+ ............. 190,367 159,207
------------- -------------
224,008 171,387
------------- -------------
ENERGY AND UTILITIES: NATURAL GAS UTILITIES -- 0.0%
56,700 Corning Natural Gas Corp., expire 08/17/11+ ........ 0 56,700
------------- -------------
224,008 228,087
------------- -------------
COMMUNICATIONS -- 0.1%
TELECOMMUNICATIONS -- 0.1%
4,000 Bharti Airtel Ltd., expire 09/19/13+ (b) ........... 52,062 58,765
18,000 Bharti Airtel Ltd., expire 12/15/16+ (b) ........... 399,311 264,422
------------- -------------
451,373 323,187
------------- -------------
TOTAL WARRANTS ..................................... 675,381 551,274
------------- -------------
PRINCIPAL MARKET
AMOUNT COST VALUE
- ----------- ------------- -------------
U.S. GOVERNMENT OBLIGATIONS -- 5.2%
U.S. TREASURY CASH MANAGEMENT BILLS -- 0.2%
$ 940,000 U.S. Treasury Cash Management Bills,
0.030% to 0.137%++,
04/29/09 to 06/24/09 ............................ $ 939,511 $ 939,429
------------- -------------
U.S. TREASURY BILLS -- 0.2%
1,191,000 U.S. Treasury Bills,
0.020% to 1.898%++,
01/29/09 to 06/18/09 ............................ 1,190,225 1,190,164
------------- -------------
U.S. TREASURY NOTES -- 4.8%
28,130,000 4.500%, 04/30/09 ................................ 28,432,450 28,536,591
------------- -------------
TOTAL U.S. GOVERNMENT OBLIGATIONS .................. 30,562,186 30,666,184
------------- -------------
TOTAL INVESTMENTS -- 99.9% ......................... $ 649,825,515 589,653,964
=============
OTHER ASSETS AND LIABILITIES (NET) -- 0.1% ......... 497,771
-------------
NET ASSETS -- 100.0% ............................... $ 590,151,735
=============
- ----------
(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 the valuation of comparable securities and other
factors on a regular basis. At December 31, 2008, the market value of fair
valued securities amounted to $0 or 0.00% of 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 December
31, 2008, the market value of Rule 144A securities amounted to $834,411 or
0.14% of net assets.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
See accompanying notes to financial statements.
8
THE GABELLI UTILITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
ASSETS:
Investments, at value (cost $649,825,515) ............... $589,653,964
Cash .................................................... 653
Receivable for Fund shares sold ......................... 1,305,785
Receivable for investments sold ......................... 28
Dividends and interest receivable ....................... 1,489,672
Unrealized appreciation on swap contracts ............... 2,609
Prepaid expenses ........................................ 70,591
Other asset ............................................. 20
------------
TOTAL ASSETS ............................................ 592,523,322
------------
LIABILITIES:
Payable for Fund shares redeemed ........................ 1,196,696
Distributions payable ................................... 2,565
Payable for investment advisory fees .................... 478,831
Payable for distribution fees ........................... 274,965
Payable for accounting fees ............................. 7,502
Payable for shareholder services fees ................... 211,813
Other accrued expenses .................................. 199,215
------------
TOTAL LIABILITIES ....................................... 2,371,587
------------
NET ASSETS applicable to 94,075,228
shares outstanding ................................... $590,151,735
============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ......... $654,760,192
Accumulated net investment income ....................... 55,720
Accumulated net realized loss on investments,
swap contracts, and foreign
currency transactions ................................ (4,492,980)
Net unrealized depreciation on investments .............. (60,171,551)
Net unrealized appreciation on swaps .................... 2,609
Net unrealized depreciation on foreign
currency translations ................................ (2,255)
------------
NET ASSETS .............................................. $590,151,735
============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net Asset Value, offering, and redemption price
per share ($123,864,029 / 19,260,456 shares
outstanding; unlimited number of
shares authorized) ................................... $ 6.43
============
CLASS A:
Net Asset Value and redemption price per share
($202,111,257 / 31,277,170 shares outstanding;
unlimited number of shares authorized) ............... $ 6.46
============
Maximum offering price per share (NAV / .9425,
based on maximum sales charge of 5.75%
of the offering price) ............................... $ 6.85
============
CLASS B:
Net Asset Value and offering price per share
($243,168 / 40,390 shares outstanding;
unlimited number of shares authorized) ............... $ 6.02(a)
============
CLASS C:
Net Asset Value and offering price per share
($256,517,206 / 42,345,921 shares outstanding;
unlimited number of shares authorized) ............... $ 6.06(a)
============
CLASS I:
Net Asset Value, offering, and redemption price
per share ($7,416,075 / 1,151,291 shares
outstanding; unlimited number of
shares authorized) ................................... $ 6.44
============
- ----------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
INVESTMENT INCOME:
Dividends (net of foreign taxes of $298,427) ............... $ 21,102,024
Interest ................................................... 1,383,067
-------------
TOTAL INVESTMENT INCOME .................................... 22,485,091
-------------
EXPENSES:
Investment advisory fees ................................... 6,714,038
Distribution fees - Class AAA .............................. 339,453
Distribution fees - Class A ................................ 595,031
Distribution fees - Class B ................................ 2,909
Distribution fees - Class C ................................ 2,958,990
Shareholder services fees .................................. 609,579
Shareholder communications expenses ........................ 197,479
Custodian fees ............................................. 125,575
Registration expenses ...................................... 75,472
Legal and audit fees ....................................... 60,297
Accounting fees ............................................ 45,000
Trustees' fees ............................................. 34,602
Miscellaneous expenses ..................................... 66,468
-------------
TOTAL EXPENSES ............................................. 11,824,893
Less: Custodian fee credits ................................ (2,909)
-------------
NET EXPENSES ............................................... 11,821,984
-------------
NET INVESTMENT INCOME ...................................... 10,663,107
-------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, SWAP CONTRACTS, AND
FOREIGN CURRENCY:
Net realized loss on investments ........................... (2,252,304)
Net realized loss on swap contracts ........................ (130,374)
Net realized gain on foreign currency
transactions ............................................ 38,552
-------------
Net realized loss on investments, swap contracts,
and foreign currency transactions ....................... (2,344,126)
-------------
Net change in unrealized appreciation/
(depreciation) on investments ........................... (168,730,441)
Net change in unrealized appreciation/
(depreciation) on swap contracts ........................ 11,598
Net change in unrealized appreciation/
(depreciation) on foreign currency translations ......... (3,488)
-------------
Net change in unrealized appreciation/
(depreciation) on investments, swap contracts,
and foreign currency translations ....................... (168,722,331)
-------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, SWAP CONTRACTS, AND
FOREIGN CURRENCY ........................................ (171,066,457)
-------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... $(160,403,350)
=============
See accompanying notes to financial statements.
9
THE GABELLI UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2008 2007
------------- ------------
OPERATIONS:
Net investment income .................................................... $ 10,663,107 $ 10,074,574
Net realized gain/(loss) on investments, swap contracts, and
foreign currency transactions ......................................... (2,344,126) 19,828,787
Net change in unrealized appreciation/(depreciation) on investments,
swap contracts, and foreign currency translations ..................... (168,722,331) 21,175,110
------------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......... (160,403,350) 51,078,471
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class AAA ............................................................. (2,088,307) (2,345,569)
Class A ............................................................... (3,636,534) (3,479,842)
Class B ............................................................... (4,728) (5,267)
Class C ............................................................... (4,803,967) (4,177,106)
Class I ............................................................... (33,465) --
------------- ------------
(10,567,001) (10,007,784)
------------- ------------
Net realized gain
Class AAA ............................................................. (313,299) (4,682,214)
Class A ............................................................... (545,574) (6,946,445)
Class B ............................................................... (710) (10,514)
Class C ............................................................... (720,719) (8,338,320)
Class I ............................................................... (5,022) --
------------- ------------
(1,585,324) (19,977,493)
------------- ------------
Return of capital
Class AAA ............................................................. (12,360,158) (7,778,858)
Class A ............................................................... (21,523,718) (11,540,568)
Class B ............................................................... (27,983) (17,467)
Class C ............................................................... (28,433,460) (13,852,978)
Class I ............................................................... (198,070) --
------------- ------------
(62,543,389) (33,189,871)
------------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................................... (74,695,714) (63,175,148)
------------- ------------
SHARES OF BENEFICIAL INTEREST TRANSACTIONS:
Class AAA ............................................................. 7,935,944 6,022,104
Class A ............................................................... 22,719,949 63,460,301
Class B ............................................................... 3,039 2,760
Class C ............................................................... 47,278,222 113,557,340
Class I ............................................................... 7,560,758 --
------------- ------------
NET INCREASE IN NET ASSETS FROM SHARES OF BENEFICIAL INTEREST
TRANSACTIONS .......................................................... 85,497,912 183,042,505
------------- ------------
REDEMPTION FEES .......................................................... 2,487 (2,545)
------------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS .................................... (149,598,665) 170,943,283
NET ASSETS:
Beginning of period ...................................................... 739,750,400 568,807,117
------------- ------------
End of period (including undistributed net investment income of
$55,720 and $55,198, respectively) .................................... $ 590,151,735 $739,750,400
============= ============
See accompanying notes to financial statements.
10
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 Redemption
December 31 of Period Income (a) Investments Operations Income Investments Capital Distributions Fees(a)
- ----------- --------- ---------- -------------- ---------- ---------- ----------- --------- ------------- ----------
CLASS AAA
2008 $9.08 $0.15 $(1.96) $(1.81) $(0.12) $(0.02) $(0.70) $(0.84) $ 0.00(b)
2007 9.16 0.16 0.60 0.76 (0.13) (0.27) (0.44) (0.84) (0.00)(b)
2006 8.20 0.17 1.63 1.80 (0.16) (0.18) (0.50) (0.84) 0.00(b)
2005 8.36 0.15 0.53 0.68 (0.15) (0.09) (0.60) (0.84) 0.00(b)
2004 8.03 0.15 1.02 1.17 (0.13) (0.02) (0.69) (0.84) 0.00(b)
CLASS A
2008 $9.12 $0.15 $(1.97) $(1.82) $(0.12) $(0.02) $(0.70) $(0.84) $ 0.00(b)
2007 9.19 0.16 0.61 0.77 (0.13) (0.27) (0.44) (0.84) (0.00)(b)
2006 8.23 0.18 1.62 1.80 (0.16) (0.18) (0.50) (0.84) 0.00(b)
2005 8.38 0.16 0.53 0.69 (0.15) (0.09) (0.60) (0.84) 0.00(b)
2004 8.06 0.19 0.97 1.16 (0.11) (0.01) (0.72) (0.84) 0.00(b)
CLASS B
2008 $8.63 $0.09 $(1.86) $(1.77) $(0.12) $(0.02) $(0.70) $(0.84) $ 0.00(b)
2007 8.80 0.09 0.58 0.67 (0.13) (0.27) (0.44) (0.84) (0.00)(b)
2006 7.97 0.11 1.56 1.67 (0.12) (0.18) (0.54) (0.84) 0.00(b)
2005 8.20 0.08 0.53 0.61 (0.09) (0.09) (0.66) (0.84) 0.00(b)
2004 7.96 0.08 1.00 1.08 (0.08) (0.01) (0.75) (0.84) 0.00(b)
CLASS C
2008 $8.67 $0.09 $(1.86) $(1.77) $(0.12) $(0.02) $(0.70) $(0.84) $ 0.00(b)
2007 8.84 0.09 0.58 0.67 (0.13) (0.27) (0.44) (0.84) (0.00)(b)
2006 8.00 0.11 1.57 1.68 (0.12) (0.18) (0.54) (0.84) 0.00(b)
2005 8.23 0.09 0.52 0.61 (0.09) (0.09) (0.66) (0.84) 0.00(b)
2004 7.98 0.11 0.98 1.09 (0.06) (0.01) (0.77) (0.84) 0.00(b)
CLASS I
2008(e) $8.94 $0.16 $(1.82) $(1.66) $(0.12) $(0.02) $(0.70) $(0.84) $ 0.00(b)
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA
-----------------------------------------------------
Net Asset Net Assets Operating Operating
Period Value, End of Net Expenses Expenses Portfolio
Ended End of Total Period Investment Net of Before Turnover
December 31 Period Return+ (in 000's) Income Reimbursements Reimbursements Rate++
- ----------- --------- ------- ---------- ---------- -------------- -------------- ---------
CLASS AAA
2008 $6.43 (20.9)% $123,864 1.92% 1.43%(c) 1.43%(c) 19%
2007 9.08 8.6 161,930 1.78 1.42(c) 1.41 19
2006 9.16 23.1 157,645 2.02 1.44 1.44 24
2005 8.20 8.4 124,437 1.79 1.50 1.50 18
2004 8.36 15.6 81,471 1.85 1.82 1.82(d) 17
CLASS A
2008 $6.46 (20.9)% $202,112 1.92% 1.43%(c) 1.43%(c) 19%
2007 9.12 8.7 261,468 1.78 1.42(c) 1.41 19
2006 9.19 23.0 201,124 2.02 1.44 1.44 24
2005 8.23 8.5 81,869 1.88 1.50 1.50 18
2004 8.38 15.4 10,165 2.30 1.82 1.82(d) 17
CLASS B
2008 $6.02 (21.6)% $ 243 1.16% 2.18%(c) 2.18%(c) 19%
2007 8.63 7.9 343 1.02 2.17(c) 2.16 19
2006 8.80 22.1 347 1.28 2.19 2.19 24
2005 7.97 7.6 331 1.01 2.25 2.25 18
2004 8.20 14.5 333 1.08 2.57 2.57(d) 17
CLASS C
2008 $6.06 (21.5)% $256,517 1.17% 2.18%(c) 2.18%(c) 19%
2007 8.67 7.8 316,009 1.04 2.17(c) 2.16 19
2006 8.84 22.1 209,691 1.27 2.19 2.19 24
2005 8.00 7.6 94,118 1.14 2.25 2.25 18
2004 8.23 14.6 10,245 1.33 2.57 2.57(d) 17
CLASS I
2008(e) $6.44 (19.6)% $ 7,416 2.34%(f) 1.18%(c)(f) 1.18%(c)(f) 19%
- ----------
+ 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 a year is not
annualized.
++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate to include cash proceeds due
to mergers. Had this policy been adopted retroactively, the portfolio
turnover rate for the years ended December 31, 2007, 2006, 2005, and 2004
would have been 47%, 37%, 33%, and 36%, respectively.
(a) Per share data is calculated using the average shares outstanding method.
(b) Amount represents less than $0.005 per share.
(c) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits, the expense ratio for the year ended December 31, 2007 would
have been 1.41% (Class AAA and Class A) and 2.16% (Class B and Class C).
For the year ended December 31, 2008, the effect of custodian fee credits
was minimal.
(d) 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 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.
(e) From the commencement of offering Class I Shares on January 11, 2008
through December 31, 2008.
(f) Annualized.
See accompanying notes to financial statements.
11
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
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 with the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities with 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.
Statement of Financial Accounting Standard No. 157, "Fair Value Measurements"
("SFAS 157") clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value, and requires additional
disclosures about the use of fair value measurements. The three levels of the
fair value hierarchy under SFAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities;
12
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit
risk, etc.); and
- Level 3 - significant unobservable inputs (including the Fund's
determinations as to the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
summary of the Fund's investments and other financial instruments, by inputs
used to value the Fund's investments as of December 31, 2008 is, as follows:
INVESTMENTS IN OTHER FINANCIAL
SECURITIES INSTRUMENTS (UNREALIZED
(MARKET VALUE) APPRECIATION)*
VALUATION INPUTS ASSETS ASSETS
- ---------------- -------------- -----------------------
Level 1 - Quoted Prices $558,838,552 --
Level 2 - Other Significant Observable Inputs 30,815,412 $2,609
Level 3 - Significant Unobservable Inputs 0 --
------------ ------
TOTAL $589,653,964 $2,609
============ ======
- ----------
* Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards, and swaps, which are
valued at the unrealized appreciation/depreciation on the investment.
The following is a reconciliation of Level 3 investments for which significant
unobservable inputs were used to determine fair value:
INVESTMENTS IN
SECURITIES
(MARKET VALUE
--------------
BALANCE AS OF 12/31/07 $ 0
Accrued discounts/(premiums) --
Realized gain/(loss) --
Change in unrealized appreciation/(depreciation)+ 0
Net purchases/(sales) --
Transfers in and/or out of Level 3 --
---
BALANCE AS OF 12/31/08 $ 0
===
Net change in unrealized appreciation/(depreciation) during
the period on Level 3 investments held at 12/31/08+ $ 0
---
- ----------
+ Net change in unrealized appreciation/(depreciation) is included in the
related amounts on investments in the Statement of Operations.
In March 2008, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161") that is
effective for fiscal years beginning after November 15, 2008. SFAS 161 is
intended to improve financial reporting for derivative instruments by
requiring enhanced disclosure that enables investors to understand how and why
an entity uses derivatives, how derivatives are accounted for, and how
derivative instruments affect an entity's results of operations and financial
position. Management is currently evaluating the implications of SFAS 161 on
the Fund's financial statement disclosures.
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
13
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. It is the policy of the
Fund to always receive and maintain securities as collateral whose market value,
including accrued interest, are 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 December
31, 2008, there were no open repurchase agreements.
SWAP AGREEMENTS. The Fund may enter into equity and contract for difference swap
transactions. The use of swaps is a highly specialized activity that involves
investment techniques and risks different from those associated with ordinary
portfolio security transactions. In a swap, a set of future cash flows are
exchanged between two counterparties. One of these cash flow streams will
typically be based on a reference interest rate combined with the performance of
a notional value of shares of a stock. The other will be based on the
performance of the shares of a stock. There is no assurance that the swap
contract counterparties will be able to meet their obligations pursuant to the
swap contracts, or that, in the event of default, the Fund will succeed in
pursuing contractual remedies. The Fund thus assumes the risk that it may be
delayed in or prevented from obtaining payments owed to it pursuant to the swap
contracts. The creditworthiness of the swap contract counterparties is closely
monitored in order to minimize the risk. Depending on the general state of
short-term interest rates and the returns of the Fund's portfolio securities at
that point in time, such a default could negatively affect the Fund's ability to
make dividend payments. In addition, at the time a swap transaction reaches its
scheduled termination date, there is a risk that the Fund will not be able to
obtain a replacement transaction or that the terms of the replacement will not
be as favorable as on the expiring transaction. If this occurs, it could have a
negative impact on the Fund's ability to make dividend payments.
The use of derivative instruments involves, to varying degrees, elements of
market and counterparty risk in excess of the amount recognized below.
Unrealized gains related to swaps are reported as an asset and unrealized losses
are reported as a liability in the Statement of Assets and Liabilities. The
change in value of swaps, including the accrual of periodic amounts of interest
to be paid or received on swaps, is reported as unrealized gains or losses in
the Statement of Operations. A realized gain or loss is recorded upon payment or
receipt of a periodic payment or termination of swap agreements.
Effective March 16, 2008, Bear, Stearns International Limited entered into a
Guaranty Agreement with JPMorgan Chase & Co., whereby JPMorgan Chase & Co.
unconditionally guarantees the due and punctual payment of certain liabilities
of Bear, Stearns International Limited, including the current liabilities of
Bear, Stearns International Limited to the Fund. As of December 31, 2008, the
Fund held a contract for difference swap with Bear, Stearns International
Limited which is covered by the JPMorgan Chase & Co. Guaranty Agreement as of
the date of the report. Details of the swap at December 31, 2008 are as follows:
NOTIONAL EQUITY SECURITY INTEREST RATE/ TERMINATION NET UNREALIZED
AMOUNT RECEIVED EQUITY SECURITY PAID DATE APPRECIATION
--------- ----------------------- -------------------------------- ----------- --------------
Market Value Overnight LIBOR plus 40 bps plus
Appreciation on: Market Value Depreciation on:
$73,364 (22,000 Shares) International Power plc International Power plc 09/15/09 $2,609
14
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 December 31, 2008, 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 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 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.
15
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
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 included in
"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. For the year ended December 31, 2008, reclassifications were
made to decrease accumulated net investment income by $95,584 and increase
accumulated net realized loss on investments, swap contracts, and foreign
currency transactions by $93,095 with an offsetting adjustment to paid-in
capital.
The tax character of distributions paid during the years ended December 31, 2008
and December 31, 2007, was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) .... $10,567,001 $19,674,262
Net long-term capital gains ................... 1,585,324 10,311,015
Return of capital ............................. 62,543,389 33,189,871
----------- -----------
Total distributions paid ...................... $74,695,714 $63,175,148
=========== ===========
16
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
At December 31, 2008, the difference between book basis and tax basis unrealized
depreciation was primarily due to deferral of losses from wash sales for tax
purposes and basis adjustments on investments in partnerships.
As of December 31, 2008, the components of accumulated earnings/losses on a tax
basis were as follows:
Net unrealized depreciation on investments
and foreign currency translations ..... $(64,608,993)
Other temporary differences .............. 536
------------
Total .................................... $(64,608,457)
============
The following summarizes the tax cost of investments and the related unrealized
appreciation/depreciation at December 31, 2008:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ ------------ --------------
Investments ....... $654,260,702 $ 34,107,836 $(98,714,574) $ (64,606,738)
Swap contracts .... -- 2,609 -- 2,609
------------ ------------ ------------ -------------
$654,260,702 $ 34,110,445 $(98,714,574) $ (64,604,129)
============ ============ ============ =============
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48") provides guidance for how uncertain tax positions should be recognized,
measured, presented, and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the "more-likely-than-not" threshold are recorded
as a tax benefit or expense in the current year. In accordance with FIN 48,
management has analyzed the Fund's tax positions taken on the federal and state
income tax returns for all open tax years (the current and prior three tax
years) and has concluded that no provision for income tax is required in the
Fund's financial statements. Management's determination regarding FIN 48 may be
subject to review and adjustment at a later date based on factors including, but
not limited to, an on-going analysis of tax laws, regulations, and
interpretations thereof.
17
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 who 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 and the Chairman of
the Audit Committee and the Lead Trustee each receives an annual fee of $1,000.
Trustees who are directors or employees of the Adviser or an affiliated company
receive no compensation or expense reimbursement from the Fund.
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of shares, except for Class I Shares, pursuant to Rule
12b-1 under the 1940 Act. 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
during 2008, other than short-term securities and U.S. Government obligations,
aggregated $159,557,484 and $86,473,379, respectively.
Purchases and proceeds from the sales of U.S. Government obligations during
2008, other than short-term obligations aggregated $47,186,700 and $33,056,597,
respectively.
6. TRANSACTIONS WITH AFFILIATES. During 2008, the Fund paid brokerage
commissions on security trades of $263,285 to Gabelli & Company. Additionally,
Gabelli & Company informed the Fund that it retained $494,050 from investors
representing commissions (sales charges and underwriting fees) on sales and
redemptions of Fund shares.
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 2008, the Fund
paid or accrued $45,000 to the Adviser in connection with the cost of computing
the Fund's NAV.
7. LINE OF CREDIT. The Fund participates in an unsecured line of credit of up to
$75,000,000 from which it may borrow up to 10% of its net assets from the
custodian for temporary borrowing purposes. Borrowings under this arrangement
bear interest at 0.75% above the federal funds rate on outstanding balances.
This amount, if any, would be included in "interest expense" in the Statement of
Operations. During 2008, there were no borrowings under the line of credit.
8. SHARES OF BENEFICIAL INTEREST. The Fund currently offers five classes of
shares - Class AAA Shares, Class A Shares, Class B Shares, Class C Shares, and
Class I Shares. Class AAA Shares are offered without a sales charge only to
investors who acquire them directly from Gabelli & Company, or through selected
broker/dealers, or the transfer agent. Class I Shares are offered to
foundations, endowments, institutions, and employee benefit plans without a
sales charge. Class A Shares are subject to a maximum front-end sales charge of
5.75%. Class
18
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. Class I Shares were
first issued on January 11, 2008.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are
redeemed or exchanged on or before the seventh day after the date of a
purchase.The redemption fee is deducted from the proceeds otherwise payable to
the redeeming shareholders and is retained by the Fund. The redemption fees
during the years ended December 31, 2008 and December 31, 2007 amounted to
$2,487 and $(2,545), respectively.
The redemption fee does not apply to redemptions of shares where (i) the shares
were purchased through automatic reinvestment of 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.
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS AAA CLASS AAA
Shares sold .......................................... 7,485,201 $ 54,692,572 5,227,303 $ 48,327,421
Shares issued upon reinvestment of distributions ..... 1,447,640 10,884,722 1,128,114 10,369,691
Shares redeemed ...................................... (7,498,231) (57,641,350) (5,745,845) (52,675,008)
---------- ------------ ---------- ------------
Net increase ...................................... 1,434,610 $ 7,935,944 609,572 $ 6,022,104
========== ============ ========== ============
CLASS A CLASS A
Shares sold .......................................... 9,529,572 $ 74,506,509 12,159,549 $113,155,380
Shares issued upon reinvestment of distributions ..... 1,661,474 12,625,283 1,320,585 12,182,769
Shares redeemed ...................................... (8,573,955) (64,411,843) (6,701,549) (61,877,848)
---------- ------------ ---------- ------------
Net increase ...................................... 2,617,091 $ 22,719,949 6,778,585 $ 63,460,301
========== ============ ========== ============
CLASS B CLASS B
Shares sold .......................................... 650 $ 3,976 -- --
Shares issued upon reinvestment of distributions ..... 456 3,205 315 $ 2,770
Shares redeemed ...................................... (470) (4,142) (1) (10)
---------- ------------ ---------- ------------
Net increase ...................................... 636 $ 3,039 314 $ 2,760
========== ============ ========== ============
CLASS C CLASS C
Shares sold .......................................... 10,624,623 $ 80,311,588 14,155,988 $126,262,431
Shares issued upon reinvestment of distributions ..... 2,948,363 21,067,976 1,877,177 16,533,227
Shares redeemed ...................................... (7,663,671) (54,101,342) (3,313,238) (29,238,318)
---------- ------------ ---------- ------------
Net increase ...................................... 5,909,315 $ 47,278,222 12,719,927 $113,557,340
========== ============ ========== ============
CLASS I*
Shares sold .......................................... 1,200,472 $ 7,881,142
Shares issued upon reinvestment of distributions ..... 12,707 95,199
Shares redeemed ...................................... (61,888) (415,583)
---------- ------------
Net increase ...................................... 1,151,291 $ 7,560,758
========== ============
- ----------
* From the commencement of offering Class I Shares on January 11, 2008.
19
THE GABELLI UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. On April 24, 2008, the Adviser entered into an administrative
settlement with the SEC to resolve the SEC's inquiry regarding prior frequent
trading activity in shares of the GAMCO Global Growth Fund (the "Global Growth
Fund") by one investor who was banned from the Global Growth Fund in August
2002. In the settlement, the SEC found that the Adviser had violated Section
206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule
17d-1 thereunder and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement is not expected to impact the Fund and will not
have a material adverse impact on the Adviser or its ability to fulfill its
obligations under the Advisory Agreement. On the same day, the SEC filed a civil
action against the Executive Vice President and Chief Operating Officer of the
Adviser, alleging violations of certain federal securities laws arising from the
same matter. The officer is also an officer of the Global Growth Fund and other
funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies
the allegations and is continuing in his positions with the Adviser and the
funds. The Adviser currently expects that any resolution of the action against
the officer will not have a material adverse impact on the Adviser or its
ability to fulfill its obligations under the Advisory Agreement.
In a separate matter, on January 12, 2009, the SEC issued an administrative
action approving a final settlement of a previously disclosed matter with the
Adviser involving compliance with Section 19(a) of the Investment Company Act of
1940 and Rule 19a-1 thereunder by two closed-end funds. These provisions require
registered investment companies when making a distribution in the nature of a
dividend from sources other than net investment income to contemporaneously
provide written statements to shareholders, which adequately disclose the source
or sources of such distribution. While the two funds sent annual statements and
provided other materials containing this information, the shareholders did not
receive the notices required by Rule 19a-1 with any of the distributions that
were made for 2002 and 2003. The Adviser believes that the funds have been in
compliance with Section 19(a) and Rule 19a-1 since the beginning of 2004. As
part of the settlement, in which the Adviser neither admits nor denies the
findings by the SEC, the Adviser agreed to pay a civil monetary penalty of
$450,000 and to cease and desist from causing violations of Section 19(a) and
Rule 19a-1. In connection with the settlement, the SEC noted the remedial
actions previously undertaken by the Adviser.
20
THE GABELLI UTILITIES FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
The Gabelli Utilities Fund
We have audited the accompanying statement of assets and liabilities of The
Gabelli Utilities Fund (the "Fund"), including the schedule of investments, as
of December 31, 2008, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2008, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Gabelli Utilities Fund at December 31, 2008, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the periods then ended, in conformity with U.S. generally accepted accounting
principles.
(ERNST & YOUNG LLP)
Philadelphia, Pennsylvania
February 24, 2009
21
THE GABELLI UTILITIES FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Trustees and is available
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Utilities Fund at One Corporate Center, Rye, NY
10580-1422.
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS(1) TIME OVERSEEN OTHER DIRECTORSHIPS
AND AGE SERVED(2) BY TRUSTEE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS HELD BY TRUSTEE(4)
------- ---------- ---------- ---------------------------------------------------------------- --------------------
INTERESTED TRUSTEES(3):
MARIO J. GABELLI Since 1999 26 Chairman and Chief Executive Officer of GAMCO Investors, Inc. Director of Morgan
Trustee and Chief Investment Officer - Value Portfolios of Gabelli Group Holdings, Inc.
Age: 66 Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or (holding company);
Chief Investment Officer of other registered investment Chairman of the
companies in the Gabelli/GAMCO Funds complex; Chairman and Board of LICT Corp.
Chief Executive Officer of GGCP, Inc. (multimedia and
communication
services company)
INDEPENDENT TRUSTEES(5):
ANTHONY J. COLAVITA Since 1999 36 Partner in the law firm of Anthony J. Colavita, P.C. --
Trustee
Age: 73
VINCENT D. ENRIGHT Since 1999 16 Former Senior Vice President and Chief Financial Officer of Trustee of Echo
Trustee KeySpan Corporation (public utility) Therapeutics, Inc.
Age: 65 (therapeutics and
(diagnostics)
MARY E. HAUCK Since 2000 3 Retired Senior Manager of the Gabelli O'Connor Fixed Income --
Trustee Mutual Funds Management Company
Age: 66
WERNER J. ROEDER, MD Since 1999 22 Medical Director of Lawrence Hospital and practicing private --
Trustee physician
Age: 68
OFFICERS:
BRUCE N. ALPERT Since 2003 -- Executive Vice President and Chief Operating Officer of Gabelli --
President Funds, LLC since 1988 and an officer of all of the registered
Age: 57 investment companies in the Gabelli/GAMCO Funds complex.
Director and President of Teton Advisors, Inc. (formerly Gabelli
Advisers, Inc.) since 1998
AGNES MULLADY Since 2006 -- Vice President of Gabelli Funds, LLC since 2007; Officer of all --
Treasurer and Secretary of the registered investment companies in the Gabelli/GAMCO
Age: 50 Funds complex; Senior Vice President of U.S. Trust Company, N.A.
and Treasurer and Chief Financial Officer of Excelsior Funds
from 2004 through 2005; Chief Financial Officer of AMIC
Distribution Partners from 2002 through 2004
PETER D. GOLDSTEIN Since 2004 -- Director of Regulatory Affairs at GAMCO Investors, Inc. since --
Chief Compliance Officer 2004; Chief Compliance Officer of all of the registered
Age: 55 investment companies in the Gabelli/GAMCO Funds complex; Vice
President of Goldman Sachs Asset Management from 2000 through
2004
- ----------
(1) Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
(2) Each Trustee will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Trustee and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Trustee resigns or retires, or a Trustee is
removed by the Board of Trustees or shareholders, in accordance with the
Fund's By-Laws and Agreement and Declaration of Trust. Each officer will
hold office for an indefinite term until the date he or she resigns or
retires or until his or her successor is elected and qualified.
(3) "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" because of his affiliation with Gabelli
Funds, LLC which acts as the Fund's investment adviser.
(4) This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
(5) Trustees who are not interested persons are considered "Independent"
Trustees.
22
GABELLI/GAMCO FUNDS AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli/GAMCO Funds are investment companies registered with the Securities
and Exchange Commission under the Investment Company Act of 1940. We are managed
by Gabelli Funds, LLC or Teton Advisors, Inc., which are affiliated with GAMCO
Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has
subsidiaries that provide investment advisory or brokerage services for a
variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
SHAREHOLDER?
If you apply to open an account directly with us, you will be giving us some
non-public information about yourself. The non-public information we collect
about you is:
- - INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
- - INFORMATION ABOUT YOUR TRANSACTIONS WITH US, ANY TRANSACTIONS WITH OUR
AFFILIATES, AND TRANSACTIONS WITH THE ENTITIES WE HIRE TO PROVIDE SERVICES
TO YOU. This would include information about the shares that you buy or
redeem. If we hire someone else to provide services--like a transfer
agent--we will also have information about the transactions that you
conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers or
former customers to anyone other than our affiliates, our service providers who
need to know such information, and as otherwise permitted by law. If you want to
find out what the law permits, you can read the privacy rules adopted by the
Securities and Exchange Commission. They are in volume 17 of the Code of Federal
Regulations, Part 248. The Commission often posts information about its
regulations on its website, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the people
who need to know that information in order to provide services to you or the
Fund and to ensure that we are complying with the laws governing the securities
business. We maintain physical, electronic, and procedural safeguards to keep
your personal information confidential.
(CASH FLOW CHART)
THE GABELLI UTILITIES FUND
ANNUAL REPORT
DECEMBER 31, 2008
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
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GAMCO INVESTORS, INC.
Anthony J. Colavita
ATTORNEY-AT-LAW
ANTHONY J. COLAVITA, P.C.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
KEYSPAN CORP.
Mary E. Hauck
FORMER SENIOR PORTFOLIO MANAGER
GABELLI-O'CONNOR FIXED INCOME
MUTUAL FUND MANAGEMENT CO.
Werner J. Roeder, MD
MEDICAL DIRECTOR
LAWRENCE HOSPITAL
OFFICERS
Bruce N. Alpert
PRESIDENT
Agnes Mullady
SECRETARY AND TREASURER
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
This report is submitted for the general information of the shareholders of The
Gabelli Utilities Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
GAB470Q408SR
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Trustees has determined that Vincent D. Enright is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$36,500 for 2007 and $36,500 for 2008.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2007 and $0 for 2008.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $4,100 for 2007 and $4,300
for 2008. Tax fees represent tax compliance services provided in
connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $69,100 for 2007 and $4,300 for 2008.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's 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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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 3/6/09
----------------------------------------------------------------------------
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 3/6/09
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date 3/6/09
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.