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 811-09243
------------
The Gabelli Utility Trust
---------------------------------------------------
(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, 2004
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[LOGO OMITTED]
THE GABELLI UTILITY TRUST
THE GABELLI UTILITY TRUST
Annual Report
December 31, 2004
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 on
Form N-CSR. This certification would cover the portfolio manager's 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, 2004.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2004 (A)
----------------------------------------------------
Since
Inception
QUARTER 1 YEAR 3 YEAR 5 YEAR (7/9/99)
------- ------ ------ ------ --------
GABELLI UTILITY TRUST NAV RETURN (B) .................... 8.71% 13.43% 9.16% 9.17% 9.02%
GABELLI UTILITY TRUST INVESTMENT RETURN (C) ............. (1.96) 5.11 7.33 13.23 12.73
S&P 500 Utility Index ................................... 12.18 24.28 3.18 3.73 1.32
Lipper Utility Fund Average ............................. 11.91 23.40 4.87 0.47 1.48
(a)RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
WHEN SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE DATA
PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST
RECENT MONTH END. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS AND CHARGES OF THE FUND BEFORE INVESTING. THE S&P 500
UTILITY INDEX IS AN UNMANAGED INDICATOR OF ELECTRIC AND GAS UTILITY STOCK
PERFORMANCE, WHILE THE LIPPER AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF
OPEN-END MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR CATEGORY. DIVIDENDS ARE
CONSIDERED REINVESTED. PERFORMANCE FOR PERIODS LESS THAN ONE YEAR IS NOT
ANNUALIZED.
(b)TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN NET ASSET
VALUE ("NAV"), REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE ON THE
EX-DIVIDEND DATE AND ADJUSTMENTS FOR RIGHTS OFFERINGS, AND ARE NET OF
EXPENSES. SINCE INCEPTION RETURN BASED ON INITIAL NET ASSET VALUE OF $7.50.
(c)TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF DISTRIBUTIONS AND
ADJUSTMENTS FOR RIGHTS OFFERINGS. SINCE INCEPTION RETURN BASED ON INITIAL
NET ASSET VALUE OF $7.50.
--------------------------------------------------------------------------------
Sincerely yours,
/s/ BRUCE N. ALPERT
Bruce N. Alpert
President
February 24, 2005
THE GABELLI UTILITY TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
Under SEC rules, all funds are required to include in their annual and
semi-annual shareholder reports a presentation of portfolio holdings in a table,
chart or graph by reasonably identifiable categories. The following table which
presents portfolio holdings as a percent of total investments is provided in
compliance with such requirement.
Energy and Utilities: Integrated ..................... 29.5%
U.S. Government Obligations .......................... 22.8%
Energy and Utilities: Electric ....................... 17.6%
Energy and Utilities: Natural Gas .................... 10.5%
Repurchase Agreements ................................ 9.6%
Telecommunications ................................... 3.8%
Energy and Utilities: Water .......................... 2.4%
Cable and Satellite .................................. 1.8%
Diversified Industrial ............................... 0.8%
Wireless Communications .............................. 0.5%
Environmental Services ............................... 0.2%
Equipment and Supplies ............................... 0.2%
Metals and Mining .................................... 0.2%
Communications Equipment ............................. 0.1%
Agriculture .......................................... 0.0%
Energy and Utilities: Oil ............................ 0.0%
------
100.0%
======
THE UTILITY TRUST (THE "TRUST") FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS
WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q,
THE FIRST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2004.
SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE
TRUST AT 800-GABELLI (800-422-3554). THE TRUST'S FORM N-Q IS AVAILABLE ON THE
SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE
COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE
OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING
1-800-SEC-0330.
PROXY VOTING: The Trust 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 Trust's proxy voting policies and procedures are available
(i) without charge, upon request, by calling 800-GABELLI (800-422-3554); (ii) by
writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and
(iii) by visiting the Securities and Exchange Commission's website at
www.sec.gov.
2
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 66.7%
AGRICULTURE -- 0.0%
800 Cadiz Inc.+ ............... $ 3,000 $ 11,400
------------ ------------
CABLE AND SATELLITE -- 1.8%
100,000 DIRECTV Group Inc.+ ....... 1,648,749 1,674,000
55,000 EchoStar Communications
Corp., Cl. A ............ 1,759,753 1,828,200
25,000 Liberty Media International
Inc., Cl. A+ ............ 1,003,352 1,155,750
------------ ------------
4,411,854 4,657,950
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.1%
70,000 Furukawa Electric Co. Ltd.+ 458,298 388,016
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.8%
3,250 Brascan Corp., Cl. A ...... 78,410 117,032
19,000 Catalytica Energy
Systems Inc.+ ........... 167,153 42,940
50,000 General Electric Co. ...... 1,627,280 1,825,000
------------ ------------
1,872,843 1,984,972
------------ ------------
ENERGY AND UTILITIES: ELECTRIC -- 17.6%
230,000 AES Corp.+ ................ 1,158,570 3,144,100
369,400 Allegheny Energy Inc.+ .... 3,864,370 7,280,874
24,000 ALLETE Inc. ............... 749,469 882,000
45,000 American Electric Power
Co. Inc. ................ 1,396,114 1,545,300
20,000 Calpine Corp.+ ............ 52,600 78,800
20,000 Cleco Corp. ............... 364,947 405,200
115,000 DPL Inc. .................. 2,241,615 2,887,650
25,000 DTE Energy Co. ............ 1,021,956 1,078,250
200,000 Duquesne Light Holdings Inc. 3,488,741 3,770,000
90,000 Edison International ...... 1,794,977 2,882,700
200,000 El Paso Electric Co.+ ..... 2,637,085 3,788,000
45,000 FPL Group Inc. ............ 2,640,339 3,363,750
105,000 Great Plains Energy Inc. .. 3,272,187 3,179,400
41,000 Green Mountain Power Corp. 893,905 1,182,030
22,500 Pepco Holdings Inc. ....... 449,918 479,700
105,000 TECO Energy Inc. .......... 1,580,547 1,610,700
33,000 TXU Corp. ................. 541,115 2,130,480
22,000 UIL Holdings Corp. ........ 966,711 1,128,600
221,000 Unisource Energy Corp. .... 5,337,120 5,328,310
------------ ------------
34,452,286 46,145,844
------------ ------------
ENERGY AND UTILITIES: INTEGRATED -- 29.3%
75,000 Alliant Energy Corp. ...... 1,824,382 2,145,000
20,000 Ameren Corp. .............. 892,320 1,002,800
434,000 Aquila Inc.+ .............. 1,281,710 1,601,460
500 Avista Corp. .............. 5,575 8,835
28,000 Black Hills Corp. ......... 838,957 859,040
48,400 Central Vermont Public
Service Corp. ........... 947,272 1,125,784
53,600 CH Energy Group Inc. ...... 2,435,686 2,575,480
55,000 Cinergy Corp. ............. 1,727,502 2,289,650
200,000 CMS Energy Corp.+ ......... 1,572,268 2,090,000
55,000 Consolidated Edison Inc. .. 2,168,745 2,406,250
75,000 Constellation Energy
Group Inc. .............. 2,109,100 3,278,250
2,000 Dominion Resources Inc. ... 80,310 135,480
160,000 Duke Energy Corp. ......... 3,043,734 4,052,800
170,000 El Paso Corp. ............. 1,539,873 1,768,000
10,000 Empire District Electric Co. 199,271 226,800
200,000 Enel SpA .................. 1,531,070 1,965,475
80,000 Energy East Corp. ......... 1,767,343 2,134,400
3,000 Entergy Corp. ............. 84,249 202,770
MARKET
SHARES COST VALUE
------ ---- ------
50,979 FirstEnergy Corp. ......... $ 1,759,571 $ 2,014,180
83,000 Florida Public Utilities Co. 1,043,302 1,589,450
300,000 Hera SpA .................. 433,286 864,483
67,500 Maine & Maritimes Corp. ... 2,153,183 1,778,625
64,100 MGE Energy Inc. ........... 1,882,264 2,309,523
300,000 Mirant Corp.+ ............. 88,995 115,500
25,521 NiSource Inc. ............. 521,206 581,369
170,000 Northeast Utilities ....... 3,354,148 3,204,500
100,000 NSTAR ..................... 4,399,960 5,428,000
101,000 OGE Energy Corp. .......... 2,429,412 2,677,510
25,000 Ormat Technologies Inc.+ .. 375,000 407,000
23,000 Otter Tail Corp. .......... 618,745 587,190
50,000 PG&E Corp.+ ............... 1,309,559 1,664,000
20,000 PNM Resources Inc. ........ 290,976 505,800
100,000 Progress Energy Inc. ...... 4,383,880 4,524,000
40,000 Progress Energy Inc., CVO+ 20,800 5,200
17,200 Public Service Enterprise
Group Inc. .............. 867,740 890,444
28,000 Puget Energy Inc. ......... 630,939 691,600
55,000 SCANA Corp. ............... 1,694,645 2,167,000
30,000 Sierra Pacific Resources+ . 227,798 315,000
25,000 Unitil Corp. .............. 661,268 707,500
39,600 Vectren Corp. ............. 957,519 1,061,280
235,000 Westar Energy Inc. ........ 3,605,547 5,374,450
65,000 Wisconsin Energy Corp. .... 2,001,706 2,191,150
7,000 WPS Resources Corp. ....... 204,319 349,720
270,000 Xcel Energy Inc. .......... 4,521,685 4,914,000
------------ ------------
64,486,820 76,786,748
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS -- 10.5%
28,000 AGL Resources Inc. ........ 692,019 930,720
55,000 Atmos Energy Corp. ........ 1,349,828 1,504,250
30,000 Cascade Natural Gas Corp... 645,300 636,000
10,000 Chesapeake Utilities Corp. 224,113 267,000
29,700 Delta Natural Gas Co. Inc. 494,549 808,404
40,000 Dynegy Inc., Cl. A+ ....... 250,000 184,800
16,500 EnergySouth Inc. .......... 386,686 462,660
100,000 KeySpan Corp. ............. 3,586,039 3,945,000
90,000 National Fuel Gas Co. ..... 2,155,590 2,550,600
90,000 Nicor Inc. ................ 3,094,431 3,324,600
100,000 ONEOK Inc. ................ 1,837,227 2,842,000
45,000 Peoples Energy Corp. ...... 1,768,333 1,977,750
30,000 Piedmont Natural Gas Co. Inc. 428,588 697,200
6,000 RGC Resources Inc. ........ 128,344 155,340
135,000 SEMCO Energy Inc. ......... 1,204,905 720,900
110,000 Southern Union Co.+ ....... 1,848,448 2,637,811
150,000 Southwest Gas Corp. ....... 3,710,968 3,810,000
------------ ------------
23,805,368 27,455,035
------------ ------------
ENERGY AND UTILITIES: OIL -- 0.0%
2,700 Kaneb Services LLC ........ 116,235 116,613
------------ ------------
ENERGY AND UTILITIES: WATER -- 2.4%
14,000 American States Water Co. . 312,701 364,000
15,000 Aqua America Inc. ......... 183,101 368,850
16,500 Artesian Resources Corp.,
Cl. A ................... 257,250 463,980
20,500 BIW Ltd. .................. 385,069 404,875
20,520 California Water
Service Group ............. 566,928 772,578
7,500 Connecticut Water
Service Inc. ............ 146,455 198,675
51,333 Middlesex Water Co. ....... 801,882 972,247
14,066 Pennichuck Corp. .......... 367,734 367,123
58,000 SJW Corp. ................. 1,862,621 2,111,200
See accompanying notes to financial statements.
3
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2004
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: WATER (CONTINUED)
7,716 Southwest Water Co. ....... $ 52,056 $ 103,786
6,000 York Water Co. ............ 108,269 116,460
------------ ------------
5,044,066 6,243,774
------------ ------------
ENVIRONMENTAL SERVICES -- 0.2%
10,000 Ionics Inc.+ .............. 433,100 433,400
------------ ------------
EQUIPMENT AND SUPPLIES -- 0.2%
50,000 Capstone Turbine Corp. + .. 83,080 91,500
15,000 Mueller Industries Inc. ... 664,197 483,000
------------ ------------
747,277 574,500
------------ ------------
METALS AND MINING -- 0.2%
25,000 Compania de Minas
Buenaventura SA, ADR .... 549,835 572,500
------------ ------------
TELECOMMUNICATIONS -- 3.1%
53,000 BCE Inc. .................. 1,141,428 1,278,890
33,000 BellSouth Corp. ........... 917,474 917,070
32,000 BT Group plc, ADR ......... 1,108,709 1,264,960
50,000 CenturyTel Inc. ........... 1,572,826 1,773,500
150,000 Cincinnati Bell Inc.+ ..... 703,244 622,500
10,200 Commonwealth Telephone
Enterprises Inc.+ ....... 394,296 506,532
10,000 D&E Communications Inc. ... 100,525 120,500
20,000 Deutsche Telekom AG, ADR+.. 367,940 453,600
2,000 France Telecom SA, ADR .... 22,799 66,160
200 Hutchison Telecommunications
International Ltd.+ ..... 163 180
200 Mobistar SA+ .............. 18,056 18,744
200 PT Indonesian Satellite
Corporation Tbk (Indosat) 128 124
200 Tele2 AB, Cl. B ........... 8,180 7,855
200 Telecom Italia SpA, ADR ... 7,868 8,174
40,000 Touch America Holdings Inc.+ 38,488 48
30,000 Verizon Communications Inc. 1,071,989 1,215,300
------------ ------------
7,474,113 8,254,137
------------ ------------
WIRELESS COMMUNICATIONS -- 0.5%
200 America Movil SA de CV,
Cl. L, ADR .............. 9,424 10,470
500 China Mobile (Hong Kong)
Ltd., ADR ............... 8,563 8,580
500 China Unicom Ltd., ADR .... 3,933 3,925
200 Cosmote Mobile
Telecommunications SA ... 3,702 4,012
38,000 mm02 plc, ADR+ ............ 387,488 895,660
1,000 Mobile TeleSystems, ADR ... 137,612 138,510
190 MobilOne Ltd. ............. 218 212
200 Nextel Communications
Inc., Cl. A+ ............ 5,959 6,000
200 SK Telecom Co. Ltd., ADR 4,626 4,450
200 SmarTone Telecommunications
Holdings Ltd. ........... 207 224
200 Telefonica Moviles SA, ADR 2,332 2,542
200 Tim Hellas
Telecommunications SA, ADR 3,316 3,750
200 Total Access
Communications plc+ .... 715 708
8,000 Vimpel-Communications, ADR+ 267,890 289,120
200 Virgin Mobile Holdings PLC+ 868 874
200 Vodafone Group plc, ADR ... 5,666 5,476
------------ ------------
842,519 1,374,513
------------ ------------
TOTAL COMMON
STOCKS .................. 144,697,614 174,999,402
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
PREFERRED STOCKS -- 0.7%
TELECOMMUNICATIONS -- 0.7%
31,033 Citizens Communications Co.,
5.000% Cv. Pfd. ........ $ 1,542,645 $ 1,877,496
------------ ------------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.2%
ENERGY AND UTILITIES: INTEGRATED -- 0.2%
$ 500,000 Mirant Corp., Deb. Cv.,
2.500%, 06/15/21+ (b) .. 378,108 363,125
------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 22.8%
60,000,000 U.S. Treasury Bills,
1.786% to 1.921%++,
01/20/05 to 02/10/05 ... 59,914,989 59,914,989
------------ ------------
REPURCHASE AGREEMENTS -- 9.6%
25,289,000 ABN AMRO, 1.450%, dated
12/31/2004, due 01/03/05,
proceeds at maturity,
$25,292,056 (a) ........ 25,289,000 25,289,000
------------ ------------
TOTAL INVESTMENTS -- 100.0% ........... $231,822,356 262,444,012
============
LIABILITIES IN EXCESS OF OTHER ASSETS ............... (880,718)
PREFERRED STOCK
(1,185,200 preferred shares outstanding) .......... (54,605,000)
------------
NET ASSETS COMMON STOCK
(28,976,703 common shares outstanding) ............ $206,958,294
============
NET ASSET VALUE PER COMMON SHARE
($206,958,294 / 28,976,703 shares outstanding) ... $7.14
=====
-------------
For Federal tax purposes:
Aggregate cost ......................... $232,986,409
============
Gross unrealized appreciation .......... $ 32,364,709
Gross unrealized depreciation .......... (2,907,106)
------------
Net unrealized appreciation
(depreciation) ....................... $ 29,457,603
============
-------------
(a) Collateralized by U.S. Treasury Bond, 7.875%, due 02/15/21,
market value $25,354,905.
(b) Bond in default.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
CVO - Contingent Value Obligation.
See accompanying notes to financial statements.
4
THE GABELLI UTILITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2004
ASSETS:
Investments, at value (cost $231,822,356) .. $262,444,012
Cash and foreign currency, at value
(cost $249) .............................. 245
Dividends and interest receivable .......... 484,966
Other assets ............................... 12,560
------------
TOTAL ASSETS ............................... 262,941,783
------------
LIABILITIES:
Payable for investment advisory fees ....... 718,033
Dividends payable .......................... 28,733
Payable for offering expenses .............. 387,040
Payable for shareholder communication fees 142,896
Other accrued expenses and liabilities ..... 101,787
------------
TOTAL LIABILITIES 1,378,489
------------
PREFERRED STOCK:
Series A Cumulative Preferred Stock
(5.625%, $25 liquidation value, $0.001
par value, 1,200,000 shares authorized
with 1,184,200 shares issued and
outstanding) ............................. 29,605,000
Series B Cumulative Preferred Stock
(Auction Rate, $25,000 liquidation value,
$0.001 par value, 1,000 shares authorized
with 1,000 shares issued and outstanding) 25,000,000
------------
TOTAL PREFERRED STOCK .................... 54,605,000
------------
NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS ....................... $206,958,294
============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS CONSIST OF:
Shares of beneficial interest, at par value $ 28,977
Additional paid-in capital ................. 177,500,450
Accumulated distributions in excess of net
investment income ........................ (28,733)
Accumulated net realized loss on
investments and foreign currency ......... (1,164,053)
transactions
Net unrealized appreciation on investments
and foreign currency translations ........ 30,621,653
------------
TOTAL NET ASSETS ........................... $206,958,294
============
NET ASSET VALUE PER COMMON SHARE
($206,958,294 / 28,976,703 shares
outstanding; unlimited number of
shares authorized of $0.001
par value) ............................ $7.14
=====
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign taxes of $35,469) $ 6,298,108
Interest ................................... 691,353
-----------
TOTAL INVESTMENT INCOME ................... 6,989,461
-----------
EXPENSES:
Investment advisory fees .................. 2,143,026
Shareholder communications expenses ....... 391,198
Shareholder services fees ................. 218,877
Payroll ................................... 145,351
Legal and audit fees ...................... 64,168
Auction agent expenses .................... 63,440
Trustees' fees ............................ 48,000
Custodian fees ............................ 36,746
Miscellaneous expenses .................... 162,109
-----------
TOTAL EXPENSES ............................ 3,272,915
LESS: CUSTODIAN FEE CREDIT ................ (6,931)
-----------
NET EXPENSES .............................. 3,265,984
-----------
NET INVESTMENT INCOME ..................... 3,723,477
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investments .......... 1,151,203
Net realized gain on foreign
currency transactions ................... 3,970
-----------
Net realized gain on investments and foreign
currency transactions ................... 1,155,173
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations ........... 22,003,591
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ........ 23,158,764
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................... 26,882,241
Total Distributions to Preferred
Stock Shareholders ...................... (2,047,789)
-----------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS ......................... $24,834,452
===========
See accompanying notes to financial statements.
5
THE GABELLI UTILITY TRUST
STATEMENT OF CHANGES IN NET ASSETS
ATTRIBUTABLE TO COMMON SHAREHOLDERS
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------
OPERATIONS:
Net investment income ............................................................... $ 3,723,477 $ 1,661,174
Net realized gain (loss) on investments and foreign currency transactions ........... 1,155,173 3,379,237
Net change in unrealized appreciation/depreciation on investments ................... 22,003,591 17,078,674
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ 26,882,241 22,119,085
------------ ------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ............................................................... (1,374,189) (252,258)
Net realized short-term gains on investments and foreign currency transactions (434,680) (29,505)
Net realized long-term gains on investments and foreign currency transactions ....... (238,920) (555,151)
------------ ------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ................................. (2,047,789) (836,914)
------------ ------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS
RESULTING FROM OPERATIONS ......................................................... 24,834,452 21,282,171
------------ ------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ............................................................... (2,352,322) (1,465,686)
Net realized short-term gains on investments and foreign currency transactions (744,082) (193,597)
Net realized long-term gains on investments and foreign currency transactions ....... (408,981) (3,642,522)
Return of capital ................................................................... (13,426,831) (7,047,175)
------------ ------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .................................... (16,932,216) (12,348,980)
------------ ------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment of dividends
and distributions and rights offering ............................................. 42,537,829 54,012,622
Net increase in net assets from repurchase of preferred shares ...................... 30,323 --
Offering costs for preferred shares charged to paid-in capital ...................... 15,102 (1,550,000)
Offering costs for issuance of rights charged to paid-in capital .................... (34,089) --
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ................. 42,549,165 52,462,622
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS 50,451,401 61,395,813
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS:
Beginning of period ................................................................. 156,506,893 95,111,080
------------ ------------
End of period ....................................................................... $206,958,294 $156,506,893
============ ============
See accompanying notes to financial statements.
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Utility Trust (the "Utility Trust" or the "Fund")
is a closed-end, non-diversified management investment company organized as a
Delaware statutory trust on February 25, 1999 and registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), whose primary
objective is long-term growth of capital and income. The Utility Trust had no
operations prior to July 9, 1999, other than the sale of 10,000 shares of
beneficial interest for $100,000 to The Gabelli Equity Trust Inc. (the "Equity
Trust") at $10.00 per share. On July 9, 1999, the Utility Trust had a 4 for 3
stock split making the balance of Utility Trust shares held by the Equity Trust
as 13,333. On July 9, 1999, the Equity Trust contributed $79,487,260 in cash and
securities in exchange for shares of the Utility Trust, and on the same date
distributed such shares to Equity Trust shareholders of record on July 1, 1999
at the rate of one share of the Utility Trust for every ten shares of the Equity
Trust. Investment operations commenced on July 9, 1999.
Effective August 1, 2002, the Utility Trust modified its non-fundamental
investment policy to increase, from 65% to 80%, the portion of its assets that
it will invest, under normal market conditions, in common stocks and other
securities of foreign and domestic companies involved in providing products,
services or equipment for (i) the generation or distribution of electricity, gas
and water and (ii) telecommunications services or infrastructure operations (the
"80% Policy").
The 80% Policy may be changed without shareholder approval. However, the
Utility Trust has adopted a policy to provide shareholders with notice at least
60 days prior to the implementation of any change in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
6
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally
valued at the preceding closing values of such securities on their respective
exchanges or if after the close of the foreign markets, but prior to the close
of business on the day the securities are being valued, market conditions change
significantly, certain foreign securities may be fair valued pursuant to
procedures established by the Board. Debt instruments that are not credit
impaired with remaining maturities of 60 days or less are valued at amortized
cost, unless the Board determines such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Board. Debt instruments having a maturity greater than 60 days
for which market quotations are readily available are valued at the latest
average of the bid and asked prices. If there were no asked prices quoted on
such day, the security is valued using the closing bid price. Futures contracts
are valued at the closing settlement price of the exchange or board of trade on
which the applicable contract is traded.
Securities and assets for which market quotations are not readily available
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
REPURCHASE AGREEMENTS. The Utility Trust 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
Utility Trust takes possession of an underlying debt obligation subject to an
obligation of the seller to repurchase, and the Utility Trust to resell, the
obligation at an agreed-upon price and time, thereby determining the yield
during the Utility Trust's holding period. The Utility Trust will always receive
and maintain securities as collateral whose market value, including accrued
interest, will be at least equal to 100% of the dollar amount invested by the
Utility Trust in each agreement. The Utility Trust 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 Utility Trust may be delayed or limited.
FOREIGN CURRENCY TRANSLATION. The books and records of the Utility Trust
are maintained in United States (U.S.) dollars. Foreign currencies, investments
and other assets and liabilities are translated into U.S. dollars at the
exchange rates prevailing at the end of the period, and 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, which 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 Utility Trust 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 Utility Trust 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.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
7
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with Federal income tax regulations,
which may differ from that determined under U.S. generally accepted accounting
principles. Distributions to Shareholders of the Utility Trust's 5.625% Series A
Cumulative Preferred Stock and Series B Auction Rate Cumulative Preferred Stock
("Cumulative Preferred Stock") are accrued on a daily basis and are determined
as described in Note 5.
For the year ended December 31, 2004, reclassifications were made to
decrease accumulated distributions in excess of net investment income by $3,970
and to increase accumulated net realized loss on investments and foreign
currency transactions by $3,970.
The tax character of distributions paid during the fiscal year ended
December 31, 2004 and December 31, 2003 were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
-------------------------- -----------------------
Common Preferred Common Preferred
----------- ---------- ----------- --------
Distributions paid from:
Ordinary income
(inclusive of short term capital gains) $ 3,096,404 $1,808,869 $ 1,659,283 $281,763
Net long term capital gains ............. 408,981 238,920 3,642,522 555,151
Non-taxable return of capital ........... 13,426,831 -- 7,047,175 --
----------- ---------- ----------- --------
Total distributions paid ................ $16,932,216 $2,047,789 $12,348,980 $836,914
=========== ========== =========== ========
PROVISION FOR INCOME TAXES. The Utility Trust intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. It is the Fund's policy to comply with the
requirements of the Internal Revenue 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.
Dividends and interest from non-U.S. sources received by the Utility Trust
are generally subject to non-U.S. withholding taxes at rates ranging up to 30%.
Such withholding taxes may be reduced or eliminated under the terms of
applicable U.S. income tax treaties, and the Utility Trust intends to undertake
any procedural steps required to claim the benefits of such treaties.
As of December 31, 2004, the components of accumulated earnings/(losses) on
a tax basis were as follows:
Net unrealized appreciation on
investments and foreign currency .............. $29,457,600
Dividends payable ............................... (28,733)
-----------
Total accumulated gain .......................... $29,428,867
===========
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Utility Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Utility Trust will pay the Adviser on the first
business day of each month a fee for the previous month equal on an annual basis
to 1.00% of the value of the Utility Trust's average weekly net assets plus
liquidation value of preferred stock. In accordance with the Advisory Agreement,
the Adviser provides a continuous investment program for the Utility Trust's
portfolio and oversees the administration of all aspects of the Utility Trust's
business and affairs. The Adviser has agreed to reduce the management fee on the
incremental assets attributable to each series of the Cumulative Preferred Stock
if the total return of the net asset value of the common shares of the Utility
Trust, including distributions and advisory fee subject to reduction, does not
exceed the stated dividend rate of the respective Cumulative Preferred Stock for
the year.
The Utility Trust's total return on the net asset value of the common
shares is monitored on a monthly basis to assess whether the total return on the
net asset value of the common shares exceeds the stated dividend rate of the
Cumulative Preferred Stock for the period. For the year ended December 31, 2004,
the Utility Trust's total return on the net asset value of the common shares
exceeded the stated dividend rate of all outstanding Preferred Stock. Thus,
management fees were accrued on these assets.
During the year ended December 31, 2004, Gabelli & Company, Inc. ("Gabelli
& Company"), an affiliate of the Adviser, received $137,599 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Utility Trust.
In connection with the 2003 and 2004 Rights Offering ("Rights"), holders of
unexercised rights to purchase common shares of the Utility Trust were able to
instruct the Subscription Agent (EquiServe Trust Company) to sell such Rights on
their behalf. The Subscription Agent was permitted to effect such sales through
Gabelli & Company, unless the Subscription Agent was able to negotiate a lower
commission rate with an independent broker. Total commissions from sales of
Rights effected by the Subscription Agent through Gabelli & Company amounted to
$22,630 and $21,882 for the years ended December 31, 2003 and 2004,
respectively.
8
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The cost of calculating the Utility Trust's net asset value per share is a
Trust expense pursuant to the Investment Advisory Agreement between the Trust
and the Adviser. During the year ended December 31, 2004, the Utility Trust
reimbursed the Adviser $34,800 in connection with the cost of computing the
Trust's net asset value.
The Trust is assuming its portion of the allocated cost of the Gabelli
Funds' Chief Compliance Officer in the amount of $1,538 for the period of
October 1, 2004 through December 31, 2004 which is included in payroll expense
on the Statement of Operations.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the year ended December 31,
2004 aggregated $69,810,451 and $28,560,536, respectively.
5. CAPITAL. The Board of the Utility Trust has authorized the repurchase of its
shares on the open market when the shares are trading at a discount of 10% or
more (or such other percentage as the Board may determine from time to time)
from the net asset value of the shares. During the year ended December 31, 2004,
the Utility Trust did not repurchase any shares of beneficial interest in the
open market.
On October 20, 2004, the Utility Trust distributed one transferable right
for each of the 23,118,091 common shares outstanding to shareholders of record
on that date. Four rights were required to purchase one additional common share
at the subscription price of $7.00 per share. Shareholders who exercised their
full primary subscription rights were eligible for an over-subscription
privilege entitling them to subscribe, subject to certain limitations and a
pro-rata allotment, for any additional shares not purchased pursuant to the
primary subscription plus such additional amounts as authorized by the Board in
accordance with the registration statement. The subscription period expired on
November 24, 2004. The rights offering was fully subscribed, having received
over-subscription requests in excess of the shares available for primary
subscription resulting in the issuance of 5,779,546 common shares and proceeds
of $40,456,822 to the Utility Trust, prior to the deduction of estimated
expenses of $475,000. The net asset value per share of the Utility Trust common
shareholders was reduced by approximately $0.06 per share as a result of the
issuance of shares below net asset value.
On August 20, 2003, the Utility Trust distributed one transferable right
for each of the 15,298,490 common shares outstanding to shareholders of record
on that date. Three rights were required to purchase one additional common share
at the subscription price of $7.00 per share. Shareholders who exercised their
full primary subscription rights were eligible for an over-subscription
privilege entitling them to subscribe, subject to certain limitations and a
pro-rata allotment, for any additional shares not purchased pursuant to the
primary subscription plus such additional amounts as authorized by the Board in
accordance with the registration statement. The subscription period expired on
September 25, 2003. The rights offering was fully and over-subscribed resulting
in the issuance of 7,500,000 common shares and proceeds of $52,500,000 to the
Utility Trust, prior to the deduction of expenses of $534,089. The net asset
value per share of the Utility Trust common shareholders was enhanced by
approximately $0.12 per share as a result of the issuance of shares above net
asset value.
Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
------------------------ -----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
Shares issued in rights offering ..... 5,779,546 $39,981,829 7,500,000 $52,105,762
Shares issued upon reinvestment
of dividends and distributions ..... 290,925 2,556,000 225,740 1,906,860
--------- ----------- --------- -----------
Net increase ......................... 6,070,471 $42,537,829 7,725,740 $54,012,622
========= =========== ========= ===========
On July 31, 2003, the Utility Trust received net proceeds of $28,877,500
(after underwriting discounts of $945,000 and offering expenses of $169,949)
from the public offering of 1,200,000 shares of 5.625% Series A Cumulative
Preferred Stock. Commencing July 31, 2008 and thereafter, the Utility Trust, at
its option, may redeem the 5.625% Series A Cumulative Preferred Stock in whole
or in part at the liquidation value price. During the year ended December 31,
2004, the Utility Trust repurchased 15,800 shares of 5.625% Series A Cumulative
Preferred Stock in the open market at a cost of $364,714 and an average discount
of approximately 7.72% from its liquidation value of $25.00 per share. All
repurchased shares of 5.625% Series A Cumulative Preferred Stock have been
retired. At December 31, 2004, 1,184,200 shares of the 5.625% Series A
Cumulative Preferred Stock were outstanding and accrued dividends amounted to
$23,129.
On July 31, 2003, the Utility Trust received net proceeds of $24,572,500
(after underwriting discounts of $250,000 and offering expenses of $169,949)
from the public offering of 1,000 shares of Series B Auction Rate Cumulative
Preferred Stock. The dividend rate, as set by the auction process, which is
generally held every 7 days, is expected to vary with short-term interest rates.
The rates of Series B Auction Rate Cumulative Preferred Stock ranged from 1.05%
to 2.69% for the year ended December 31, 2004. Existing shareholders may submit
an order to hold, bid or sell such shares on each auction date. Series B Auction
Rate Cumulative Preferred Stock shareholders may also trade shares in the
secondary market. The Utility Trust, at its option, may redeem the Series B
Auction
9
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Rate Cumulative Preferred Stock in whole or in part at the liquidation
value price at any time. During the year ended December 31, 2004, the Utility
Trust did not redeem any shares of Series B Auction Rate Cumulative Preferred
Stock. At December 31, 2004, 1,000 shares of the Series B Auction Rate
Cumulative Preferred Stock were outstanding with an annualized dividend rate of
2.69 percent per share and accrued dividends amounted to $5,604.
The Utility Trust is required by the 1940 Act and by the Statements of
Preference to meet certain asset coverage tests with respect to the Cumulative
Preferred Stock. If the Utility Trust fails to meet these requirements and does
not correct such failure, the Utility Trust may be required to redeem, in part
or in full, the 5.625% Series A and Series B Auction Rate Cumulative Preferred
Stock at a redemption price of $25.00 and $25,000, respectively, per share plus
an amount equal to the accumulated and unpaid dividends whether or not declared
on such shares in order to meet these requirements. Additionally, failure to
meet the foregoing asset coverage requirements could restrict the Utility
Trust's ability to pay dividends to common shareholders and could lead to sales
of portfolio securities at inopportune times.
The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of Common Stock (one vote per share) and will vote together
with holders of shares of Common Stock as a single class. In addition, the 1940
Act requires that along with approval of a majority of the holders of Common
Stock, approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Utility Trust's subclassification
as a closed-end investment company or changes in its fundamental investment
restrictions. The income received on the Utility Trust's assets may vary in a
manner unrelated to the fixed and variable rates, which could have either a
beneficial or detrimental impact on net investment income and gains available to
common shareholders.
Under Emerging Issues Task Force (EITF) promulgating Topic D-98,
Classification and Measurement of Redeemable Securities, which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are to be classified outside of permanent equity to the extent that the
redemption is at a fixed or determinable price and at the option of the holder
or upon the occurrence of an event that is not solely within the control of the
issuer. Subject to the guidance of the EITF, the Utility Trust's Cumulative
Preferred Stock has been reclassified outside of permanent equity (net assets
attributable to common stock shareholders) in the accompanying financial
statements.
6. INDUSTRY CONCENTRATION. Because the Utility Trust primarily invests in common
stocks and other securities of foreign and domestic companies in the utility
industry, its portfolio may be subject to greater risk and market fluctuations
than a portfolio of securities representing a broad range of investments.
7. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests. The Utility Trust
does not believe that these matters will have a material adverse effect on the
Utility Trust's financial position or the results of its operations.
8. INDEMNIFICATIONS. The Utility Trust enters into contracts that contain a
variety of indemnifications. The Utility Trust's maximum exposure under these
arrangements is unknown. However, the Utility Trust has not had prior claims or
losses pursuant to these contracts and expects the risk of loss to be remote.
10
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A UTILITY TRUST SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD:
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- ------- ------- -------
OPERATING PERFORMANCE:
Net asset value, beginning of period ........................... $ 6.83 $ 6.27 $ 7.32 $ 8.21 $ 7.62
-------- -------- ------- ------- -------
Net investment income .......................................... 0.16 0.10 0.11 0.12 0.15
Net realized and unrealized gain (loss) on investments ......... 0.99 1.17 (0.62) (0.32) 1.44
-------- -------- ------- ------- -------
Total from investment operations ............................... 1.15 1.27 (0.51) (0.20) 1.59
-------- -------- ------- ------- -------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .......................................... (0.06) (0.01) -- -- --
Net realized gain on investments ............................... (0.03) (0.04) -- -- --
-------- -------- ------- ------- -------
Total distributions to preferred stock shareholders ............ (0.09) (0.05) -- -- --
-------- -------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS RESULTING FROM OPERATIONS ............. 1.06 1.22 (0.51) (0.20) 1.59
-------- -------- ------- ------- -------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .......................................... (0.10) (0.09) (0.11) (0.21) (0.06)
Net realized gain on investments ............................... (0.05) (0.22) (0.36) (0.49) (0.94)
Paid-in capital ................................................ (0.57) (0.41) (0.25) -- --
-------- -------- ------- ------- -------
Total distributions to common stock shareholders ............... (0.72) (0.72) (0.72) (0.70) (1.00)
-------- -------- ------- ------- -------
CAPITAL SHARE TRANSACTIONS:
Increase in net asset value from common stock share transactions 0.03 0.03 0.03 0.01 --
Increase/decrease in net asset value from shares issued in
rights offering .............................................. (0.06) 0.12 0.15 -- --
Increase in net asset value from repurchase of preferred shares 0.00(d) -- -- -- --
Offering costs for preferred shares charged to paid-in capital 0.00(d) (0.09) -- -- --
Offering costs for issuance of rights charged to paid-in capital (0.00)(d) -- -- -- --
-------- -------- ------- ------- -------
Total capital share transactions ............................... (0.03) 0.06 0.18 0.01 --
-------- -------- ------- ------- -------
NET ASSET VALUE ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS,
END OF PERIOD ................................................ $ 7.14 $ 6.83 $ 6.27 $ 7.32 $ 8.21
======== ======== ======= ======= =======
Net asset value total return + ................................. 13.43% 18.60% (6.79)% (3.15)% 22.01%
======== ======== ======= ======= =======
Market value, end of period .................................... $ 9.30 $ 9.60 $ 8.72 $ 9.33 $ 8.75
======== ======== ======= ======= =======
Total investment return ++ ..................................... 5.11% 19.86% 1.70% 15.82% 29.95%
======== ======== ======= ======= =======
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred shares
end of period (in 000's) ..................................... $261,563 $211,507 $95,111 $82,197 $90,669
Net assets attributable to common shares end of period (in 000's) $206,958 $156,507 $95,111 $82,197 $90,669
Ratio of net investment income to average net assets
attributable to common shares ................................ 2.32% 1.52% 1.65% 1.57% 1.88%
Ratio of operating expenses to average net assets
attributable to common shares (a) ............................ 2.04% 2.04% 1.93% 2.00% 1.95%
Ratio of operating expenses to average total net assets
including liquidation value of preferred shares (a) .......... 1.52% 1.68% -- -- --
Portfolio turnover rate ........................................ 18% 28% 29% 41% 92%
PREFERRED STOCK:
5.625% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) .................... $ 29,605 $ 30,000 -- -- --
Total shares outstanding (in 000's) ............................ 1,184 1,200 -- -- --
Liquidation preference per share ............................... $ 25.00 $ 25.00 -- -- --
Average market value (b) ....................................... $ 24.68 $ 25.12 -- -- --
Asset coverage per share ....................................... $ 119.75 $ 96.14 -- -- --
AUCTION RATE CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) .................... $ 25,000 $ 25,000 -- -- --
Total shares outstanding (in 000's) ............................ 1 1 -- -- --
Liquidation preference per share ............................... $ 25,000 $ 25,000 -- -- --
Average market value (b) ....................................... $ 25,000 $ 25,000 -- -- --
Asset coverage per share ....................................... $119,752 $ 96,140
ASSET COVERAGE (C) ............................................. 479% 385% -- -- --
----------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder.
++ Based on market value per share, adjusted for reinvestment of distributions,
including the effect of shares issued pursuant to rights offering, assuming
full subscription by shareholder.
(a)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 for the year ended December 31, 2000, the ratio of operating expenses
to average net assets attributable to common stock would be 1.93%. For the
fiscal years ended December 31, 2001 through 2004, the effect of the
custodian fee credits was minimal.
(b)Based on weekly prices.
(c)Asset coverage is calculated by combining all series of preferred stock.
(d)Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
11
THE GABELLI UTILITY TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
The Gabelli Utility Trust:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Utility Trust (the
"Trust") at December 31, 2004, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2004 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 28, 2005
12
THE GABELLI UTILITY TRUST
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Trust are managed under the direction of
the Trust's Board of Trustees. Information pertaining to the Trustees and
officers of the Trust is set forth below. The Fund's Statement of Additional
Information includes additional information about The Gabelli Utility Trust
Trustees and is available, without charge, upon request, by calling 800-GABELLI
(800-422-3554) or by writing to The Gabelli Utility Trust at One Corporate
Center, Rye, NY 10580-1422.
TERM OF NUMBER OF
OFFICE AND FUNDS IN TRUST
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE 4
----------------- ---------- -------------- ---------------------- -------------------
INTERESTED TRUSTEES 3:
-------------------
MARIO J. GABELLI Since 1999** 24 Chairman of the Board and Chief Executive Director of Morgan Group
Trustee and Officer of Gabelli Asset Management Inc. Holdings, Inc. (holding
Chief Investment Officer and Chief Investment Officer of company)
Age: 62 Gabelli Funds, LLC and GAMCO Investors,
Inc.; Vice Chairman and Chief Executive
Officer of Lynch Interactive Corporation
(multimedia and services)
JOHN D. GABELLI Since 1999* 10 Senior Vice President of Gabelli & --
Trustee Company, Inc., Director of Gabelli
Age: 60 Advisers, Inc.
KARL OTTO POHL Since 1999* 34 Member of the Shareholder Committee Director of Gabelli
Trustee of Sal Oppenheim Jr. & Cie (private Asset Management Inc.
Age: 75 investment bank); Former President of the (investment management);
Deutsche Bundesbank and Chairman of its Chairman, Incentive
Central Bank Council (1980-1991) Capital and Incentive
Asset Management
(Zurich); Director at
Sal Oppenheim Jr.
& Cie, Zurich
NON-INTERESTED TRUSTEES:
-----------------------
THOMAS E. BRATTER Since 1999** 3 Director, President and Founder, The John --
Trustee Dewey Academy (residential college
Age: 65 preparatory therapeutic high school)
ANTHONY J. COLAVITA Since 1999*** 36 President and Attorney at Law in the --
Trustee law firm of Anthony J. Colavita, P.C.
Age: 69
JAMES P. CONN Since 1999* 13 Former Managing Director and Chief Director of LaQuinta
Trustee Investment Officer of Financial Security Corp. Holdings (hotels)
Age: 66 Assurance Ltd. (1992-1998) and First Republic Bank
(banking)
VINCENT D. ENRIGHT Since 1999** 13 Former Senior Vice President and Chief Director of Aphton
Trustee Financial Officer of KeySpan Energy Corporation
Age: 61 Corporation (biopharmaceutical
company)
FRANK J. FAHRENKOPF JR. Since 1999*** 4 President and Chief Executive Officer Director of First
Trustee of the American Gaming Association Republic Bank (banking)
Age: 65 since June 1995; Partner in the law firm
of Hogan & Hartson (law firm);
Co-Chairman of the Commission
on Presidential Debates; Former Chairman
of the Republican National Committee
ROBERT J. MORRISSEY Since 1999*** 10 Partner in the law firm of Morrissey, --
Trustee Hawkins & Lynch
Age: 65
ANTHONY R. PUSTORINO Since 1999* 17 Certified Public Accountant; Professor Director of Lynch
Trustee Emeritus, Pace University Corporation (diversified
Age: 79 manufacturing)
SALVATORE J. ZIZZA Since 1999*** 24 Chairman, Hallmark Electrical Director of Hollis Eden
Trustee Supplies Corp. Pharmaceuticals and Earl
Age: 59 Scheib, Inc. (automotive
services)
13
THE GABELLI UTILITY TRUST
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF NUMBER OF
OFFICE AND FUNDS IN TRUST
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE 4
----------------- ---------- -------------- ---------------------- -------------------
OFFICERS:
--------
BRUCE N. ALPERT Since 2003 -- Executive Vice President and Chief --
President and Treasurer Operating Officer of Gabelli Funds,
Age: 53 LLC since 1988 and an officer of
all mutual funds advised by
Gabelli Funds, LLC and its
affiliates. Director and
President of Gabelli Advisers, Inc.
DAVID I. SCHACHTER Since 1999 -- Vice President of the Trust since 1999. --
Vice President Research Analyst at Gabelli & Company, Inc.
Age: 51 since 1999. Prior to October 1999,
Mr. Schachter worked for Thomas J.
Herzfeld Advisors, an investment
adviser specializing in closed-end funds.
JAMES E. MCKEE Since 1999 -- Vice President, General Counsel and --
Secretary Secretary of Gabelli Asset Management
Age: 41 Inc. since 1999 and GAMCO Investors,
Inc. since 1993; Secretary of all mutual
funds advised by Gabelli Advisers,
Inc. and Gabelli Funds, LLC.
PETER D. GOLDSTEIN Since 2004 -- Director of Regulatory Affairs --
Chief Compliance Officer at Gabelli Asset Management
Age: 51 Inc. since February 2004; Vice President
of Goldman Sachs Asset Management from
November 2000 through January 2004;
Deputy General Counsel at Gabelli Asset
Management Inc. from February 1998
through November 2000
----------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 The Trust's Board of Trustees is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Trust's 2006 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
** - Term expires at the Trust's 2007 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
*** - Term expires at the Trust's 2005 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
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 Trust as defined in the Investment Company Act of
1940. Messrs. M. Gabelli, J. Gabelli and Pohl are each considered an
"interested person" because of their affiliation with Gabelli Funds, LLC
which acts as the Trust's investment adviser. Mario J. Gabelli and John D.
Gabelli are brothers.
4 This column includes only directorships of companies required to report to
the SEC under the Securities and Exchange Act of 1934 (i.e. public companies)
or other investment companies registered under the 1940 Act.
CERTIFICATIONS
The Utility Trust's Chief Executive Officer has certified to the New York
Stock Exchange that, as of June 7, 2004, he was not aware of any violation by
the Utility Trust of applicable NYSE corporate governance listing standards. The
Utility Trust reports to the SEC on Form N-CSR and N-CSRs contain certifications
by the Trust's principal executive officer and principal financial officer that
relate to the Trust's disclosure in such reports and that are required by Rule
30a-2(a) under the Investment Company Act.
14
THE GABELLI UTILITY TRUST
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2004
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL RETURN OF REINVESTMENT
DATE DATE PER SHARE (A) INCOME (A) GAINS (A) CAPITAL (A)(E) PRICE
-------- -------- ------------- ---------- --------- -------------- ------------
COMMON SHARES
01/26/04 01/09/04 $0.060000 $0.010255 $0.000191 $0.049554 $6.810000
02/23/04 02/06/04 0.060000 0.010255 0.000191 0.049554 6.720000
03/25/04 03/11/04 0.060000 0.010255 0.000191 0.049554 6.910000
04/26/04 04/12/04 0.060000 0.010255 0.000191 0.049554 6.880000
05/24/04 05/10/04 0.060000 0.010255 0.000191 0.049554 6.610000
06/24/04 06/10/04 0.060000 0.010255 0.000191 0.049554 6.540000
07/26/04 07/12/04 0.060000 0.010255 0.000191 0.049554 6.570000
08/25/04 08/11/04 0.060000 0.010255 0.000191 0.049554 6.460000
09/24/04 09/10/04 0.060000 0.010255 0.000191 0.049554 6.670000
10/25/04 10/11/04 0.060000 0.010255 0.000191 0.049554 6.820000
11/29/04 11/22/04 0.060000 0.010255 0.000191 0.049554 7.070000
12/27/04 12/10/04 0.060000 0.010255 0.000191 0.049554 6.940000
--------- --------- --------- --------
TOTAL COMMON STOCK $0.720000 $0.123060 $0.002292 $0.594648
5.625% PREFERRED SHARES
03/26/04 03/19/04 $0.351563 $0.345131 $0.006432 -- --
06/28/04 06/21/04 0.351563 0.345131 0.006432 -- --
09/27/04 09/20/04 0.351563 0.345131 0.006432 -- --
12/27/04 12/17/04 0.351563 0.345131 0.006432 -- --
--------- --------- ---------
TOTAL PREFERRED STOCK $1.406252 $1.380524 $0.025728
AUCTION RATE PREFERRED SHARES
Auction rate preferred shares pay dividends weekly based on a rate set at
auction, usually held every seven days. The percentage of 2004 distributions
derived from long-term capital gains was 1.83%.
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2004 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. Ordinary income is reported in
box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2a of
Form 1099-DIV.
NON-TAXABLE RETURN OF CAPITAL
The amount received as a non-taxable (return of capital) distribution should
be applied to reduce the tax cost of shares.There was $0.59465 per share return
of capital in 2004 reported in box 3 of Form 1099-DIV for common stock
shareholders.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME AND U.S.
GOVERNMENT SECURITIES INCOME
The Utility Trust paid to common and 5.625% Series A preferred shareholders
ordinary income dividends of $0.123060 and $1.380524 per share, respectively, in
2004. The Utility Trust paid to Series B Auction Rate preferred shareholders an
ordinary income dividend totalling $369.37 per share in 2004. For the fiscal
year ended December 31, 2004, 100% of the ordinary income dividend qualifies for
the dividend received deduction available to corporations, and 100% of the
ordinary income distribution was deemed qualifying dividend income. The
percentage of the ordinary income dividends paid by the Utility Trust during
2004 derived from U.S. Government Securities was 5.57%. The percentage of U.S.
Government Securities held as of December 31, 2004 was 22.90%. However, it
should be noted that the Utility Trust did not hold more than 50% of its assets
in U.S. Government Securities at the end of each calendar quarter during 2004.
HISTORICAL DISTRIBUTION SUMMARY
SHORT- LONG- ADJUSTMENT
TERM TERM TO
INVESTMENT CAPITAL CAPITAL RETURN OF TOTAL COST
INCOME(B) GAINS(B) GAINS CAPITAL(C) DISTRIBUTIONS (A) BASIS (D)
-------- -------- -------- -------- ----------------- ---------
COMMON STOCK
2004 (g) ....................... $0.093480 $0.029580 $0.002292 $0.594648 $0.720000 $0.594648
2003 (f) ....................... 0.085440 0.011280 0.212400 0.410880 0.720000 0.410880
2002 (e) ....................... 0.111750 0.002100 0.359000 0.246900 0.720000 0.246900
2001 ........................... 0.208350 0.331420 0.160230 -- 0.700000 --
2000 ........................... 0.056200 0.140200 0.803600 -- 1.000000 --
1999 ........................... 0.080490 0.000900 0.068610 -- 0.150000 --
5.625% PREFERRED STOCK
2004 ........................... $1.04873 $0.33179 $0.02572 -- $1.40625 --
AUCTION RATE PREFERRED SHARES
2004 ...........................$280.59420 $88.77260 $6.88340 -- $376.20000 --
----------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income.
(c) Non-taxable.
(d) Decrease in cost basis.
(e) On May 22, 2002, the Trust distributed Rights equivalent to $0.085 per share
based upon full subscription of all issued shares.
(f) On August 20, 2003, the Trust also distributed Rights equivalent to $0.18
per share based upon full subscription of all issued shares
(g) On October 20, 2004, the Trust also distributed Rights equivalent to $0.03
per share based upon full subscription of all issued shares.
15
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Utility Trust ("Utility Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Utility Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Utility Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Utility Trust. Plan participants may send their stock
certificates to EquiServe Trust Company ("EquiServe") to be held in their
dividend reinvestment account. Registered shareholders wishing to receive their
distribution in cash must submit this request in writing to:
The Gabelli Utility Trust
c/o EquiServe
P.O. Box 43011
Providence, RI 02940-3011
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact EquiServe at (800) 336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must do
so in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you should
contact such institution. If such institution is not participating in the Plan,
your account will be credited with a cash dividend. In order to participate in
the Plan through such institution, it may be necessary for you to have your
shares taken out of "street name" and re-registered in your own name. Once
registered in your own name your dividends will be automatically reinvested.
Certain brokers participate in the Plan. Shareholders holding shares in "street
name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the Plan
in lieu of cash dividends is determined in the following manner. Under the Plan,
whenever the market price of the Utility Trust's Common Stock is equal to or
exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Utility Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Utility Trust valued at market
price. If the Utility Trust should declare a dividend or capital gains
distribution payable only in cash, EquiServe will buy Common Stock in the open
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that EquiServe will endeavor to terminate purchases in the open
market and cause the Utility Trust to issue shares at net asset value if,
following the commencement of such purchases, the market value of the Common
Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions will
not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Utility Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by EquiServe on at least 90 days' written
notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders
to increase their investment in the Utility Trust. In order to participate in
the Voluntary Cash Purchase Plan, shareholders must have their shares registered
in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Utility Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. EquiServe will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. EquiServe will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment in the following period.
A payment may be withdrawn without charge if notice is received by EquiServe at
least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Utility Trust.
------------------------------------------------------------
The Annual Meeting of the Utility Trust's stockholders will
be held at 11:00 A.M. on Monday, May 9, 2005, in Greenwich,
Connecticut.
------------------------------------------------------------
16
TRUSTEES AND OFFICERS
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN AND CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND
CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
KEYSPAN ENERGY CORP.
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
John D. Gabelli
SENIOR VICE PRESIDENT,
GABELLI & COMPANY, INC.
Robert J. Morrissey
ATTORNEY-AT-LAW
MORRISSEY, HAWKINS & LYNCH
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT & TREASURER
David I. Schachter
VICE PRESIDENT & OMBUDSMAN
James E. McKee
SECRETARY
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
Mellon Trust of New England, N.A.
COUNSEL
Skadden, Arps, Slate, Meagher & Flom, LLP
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
5.625%
COMMON PREFERRED
------ ---------
NYSE-Symbol: GUT GUTPrA
Shares Outstanding: 28,976,703 1,184,200
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "Specialized Equity Funds," in Sunday's The New York Times and in
Monday's The Wall Street Journal. It is also listed in Barron's Mutual
Funds/Closed End Funds section under the heading "Specialized Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet
homepage at: WWW.GABELLI.COM or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Utility Trust may, from time to
time, purchase its shares in the open market when the Utility Trust shares
are trading at a discount of 10% or more from the net asset value of the
shares. The Utility Trust may also, from time to time, purchase shares of
its 5.625% Series A Cumulative Preferred Shares in the open market when
the shares are trading at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM
GBFUF-AR-12/04
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 Anthony R. Pustorino 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
$35,801 in 2004 and $56,246 in 2003.
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 $13,400 in 2004 and $6,500 in 2003.
Audit-related fees represent services provided in the preparation of
Preferred Shares Reports.
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 $2,550 in 2004 and $2,450
in 2003.
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 2004 and $0 for 2003
(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 auditors to the registrant and (ii) all
permissible non-audit services to be provided by the independent
auditors 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
auditors' 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
aggregate amount of all such permissible non-audit services
provided to the registrant, Gabelli and any Covered Services
Provider constitutes not more than 5% of the total amount of
revenues paid by the registrant to its independent auditors during
the fiscal year in which the permissible non-audit services are
provided; (ii) the permissible non-audit services were not
recognized by the registrant at the time of the engagement to be
non-audit services; and (iii) 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) 100%
(c) 100%
(d) N/A
(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 $0 in 2004 and $0 in 2003.
(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.
The registrant has a separately designated audit committee consisting of the
following members: Anthony J. Colavita, Vincent D. Enright and Anthony R.
Pustorino.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
GABELLI ASSET MANAGEMENT INC. AND AFFILIATES
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THE VOTING OF PROXIES ON BEHALF OF CLIENTS
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Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.
These procedures will be used by GAMCO Investors, Inc., Gabelli Funds,
LLC and Gabelli Advisers, Inc. (collectively, the "Advisers") to determine how
to vote proxies relating to portfolio securities held by their clients,
including the procedures that the Advisers use when a vote presents a conflict
between the interests of the shareholders of an investment company managed by
one of the Advisers, on the one hand, and those of the Advisers; the principal
underwriter; or any affiliated person of the investment company, the Advisers,
or the principal underwriter. These procedures will not apply where the Advisers
do not have voting discretion or where the Advisers have agreed with a client to
vote the client's proxies in accordance with specific guidelines or procedures
supplied by the client (to the extent permitted by ERISA).
I. PROXY VOTING COMMITTEE
The Proxy Voting Committee was originally formed in April 1989 for the
purpose of formulating guidelines and reviewing proxy statements within the
parameters set by the substantive proxy voting guidelines originally published
by GAMCO Investors, Inc. in 1988 and updated periodically, a copy of which are
appended as Exhibit A. The Committee will include representatives of Research,
Administration, Legal, and the Advisers. Additional or replacement members of
the Committee will be nominated by the Chairman and voted upon by the entire
Committee. As of December 31, 2004, the members are:
Bruce N. Alpert, Chief Operating Officer of Gabelli Funds, LLC
Ivan Arteaga, Portfolio Manager
Caesar M. P. Bryan, Portfolio Manager
Stephen DeTore, Deputy General Counsel
Joshua Fenton, Director of Buy-Side Research
Douglas R. Jamieson, Chief Operating Officer of GAMCO
James E. McKee, General Counsel
Karyn-Marie Prylucki, Director of Proxy Voting Services
William S. Selby, Managing Director of GAMCO
Howard F. Ward, Portfolio Manager
Peter D. Zaglio, Senior Vice President
Peter D. Zaglio currently chairs the Committee. In his absence, the
Director of Research will chair the Committee. Meetings are held on an as needed
basis to form views on the manner in which the Advisers should vote proxies on
behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.
All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.
For matters submitted to the Committee, each member of the Committee
will receive, prior to the meeting, a copy of the proxy statement, any relevant
third party research, a summary of any views provided by the Chief Investment
Officer and any recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may be invited to
present their viewpoints. If the Legal Department believes that the matter
before the committee is one with respect to which a conflict of interest may
exist between the Advisers and their clients, counsel will provide an opinion to
the Committee concerning the conflict. If the matter is one in which the
interests of the clients of one or more of Advisers may diverge, counsel will so
advise and the Committee may make different recommendations as to different
clients. For any matters where the recommendation may trigger appraisal rights,
counsel will provide an opinion concerning the likely risks and merits of such
an appraisal action.
Each matter submitted to the Committee will be determined by the vote
of a majority of the members present at the meeting. Should the vote concerning
one or more recommendations be tied in a vote of the Committee, the Chairman of
the Committee will cast the deciding vote. The Committee will notify the proxy
department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the
voting of any shares not covered by a contrary investment guideline provided by
the client, the Committee is not bound by the preferences set forth in the Proxy
Guidelines and will review each matter on its own merits. Written minutes of all
Proxy Voting Committee meetings will be maintained. The Advisers subscribe to
ISS, which supplies current information on companies, matters being voted on,
regulations, trends in proxy voting and information on corporate governance
issues.
If the vote cast either by the analyst or as a result of the
deliberations of the Proxy Voting Committee runs contrary to the recommendation
of the Board of Directors of the issuer, the matter will be referred to legal
counsel to determine whether an amendment to the most recently filed Schedule
13D is appropriate.
II. SOCIAL ISSUES AND OTHER CLIENT GUIDELINES
If a client has provided special instructions relating to the voting of
proxies, they should be noted in the client's account file and forwarded to the
proxy department. This is the responsibility of the investment professional or
sales assistant for the client. In accordance with Department of Labor
guidelines, the Advisers' policy is to vote on behalf of ERISA accounts in the
best interest of the plan participants with regard to social issues that carry
an economic impact. Where an account is not governed by ERISA, the Advisers will
vote shares held on behalf of the client in a manner consistent with any
individual investment/voting guidelines provided by the client. Otherwise the
Advisers will abstain with respect to those shares.
III. CLIENT RETENTION OF VOTING RIGHTS
If a client chooses to retain the right to vote proxies or if there is
any change in voting authority, the following should be notified by the
investment professional or sales assistant for the client.
- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account
In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. VOTING RECORDS
The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers' staff may request proxy-voting
records for use in presentations to current or prospective clients. Requests for
proxy voting records should be made at least ten days prior to client meetings.
If a client wishes to receive a proxy voting record on a quarterly,
semi-annual or annual basis, please notify the Proxy Voting Department. The
reports will be available for mailing approximately ten days after the quarter
end of the period. First quarter reports may be delayed since the end of the
quarter falls during the height of the proxy season.
A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.
V. VOTING PROCEDURES
1. Custodian banks, outside brokerage firms and First Clearing Corporation are
responsible for forwarding proxies directly to GAMCO.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms (VAFs) - Issued by ADP. VAFs must be
voted through the issuing institution causing a time lag. ADP is an outside
service contracted by the various institutions to issue proxy materials.
o Proxy cards which may be voted directly.
2. Upon receipt of the proxy, the number of shares each form represents is
logged into the proxy system according to security.
3. In the case of a discrepancy such as an incorrect number of shares, an
improperly signed or dated card, wrong class of security, etc., the issuing
custodian is notified by phone. A corrected proxy is requested. Any arrangements
are made to insure that a proper proxy is received in time to be voted
(overnight delivery, fax, etc.). When securities are out on loan on record date,
the custodian is requested to supply written verification.
4. Upon receipt of instructions from the proxy committee, the votes are cast and
recorded for each account on an individual basis.
Since January 1, 1992, records have been maintained on the Proxy Edge system.
The system is backed up regularly. From 1990 through 1991, records were
maintained on the PROXY VOTER system and in hardcopy format. Prior to 1990,
records were maintained on diskette and in hardcopy format.
PROXY EDGE records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How the Adviser voted for the client on each issue
The rationale for the vote when it is appropriate
Records prior to the institution of the PROXY EDGE system include:
Security name
Type of Meeting (Annual, Special, Contest)
Date of Meeting
Name of Custodian
Name of Client
Custodian Account Number
Adviser or Fund Account Number
Directors' recommendation
How the Adviser voted for the client on each issue
Date the proxy statement was received and by whom
Name of person posting the vote
Date and method by which the vote was cast
o From these records individual client proxy voting records are compiled. It
is our policy to provide institutional clients with a proxy voting record
during client reviews. In addition, we will supply a proxy voting record at
the request of the client on a quarterly, semi-annual or annual basis. On
an annual basis, all registered investment companies file their Proxy
Voting History for the period July 1 - June 30 on Form N-PX.
5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.
6. Shareholder Vote Authorization Forms issued by ADP are always sent directly
to a specific individual at ADP.
7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:
o VAFs can be faxed to ADP up until the time of the meeting. This is followed
up by mailing the original form.
o When a solicitor has been retained, the solicitor is called. At the
solicitor's direction, the proxy is faxed.
8. In the case of a proxy contest, records are maintained for each opposing
entity.
9. Voting in Person
a) At times it may be necessary to vote the shares in person. In this case, a
"legal proxy" is obtained in the following manner:
o Banks and brokerage firms using the services at ADP:
A call is placed to ADP requesting legal proxies. The VAFs are then sent
overnight to ADP. ADP issues individual legal proxies and sends them back via
overnight. A lead-time of at least two weeks prior to the meeting is needed to
do this. Alternatively, the procedures detailed below for banks not using ADP
may be implemented.
o Banks and brokerage firms issuing proxies directly:
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."
b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:
o A limited Power of Attorney appointing the attendee an Adviser representative.
o A list of all shares being voted by custodian only. Client names and account
numbers are not included. This list must be presented, along with the proxies,
to the Inspectors of Elections and/or tabulator at least one-half hour prior
to the scheduled start of the meeting. The tabulator must "qualify" the votes
(i.e. determine if the vote have previously been cast, if the votes have been
rescinded, etc. votes have previously been cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
APPENDIX A
PROXY GUIDELINES
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PROXY VOTING GUIDELINES
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GENERAL POLICY STATEMENT
It is the policy of GABELLI ASSET MANAGEMENT INC. to vote in the best economic
interests of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.
BOARD OF DIRECTORS
The advisers do not consider the election of the Board of Directors a routine
issue. Each slate of directors is evaluated on a case-by-case basis.
Factors taken into consideration include:
o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance
SELECTION OF AUDITORS
In general, we support the Board of Directors' recommendation for auditors.
BLANK CHECK PREFERRED STOCK
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.
CLASSIFIED BOARD
A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.
Where a classified board is in place, we will generally not support attempts to
change to an annually elected board.
When an annually elected board is in place, we generally will not support
attempts to classify the board.
INCREASE AUTHORIZED COMMON STOCK
The request to increase the amount of outstanding shares is considered on a
case-by-case basis.
Factors taken into consideration include:
o Future use of additional shares
-Stock split
-Stock option or other executive compensation plan
-Finance growth of company/strengthen balance sheet
-Aid in restructuring
-Improve credit rating
-Implement a poison pill or other takeover defense
o Amount of stock currently authorized but not yet issued or reserved for
stock option plans
o Amount of additional stock to be authorized and its dilutive effect
We will support this proposal if a detailed and verifiable plan for the use of
the additional shares is contained in the proxy statement.
CONFIDENTIAL BALLOT
We support the idea that a shareholder's identity and vote should be treated
with confidentiality.
However, we look at this issue on a case-by-case basis.
In order to promote confidentiality in the voting process, we endorse the use of
independent Inspectors of Election.
CUMULATIVE VOTING
In general, we support cumulative voting.
Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.
Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.
Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.
DIRECTOR LIABILITY AND INDEMNIFICATION
We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.
EQUAL ACCESS TO THE PROXY
The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.
FAIR PRICE PROVISIONS
Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.
We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.
Reviewed on a case-by-case basis.
GOLDEN PARACHUTES
Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.
We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by- case basis.
NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.
ANTI-GREENMAIL PROPOSALS
We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.
LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS
We support the right of shareholders to call a special meeting.
CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER
This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.
As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the
following:
o State of Incorporation
o Management history of responsiveness to shareholders
o Other mitigating factors
POISON PILL
In general, we do not endorse poison pills.
In certain cases where management has a history of being responsive to the needs
of shareholders and the stock is very liquid, we will reconsider this position.
REINCORPORATION
Generally, we support reincorporation for well-defined business reasons. We
oppose reincorporation if proposed solely for the purpose of reincorporating in
a state with more stringent anti-takeover statutes that may negatively impact
the value of the stock.
STOCK OPTION PLANS
Stock option plans are an excellent way to attract, hold and motivate directors
and employees. However, each stock option plan must be evaluated on its own
merits, taking into consideration the following:
o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing
stock option plans
SUPERMAJORITY VOTE REQUIREMENTS
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of a simple majority of the outstanding shares. In
general, we oppose supermajority-voting requirements. Supermajority requirements
often exceed the average level of shareholder participation. We support
proposals' approvals by a simple majority of the shares voting.
LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT
Written consent allows shareholders to initiate and carry on a shareholder
action without having to wait until the next annual meeting or to call a special
meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a
shareholder meeting.
Reviewed on a case-by-case basis.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Provide the information specified in the table with respect to any purchase made
by or on behalf of the registrant or any "affiliated purchaser" as defined in
Rule 10b-18(a)(3) under the Exchange Act (17CFR 240-10b-18(a)(3)), of shares or
other units of any class of the registrant's equity securities that is
registered by the registrant pursuant to Section 12 of the Exchange Act (15
U.S.C. 781).
REGISTRANT PURCHASES OF EQUITY SECURITIES
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(C) TOTAL NUMBER OF SHARES (OR (D) MAXIMUM NUMBER (OR APPROXIMATE
(A) TOTAL NUMBER (B) AVERAGE UNITS) PURCHASED AS PART OF DOLLAR VALUE) OF SHARES (OR UNITS) THAT
OF SHARES (OR PRICE PAID PER PUBLICLY ANNOUNCED PLANS OR MAY YET BE PURCHASED UNDER
PERIOD UNITS) PURCHASED SHARE (OR UNIT) PROGRAMS THE PLANS OR PROGRAMS
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Month #1 Common - N/A Common - N/A Common - N/A Common - 23,047,887
07/01/04
through Preferred Series A Preferred Preferred Series A - 500 Preferred Series A - 1,184,700 - 500 =
07/31/04 - 500 Series A - 1,184,200
$23.12
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Month #2 Common - N/A Common - N/A Common - N/A Common - 23,071,898
08/01/04
through Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,184,200
08/31/04 - N/A Series A - N/A
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Month #3 Common - N/A Common - N/A Common - N/A Common - 23,094,835
09/01/04
through Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,184,200
09/30/04 - N/A Series A - N/A
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Month #4 Common - N/A Common - N/A Common - N/A Common - 23,118,184
10/01/04
through Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,184,200
10/31/04 - N/A Series A - N/A
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Month #5 Common - N/A Common - N/A Common - N/A Common - 23,143,363
11/01/04
through Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,184,200
11/30/04 - N/A Series A - N/A
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Month #6 Common - N/A Common - N/A Common - N/A Common - 28,947,268
12/01/04
through Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,184,200
12/31/04 - N/A Series A - N/A
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Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series A Preferred Preferred Series A - 500
- 500 Series A -
$23.12
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Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the potential
repurchase of common and preferred shares occurs quarterly in the Fund's
quarterly report in accordance with Section 23(c) of the Investment Company Act
of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all common
shares outstanding may be repurchased when the Fund's common shares are trading
at a discount of 10% or more from the net asset value of the shares.
Any or all preferred shares outstanding may be repurchased when the
Fund's preferred shares are trading at a discount to the liquidation value of
$25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior
to expiration, or under which the registrant does not intend to make
further purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, that is the subject of disclosure required by Item
2, filed as exhibit (a)(1) to the Registrant's Form N-CSR, filed
on March 10, 2004 (Accession No. 0000935069-04-000466).
(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 Utility Trust
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive Officer
Date March 9, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
& Principal Financial Officer
Date March 9, 2005
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* Print the name and title of each signing officer under his or her signature.