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
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The Gabelli Utility Trust
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2006
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[LOGO]
THE GABELLI
UTILITY TRUST
THE GABELLI UTILITY TRUST
Semi-Annual Report
June 30, 2006
TO OUR SHAREHOLDERS,
During the second quarter of 2006, The Gabelli Utility Trust's (the
"Fund") total return was 3.6% on a net asset value ("NAV") basis while the
Standard & Poor's ("S&P") 500 Utility Index rose 5.7% and the Lipper Utility
Fund Average rose 3.8%. For the six month period ended June 30, 2006, the Fund's
NAV total return was 8.7% versus gains of 4.5% and 6.9% for the S&P 500 Utility
Index and the Lipper Utility Fund Average, respectively. The Fund's market price
on June 30, 2006 was $8.76, which equates to a 21.5% premium to its NAV of
$7.21. The Fund's market price declined 1.3% and 1.4% for the second quarter and
the six month period ended June 30, 2006, respectively.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2006.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2006 (A)
------------------------------------------------
SINCE
YEAR TO INCEPTION
QUARTER DATE 1 YEAR 3 YEAR 5 YEAR (7/9/99)
------- ---- ------ ------ ------ --------
GABELLI UTILITY TRUST
NAV RETURN (b) ........................ 3.60% 8.67% 7.13% 12.87% 8.16% 9.43%
INVESTMENT RETURN (c) ................. (1.34) (1.41) (3.72) 4.31 7.61 10.83
S&P 500 Utility Index ................... 5.69 4.47 5.92 17.67 1.26 3.97
Lipper Utility Fund Average ............. 3.80 6.91 10.57 17.77 3.97 4.17
(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
PERFORMANCE DATA PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE
INFORMATION AS OF THE MOST RECENT MONTH END. PERFORMANCE RETURNS FOR
PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. INVESTORS SHOULD CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE
FUND BEFORE INVESTING. THE S&P 500 UTILITY INDEX IS AN UNMANAGED INDICATOR
OF ELECTRIC AND GAS UTILITY STOCK PERFORMANCE. THE LIPPER AVERAGE REFLECTS
THE AVERAGE PERFORMANCE OF OPEN-END MUTUAL FUNDS CLASSIFIED IN THIS
PARTICULAR CATEGORY. DIVIDENDS ARE CONSIDERED REINVESTED.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN 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 IS BASED ON AN INITIAL NAV 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 IS BASED ON AN
INITIAL OFFERING PRICE OF $7.50.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The financial
statements and investment portfolio are mailed separately from the commentary.
Both the commentary and the financial statements, including the portfolio of
investments, will be available on our website at www.gabelli.com/funds.
--------------------------------------------------------------------------------
THE GABELLI UTILITY TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments as of June 30, 2006:
Energy and Utilities: Electric Integrated .......................... 44.0%
Repurchase Agreements .............................................. 9.2%
Energy and Utilities: Natural Gas Utilities ........................ 8.4%
Energy and Utilities:
Electric Transmission and Distribution ........................... 8.3%
Energy and Utilities: Natural Gas Integrated ....................... 6.3%
Telecommunications ................................................. 5.8%
Cable and Satellite ................................................ 3.5%
Energy and Utilities: Global Utilities ............................. 3.2%
Energy and Utilities: Water ........................................ 3.0%
Energy and Utilities: Merchant Energy .............................. 1.9%
Diversified Industrial ............................................. 1.5%
Entertainment ...................................................... 0.9%
Wireless Communications ............................................ 0.9%
Energy and Utilities: Oil .......................................... 0.7%
Communications Equipment ........................................... 0.7%
Transportation ..................................................... 0.4%
Energy and Utilities: Services ..................................... 0.3%
Metals and Mining .................................................. 0.2%
Aerospace .......................................................... 0.2%
Aviation: Parts and Services ....................................... 0.2%
Energy and Utilities: Alternative Energy ........................... 0.2%
Equipment and Supplies ............................................. 0.1%
Real Estate ........................................................ 0.1%
Agriculture ........................................................ 0.0%
-----
100.0%
=====
THE UTILITY TRUST (THE "FUND") FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS
WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q,
THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED MARCH 31, 2006. SHAREHOLDERS
MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT
800-GABELLI (800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S
WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE COMMISSION'S
PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE
PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. A description of the
Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, (i)
by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli Funds at
One Corporate Center, Rye, NY 10580-1422; and (iii) by visiting the Securities
and Exchange Commission's website at www.sec.gov.
SHAREHOLDER MEETING - MAY 15, 2006 - FINAL RESULTS
The Annual Meeting of Shareholders was held on May 15, 2006 at the
Greenwich Library in Greenwich, Connecticut. At that meeting, common and
preferred shareholders voting together as a single class elected John D. Gabelli
and Anthony R. Pustorino as Trustees of the Fund. There were 27,373,592 votes
and 27,356,738 votes cast in favor of each Trustee and 505,450 votes and 522,305
votes withheld, respectively. In addition, preferred shareholders voting as a
separate class elected James P. Conn as a Trustee. There were 1,072,881 votes
cast in favor of Mr. Conn and 11,081 votes withheld.
Mario J. Gabelli, Thomas E. Bratter, Anthony J. Colavita, Vincent D.
Enright, Frank J. Fahrenkopf, Jr., Robert J. Morrissey, and Salvatore J. Zizza
continue to serve in their capacities as Trustees.
We thank you for your participation and appreciate your continued support.
2
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS
JUNE 30, 2006 (UNAUDITED)
MARKET
SHARES COST VALUE
--------- ------------ ------------
COMMON STOCKS -- 89.1%
AEROSPACE -- 0.2%
65,000 Rolls-Royce Group plc+ ......................................... $ 513,387 $ 497,624
------------ ------------
AGRICULTURE -- 0.0%
800 Cadiz Inc.+ .................................................... 3,000 13,608
------------ ------------
AVIATION: PARTS AND SERVICES -- 0.2%
6,000 Sequa Corp., Cl. A+ ............................................ 371,619 489,000
------------ ------------
CABLE AND SATELLITE -- 3.5%
100,000 Cablevision Systems Corp.,
Cl. A+ ....................................................... 1,668,308 2,145,000
5,000 Cogeco Cable Inc. .............................................. 105,008 93,523
20,000 Cogeco Inc. .................................................... 389,461 358,327
12,000 Comcast Corp., Cl. A+ .......................................... 387,350 392,880
150,000 DIRECTV Group Inc.+ ............................................ 2,435,609 2,475,000
60,000 EchoStar Communications
Corp., Cl. A+ ................................................ 1,873,736 1,848,600
35,000 Liberty Global Inc., Cl. A+ .................................... 739,454 752,500
20,000 Liberty Global Inc., Cl. C+ .................................... 421,966 411,400
20,000 Rogers Communications
Inc., Cl. B .................................................. 553,618 808,000
------------ ------------
8,574,510 9,285,230
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.7%
280,000 Furukawa Electric Co. Ltd. ..................................... 1,441,034 1,810,556
------------ ------------
DIVERSIFIED INDUSTRIAL -- 1.5%
18,000 Catalytica Energy Systems Inc.+ ................................ 149,778 25,560
15,000 Cooper Industries Ltd., Cl. A .................................. 1,128,452 1,393,800
75,000 General Electric Co. ........................................... 2,510,140 2,472,000
------------ ------------
3,788,370 3,891,360
------------ ------------
ENERGY AND UTILITIES: ALTERNATIVE ENERGY -- 0.2%
12,000 Ormat Technologies Inc. ........................................ 180,000 457,800
------------ ------------
ENERGY AND UTILITIES: ELECTRIC INTEGRATED -- 44.0%
355,000 Allegheny Energy Inc.+ ......................................... 8,225,284 13,159,850
24,000 ALLETE Inc. .................................................... 749,469 1,136,400
75,000 Alliant Energy Corp. ........................................... 1,824,383 2,572,500
20,000 Ameren Corp. ................................................... 892,320 1,010,000
60,000 American Electric
Power Co. Inc. ............................................... 1,918,567 2,055,000
500,000 Aquila Inc.+ ................................................... 1,515,272 2,105,000
6,000 Avista Corp. ................................................... 106,558 136,980
35,000 Black Hills Corp. .............................................. 1,060,967 1,201,550
30,000 Cleco Corp. .................................................... 570,612 697,500
190,000 CMS Energy Corp.+ .............................................. 1,473,074 2,458,600
76,000 Constellation Energy Group ..................................... 4,076,214 4,143,520
3,000 Dominion Resources Inc. ........................................ 152,527 224,370
160,000 DPL Inc. ....................................................... 3,365,523 4,288,000
24,000 DTE Energy Co. ................................................. 978,366 977,760
240,000 Duke Energy Corp. .............................................. 5,000,875 7,048,800
MARKET
SHARES COST VALUE
--------- ------------ ------------
90,000 Edison International ........................................... $ 3,861,403 $ 3,510,000
200,000 El Paso Electric Co.+ .......................................... 2,637,085 4,032,000
12,000 Empire District Electric Co. ................................... 245,171 246,600
3,000 Entergy Corp. .................................................. 84,249 212,250
55,979 FirstEnergy Corp. .............................................. 2,290,333 3,034,622
131,850 Florida Public Utilities Co. ................................... 1,133,947 1,659,991
130,000 FPL Group Inc. ................................................. 5,340,409 5,379,400
105,000 Great Plains Energy Inc. ....................................... 3,272,186 2,925,300
59,100 Green Mountain Power Corp. ..................................... 1,504,083 2,008,809
50,000 Hawaiian Electric
Industries Inc. .............................................. 1,321,257 1,395,500
20,000 Kerr-McGee Corp. ............................................... 1,377,293 1,387,000
64,000 Maine & Maritimes Corp. ........................................ 2,029,678 998,400
66,000 MGE Energy Inc. ................................................ 1,951,270 2,055,900
45,000 NiSource Inc. .................................................. 970,021 982,800
40,000 NorthWestern Corp. ............................................. 1,394,356 1,374,000
101,000 OGE Energy Corp. ............................................... 2,429,411 3,538,030
25,000 Otter Tail Corp. ............................................... 667,745 683,250
50,000 PG&E Corp. ..................................................... 1,309,559 1,964,000
20,000 PNM Resources Inc. ............................................. 290,976 499,200
100,000 Progress Energy Inc. ........................................... 4,383,880 4,287,000
40,000 Progress Energy Inc., CVO+ ..................................... 20,800 12,000
25,000 Public Service Enterprise
Group Inc. ................................................... 1,299,329 1,653,000
35,000 Puget Energy Inc. .............................................. 795,990 751,800
55,000 SCANA Corp. .................................................... 1,694,645 2,121,900
30,000 Sierra Pacific Resources+ ...................................... 227,798 420,000
105,000 TECO Energy Inc. ............................................... 1,580,547 1,568,700
25,000 TXU Corp. ...................................................... 1,303,125 1,494,750
165,000 Unisource Energy Corp. ......................................... 4,059,704 5,139,750
27,500 Unitil Corp. ................................................... 727,736 661,650
47,000 Vectren Corp. .................................................. 1,162,166 1,280,750
252,500 Westar Energy Inc. ............................................. 4,726,887 5,315,125
80,000 Wisconsin Energy Corp. ......................................... 2,806,837 3,224,000
52,000 WPS Resources Corp. ............................................ 2,658,058 2,579,200
270,000 Xcel Energy Inc. ............................................... 4,521,685 5,178,600
------------ ------------
97,989,630 116,791,107
------------ ------------
ENERGY AND UTILITIES:
ELECTRIC TRANSMISSION AND DISTRIBUTION -- 8.3%
55,000 CH Energy Group Inc. ........................................... 2,495,940 2,640,000
57,000 Consolidated Edison Inc. ....................................... 2,257,002 2,533,080
220,000 Duquesne Light
Holdings Inc. ................................................ 3,846,365 3,616,800
80,000 Energy East Corp. .............................................. 1,767,343 1,914,400
170,000 Northeast Utilities ............................................ 3,354,147 3,513,900
215,000 NSTAR .......................................................... 4,848,628 6,149,000
22,500 Pepco Holdings Inc. ............................................ 449,918 530,550
22,000 UIL Holdings Corp. ............................................. 966,711 1,238,380
------------ ------------
19,986,054 22,136,110
------------ ------------
See accompanying notes to financial statements.
3
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2006 (UNAUDITED)
MARKET
SHARES COST VALUE
--------- ------------ ------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: GLOBAL UTILITIES -- 3.2%
1,500 Areva .......................................................... $ 613,197 $ 1,041,787
8,000 Chubu Electric Power Co. Inc. .................................. 189,551 216,008
8,000 Chugoku Electric
Power Co. Inc. ............................................... 150,761 169,172
9,600 Electric Power Development
Co. Ltd. ..................................................... 240,854 365,746
54,000 Endesa SA ...................................................... 1,381,000 1,877,979
200,000 Enel SpA ....................................................... 1,531,070 1,724,160
300,000 Hera SpA ....................................................... 433,286 997,659
8,000 Hokkaido Electric
Power Co. Inc. ............................................... 156,870 189,794
8,000 Hokuriku Electric Power Co. .................................... 146,449 185,250
8,000 Kansai Electric Power Co. Inc. ................................. 158,472 178,959
30,000 Korea Electric Power
Corp., ADR ................................................... 445,796 568,800
8,000 Kyushu Electric Power Co. Inc. ................................. 167,818 185,949
1,000 Niko Resources Ltd. ............................................ 57,456 56,472
8,000 Shikoku Electric
Power Co. Inc. ............................................... 155,987 179,308
15,000 Tohoku Electric
Power Co. Inc. ............................................... 284,854 328,993
8,000 Tokyo Electric Power Co. Inc. .................................. 191,450 220,902
------------ ------------
6,304,871 8,486,938
------------ ------------
ENERGY AND UTILITIES: MERCHANT ENERGY -- 1.8%
230,000 AES Corp.+ ..................................................... 3,035,423 4,243,500
20,000 Calpine Corp.+ ................................................. 52,600 7,800
35,000 Dynegy Inc., Cl. A+ ............................................ 175,000 191,450
8,130 Mirant Corp.+ .................................................. 37,373 217,884
------------ ------------
3,300,396 4,660,634
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 5.3%
180,000 El Paso Corp. .................................................. 1,638,286 2,700,000
18,000 EnergySouth Inc. ............................................... 426,946 562,140
100,000 National Fuel Gas Co. .......................................... 2,436,172 3,514,000
104,000 ONEOK Inc. ..................................................... 2,500,709 3,540,160
117,500 Southern Union Co. ............................................. 1,896,520 3,179,550
12,000 Western Gas Resources Inc. ..................................... 716,370 718,200
------------ ------------
9,615,003 14,214,050
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS UTILITIES -- 8.4%
28,000 AGL Resources Inc. ............................................. 692,019 1,067,360
60,000 Atmos Energy Corp. ............................................. 1,481,243 1,674,600
35,000 Cascade Natural Gas Corp. ...................................... 748,033 738,150
10,000 Chesapeake Utilities Corp. ..................................... 224,112 300,800
3,000 Corning Natural Gas Corp.+ ..................................... 43,760 42,000
29,700 Delta Natural Gas Co. Inc. ..................................... 494,549 727,947
120,000 KeySpan Corp. .................................................. 4,387,149 4,848,000
90,000 Nicor Inc. ..................................................... 3,094,432 3,735,000
50,000 Peoples Energy Corp. ........................................... 1,981,623 1,795,500
MARKET
SHARES COST VALUE
--------- ------------ ------------
36,000 Piedmont Natural Gas
Co. Inc. ..................................................... $ 568,829 $ 874,800
6,000 RGC Resources Inc. ............................................. 128,344 150,750
140,000 SEMCO Energy Inc.+ ............................................. 1,232,605 778,400
180,000 Southwest Gas Corp. ............................................ 4,469,506 5,641,200
------------ ------------
19,546,204 22,374,507
------------ ------------
ENERGY AND UTILITIES: OIL -- 0.7%
4,000 Anadarko Petroleum Corp. ....................................... 141,060 190,760
2,645 Chevron Corp. .................................................. 165,259 164,149
20,000 Exxon Mobil Corp. .............................................. 1,168,383 1,227,000
4,000 Royal Dutch Shell plc,
Cl. A, ADR ................................................... 237,320 267,920
------------ ------------
1,712,022 1,849,829
------------ ------------
ENERGY AND UTILITIES: SERVICES -- 0.3%
70,000 ABB Ltd., ADR .................................................. 764,610 907,200
------------ ------------
ENERGY AND UTILITIES: WATER -- 3.0%
14,000 American States Water Co. ...................................... 312,701 499,100
21,333 Aqua America Inc. .............................................. 209,100 486,179
16,500 Artesian Resources Corp.,
Cl. A ........................................................ 257,250 476,190
20,500 BIW Ltd. ....................................................... 385,069 371,050
20,520 California Water Service Group ................................. 566,928 733,385
7,500 Connecticut Water Service Inc. ................................. 146,455 175,650
51,333 Middlesex Water Co. ............................................ 801,882 971,220
24,088 Pennichuck Corp. ............................................... 471,750 492,359
120,200 SJW Corp. ...................................................... 1,948,166 3,059,090
8,101 Southwest Water Co. ............................................ 52,047 96,969
12,000 Suez SA ........................................................ 387,529 492,690
12,000 Suez SA, Strips+ ............................................... 0 153
6,000 York Water Co. ................................................. 108,269 143,340
------------ ------------
5,647,146 7,997,375
------------ ------------
ENTERTAINMENT -- 0.9%
60,000 Time Warner Inc. ............................................... 1,043,038 1,038,000
40,000 Vivendi SA, ADR ................................................ 1,250,682 1,396,400
------------ ------------
2,293,720 2,434,400
------------ ------------
EQUIPMENT AND SUPPLIES -- 0.1%
50,000 Capstone Turbine Corp.+ ........................................ 83,080 114,000
7,000 Mueller Industries Inc. ........................................ 308,308 231,210
------------ ------------
391,388 345,210
------------ ------------
METALS AND MINING -- 0.2%
20,000 Compania de Minas
Buenaventura SA, ADR ......................................... 444,517 545,600
------------ ------------
REAL ESTATE -- 0.1%
4,050 Brookfield Asset
Management Inc., Cl. A ....................................... 65,353 164,511
------------ ------------
See accompanying notes to financial statements.
4
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2006 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------ ------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 5.2%
77,942 AT&T Inc. .................................................... $ 1,902,440 $ 2,173,802
60,000 BCE Inc. ..................................................... 1,302,420 1,419,000
35,000 BellSouth Corp. .............................................. 970,977 1,267,000
30,000 BT Group plc, ADR ............................................ 1,026,589 1,328,700
175,000 Cincinnati Bell Inc.+ ........................................ 814,934 717,500
10,200 Commonwealth Telephone
Enterprises Inc. ........................................... 394,296 338,232
20,000 D&E Communications Inc. ...................................... 190,498 216,800
20,000 Deutsche Telekom AG, ADR ..................................... 367,940 320,800
725,000 Eircom Group plc ............................................. 2,025,877 2,021,539
2,000 France Telecom SA, ADR ....................................... 22,799 43,720
200 Hutchison Telecommunications
International Ltd.+ ........................................ 163 322
500 Mobistar SA .................................................. 44,141 39,683
200 PT Indosat Tbk+ .............................................. 128 92
1,200 Tele2 AB, Cl. B .............................................. 14,604 12,131
3,000 Telecom Italia SpA, ADR ...................................... 99,726 83,760
40,000 Touch America Holdings Inc.+ ................................. 38,488 64
115,000 Verizon Communications Inc. .................................. 4,492,272 3,851,350
------------ ------------
13,708,292 13,834,495
------------ ------------
TRANSPORTATION -- 0.4%
25,000 GATX Corp. ................................................... 760,114 1,062,500
------------ ------------
WIRELESS COMMUNICATIONS -- 0.9%
600 America Movil SA de CV,
Cl. L, ADR ................................................. 9,424 19,956
2,000 China Mobile Ltd., ADR ....................................... 33,988 57,220
2,000 China Unicom Ltd., ADR ....................................... 16,278 17,820
200 Cosmote Mobile
Telecommunications SA ...................................... 3,702 4,502
4,000 Mobile TeleSystems, ADR ...................................... 137,612 117,760
190 MobileOne Ltd. ............................................... 218 249
2,000 QUALCOMM Inc. ................................................ 78,579 80,140
600 SK Telecom Co. Ltd., ADR ..................................... 12,374 14,052
200 SmarTone
Telecommunications
Holdings Ltd. .............................................. 207 198
1,000 Telefonica Moviles SA, ADR ................................... 11,144 13,980
28,000 United States Cellular Corp.+ ................................ 1,294,140 1,696,800
6,000 Vimpel-Communications,
ADR+ ......................................................... 196,099 274,920
200 Virgin Mobile Holdings plc ................................... 868 1,372
------------ ------------
1,794,633 2,298,969
------------ ------------
TOTAL COMMON
STOCKS ..................................................... 199,195,873 236,548,613
------------ ------------
MARKET
SHARES COST VALUE
----------- ------------ ------------
CONVERTIBLE PREFERRED STOCKS -- 1.6%
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 1.0%
2,000 El Paso Corp.,
4.990% Cv. Pfd. (a) ........................................ $ 1,945,987 $ 2,591,948
------------ ------------
TELECOMMUNICATIONS -- 0.6%
31,033 Citizens Communications Co.,
5.000% Cv. Pfd. ............................................ 1,542,645 1,706,815
------------ ------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ........................................... 3,488,632 4,298,763
------------ ------------
WARRANTS -- 0.1%
ENERGY AND UTILITIES: MERCHANT ENERGY -- 0.1%
26,107 Mirant Corp., Ser. A,
expire 01/03/11+ ........................................... 51,616 263,680
------------ ------------
PRINCIPAL
AMOUNT
-----------
REPURCHASE AGREEMENT -- 9.2%
$24,517,000 Barclays Capital Inc., 4.400%,
dated 06/30/06, due 07/03/06,
proceeds at maturity,
$24,525,990 (b) ............................................ 24,517,000 24,517,000
------------ ------------
TOTAL INVESTMENTS -- 100.0% ................................................ $227,253,121 265,628,056
============
OTHER ASSETS AND LIABILITIES (NET) ......................................................... 1,598,456
PREFERRED STOCK
(1,185,200 preferred shares outstanding) ................................................. (54,605,000)
------------
NET ASSETS COMMON SHARES
(29,491,413 common shares outstanding) ................................................... $212,621,512
============
NET ASSET VALUE PER COMMON SHARE
($212,621,512 / 29,491,413 shares outstanding) ........................................... $7.21
=====
----------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. The security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
2006, the Rule 144A security is considered liquid and the market value
amounted to $2,591,948 or 0.98% of total investments.
(b) Collateralized by U.S. Treasury Bond, 10.38%, due 11/15/12, market value
$25,007,340.
+ Non-income producing security.
ADR American Depository Receipt
CVO Contingent Value Obligation
See accompanying notes to financial statements.
5
THE GABELLI UTILITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006 (UNAUDITED)
ASSETS:
Investments, at value (cost $202,736,121) ................. $241,111,056
Repurchase agreements, at value
(cost $24,517,000) ...................................... 24,517,000
Cash ...................................................... 396
Receivable for investments sold ........................... 605,213
Dividends and interest receivable ......................... 558,376
Unrealized appreciation on swap contracts ................. 1,388,267
Other assets .............................................. 5,530
------------
TOTAL ASSETS .............................................. 268,185,838
------------
LIABILITIES:
Payable for investment advisory fees ...................... 442,443
Payable for shareholder communications expenses ........... 143,734
Payable for offering expenses ............................. 77,991
Payable for payroll expenses .............................. 40,862
Dividends payable ......................................... 33,983
Other accrued expenses and liabilities .................... 220,313
------------
TOTAL LIABILITIES ......................................... 959,326
------------
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 SHAREHOLDERS ..................................... $212,621,512
============
NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS CONSIST OF:
Shares of beneficial interest, at $0.001 par value ........ $ 29,491
Additional paid-in capital ................................ 174,002,303
Accumulated distributions in excess of net
realized gain on investments, swap contracts,
and foreign currency transactions ....................... (1,179,604)
Net unrealized appreciation on investments and
swap contracts .......................................... 39,763,202
Net unrealized appreciation on foreign
currency translations ................................... 6,120
------------
NET ASSETS ................................................ $212,621,512
============
NET ASSET VALUE PER COMMON SHARE:
($212,621,512 / 29,491,413 shares outstanding;
unlimited number of shares authorized) .................. $7.21
=====
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $44,058) ............... $ 3,685,454
Interest .................................................. 520,941
------------
TOTAL INVESTMENT INCOME ................................... 4,206,395
------------
EXPENSES:
Investment advisory fees .................................. 1,311,744
Shareholder communications expenses ....................... 185,696
Shareholder services fees ................................. 96,326
Payroll expenses .......................................... 76,874
Trustees' fees ............................................ 36,945
Auction agent expenses .................................... 31,720
Legal and audit fees ...................................... 28,802
Custodian fees ............................................ 21,189
Miscellaneous expenses .................................... 85,525
------------
TOTAL EXPENSES ............................................ 1,874,821
------------
Less: Custodian fee credits ............................... (3,331)
------------
NET EXPENSES .............................................. 1,871,490
------------
NET INVESTMENT INCOME ..................................... 2,334,905
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, SWAP CONTRACTS, AND FOREIGN CURRENCY:
Net realized gain on investments .......................... 1,192,400
Net realized loss on foreign currency transactions ........ (64,860)
Net realized gain on swap contracts ....................... 78,341
------------
Net realized gain on investments, swap contracts,
and foreign currency transactions ....................... 1,205,881
Net change in unrealized appreciation/depreciation
on investments, swap contracts, and foreign
currency translations ................................... 14,762,090
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, SWAP CONTRACTS, AND
FOREIGN CURRENCY ........................................ 15,967,971
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... 18,302,876
Total Distributions to Preferred Stock Shareholders ....... (1,402,658)
------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS .................. $ 16,900,218
============
See accompanying notes to financial statements.
6
THE GABELLI UTILITY TRUST
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
---------------- -----------------
OPERATIONS:
Net investment income ................................................................ $ 2,334,905 $ 5,093,767
Net realized gain on investments, swap contracts, and foreign currency transactions .. 1,205,881 18,709,379
Net change in unrealized appreciation/depreciation on investments, swap contracts,
and foreign currency translations .................................................. 14,762,090 (5,614,421)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................... 18,302,876 18,188,725
------------- -------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
Net investment income ................................................................ (965,335)* (497,129)
Net realized short-term gains on investments and foreign currency transactions ....... (158,832)* (80,812)
Net realized long-term gains on investments and foreign currency transactions ........ (278,491)* (1,912,493)
------------- -------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS ........................................ (1,402,658) (2,490,434)
------------- -------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS .......................................................... 16,900,218 15,698,291
------------- -------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ................................................................ (1,696,495)* (4,186,454)
Net realized short-term gains on investments and foreign currency transactions ....... (279,135)* (680,540)
Net realized long-term gains on investments and foreign currency transactions ........ (489,423)* (16,105,611)
Return of capital .................................................................... (8,112,166)* --
------------- -------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS ........................................... (10,577,219) (20,972,605)
------------- -------------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment of
dividends and distributions and rights offering .................................... 1,600,486 3,037,284
Offering costs for preferred shares charged to paid-in capital ....................... -- 19,950
Offering costs for issuance of rights charged to paid-in capital ..................... -- (43,187)
------------- -------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS .............................. 1,600,486 3,014,047
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ............ 7,923,485 (2,260,267)
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Beginning of period .................................................................. 204,698,027 206,958,294
------------- -------------
End of period (including undistributed net investment income of
$0 and $326,925, respectively) ..................................................... $ 212,621,512 $ 204,698,027
============= =============
----------
* Based on fiscal year to date book income. Amounts are subject to change
and recharacterization at fiscal year end.
See accompanying notes to financial statements.
7
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The Gabelli Utility Trust (the "Fund") is a non-diversified
closed-end 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"). The Fund 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 Fund had a 4 for 3 stock split increasing the balance of Fund shares
held by the Equity Trust to 13,333. On July 9, 1999, the Equity Trust
contributed $79,487,260 in cash and securities in exchange for shares of the
Fund, 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 Fund for every ten
shares of the Equity Trust. Investment operations commenced on July 9, 1999.
The Fund's primary objective is long-term growth of capital and income.
The Fund will invest 80% of its assets, 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 Fund 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 United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the Board
if market conditions change significantly after the close of the foreign market
but prior to the close of business on the day the securities are being valued.
Debt instruments with remaining maturities of 60 days or less that are not
credit impaired are valued at amortized cost, unless the Board determines such
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
8
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Securities and assets for which market quotations are not readily
available are fair valued as determined by the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At June 30,
2006, the Fund had an investment of $24,517,000 in a repurchase agreement.
SWAP AGREEMENTS. The Fund may enter into interest rate swap or cap
transactions. The use of interest rate swaps and caps is a highly specialized
activity that involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. In an interest rate
swap, the Fund would agree to pay to the other party to the interest rate swap
(which is known as the "counterparty") periodically a fixed rate payment in
exchange for the counterparty agreeing to pay to the Fund periodically a
variable rate payment that is intended to approximate the Fund's variable rate
payment obligation on the Series B Preferred Stock. In an interest rate cap, the
Fund would pay a premium to the counterparty and, to the extent that a specified
variable rate index exceeds a predetermined fixed rate, would receive from the
counterparty payments of the difference based on the notional amount of such
cap. Interest rate swap and cap transactions introduce additional risk because
the Fund would remain obligated to pay preferred stock dividends when due in
accordance with the Articles Supplementary even if the counterparty defaulted.
If there is a default by the counterparty to a swap contract, the Fund will be
limited to contractual remedies pursuant to the agreements related to the
transaction. There is no assurance that the swap contract counterparties will be
able to meet their obligations pursuant to the swap contracts or that, in the
event of default, the Fund will succeed in pursuing contractual remedies. The
Fund thus assumes the risk that it may be delayed in or prevented from obtaining
payments owed to it pursuant to the swap contracts. The creditworthiness of the
swap contract counterparties is closely monitored in order to minimize this
risk. Depending on the general state of short-term interest rates and the
returns on the Fund's portfolio securities at that point in time, such a default
could negatively affect the Fund's ability to make dividend payments for the
Series B Preferred Stock. In addition, at the time an interest rate swap or cap
transaction reaches its scheduled termination date, there is a risk that the
Fund will not be able to obtain a replacement transaction or that the terms of
the replacement will not be as favorable as on the expiring transaction. If this
occurs, it could have a negative impact on the Fund's ability to make dividend
payments on the Series B Preferred Stock.
9
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities.
Changes in the value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps, are reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.
The Fund has entered into an interest rate swap agreement with Citibank
N.A. Under the agreement, the Fund receives a floating rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at June 30, 2006 are as follows:
NOTIONAL FLOATING RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE APPRECIATION
-------- ---------- -------------------- ----------- ------------
$25,000,000 4.00% 5.11063% June 2, 2010 $1,388,267
----------
* Based on Libor (London Interbank Offered Rate).
FUTURES CONTRACTS. The Fund may engage in futures contracts for the
purpose of hedging against changes in the value of its portfolio securities and
in the value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.
There are several risks in connection with the use of futures contracts as
a hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At June 30, 2006, there were no open
futures contracts.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At June 30, 2006, there were no open forward foreign
exchange contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are
maintained in U.S. dollars. Foreign currencies, investments, and other assets
and liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates
10
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
of such transactions. Unrealized gains and losses that result from changes in
foreign exchange rates and/or changes in market prices of securities have been
included in unrealized appreciation/depreciation on investments and foreign
currency translations. Net realized foreign currency gains and losses resulting
from changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains
on investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gains or losses on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
CUSTODIAN FEE CREDITS. When cash balances are maintained in the custody
account, the Fund receives credits which are used to offset custodian fees. The
gross expenses paid under the custody arrangement are included in custodian fees
in the Statement of Operations with the corresponding expense offset, if any,
shown as "custodian fee credits".
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common shareholders are
recorded on the ex-dividend date. Distributions to shareholders are based on
income and capital gains as determined in accordance with Federal income tax
regulations, which may differ from income and capital gains as determined under
U.S. generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
and foreign currency transactions held by the Fund, timing differences, and
differing characterizations of distributions made by the Fund. Distributions
from net investment income include net realized gains on foreign currency
transactions. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the fiscal year
ended December 31, 2005, reclassifications were made to decrease net investment
income by $54,526, and to decrease accumulated distributions in excess of net
realized gain on investments, swap contracts, and foreign currency transactions
by $54,526.
Distributions to shareholders of the Fund's 5.625% Series A Cumulative
Preferred Stock and Series B Auction Rate Cumulative Preferred Stock
("Cumulative Preferred Stock") are recorded on a daily basis and are determined
as described in Note 5.
11
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The tax character of distributions paid during the fiscal year ended
December 31, 2005 was as follows:
COMMON PREFERRED
----------- ----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ........... $ 4,866,994 $ 577,941
Net long-term capital gains .......................... 16,105,611 1,912,493
----------- ----------
Total distributions paid ............................. $20,972,605 $2,490,434
=========== ==========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
As of December 31, 2005, the components of accumulated earnings/(losses)
on a tax basis were as follows:
Net unrealized appreciation on investments .................. $23,083,225
Net unrealized appreciation of foreign currency
and swap contracts ........................................ 738,487
Dividends payable ........................................... (35,296)
Undistributed ordinary income ............................... 368,137
-----------
Total accumulated earnings .................................. $24,154,553
===========
The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation/depreciation at June 30, 2006:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ --------------
Investments .................... $228,432,725 $ 42,640,268 $ (5,444,937) $ 37,195,331
Swap contracts ................. -- 1,388,267 -- 1,388,267
------------ ------------ ------------ ------------
$228,432,725 $ 44,028,535 $ (5,444,937) $ 38,583,598
============ ============ ============ ============
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Fund has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Fund will pay the Adviser a fee, computed weekly and paid
monthly, equal on an annual basis to 1.00% of the value of its average weekly
net assets including the liquidation value of the preferred stock. In accordance
with the Advisory Agreement, the Adviser provides a continuous investment
program for the Fund's portfolio and oversees the administration of all aspects
of the Fund's business and affairs. The Adviser has agreed to reduce the
management fee on the incremental assets attributable to the Cumulative
Preferred Stock if the total return of the net asset value ("NAV") of the common
shares of the Fund, including distributions and advisory fee subject to
reduction, does not exceed the stated dividend rate or corresponding swap rate
of the Cumulative Preferred Stock for the fiscal year.
The Fund's total return on the NAV of the common shares is monitored on a
monthly basis to assess whether the total return on the NAV of the common shares
exceeds the stated dividend rate or corresponding swap rate of each particular
series of Cumulative Preferred Stock for the period. For the six months ended
June 30, 2006, the Fund's total return on the NAV of the common shares exceeded
the stated dividend rate or corresponding swap rate of all outstanding Preferred
Stock. Thus, management fees were accrued on these assets.
12
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
During the six months ended June 30, 2006, the Fund paid brokerage
commissions of $15,135 to Gabelli & Company, Inc. ("Gabelli & Company"), an
affiliate of the Adviser.
The cost of calculating the Fund's NAV per share is a Fund expense
pursuant to the Advisory Agreement. During the six months ended June 30, 2006,
the Fund paid or accrued $22,500 to the Adviser in connection with the cost of
computing the Fund's NAV, which is included in miscellaneous expenses in the
Statement of Operations.
The Fund is assuming its portion of the allocated cost of the Gabelli
Funds' Chief Compliance Officer in the amount of $2,978 for the six months ended
June 30, 2006, which is included in payroll expenses in the Statement of
Operations.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the six months ended June 30, 2006, other than short-term securities, aggregated
$25,983,309 and $13,452,733, respectively.
5. CAPITAL. The Fund is authorized to issue an unlimited number of shares of
beneficial interest (par value $0.001). The Board 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 NAV of the shares. During the six months ended June 30, 2006, the
Fund did not repurchase any shares of beneficial interest in the open market.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
--------------------- ---------------------
Shares Amount Shares Amount
------- ---------- ------- ----------
Net increase from shares issued upon reinvestment
of dividends and distributions ................. 183,611 $1,600,486 331,099 $3,037,284
The Fund is authorized to issue up to 2,005,000 shares of $0.001 par value
Cumulative Preferred Stock. The Cumulative Preferred Stock is senior to the
common shares and results in the financial leveraging of the common shares. Such
leveraging tends to magnify both the risks and opportunities to common
shareholders. Dividends on shares of the Cumulative Preferred Stock are
cumulative. The Fund is required by the 1940 Act and by the Articles
Supplementary to meet certain asset coverage tests with respect to the
Cumulative Preferred Stock. If the Fund fails to meet these requirements and
does not correct such failure, the Fund 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 Fund's ability to
pay dividends to common shareholders and could lead to sales of portfolio
securities at inopportune times. The income received on the Fund'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.
On July 31, 2003, the Fund received net proceeds of $28,877,500 (after
underwriting discounts of $945,000 and offering expenses of $159,974) from the
public offering of 1,200,000 shares of 5.625% Series A Cumulative Preferred
Stock. Commencing July 31, 2008 and thereafter, the Fund, at its option, may
redeem the 5.625% Series A Cumulative Preferred Stock in whole or in part at the
redemption price at any time. During the six months ended June 30, 2006, the
Fund did not repurchase any shares of 5.625% Series A Cumulative Preferred
Stock. All repurchased shares of 5.625% Series A Cumulative Preferred Stock have
been retired. At June 30, 2006, 1,184,200 shares of 5.625% Series A Cumulative
Preferred Stock were outstanding and accrued dividends amounted to $23,129.
13
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
On July 31, 2003, the Fund received net proceeds of $24,572,500 (after
underwriting discounts of $250,000 and offering expenses of $159,974) 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 dividend
rates of Series B Auction Rate Cumulative Preferred Stock ranged from 4.00% to
5.21% for the six months ended June 30, 2006. 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 Fund, at its option, may redeem the Series B Auction
Rate Cumulative Preferred Stock in whole or in part at the redemption price at
any time. During the six months ended June 30, 2006, the Fund did not redeem any
shares of Series B Auction Rate Cumulative Preferred Stock. At June 30, 2006,
1,000 shares of Series B Auction Rate Cumulative Preferred Stock were
outstanding with an annualized dividend rate of 5.21% per share and accrued
dividends amounted to $10,854.
The holders of Cumulative Preferred Stock generally are entitled to one
vote per share held on each matter submitted to a vote of shareholders of the
Fund and will vote together with holders of common stock as a single class. The
holders of Cumulative Preferred Stock voting together as a single class also
have the right currently to elect two Directors and under certain circumstances
are entitled to elect a majority of the Board of Directors. In addition, the
affirmative vote of a majority of the votes entitled to be cast by holders of
all outstanding shares of the preferred stock, voting as a single class, will be
required to approve any plan of reorganization adversely affecting the preferred
stock, and the approval of two-thirds of each class, voting separately, of the
Fund's outstanding voting stock must approve the conversion of the Fund from a
closed-end to an open-end investment company. The approval of a majority (as
defined in the 1940 Act) of the outstanding preferred stock and a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities are
required to approve certain other actions, including changes in the Fund's
investment objectives or fundamental investment policies.
6. INDUSTRY CONCENTRATION. Because the Fund 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. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
8. 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 trading practices involving certain funds managed by the Adviser.
GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company, is responding to
these requests for documents and testimony. In June 2006, GAMCO began
discussions with the SEC regarding a possible resolution of their inquiry. Since
these discussions are ongoing, it cannot be determined at this time whether they
will ultimately result in a settlement of this matter. On a separate matter, in
September 2005, the Adviser was informed by the staff of the SEC that the staff
may recommend to the Commission that an administrative remedy and a monetary
penalty be sought from the Adviser in connection with the actions of two of
seven closed-end funds managed by the Adviser relating to Section 19(a) and Rule
19a-1 of the 1940 Act. These provisions require registered investment companies
to provide written statements to shareholders when a dividend is made from a
source other than net investment income. While the two closed-end funds sent
annual statements and provided other materials containing this information, the
funds did not send written statements to shareholders with each distribution in
2002 and 2003. The Adviser believes that all of the funds are now in compliance.
The Adviser believes that these matters would have no effect on the Fund or any
material adverse effect on the Adviser or its ability to manage the Fund.
14
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
INTEREST OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2006 ---------------------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001
----------- ------ ------ ------ ------ ------
OPERATING PERFORMANCE:
Net asset value, beginning of period ................. $ 6.98 $ 7.14 $ 6.83 $ 6.27 $ 7.32 $ 8.21
------ ------ ------ ------ ------ ------
Net investment income ................................ 0.08 0.18 0.16 0.10 0.11 0.12
Net realized and unrealized gain (loss) on investments 0.55 0.45 0.99 1.17 (0.62) (0.32)
------ ------ ------ ------ ------ ------
Total from investment operations ..................... 0.63 0.63 1.15 1.27 (0.51) (0.20)
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS: (a)
Net investment income ................................ (0.03)* (0.02) (0.06) (0.01) -- --
Net realized gain on investments ..................... (0.02)* (0.07) (0.03) (0.04) -- --
------ ------ ------ ------ ------ ------
Total distributions to preferred shareholders ........ (0.05) (0.09) (0.09) (0.05) -- --
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO
COMMON SHAREHOLDERS RESULTING FROM OPERATIONS ........ 0.58 0.54 1.06 1.22 (0.51) (0.20)
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ................................ (0.06)* (0.14) (0.10) (0.09) (0.11) (0.21)
Net realized gain on investments ..................... (0.02)* (0.58) (0.05) (0.22) (0.36) (0.49)
Paid-in capital ...................................... (0.28)* -- (0.57) (0.41) (0.25) --
------ ------ ------ ------ ------ ------
Total distributions to common shareholders ........... (0.36) (0.72) (0.72) (0.72) (0.72) (0.70)
------ ------ ------ ------ ------ ------
FUND SHARE TRANSACTIONS:
Increase in net asset value from common
share transactions ................................. 0.01 0.02 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(f) -- -- --
Offering costs for preferred shares charged to
paid-in capital .................................... -- 0.00(f) 0.00(f) (0.09) -- --
Offering costs for issuance of rights charged to
paid-in capital .................................... -- (0.00)(f) (0.00)(f) -- -- --
------ ------ ------ ------ ------ ------
Total fund share transactions ........................ 0.01 0.02 (0.03) 0.06 0.18 0.01
------ ------ ------ ------ ------ ------
NET ASSET VALUE ATTRIBUTABLE TO COMMON
SHAREHOLDERS, END OF PERIOD ........................ $ 7.21 $ 6.98 $ 7.14 $ 6.83 $ 6.27 $ 7.32
====== ====== ====== ====== ====== ======
Net asset value total return + ....................... 8.67% 5.71% 13.43% 18.60% (6.79)% (3.15)%
====== ====== ====== ====== ====== ======
Market value, end of period .......................... $ 8.76 $ 9.27 $ 9.30 $ 9.60 $ 8.72 $ 9.33
====== ====== ====== ====== ====== ======
Total investment return ++ ........................... (1.41)% 7.79% 5.11% 19.86% 1.70% 15.82%
====== ====== ====== ====== ====== ======
See accompanying notes to financial statements.
15
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF BENEFICIAL SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
INTEREST OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2006 ----------------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001
----------- -------- -------- -------- ------- -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred
shares, end of period (in 000's) ..................... $267,227 $259,303 $261,563 $211,507 $95,111 $82,197
Net assets attributable to common shares,
end of period (in 000's) ............................. $212,622 $204,698 $206,958 $156,507 $95,111 $82,197
Ratio of net investment income to average net assets
attributable to common shares ........................ 2.24%(e) 2.42% 2.32% 1.52% 1.65% 1.57%
Ratio of operating expenses to average net assets
attributable to common shares net of fee reduction (b) 1.80%(e) 1.85% 2.04% 2.04% 1.93% 2.00%
Ratio of operating expenses to average net assets
including liquidation value of preferred shares net
of fee reduction (b) ................................. 1.43%(e) 1.47% 1.52% 1.68% -- --
Portfolio turnover rate ................................. 6% 19% 18% 28% 29% 41%
PREFERRED STOCK:
5.625% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............. $ 29,605 $ 29,605 $ 29,605 $ 30,000 -- --
Total shares outstanding (in 000's) ..................... 1,184 1,184 1,184 1,200 -- --
Liquidation preference per share ........................ $ 25.00 $ 25.00 $ 25.00 $ 25.00 -- --
Average market value (c) ................................ $ 23.77 $ 25.02 $ 24.68 $ 25.12 -- --
Asset coverage per share ................................ $ 122.35 $ 118.72 $ 119.75 $ 96.14 -- --
AUCTION RATE CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............. $ 25,000 $ 25,000 $ 25,000 $ 25,000 -- --
Total shares outstanding (in 000's) ..................... 1 1 1 1 -- --
Liquidation preference per share ........................ $ 25,000 $ 25,000 $ 25,000 $ 25,000 -- --
Average market value (c) ................................ $ 25,000 $ 25,000 $ 25,000 $ 25,000 -- --
Asset coverage per share ................................ $122,345 $118,718 $119,752 $ 96,140
ASSET COVERAGE (d) ...................................... 489% 475% 479% 385% -- --
+ Based on net asset value per share, adjusted for reinvestment of
distributions at prices dependent upon the relationship of the net asset
value per share and the market value per share on the ex-dividend dates,
including the effect of shares issued pursuant to 2004, 2003, and 2002
rights offerings, assuming full subscription by shareholder. Total return
for the period of less than one year is not annualized.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to 2004,
2003, and 2002 rights offerings, assuming full subscription by
shareholder. Total return for the period of less than one year is not
annualized.
* Based on fiscal year to date book income. Amounts are subject to change
and recharacterization at fiscal year end.
(a) Calculated based upon average common shares outstanding on the record
dates throughout the period.
(b) For the six months ended June 30, 2006 and the fiscal years ended December
31, 2001 through 2005, the effect of the custodian fee credits was
minimal.
(c) Based on weekly prices.
(d) Asset coverage is calculated by combining all series of preferred stock.
(e) Annualized.
(f) Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
16
THE GABELLI UTILITY TRUST
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
At its meeting on February 15, 2006, the Board of Trustees ("Board") of the Fund
approved the continuation of the investment advisory agreement with the Adviser
for the Fund on the basis of the recommendation by the trustees who are not
"interested persons" of the Fund (the "independent board members"). The
following paragraphs summarize the material information and factors considered
by the independent board members as well as their conclusions relative to such
factors.
NATURE, EXTENT AND QUALITY OF SERVICES. The independent board members considered
information regarding the portfolio manager, the depth of the analyst pool
available to the Adviser and the portfolio manager, the scope of administrative,
shareholder, and other services supervised or provided by the Adviser, and the
absence of significant service problems reported to the Board. The independent
board members noted the experience, length of service, and reputation of the
portfolio manager.
INVESTMENT PERFORMANCE. The independent board members reviewed the short,
medium, and long-term performance of the Fund against a peer group of equity
closed-end funds between $20 million and $2,000 million chosen by Lipper as
being comparable. The independent board members noted that the Fund's
performance was in the second quartile of the funds in its category for the
prior one and five year periods but was in the third quartile of the funds in
its category for the three year period.
PROFITABILITY. The independent board members reviewed summary data regarding the
profitability of the Fund to the Adviser both with an administrative overhead
charge and without such a charge.
ECONOMIES OF SCALE. The independent board members discussed the major elements
of the Adviser's cost structure and the relationship of those elements to
potential economies of scale. The independent board members noted that the Fund
was a closed-end fund and unlikely to realize any economies of scale.
SHARING OF ECONOMIES OF SCALE. The independent board members noted that the
investment advisory fee schedule for the Fund does not take into account any
potential economies of scale.
SERVICE AND COST COMPARISONS. The independent board members compared the expense
ratios of the investment advisory fee, other expenses, and total expenses of the
Fund to similar expense ratios of the peer group of equity closed-end funds and
noted that the advisory fee includes substantially all administrative services
of the Fund as well as investment advisory services of the Adviser. The
independent board members noted that the Fund's expense ratios were above and
the Fund's size was below average within this group. The independent board
members also noted that the advisory fee structure was the same as that in
effect for most of the Gabelli funds, except for the presence of leverage and
fees chargeable on assets attributable to leverage in certain circumstances. The
independent board members were presented with, but did not consider to be
material to their decision, various information comparing the advisory fee for
other types of accounts managed by affiliates of the Adviser.
CONCLUSIONS. The independent board members concluded that the Fund enjoyed
highly experienced portfolio management services and good ancillary services and
that the performance record was satisfactory. The independent board members
concluded that the profitability to the Adviser of managing the Fund was
reasonable and that, in part due to the structure of the Fund as a closed-end
fund, economies of scale were not a significant factor in their thinking. The
independent board members did not view the potential profitability of ancillary
services as material to their decision. On the basis of the foregoing and
without assigning particular weight to any single conclusion, the independent
board members determined to recommend continuation of the investment advisory
agreement to the full Board.
17
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Utility Trust (the "Fund") to
automatically reinvest dividends payable to common shareholders. As a
"registered" shareholder you automatically become a participant in the Fund's
Automatic Dividend Reinvestment Plan (the "Plan"). The Plan authorizes the Fund
to issue common 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 Fund. Plan participants may send their share
certificates to Computershare Trust Company, N.A. ("Computershare") 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 Computershare
P.O. Box 43010
Providence, RI 02940-3010
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 or requesting a copy of the terms of the
Plan may contact Computershare at (800) 336-6983.
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 distributions 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 common shares 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 Fund's common shares 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 common shares 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 Fund's common shares. The valuation date is the dividend or distribution
payment date or, if that date is not a New York Stock Exchange ("NYSE") trading
day, the next trading day. If the net asset value of the common shares at the
time of valuation exceeds the market price of the common shares, participants
will receive common shares from the Fund valued at market price. If the Fund
should declare a dividend or capital gains distribution payable only in cash,
Computershare will buy common shares in the open market, or on the NYSE or
elsewhere, for the participants' accounts, except that Computershare will
endeavor to terminate purchases in the open market and cause the Fund to issue
shares at net asset value if, following the commencement of such purchases, the
market value of the common shares 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.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Fund. 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 Computershare for investments in the Fund's common
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. Computershare will use these funds to purchase shares in the
open market on or about the 1st and 15th of each month. Computershare 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 Computershare, P.O. Box 43010,
Providence, RI 02940-3010 such that Computershare 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 until
the next purchase date. A payment may be withdrawn without charge if notice is
received by Computershare at least 48 hours before such payment is to be
invested.
SHAREHOLDERS WISHING TO LIQUIDATE SHARES HELD AT COMPUTERSHARE 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.
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 Fund.
The Fund 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 Computershare on at least 90 days' written
notice to participants in the Plan.
18
TRUSTEES AND OFFICERS
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GAMCO INVESTORS, INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER,
KEYSPAN ENERGY CORP.
Frank J. Fahrenkopf, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER, AMERICAN GAMING
ASSOCIATION
John D. Gabelli
SENIOR VICE PRESIDENT, GABELLI & COMPANY, INC.
Robert J. Morrissey
ATTORNEY-AT-LAW,
MORRISSEY, HAWKINS & LYNCH
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
James E. McKee
SECRETARY
Agnes Mullady
TREASURER
David I. Schachter
VICE PRESIDENT & OMBUDSMAN
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
Computershare Trust Company, N.A.
STOCK EXCHANGE LISTING
5.625%
COMMON PREFERRED
------ ---------
NYSE-Symbol: GUT GUT PrA
Shares Outstanding: 29,491,413 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) 921-5070.
--------------------------------------------------------------------------------
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 Fund may, from time to time, purchase
its common shares in the open market when the Fund's shares are trading at a
discount of 10% or more from the net asset value of the shares. The Fund may
also, from time to time, purchase shares of its 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
(914) 921-5070
WWW.GABELLI.COM
SEMI-ANNUAL REPORT
JUNE 30, 2006
GUT SA 2006
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
There has been no change, as of the date of this filing, in any of the portfolio
managers identified in response to paragraph (a)(1) of this Item in the
registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
=============================================================================================================================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY YET
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PUBLICLY ANNOUNCED PLANS BE PURCHASED UNDER THE PLANS
PERIOD PURCHASED PER SHARE (OR UNIT) OR PROGRAMS OR PROGRAMS
=============================================================================================================================
Month #1 Common - N/A Common - N/A Common - N/A Common - 29,336,096
01/01/06
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
01/31/06
=============================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 29,363,873
02/01/06
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
02/28/06
=============================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 29,393,799
03/01/06
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
03/31/06
=============================================================================================================================
Month #4 Common - N/A Common - N/A Common - N/A Common - 29,425,926
04/01/06
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
04/30/06
=============================================================================================================================
Month #5 Common - N/A Common - N/A Common - N/A Common - 29,459,522
05/01/06
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
05/31/06
=============================================================================================================================
Month #6 Common - N/A Common - N/A Common - N/A Common - 29,491,413
06/01/06
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
06/30/06
=============================================================================================================================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A
=============================================================================================================================
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) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli 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 September 1, 2006
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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
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Bruce N. Alpert, Principal Executive Officer
Date September 1, 2006
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By (Signature and Title)* /s/ Agnes Mullady
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Agnes Mullady,
Principal Financial Officer and Treasurer
Date September 1, 2006
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* Print the name and title of each signing officer under his or her signature.