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, 2003
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Date of reporting period: JUNE 30, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO OMITTED]
THE GABELLI
UTILITY TRUST
THE GABELLI UTILITY TRUST INC.
Semi-Annual Report
June 30, 2003
TO OUR SHAREHOLDERS,
We are changing the way we provide portfolio managers' commentary to
shareholders of our Funds. Our shareholder reports have typically contained
commentary on each portfolio manager's assessment of the stock market,
individual stocks and how economic events affect their thinking in managing a
specific Fund. We have always provided details about performance and presented
returns, both good and bad, hopefully in a clear and concise fashion. These
comments have been included as part of each Fund's quarterly, semi-annual, and
annual financial statements.
The Sarbanes-Oxley Act's new corporate governance regulations now require
a Fund's principal executive and financial officers to certify the entire
contents of shareholder reports in a filing with the Securities and Exchange
Commission on form N-CSR. This certification covers the portfolio manager's
commentary and subjective opinions if they are attached to or a part of the
financial statements.
Rather than ask our portfolio managers to eliminate their opinions and/or
restrict their commentary to historical facts only, we are removing their
commentary from the financial statements and sending it to you separately. As a
result, this commentary will no longer be considered part of a Fund's financial
report and therefore will not be subject to the officers' certifications.
We trust that you understand that our approach is an unintended
consequence of the ever-increasing regulatory requirements affecting public
companies generally. We hope the specific certification requirements of these
new regulations will be modified as they relate to mutual funds, since
investment companies have different corporate structures and objectives than
other public companies.
Sincerely yours,
/S/ BRUCE N. ALPERT
Bruce N. Alpert
Chief Operating Officer
August 8, 2003 Gabelli Funds, LLC
THE GABELLI UTILITY TRUST
PORTFOLIO OF INVESTMENTS
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 87.9%
AGRICULTURE -- 0.0%
20,000 Cadiz Inc.+ ..........$ 3,000 $ 2,700
----------- -----------
COMMUNICATIONS EQUIPMENT -- 0.2%
60,000 Furukawa Electric
Co. Ltd. ........... 419,016 195,877
----------- -----------
ENERGY AND UTILITIES: ELECTRIC -- 21.0%
220,000 AES Corp.+ ........... 1,072,514 1,397,000
20,000 Calpine Corp.+ ....... 52,600 132,000
55,000 Cinergy Corp. ........ 1,727,502 2,023,450
20,000 Cleco Corp. .......... 364,947 346,400
80,000 DPL Inc. ............. 1,547,470 1,275,200
19,000 DTE Energy Co. ....... 807,570 734,160
90,000 Edison International+ 1,037,120 1,478,700
160,000 El Paso Electric Co.+ 1,462,191 1,972,800
22,000 FPL Group Inc. ....... 1,192,215 1,470,700
44,000 Great Plains
Energy Inc. ........ 19,607 1,270,720
55,000 Maine Public
Service Co. ........ 1,750,455 1,788,050
170,000 Northeast Utilities .. 3,354,147 2,845,800
55,000 SCANA Corp. .......... 1,694,645 1,885,400
118,000 TECO Energy Inc. ..... 1,863,891 1,414,820
22,000 UIL Holdings Corp. ... 966,711 892,100
20,000 Unisource Energy Corp. 236,625 376,000
----------- -----------
20,050,210 21,303,300
----------- -----------
ENERGY AND UTILITIES: INTEGRATED -- 35.6%
162,000 Allegheny Energy Inc. 1,462,197 1,368,900
13,000 ALLETE Inc. .......... 222,463 345,150
75,000 Alliant Energy Corp. . 1,256,310 1,427,250
150,000 Aquila Inc. .......... 423,832 387,000
500 Avista Corp. ......... 5,575 7,075
18,000 Central Vermont Public
Service Corp. ...... 327,361 351,900
48,000 CH Energy Group Inc. . 2,186,400 2,160,000
165,000 CMS Energy Corp. ..... 1,334,352 1,336,500
75,000 Constellation Energy
Group Inc. ......... 2,109,100 2,572,500
2,000 Dominion Resources Inc. 80,310 128,540
180,000 DQE Inc. ............. 3,128,555 2,712,600
150,000 Duke Energy Corp. .... 2,884,145 2,992,500
100,000 El Paso Corp. ........ 1,049,809 808,000
13,000 Empire District
Electric Co. ....... 259,961 282,750
32,000 Energy East Corp. .... 595,433 664,320
5,000 Entergy Corp. ........ 140,415 263,900
8,979 FirstEnergy Corp. .... 287,099 345,243
83,666 Florida Public
Utilities Co. ...... 1,051,557 1,367,939
20,000 Green Mountain
Power Corp. ........ 416,731 400,000
30,000 MGE Energy Inc. ...... 816,100 941,400
110,000 Mirant Corp.+ ........ 900,482 319,000
5,000 NiSource Inc. ........ 103,120 95,000
MARKET
SHARES COST VALUE
------ ---- ------
45,000 NiSource Inc. (Sails)+ $ 90,000 $ 99,900
64,000 NSTAR ................ 2,729,958 2,915,200
6,000 Otter Tail Corp. ..... 167,121 161,880
50,000 PG&E Corp.+ .......... 625,746 1,057,500
10,000 PNM Resources Inc. ... 185,900 267,500
45,000 Progress Energy Inc. . 1,959,850 1,975,500
40,000 Progress Energy
Inc., CVO+ ......... 20,800 4,200
12,000 Puget Energy Inc. .... 266,242 286,440
30,000 Sierra Pacific
Resources+ ......... 227,798 178,200
30,000 TXU Corp. ............ 483,015 673,500
10,000 Unitil Corp. ......... 271,147 241,000
10,000 Vectren Corp. ........ 245,531 250,500
215,000 Westar Energy Inc. ... 3,192,547 3,489,450
10,000 Wisconsin Energy Corp. 257,794 290,000
7,000 WPS Resources Corp. .. 204,319 281,400
175,000 Xcel Energy Inc. ..... 3,004,875 2,632,000
----------- -----------
34,973,950 36,081,637
----------- -----------
ENERGY AND UTILITIES: NATURAL GAS -- 14.9%
33,000 AGL Resources Inc. ... 805,954 839,520
3,000 Atmos Energy Corp. ... 66,880 74,400
13,800 Cascade Natural
Gas Corp. .......... 295,987 263,580
3,000 Chesapeake Utilities
Corp. .............. 55,515 67,800
29,800 Delta Natural Gas
Co. Inc. ........... 496,324 700,002
40,000 Dynegy Inc., Cl. A+ .. 250,000 168,000
1,000 EnergySouth Inc. ..... 26,780 32,800
38,000 National Fuel Gas Co. 890,728 989,900
90,000 Nicor Inc. ........... 1,982,877 3,339,900
15,000 NUI Corp. ............ 174,468 232,800
65,000 ONEOK Inc. ........... 1,121,404 1,275,950
19,000 Peoples Energy Corp. . 665,481 814,910
20,000 Piedmont Natural
Gas Co. Inc. ....... 588,123 776,200
3,000 RGC Resources Inc. ... 59,164 70,020
115,000 SEMCO Energy Inc. .... 1,528,444 669,300
102,566 Southern Union Co.+ .. 1,458,095 1,737,468
145,000 Southwest Gas Corp. .. 3,596,118 3,071,100
----------- -----------
14,062,342 15,123,650
----------- -----------
ENERGY AND UTILITIES: WATER -- 5.3%
12,000 American States
Water Co. .......... 266,713 327,600
11,000 Artesian Resources Corp.,
Cl. A .............. 257,250 395,989
20,500 BIW Ltd. ............. 385,069 372,075
20,520 California Water
Service Group ...... 566,928 577,022
7,500 Connecticut Water
Service Inc. ....... 146,455 191,625
38,500 Middlesex Water Co. .. 801,886 948,640
20,066 Pennichuck Corp. ..... 489,727 495,630
12,000 Philadelphia
Suburban Corp. ..... 183,101 292,560
18,300 SJW Corp. ............ 1,768,527 1,560,075
See accompanying notes to financial statements.
2
THE GABELLI UTILITY TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: WATER (CONTINUED)
5,512 Southwest Water Co. $ 52,058 $ 77,003
6,000 York Water Co. ....... 108,269 98,520
----------- -----------
5,025,983 5,336,739
----------- -----------
ENVIRONMENTAL SERVICES -- 0.1%
18,000 Catalytica Energy
Systems Inc.+ ...... 179,986 48,600
----------- -----------
EQUIPMENT AND SUPPLIES -- 0.0%
10,000 Capstone Turbine
Corp.+ ............. 13,980 10,900
----------- -----------
EXCHANGE TRADED FUNDS -- 2.1%
28,000 Utilities HOLDRs Trust 2,015,370 2,088,800
----------- -----------
METALS AND MINING -- 0.5%
6,168 Fording Canadian Coal
Trust (New York) ... 132,561 111,764
19,532 Fording Canadian Coal
Trust (Toronto) .... 389,730 350,750
----------- -----------
522,291 462,514
----------- -----------
SATELLITE -- 0.6%
50,000 General Motors Corp.,
Cl. H+ ............. 870,553 640,500
----------- -----------
TELECOMMUNICATIONS -- 6.6%
45,000 BellSouth Corp. ...... 1,411,141 1,198,350
30,000 BT Group plc, ADR .... 1,094,015 1,009,800
24,000 CenturyTel Inc. ...... 910,440 836,400
140,000 Cincinnati Bell Inc.+ 953,620 938,000
18,000 Citizens Communications
Co.+ ............... 132,130 232,020
2,000 Commonwealth Telephone
Enterprises Inc.+ .. 65,002 87,940
19,788 D&E Communications
Inc. ............... 231,091 226,573
9,000 Deutsche Telekom
AG, ADR+ ........... 162,149 136,800
2,000 France Telecom SA, ADR 22,799 49,300
40,000 Touch America
Holdings Inc.+ ..... 38,488 2,680
49,000 Verizon Communications
Inc. ............... 1,876,164 1,933,050
2,045 WilTel Communications
Inc.+ .............. 53,256 30,143
----------- -----------
6,950,295 6,681,056
----------- -----------
WIRELESS COMMUNICATIONS -- 1.0%
39,000 mm02 plc, ADR+ ....... 405,354 359,970
35,000 Nextel Communications Inc.,
Cl. A+ ............. 460,343 632,800
----------- -----------
865,697 992,770
----------- -----------
TOTAL COMMON
STOCKS .............. 85,952,673 88,969,043
----------- -----------
MARKET
SHARES COST VALUE
------ ---- ------
PREFERRED STOCKS -- 1.2%
TELECOMMUNICATIONS -- 1.2%
23,000 Citizens Communications Co.,
5.000% Cv. Pfd. ....$ 1,094,616 $ 1,219,000
----------- ------------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.8%
ENERGY AND UTILITIES: INTEGRATED -- 0.8%
$ 1,100,000 Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21+ .. 833,029 825,000
----------- ------------
REPURCHASE AGREEMENT -- 10.0%
10,089,000 Agreement with State Street Bank
and Trust Co., 1.080%, dated
06/30/03, due 07/01/03,
proceeds at maturity,
$10,089,303 (a) .... 10,089,000 10,089,000
----------- ------------
TOTAL INVESTMENTS -- 99.9% ........$97,969,318 $101,102,043
===========
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.1% .................... 150,362
------------
NET ASSETS -- 100.0%
(15,282,735 shares outstanding) ............ $101,252,405
============
NET ASSET VALUE
($101,252,405 (DIVIDE) 15,282,735
shares outstanding) ..................... $6.63
=====
-----------------------
For Federal tax purposes:
Aggregate cost .................. $ 97,227,406
============
Gross unrealized appreciation ... $ 10,072,345
Gross unrealized depreciation ... (6,197,708)
------------
Net unrealized appreciation ..... $ 3,874,637
============
-----------------------
(a) Collateralized by U.S. Treasury Note, 3.375%, due 04/30/04, market value
$10,293,821.
+ Non-income producing security.
ADR - American Depository Receipt.
CVO - Contingent Value Obligation.
See accompanying notes to financial statements.
3
THE GABELLI UTILITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2003 (UNAUDITED)
ASSETS:
Investments, at value (Cost $97,969,318) ... $ 101,102,043
Cash ....................................... 757
Dividends and interest receivable .......... 308,141
Receivable for investments sold ............ 489,920
Other assets ............................... 3,465
-------------
TOTAL ASSETS ............................... 101,904,326
-------------
LIABILITIES:
Payable for investments purchased .......... 182,918
Payable for investment advisory fees ....... 83,812
Payable for audit and legal fees ........... 19,118
Other accrued expenses ..................... 366,073
-------------
TOTAL LIABILITIES .......................... 651,921
-------------
NET ASSETS applicable to 15,282,735
shares outstanding ....................... $ 101,252,405
=============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par value $ 15,283
Additional paid-in capital ................. 103,846,628
Accumulated net investment loss ............ (4,686,805)
Accumulated net realized loss on investments (1,055,344)
Net unrealized appreciation on investments . 3,132,643
-------------
TOTAL NET ASSETS ........................... $ 101,252,405
=============
NET ASSET VALUE
($101,252,405 / 15,282,735 shares outstanding;
unlimited number of shares authorized of
$0.001 par value) ........................ $6.63
=====
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes $4,647) $ 1,582,099
Interest .............................. 106,091
------------
TOTAL INVESTMENT INCOME ............... 1,688,190
------------
EXPENSES:
Investment advisory fees .............. 462,568
Shareholder communications expenses ... 146,113
Shareholder services fees ............. 123,155
Payroll ............................... 66,335
Trustees' fees ........................ 22,582
Legal and audit fees .................. 17,718
Custodian fees ........................ 7,448
Miscellaneous expenses ................ 48,770
------------
TOTAL EXPENSES ........................ 894,689
------------
LESS: CUSTODIAN FEE CREDIT ............ (147)
------------
NET EXPENSES .......................... 894,542
------------
NET INVESTMENT INCOME ................. 793,648
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investments ...... (1,635,388)
Net change in unrealized appreciation
on investments ...................... 11,593,255
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ...................... 9,957,867
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ..................... $ 10,751,515
============
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 2003 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2002
---------------- -----------------
OPERATIONS:
Net investment income ........................................... $ 793,648 $ 1,448,624
Net realized loss on investments ................................ (1,635,388) 3,644,126
Net change in unrealized appreciation/depreciation on investments 11,593,255 (11,989,550)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . 10,751,515 (6,896,800)
------------- -------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ........................................... (793,648) (1,475,143)
Net realized gain on investments ................................ -- (4,760,629)
Return of capital ............................................... (4,686,805) (3,261,058)
------------- -------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ................ (5,480,453) (9,496,830)
------------- -------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares
issued in rights offering ..................................... -- 27,737,238
Net increase in net assets from common shares issued upon
reinvestment of dividends and distributions ................... 870,263 1,570,082
------------- -------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ........ 870,263 29,307,320
------------- -------------
NET INCREASE IN NET ASSETS ...................................... 6,141,325 12,913,690
------------- -------------
NET ASSETS:
Beginning of period ............................................. 95,111,080 82,197,390
------------- -------------
End of period ................................................... $ 101,252,405 $ 95,111,080
============= =============
See accompanying notes to financial statements.
4
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The Gabelli Utility Trust (the "Utility Trust") is a
closed-end, non-diversified management investment company organized as a
Delaware business trust on February 25, 1999 and registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), whose primary objective is
long-term growth of capital and income. The Utility Trust had no operations
prior to July 9, 1999, other than the sale of 10,000 shares of beneficial
interest for $100,000 to The Gabelli Equity Trust Inc. (the "Equity Trust") at
$10.00 per share. On July 9, 1999, the Utility Trust had a 4 for 3 stock split
making the balance of Utility Trust shares held by the Equity Trust as 13,333.
On July 9, 1999, the Equity Trust contributed $79,487,260 in cash and securities
in exchange for shares of the Utility Trust, and on the same date distributed
such shares to Equity Trust shareholders of record on July 1, 1999 at the rate
of one share of the Utility Trust for every ten shares of the Equity Trust.
Investment operations commenced on July 9, 1999.
Effective August 1, 2002, the Fund modified its non-fundamental investment
policy to increase, from 65% to 80%, the portion of its assets that it will
invest, under normal market conditions, in common stocks and other securities of
foreign and domestic companies involved in providing products, services or
equipment for (i) the generation or distribution of electricity, gas and water
and (ii) telecommunications services or infrastructure operations (the "80%
Policy").
The 80% Policy may be changed without shareholder approval. However, the Fund
has adopted a policy to provide shareholders with at least 60 days' notice of
the implementation of any change in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with 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
Utility Trust 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 so determines, by such other method as the Board of Trustees
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 in
foreign markets are generally valued at the preceding closing values of such
securities on their respective exchanges or markets. Securities and assets for
which market quotations are not readily available are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the Board of Trustees. Short term debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless the
Board of Trustees determines such does not reflect the securities fair value, in
which case these securities will be valued at their fair value as determined by
the Board of Trustees. Debt instruments having a maturity greater than 60 days
for which market quotations are readily available are valued at the latest
average of the bid and asked prices. If there were no asked prices quoted on
such day, the security is valued using the closing bid price on that day.
Options are valued at the last sale price on the exchange on which they are
listed. If no sales of such options have taken place that day, they will be
valued at the mean between their closing bid and asked prices.
REPURCHASE AGREEMENTS. The Utility Trust may enter into repurchase
agreements with primary government securities dealers recognized by the Federal
Reserve Bank of New York, with member banks of the Federal Reserve System or
with
5
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
other brokers or dealers that meet credit guidelines established by the Adviser
and reviewed by the Board of Trustees. Under the terms of a typical repurchase
agreement, the Utility Trust takes possession of an underlying debt obligation
subject to an obligation of the seller to repurchase, and the Utility Trust to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Utility Trust's holding period. The Utility Trust will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 102% of the dollar amount invested
by the Utility Trust in each agreement. The Utility Trust will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Utility Trust may be delayed or limited.
SECURITIES SOLD SHORT. A short sale involves selling a security which the
Utility Trust does not own. The proceeds received for short sales are recorded
as liabilities and the Utility Trust records an unrealized gain or loss to the
extent of the difference between the proceeds received and the value of the open
short position on the day of determination. The Utility Trust records a realized
gain or loss when the short position is closed out. By entering into a short
sale, the Utility Trust bears the market risk of an unfavorable change in the
price of the security sold short. Dividends on short sales are recorded as an
expense by the Utility Trust on the ex-dividend date and interest expense is
recorded on the accrual basis.
FOREIGN CURRENCY TRANSLATION. The books and records of the Utility Trust
are maintained in United States (U.S.) dollars. Foreign currencies, investments
and other assets and liabilities are translated into U.S. dollars at the
exchange rates prevailing at the end of the period, and purchases and sales of
investment securities, income and expenses are translated at the exchange rate
prevailing on the respective dates of such transactions. Unrealized gains and
losses, which result from changes in foreign exchange rates and/or changes in
market prices of securities, have been included in unrealized
appreciation/depreciation on investments and foreign currency transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Utility Trust and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with Federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States.
PROVISION FOR INCOME TAXES. The Utility Trust intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
Dividends and interest from non-U.S. sources received by the Utility Trust
are generally subject to non-U.S. withholding taxes at rates ranging up to 30%.
Such withholding taxes may be reduced or eliminated under the terms of
applicable U.S. income tax treaties, and the Utility Trust intends to undertake
any procedural steps required to claim the benefits of such treaties.
6
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Utility Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Utility Trust will pay the Adviser on the first
business day of each month a fee for the previous month equal on an annual basis
to 1.00% of the value of the Utility Trust's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Utility Trust's portfolio and oversees the
administration of all aspects of the Utility Trust's business and affairs.
During the six months ended June 30, 2003, Gabelli & Company, Inc. received
$26,975 in brokerage commissions as a result of executing agency transactions in
portfolio securities on behalf of the Utility Trust.
The cost of calculating the Trust's net asset value per share is a Trust
expense pursuant to the Investment Advisory Agreement between the Trust and the
Adviser. During the six months ended June 30, 2003, the Gabelli Utility Trust
reimbursed the Adviser $17,400 in connection with the cost of computing the
Trust's net asset value.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the six months ended June 30,
2003 aggregated $13,736,614 and $2,710,040, respectively.
5. CAPITAL. The Board of Trustees of the Utility Trust has authorized the
repurchase of its shares on the open market when the shares are trading at a
discount of 10% or more (or such other percentage as the Board of Trustees may
determine from time to time) from the net asset value of the shares. During the
six months ended June 30, 2003, the Utility Trust did not repurchase any shares
of beneficial interest in the open market.
On May 22, 2002, the Utility Trust distributed one transferable right for
each of the 11,294,893 common shares outstanding to shareholders of record on
that date. Three rights were required to purchase one additional common share at
the subscription price of $7.50 per share. The subscription period expired on
June 27, 2002. The rights offering was fully subscribed resulting in the
issuance of 3,764,965 common shares and proceeds of $28,237,239 to the Utility
Trust, prior to the deduction of estimated expenses of $500,000. The net asset
value per share of the Utility Trust common shareholders was enhanced by
approximately $0.15 per share as a result of the issuance of shares above net
asset value.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2003 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2002
---------------------- ------------------------
Shares Amount Shares Amount
------- -------- --------- -----------
Shares issued in rights offering ........... -- -- 3,764,965 $27,737,239
Shares issued upon reinvestment
of dividends and distributions ........... 102,243 $870,263 185,730 1,570,081
------- -------- --------- -----------
Net increase ............................... 102,243 $870,263 3,950,695 $29,307,320
======= ======== ========= ===========
6. INDUSTRY CONCENTRATION. Because the Utility Trust primarily invests in common
stocks and other securities of foreign and domestic companies in the utility
industry, its portfolio may be subject to greater risk and market fluctuations
than a portfolio of securities representing a broad range of investments.
7. SUBSEQUENT EVENTS. On July 31, 2003, the Gabelli Utility Trust issued two
series of Preferred Shares valued at a total of $55 million. The issuance
consists of $30 million of 5.625% Series A Cumulative Preferred Shares and $25
million of Series B Auction Market Preferred Shares.
7
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
On August 12, 2003, the Gabelli Utility Trust announced the terms of a
Rights Offering. The record date for the Rights Offering is August 20, 2003.
Pursuant to the Offer, the Trust will distribute to shareholders of record one
transferable Right for each share of its common stock held on the record date.
Three Rights will enable a shareholder to purchase one additional share of stock
at $7.00 per share, without brokerage commissions. Rights may be exercised at
any time during the subscription period. The Rights are transferable, with the
subscription period commencing on August 20, 2003 (the record date) and
terminating 34 days later on September 23, 2003 (the expiration date), unless
extended up to ten business days thereafter.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A UTILITY TRUST COMMON SHARE SIX MONTHS ENDED YEAR ENDED DECEMBER 31, PERIOD ENDED
OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2003 ------------------------------------ DECEMBER 31,
(UNAUDITED) 2002 2001 2000 1999 (a)
---------------- -------- -------- ------- ------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ..............$ 6.27 $ 7.32 $ 8.21 $ 7.62 $ 7.50
-------- ------- ------- ------- -------
Net investment income ............................. 0.05 0.11 0.12(e) 0.15 0.08
Net realized and unrealized gain
(loss) on investments .......................... 0.65 (0.62) (0.32)(e) 1.44 0.19
-------- ------- ------- ------- -------
Total from investment operations .................. 0.70 (0.51) (0.20) 1.59 0.27
-------- ------- ------- ------- -------
CHANGE IN NET ASSET VALUE FROM TRANSACTIONS IN
SHARES OF BENEFICIAL INTEREST:
Increase in net asset value from shares
issued in rights offering ...................... -- 0.15 -- -- --
Increase in net asset value from
Trust share transactions ....................... 0.02 0.03 0.01 -- --
-------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ............................. (0.05) (0.11) (0.21) (0.06) (0.08)
Net realized gain on investments .................. -- (0.36) (0.49) (0.94) (0.07)
Return of capital ................................. (0.31) (0.25) -- -- --
-------- ------- ------- ------- -------
Total distributions ............................... (0.36) (0.72) (0.70) (1.00) (0.15)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ....................$ 6.63 $ 6.27 $ 7.32 $ 8.21 $ 7.62
======== ======= ======= ======= =======
Net asset value total return+ ..................... 10.29% (6.79)% (3.15)% 22.01% 3.62%
======== ======= ======= ======= =======
Market value, end of period .......................$ 9.61 $ 8.72 $ 9.33 $ 8.75 $ 7.63
======== ======= ======= ======= =======
Total investment return++ ......................... 14.95% 1.70% 15.82% 29.95% 3.70%
======== ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..............$101,252 $95,111 $82,197 $90,669 $83,330
Ratio of net investment income to
average net assets (c) ......................... 1.72%(b) 1.65% 1.57% 1.88% 2.27%(b)
Ratio of operating expenses to
average net assets (c)(d) ...................... 1.93%(b) 1.93% 2.00% 1.95% 1.85%(b)
Portfolio turnover rate ........................... 3% 29% 41% 92% 37%
--------------------------
+ Based on net asset value per share, adjusted for reinvestment of
distributions. Total return for the periods 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 rights
offering, assuming full subscription by shareholder. Total return for the
periods of less than one year is not annualized.
(a) The Gabelli Utility Trust commenced operations on July 9, 1999.
(b) Annualized.
(c) During the period ended December 31, 1999, the Utility Trust's
administrator voluntarily reimbursed certain expenses. If such
reimbursement had not occurred, the annualized ratios of net investment
income and operating expenses to average net assets would have been 1.85%
and 2.17%, respectively.
(d) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits for the six months ended June 30, 2003 and the year ended
December 31, 2002, 2001, and 2000, the expense ratios would be 1.93%,
1.93%, 2.00% and 1.93%, respectively.
(e) 2001's net investment income per share and net realized and unrealized gain
(loss) on investments were originally presented in the Financial Highlights
without regard to the character of distributions paid during the year.
Amounts as previously reported of $0.61 and $(0.81), respectively, have
been revised to reflect reclassification of amounts based on the character
of 2001 distributions.
See accompanying notes to financial statements.
8
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Utility Trust ("Utility Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Utility Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Utility Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Utility Trust. Plan participants may send their stock
certificates to EquiServe Trust Company ("EquiServe") to be held in their
dividend reinvestment account. Registered shareholders wishing to receive their
distribution in cash must submit this request in writing to:
The Gabelli Utility Trust
c/o EquiServe
P.O. Box 43011
Providence, RI 02940-3011
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact EquiServe at 1 (800)
336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must do
so in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you should
contact such institution. If such institution is not participating in the Plan,
your account will be credited with a cash dividend. In order to participate in
the Plan through such institution, it may be necessary for you to have your
shares taken out of "street name" and re-registered in your own name. Once
registered in your own name your dividends will be automatically reinvested.
Certain brokers participate in the Plan. Shareholders holding shares in "street
name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the Plan
in lieu of cash dividends is determined in the following manner. Under the Plan,
whenever the market price of the Utility Trust's Common Stock is equal to or
exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Utility Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Utility Trust valued at market
price. If the Utility Trust should declare a dividend or capital gains
distribution payable only in cash, EquiServe will buy Common Stock in the open
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that EquiServe will endeavor to terminate purchases in the open
market and cause the Utility Trust to issue shares at net asset value if,
following the commencement of such purchases, the market value of the Common
Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions will
not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Utility Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by EquiServe on at least 90 days' written
notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders
to increase their investment in the Utility Trust. In order to participate in
the Voluntary Cash Purchase Plan, shareholders must have their shares registered
in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Utility Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. EquiServe will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. EquiServe will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment in the following month.
A payment may be withdrawn without charge if notice is received by EquiServe at
least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Utility Trust.
9
TRUSTEES AND OFFICERS
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN AND CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
KEYSPAN ENERGY CORP.
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
John D. Gabelli
SENIOR VICE PRESIDENT,
GABELLI & COMPANY, INC.
Robert J. Morrissey
ATTORNEY-AT-LAW
MORRISSEY, HAWKINS & LYNCH
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT
Gus Coutsouros
VICE PRESIDENT & TREASURER
David I. Schachter
VICE PRESIDENT & OMBUDSMAN
James E. McKee
SECRETARY
INVESTMENT ADVISOR
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
Boston Safe Deposit and Trust Company
COUNSEL
Skadden, Arps, Slate, Meagher & Flom, LLP
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
COMMON
------
NYSE-Symbol: GUT
Shares Outstanding: 15,282,735
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "Specialized Equity Funds," in Sunday's The New York Times and in
Monday's The Wall Street Journal. It is also listed in Barron's Mutual
Funds/Closed End Funds section under the heading "Specialized Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Utility Trust may, from time to
time, purchase shares of its common stock in the open market when the Utility
Trust shares are trading at a discount of 10% or more from the net asset value
of the shares. The Utility Trust may also, from time to time, purchase shares
of its Cumulative Preferred Stock 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, 2003
GBFUF SA/03
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. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. 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 Exchange Act
(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 last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(b) Certifications pursuant to 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
-------------------------------------------------------------
By (Signature and Title)* /S/ BRUCE N. ALPERT
----------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 09/03/03
---------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ BRUCE N. ALPERT
----------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 09/03/03
---------------------------------------------------------------------
By (Signature and Title)* /S/ GUS A. COUTSOUROS
----------------------------------------------
Gus A. Coutsouros, Principal Financial Officer
Date 09/03/03
---------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.