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
-------------------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
-------------------------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
-------------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
--------------
Date of fiscal year end: December 31, 2004
-----------------
Date of reporting period: June 30, 2004
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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.
The Report to Shareholders is attached herewith.
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER
RYE, NY 10580-1422
(914) 921-5070
WWW.GABELLI.COM
SEMI-ANNUAL REPORT
JUNE 30, 2004
GUT PQ2/04
[LOGO]
THE GABELLI
UTILITY TRUST
THE GABELLI UTILITY TRUST
Semi-Annual Report
June 30, 2004
TO OUR SHAREHOLDERS,
During the second quarter of 2004, the Gabelli Utility Trust's (the
"Trust") total return declined 0.6% on a net asset value ("NAV") basis while the
Standard & Poor's ("S&P") 500 Utility Index declined 1.3% and the Lipper Utility
Fund Average rose 0.1%. For the six-month period ended June 30, 2004, the
Trust's NAV total return was 3.1% versus gains of 3.8% and 4.2% for the S&P 500
Utility Index and the Lipper Utility Fund Average, respectively. The Trust's
market price on June 30, 2004 was $9.22, which equates to a 38.0% premium to its
net asset value ("NAV") of $6.68. The Trust's market price fell 3.4% during the
second quarter but rose 0.04% during the six-month period ended June 30, 2004.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2004.
COMPARATIVE RESULTS
------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2004 (a)
YEAR TO SINCE
QUARTER DATE 1 YEAR 3 YEAR INCEPTION (b)
------- ------ ------ ------ -------------
Gabelli Utility Trust NAV Return (c) ......... (0.55)% 3.14% 9.21% 3.98% 7.37%
Gabelli Utility Trust Investment Return (d) .. (3.39) 0.04 2.01 9.06 13.06
S&P 500 Utility Index ........................ (1.29) 3.80 11.49 (10.03) (2.15)
Lipper Utility Fund Average .................. 0.11 4.15 13.35 (5.57) (1.77)
(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. The S&P 500 Utility Index is an unmanaged indicator of
electric and gas utility stock performance, while the Lipper Average
reflects the average performance of open-end mutual funds classified in
this particular category. Dividends are considered reinvested. Performance
for periods less than one year is not annualized.
(b) From commencement of investment operations on July 9, 1999.
(c) Total returns and average annual returns reflect changes in net asset
value ("NAV"), reinvestment of distributions at NAV on the ex-dividend
date and adjustments for rights offerings, and are net of expenses. Since
inception return based on an initial NAV of $7.50.
(d) Total returns and average annual returns reflect changes in closing market
values on the New York Stock Exchange, reinvestment of distributions and
adjustments for rights offerings. Since inception return based on an
initial market price value of $7.50.
------------------------------------------------------------------------------------------------------------
SHAREHOLDER MEETING -- MAY 10, 2004 -- FINAL RESULTS
The Annual Meeting of Shareholders was held on May 10, 2004 at the
Greenwich Public Library in Greenwich, Connecticut. At that meeting, common
shareholders and preferred shareholders voting as a single class elected Mario
J. Gabelli, Thomas E. Bratter and Vincent D. Enright as Trustees of the Trust.
There were 22,024,751 votes, 21,987,193 votes and 21,998,854 votes cast in favor
of these Trustees and 245,582 votes, 283,140 votes and 271,478 votes withheld
for each Trustee, respectively. Preferred shareholders voting as a separate
class elected Anthony J. Colavita and James P. Conn as Trustees of the Trust.
There were 1,172,448 votes and 1,172,448 votes cast in favor of these Trustees
and 22,137 votes and 22,137 votes withheld for these Trustees, respectively.
Frank J. Fahrenkopf, Jr., John D. Gabelli, Robert J. Morrissey, Karl Otto
Pohl, Anthony R. Pustorino and Salvatore J. Zizza continue to serve in their
capacities as Trustees of the Trust.
We thank you for your participation and appreciate your continued support.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage at www.gabelli.com contains
information about Gabelli Asset Management Inc., the Gabelli Mutual Funds, IRAs,
401(k)s, quarterly reports, closing prices and other current news. You can send
us e-mail at closedend@gabelli.com.
You may sign up for our e-mail alerts at www.gabelli.com and receive early
notice of news events, media sightings and closing mutual fund prices.
--------------------------------------------------------------------------------
We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to new 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. Both the commentary
and the financial statements, including the portfolio of investments, will be
available on our website at www.gabelli.com/funds.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
A description of the Trust's proxy voting policies and procedures and how the
Trust voted proxies relating to portfolio securities during the most recent
12-month period ended June 30, 2004 are available (i) without charge, upon
request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli
Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) on the Securities
and Exchange Commission's website at www.sec.gov.
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2
THE GABELLI UTILITY TRUST
PORTFOLIO OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
---------- ------------ ------------
COMMON STOCKS -- 75.4%
AGRICULTURE -- 0.0%
800 Cadiz Inc.+ ................................ $ 3,000 $ 6,800
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.1%
70,000 Furukawa Electric Co. Ltd.+ ................ 458,298 298,951
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.1%
50,000 Capstone Turbine Corp.+ .................... 83,080 108,820
20,100 Catalytica Energy
Systems Inc.+ ............................ 186,266 57,084
1,000 Chesapeake Corp. ........................... 21,560 26,680
------------ ------------
290,906 192,584
------------ ------------
ENERGY AND UTILITIES: ELECTRIC -- 18.2%
250,000 AES Corp.+ ................................. 1,283,714 2,482,500
35,000 American Electric
Power Co. Inc. ........................... 1,062,994 1,120,000
20,000 Calpine Corp.+ ............................. 52,600 86,400
55,000 Cinergy Corp. .............................. 1,727,502 2,090,000
20,000 Cleco Corp. ................................ 364,947 359,600
110,000 DPL Inc. ................................... 2,120,170 2,136,200
25,000 DTE Energy Co. ............................. 1,021,956 1,013,500
200,000 Duquesne Light Holdings Inc. ............... 3,488,741 3,862,000
92,000 Edison International ....................... 1,837,435 2,352,440
200,000 El Paso Electric Co.+ ...................... 2,637,085 3,088,000
46,000 FPL Group Inc. ............................. 2,695,868 2,941,700
100,000 Great Plains Energy Inc. ................... 3,130,937 2,970,000
170,000 Northeast Utilities ........................ 3,354,148 3,309,900
55,000 SCANA Corp. ................................ 1,694,645 2,000,350
112,000 TECO Energy Inc. ........................... 1,728,327 1,342,880
22,000 UIL Holdings Corp. ......................... 966,711 1,071,180
233,000 Unisource Energy Corp. ..................... 5,479,145 5,790,050
------------ ------------
34,646,925 38,016,700
------------ ------------
ENERGY AND UTILITIES: INTEGRATED -- 32.8%
369,400 Allegheny Energy Inc.+ ..................... 3,864,370 5,692,454
13,000 ALLETE Inc. ................................ 222,463 432,900
75,000 Alliant Energy Corp. ....................... 1,824,382 1,956,000
20,000 Ameren Corp. ............................... 892,320 859,200
310,000 Aquila Inc.+ ............................... 965,510 1,103,600
500 Avista Corp. ............................... 5,575 9,210
18,000 Black Hills Corp. .......................... 551,095 567,000
48,400 Central Vermont Public
Service Corp. ............................ 947,272 991,716
53,600 CH Energy Group Inc. ....................... 2,435,686 2,489,184
200,000 CMS Energy Corp.+ .......................... 1,572,268 1,826,000
52,000 Consolidated Edison Inc. ................... 2,044,845 2,067,520
75,000 Constellation Energy
Group Inc. ............................... 2,109,100 2,842,500
2,000 Dominion Resources Inc. .................... 80,310 126,160
185,000 Duke Energy Corp. .......................... 3,552,377 3,753,650
145,000 El Paso Corp. .............................. 1,304,098 1,142,600
10,000 Empire District Electric Co. ............... 199,271 201,100
200,000 Enel SpA ................................... 1,531,070 1,603,543
100,000 Energy East Corp. .......................... 2,132,093 2,425,000
3,000 Entergy Corp. .............................. 84,249 168,030
35,979 FirstEnergy Corp. .......................... 1,170,679 1,345,975
83,000 Florida Public Utilities Co. ............... 1,043,302 1,501,470
36,000 Green Mountain Power Corp. ................. 764,763 939,600
280,000 Hera SpA ................................... 388,845 592,751
67,000 Maine & Maritimes Corp. .................... 2,137,778 2,144,000
64,100 MGE Energy Inc. ............................ 1,882,264 2,091,583
300,000 Mirant Corp.+ .............................. 88,995 107,700
20,000 NiSource Inc. .............................. 402,228 412,400
45,000 NiSource Inc. (SAILS)+ ..................... 90,000 113,400
95,000 NSTAR ...................................... 4,154,712 4,548,600
101,000 OGE Energy Corp. ........................... 2,429,412 2,572,470
22,000 Otter Tail Corp. ........................... 593,261 590,920
50,000 PG&E Corp.+ ................................ 1,309,559 1,397,000
15,000 PNM Resources Inc. ......................... 185,900 311,550
100,000 Progress Energy Inc. ....................... 4,383,880 4,405,000
40,000 Progress Energy Inc., CVO+ ................. 20,800 14,400
25,000 Puget Energy Inc. .......................... 563,615 547,750
30,000 Sierra Pacific Resources+ .................. 227,798 231,300
35,000 TXU Corp. .................................. 587,515 1,417,850
25,000 Unitil Corp. ............................... 661,268 658,750
39,600 Vectren Corp. .............................. 957,519 993,564
235,000 Westar Energy Inc. ......................... 3,605,547 4,678,850
51,000 Wisconsin Energy Corp. ..................... 1,550,525 1,663,110
7,000 WPS Resources Corp. ........................ 204,319 324,450
270,000 Xcel Energy Inc. ........................... 4,521,685 4,511,700
------------ ------------
60,244,523 68,373,510
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS -- 12.0%
28,000 AGL Resources Inc. ......................... 692,019 813,400
30,000 Atmos Energy Corp. ......................... 735,388 768,000
30,000 Cascade Natural Gas Corp. .................. 645,300 662,100
7,000 Chesapeake Utilities Corp. ................. 149,578 158,900
29,700 Delta Natural Gas Co. Inc. ................. 494,549 735,075
40,000 Dynegy Inc., Cl. A+ ........................ 250,000 170,400
11,000 EnergySouth Inc. ........................... 386,686 440,220
105,000 KeySpan Corp. .............................. 3,762,532 3,853,500
100,000 National Fuel Gas Co. ...................... 2,409,628 2,500,000
90,000 Nicor Inc. ................................. 3,094,431 3,057,300
15,000 NUI Corp. .................................. 174,468 219,000
100,000 ONEOK Inc. ................................. 1,837,227 2,199,000
45,000 Peoples Energy Corp. ....................... 1,768,333 1,896,750
15,000 Piedmont Natural Gas Co. Inc. .............. 428,588 640,500
6,000 RGC Resources Inc. ......................... 128,344 143,340
140,000 SEMCO Energy Inc. .......................... 1,335,461 814,800
107,329 Southern Union Co.+ ........................ 1,892,655 2,262,495
150,000 Southwest Gas Corp. ........................ 3,710,968 3,619,500
------------ ------------
23,896,155 24,954,280
------------ ------------
ENERGY AND UTILITIES: OIL -- 0.1%
5,000 Exxon Mobil Corp. .......................... 178,050 222,050
------------ ------------
See accompanying notes to financial statements.
3
THE GABELLI UTILITY TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
---------- ------------ ------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: WATER -- 2.7%
14,000 American States Water Co. .................. $ 312,701 $ 325,360
15,000 Aqua America Inc. .......................... 183,101 300,750
16,500 Artesian Resources Corp.,
Cl. A .................................... 257,250 436,425
20,500 BIW Ltd. ................................... 385,069 398,315
20,520 California Water
Service Group ............................ 566,928 565,326
7,500 Connecticut Water
Service Inc. ............................. 146,455 192,450
51,333 Middlesex Water Co. ........................ 801,882 994,834
13,066 Pennichuck Corp. ........................... 342,804 337,560
57,800 SJW Corp. .................................. 1,856,111 1,965,200
7,349 Southwest Water Co. ........................ 52,056 92,009
6,000 York Water Co. ............................. 108,269 110,640
------------ ------------
5,012,626 5,718,869
------------ ------------
FINANCIAL SERVICES -- 0.1%
2,000 American Express Co. ....................... 104,220 102,760
------------ ------------
METALS AND MINING -- 0.3%
23,000 Compania de Minas
Buenaventura SA, ADR ..................... 505,075 508,300
------------ ------------
REAL ESTATE -- 0.1%
3,250 Brascan Corp., Cl. A ....................... 78,410 91,780
------------ ------------
SATELLITE -- 1.3%
85,000 DIRECTV Group Inc.+ ........................ 1,390,100 1,453,500
55,000 PanAmSat Corp.+ ............................ 1,275,166 1,277,100
------------ ------------
2,665,266 2,730,600
------------ ------------
TELECOMMUNICATIONS -- 4.2%
4,000 ALLTEL Corp. ............................... 201,515 202,480
50,000 BCE Inc. ................................... 1,078,878 1,002,000
30,000 BellSouth Corp. ............................ 836,024 786,600
32,000 BT Group plc, ADR .......................... 1,108,709 1,171,200
65,000 CenturyTel Inc. ............................ 2,165,326 1,952,600
150,000 Cincinnati Bell Inc.+ ...................... 703,244 666,000
55,000 Citizens Communications
Co.+ ..................................... 633,804 665,500
10,200 Commonwealth Telephone
Enterprises Inc.+ ........................ 394,296 456,654
10,000 D&E Communications Inc. .................... 100,525 134,200
6,000 Deutsche Telekom AG, ADR+ .................. 91,080 106,260
2,000 France Telecom SA, ADR ..................... 22,799 52,560
40,000 Touch America
Holdings Inc.+ ........................... 38,488 240
45,000 Verizon Communications Inc. ................ 1,676,627 1,628,550
------------ ------------
9,051,315 8,824,844
------------ ------------
WIRELESS COMMUNICATIONS -- 3.4%
450,000 AT&T Wireless Services Inc.+ ............... 6,184,650 6,444,000
38,000 mm02 plc, ADR+ ............................. 387,488 638,400
------------ ------------
6,572,138 7,082,400
------------ ------------
TOTAL COMMON
STOCKS ................................... 143,706,907 157,124,428
------------ ------------
PREFERRED STOCKS -- 2.4%
PUBLISHING -- 0.0%
3,682 News Corp. Ltd., Pfd., ADR ................. 107,146 121,064
------------ ------------
TELECOMMUNICATIONS -- 2.4%
100,000 Citizens Communications Co.,
5.000% Cv. Pfd. .......................... 4,987,571 5,000,000
------------ ------------
TOTAL PREFERRED
STOCKS ................................... 5,094,717 5,121,064
------------ ------------
PRINCIPAL
AMOUNT
----------
CORPORATE BONDS -- 0.1%
ENERGY AND UTILITIES: INTEGRATED -- 0.1%
$ 500,000 Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21+ (b) .................... 378,108 282,187
------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 14.4%
30,000,000 U.S. Treasury Bills,
0.989%++, 07/08/04 ....................... 29,994,313 29,994,313
------------ ------------
REPURCHASE AGREEMENTS -- 7.7%
15,984,000 State Street Bank and Trust Co.,
1.180%, dated 06/30/04,
due 07/01/04, proceeds at
maturity, $15,984,524 (a) ................ 15,984,000 15,984,000
------------ ------------
TOTAL INVESTMENTS -- 100.0% $195,158,045 208,505,992
============
OTHER ASSETS IN EXCESS OF LIABILITIES................................... 157,316
------------
PREFERRED STOCK
(1,185,700 preferred shares outstanding)............................ (54,617,500)
------------
NET ASSETS COMMON STOCK
(23,047,888 common shares outstanding).............................. $154,030,966
============
NET ASSET VALUE PER COMMON SHARE
($154,030,966 / 23,047,888 shares outstanding)...................... $6.68
=====
-----------------------------
For Federal tax purposes:
Aggregate cost............................................ $194,564,516
============
Gross unrealized appreciation............................. $ 16,361,851
Gross unrealized depreciation............................. (2,420,375)
============
Net unrealized appreciation............................... $ 13,941,476
============
-----------------------------
(a) Collateralized by U.S. Treasury Note, 1.750%, due 12/31/04, market value
$16,307,456.
(b) Bond in default.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
CVO - Contingent Value Obligation.
SAILS - Stock Appreciation Income Linked Securities.
See accompanying notes to financial statements.
4
THE GABELLI UTILITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
ASSETS:
Investments, at value (cost $195,158,045) ............. $ 208,505,992
Cash and foreign currency, at value (cost $5) ......... 984
Dividends and interest receivable ..................... 549,387
-------------
TOTAL ASSETS .......................................... 209,056,363
-------------
LIABILITIES:
Dividends payable ..................................... 26,452
Payable for investment advisory fees .................. 248,755
Payable for shareholder communication fees ............ 118,218
Other accrued expenses and liabilities ................ 14,472
-------------
TOTAL LIABILITIES ..................................... 407,897
-------------
PREFERRED STOCK:
Series A Cumulative Preferred Stock (5.625%,
$25 liquidation value, $0.001 par value,
1,200,000 shares authorized with 1,184,700
shares issued and outstanding) ..................... 29,617,500
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 ................................. 54,617,500
-------------
NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS ................................. $ 154,030,966
=============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS CONSIST OF:
Shares of beneficial interest, at par value ........... $ 23,048
Additional paid-in capital ............................ 149,659,637
Accumulated distributions in excess of net
investment income .................................. (7,825,368)
Accumulated net realized loss on investments
and foreign currency transactions .................. (1,174,675)
Net unrealized appreciation on investments
and foreign currency transactions .................. 13,348,324
-------------
TOTAL NET ASSETS ...................................... $ 154,030,966
=============
NET ASSET VALUE PER COMMON SHARE
($154,030,966 / 23,047,888 shares outstanding;
unlimited number of shares authorized of
$0.001 par value) ..................................... $6.68
=====
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $18,391) ........... $ 2,509,436
Interest .............................................. 299,877
-------------
TOTAL INVESTMENT INCOME ............................... 2,809,313
-------------
EXPENSES:
Investment advisory fees .............................. 894,212
Shareholder communications expenses ................... 156,141
Shareholder services fees ............................. 106,591
Payroll ............................................... 67,597
Trustees' fees ........................................ 25,908
Legal and audit fees .................................. 22,037
Custodian fees ........................................ 14,328
Miscellaneous expenses ................................ 77,920
-------------
TOTAL EXPENSES ........................................ 1,364,734
LESS: CUSTODIAN FEE CREDIT ............................ (191)
-------------
NET EXPENSES .......................................... 1,364,543
-------------
NET INVESTMENT INCOME ................................. 1,444,770
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments ...................... (686,082)
Net change in unrealized appreciation/depreciation
on investments and foreign currency transactions ... 4,730,262
-------------
Net Realized and Unrealized Gain on Investments
and Foreign Currency Transactions .................. 4,044,180
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................................... 5,488,950
-------------
Total Distributions to Preferred Stock Shareholders ... (973,658)
-------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS .................................... $ 4,515,292
=============
See accompanying notes to financial statements.
5
THE GABELLI UTILITY TRUST
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
SIX MONTHS ENDED
JUNE 30, 2004 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2003
----------------- -----------------
OPERATIONS:
Net investment income ............................................................. $ 1,444,770 $ 1,661,174
Net realized gain (loss) on investments and foreign currency transactions ......... (686,082) 3,379,237
Net change in unrealized appreciation/depreciation on investments and foreign
currency transactions .......................................................... 4,730,262 17,078,674
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............................. 5,488,950 22,119,085
------------- -------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ............................................................. (973,658) (252,258)
Net realized short-term gain on investments and foreign currency transactions ..... -- (29,505)
Net realized long-term gains on investments and foreign currency transactions ..... -- (555,151)
------------- -------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ............................... (973,658) (836,914)
------------- -------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS
RESULTING FROM OPERATIONS ...................................................... 4,515,292 21,282,171
------------- -------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ............................................................. (441,443) (1,465,686)
Net realized short-term gain on investments and foreign currency transactions ..... -- (193,597)
Net realized long-term gains on investments and foreign currency transactions ..... -- (3,642,522)
Return of capital ................................................................. (7,825,368)* (7,047,175)
------------- -------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .................................. (8,266,811)* (12,348,980)
------------- -------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment of dividends
and distributions and rights offering .......................................... 1,246,246 54,012,622
Net increase in net assets from repurchase of preferred shares .................... 29,346 --
Offering costs for preferred shares charged to paid-in capital .................... -- (1,550,000)
------------- -------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS .......................... 1,275,592 52,462,622
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS ............................................................. (2,475,927) 61,395,813
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS:
Beginning of period ............................................................... 156,506,893 95,111,080
------------- -------------
End of period ..................................................................... $ 154,030,966 $ 156,506,893
============= =============
---------------
* Based on current earnings and subject to change and recharacterization at
fiscal year end.
See accompanying notes to financial statements.
6
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 statutory trust on February 25, 1999 and registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), whose primary
objective is long-term growth of capital and income. The Utility Trust had no
operations prior to July 9, 1999, other than the sale of 10,000 shares of
beneficial interest for $100,000 to The Gabelli Equity Trust Inc. (the "Equity
Trust") at $10.00 per share. On July 9, 1999, the Utility Trust had a 4 for 3
stock split making the balance of Utility Trust shares held by the Equity Trust
as 13,333. On July 9, 1999, the Equity Trust contributed $79,487,260 in cash and
securities in exchange for shares of the Utility Trust, and on the same date
distributed such shares to Equity Trust shareholders of record on July 1, 1999
at the rate of one share of the Utility Trust for every ten shares of the Equity
Trust. Investment operations commenced on July 9, 1999.
Effective August 1, 2002, the Utility Trust modified its non-fundamental
investment policy to increase, from 65% to 80%, the portion of its assets that
it will invest, under normal market conditions, in common stocks and other
securities of foreign and domestic companies involved in providing products,
services or equipment for (i) the generation or distribution of electricity, gas
and water and (ii) telecommunications services or infrastructure operations (the
"80% Policy").
The 80% Policy may be changed without shareholder approval. However, the
Utility Trust has adopted a policy to provide shareholders with 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 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 foreign markets are generally
valued at the preceding closing values of such securities on their respective
exchanges or if after the close, market conditions change significantly, certain
foreign securities may be fair valued pursuant to procedures established by the
Board. Debt instruments that are not credit impaired with remaining maturities
of 60 days or less are valued at amortized cost, unless the Board determines
such does not reflect the securities' fair value, in which case these securities
will be valued at their fair value as determined by the Board. Debt instruments
having a maturity greater than 60 days for which market quotations are readily
available are valued at the latest average of the bid and asked prices. If there
were no asked prices quoted on such day, the security is valued using the
closing bid price. Futures contracts are valued at the official closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
7
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Board. Fair
valuation methodologies and procedures may include, but are not limited to:
analysis and review of available financial and non-financial information about
the company; comparisons to the valuation and changes in valuation of similar
securities, including a comparison of foreign securities to the equivalent U.S.
dollar value ADR securities at the close of the U.S. exchange; and evaluation of
any other information that could be indicative of the value of the security.
REPURCHASE AGREEMENTS. The Utility Trust may enter into repurchase
agreements with primary government securities dealers recognized by the Federal
Reserve Bank of New York, 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 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.
FOREIGN CURRENCY TRANSACTION. 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. Distributions to Shareholders of the Utility Trust's 5.625% Tax
Advantaged Series A Cumulative Preferred Stock and Series B Auction Rate
Cumulative Preferred Stock ("Cumulative Preferred Stock") are accrued on a daily
basis and are determined as described in Note 5.
For the year ended December 31, 2003, reclassifications were made to
increase distributions in excess of net investment income for $27,100 and to
decrease distributions in excess of net realized gain on investments for
$27,100, with an offsetting adjustment to additional paid-in capital.
8
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The tax character of distributions paid during the fiscal year ended December
31, 2003 were as follows:
YEAR ENDED
DECEMBER 31, 2003
---------------------------
COMMON PREFERRED
----------- -----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short term capital gains) .. $ 1,659,283 $ 281,763
Net long term capital gains ................. 3,642,522 555,151
Non-taxable return of capital ............... 7,047,175 --
----------- -----------
Total distributions paid .................... $12,348,980 $ 836,914
=========== ===========
The tax character of amounts distributed in 2004 which exceed the ordinary
income and net capital gains of the Fund will be treated as a non-taxable return
of capital. Such determination can only be made upon completion of the taxable
year.
PROVISION FOR INCOME TAXES. The Trust intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.
Dividends and interest from non-U.S. sources received by the Utility Trust
are generally subject to non-U.S. withholding taxes at rates ranging up to 30%.
Such withholding taxes may be reduced or eliminated under the terms of
applicable U.S. income tax treaties, and the Utility Trust intends to undertake
any procedural steps required to claim the benefits of such treaties.
As of December 31, 2003, the components of accumulated earnings/(losses)
on a tax basis were as follows:
Net unrealized appreciation on investments $ 8,129,469
Dividends payable ........................ (29,669)
-----------
Total accumulated gain ................... $ 8,099,800
===========
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 plus
liquidation value of preferred stock. In accordance with the Advisory Agreement,
the Adviser provides a continuous investment program for the Utility Trust's
portfolio and oversees the administration of all aspects of the Utility Trust's
business and affairs. The Adviser has agreed to reduce the management fee on the
incremental assets attributable to each series of the Cumulative Preferred Stock
if the total return of the net asset value of the common shares of the Utility
Trust, including distributions and advisory fee subject to reduction, does not
exceed the stated dividend rate of the respective Cumulative Preferred Stock for
the year.
The Trust's total return on the net asset value of the common shares is
monitored on a monthly basis to assess whether the total return on the net asset
value of the common shares exceeds the stated dividend rate of the Cumulative
Preferred Stock for the period. For the six months ended June 30, 2004, the
Trust's total return on the net asset value of the common shares exceeded the
stated dividend rate of the Series B Auction Rate Cumulative Preferred Stock.
Thus, management fees were accrued on these assets, but not on the assets of the
Series A Cumulative Preferred Stock. Management fees were reduced by the amount
of $149,180.
During the six months ended June 30, 2004, Gabelli & Company, Inc. and its
affiliates received $80,330 in brokerage commissions as a result of executing
agency transactions in portfolio securities on behalf of the Utility Trust.
9
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
In connection with the 2003 Rights Offering, holders of unexercised rights
to purchase common shares of the Utility Trust's ("Rights") were able to
instruct the Subscription Agent (EquiServe Trust Company) to sell such Rights on
their behalf. The Subscription Agent was permitted to effect such sales through
Gabelli & Company, unless the Subscription Agent was able to negotiate a lower
commission rate with an independent broker. Total commissions from sales of
Rights effected by the Subscription Agent through Gabelli & Company amounted to
$22,630 for the year ended December 31, 2003.
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, 2004, the 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,
2004 aggregated $39,960,060 and $11,327,871, 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, 2004, the Utility Trust did not repurchase any shares
of beneficial interest in the open market.
On August 20, 2003, the Utility Trust distributed one transferable right
for each of the 15,298,490 common shares outstanding to shareholders of record
on that date. Three rights were required to purchase one additional common share
at the subscription price of $7.00 per share. Shareholders who exercised their
full primary subscription rights were eligible for an over-subscription
privilege entitling them to subscribe, subject to certain limitations and a
pro-rata allotment, for any additional shares not purchased pursuant to the
primary subscription plus such additional amounts as authorized by the Board of
Trustees in accordance with the registration statement. The subscription period
expired on September 25, 2003. The rights offering was fully and over-subscribed
resulting in the issuance of 7,500,000 common shares and proceeds of $52,500,000
to the Utility Trust, prior to the deduction of estimated expenses of $500,000.
The net asset value per share of the Utility Trust common shareholders was
enhanced by approximately $0.12 per share as a result of the issuance of shares
above net asset value.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2004 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2003
---------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ---------- -----------
Shares issued in rights offering .. -- $ -- 7,500,000 $52,105,762
Shares issued upon reinvestment
of dividends and distributions . 141,656 1,246,246 225,740 1,906,860
------- ---------- ---------- -----------
Net increase ...................... 141,656 $1,246,246 7,725,740 $54,012,622
======= ========== ========= ===========
On July 31, 2003, the Utility Trust received net proceeds of $28,877,500
(after underwriting discounts of $945,000 and estimated offering expenses of
$177,500) from the public offering of 1,200,000 shares of 5.625% Series A
Cumulative Preferred Stock. Commencing July 31, 2008 and thereafter, the Utility
Trust, at its option, may redeem the 5.625% Series A Cumulative Preferred Stock
in whole or in part at the liquidation value price. During the six months ended
June 30, 2004, the Utility Trust repurchased 15,300 shares of 5.625% Series A
Cumulative Preferred Stock in the open market at a cost of $353,154 and an
average discount of approximately 7.72% from its liquidation value of $25.00 per
share. All repurchased shares of 5.625% Series A Cumulative Preferred Stock have
been retired. At June 30, 2004, 1,184,700 shares of the 5.625% Series A
Cumulative Preferred Stock were outstanding and accrued dividends amounted to
$13,883.
10
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
On July 31, 2003, the Utility Trust received net proceeds of $24,572,500
(after underwriting discounts of $250,000 and estimated offering expenses of
$177,500) from the public offering of 1,000 shares of Series B Auction Rate
Cumulative Preferred Stock. The dividend rate, as set by the auction process,
which is generally held every 7 days, is expected to vary with short-term
interest rates. The rates of Series B Auction Rate Cumulative Preferred Stock
ranged from 1.05% to 1.55% for the six months ended June 30, 2004. Existing
shareholders may submit an order to hold, bid or sell such shares on each
auction date. Series B Auction Rate Cumulative Preferred Stock shareholders may
also trade shares in the secondary market. The Utility Trust, at its option, may
redeem the Series B Auction Rate Cumulative Preferred Stock in whole or in part
at the liquidation value price at any time. During the six months ended June 30,
2004, the Utility Trust did not repurchase any shares of Series B Auction Rate
Cumulative Preferred Stock. At June 30, 2004, 1,000 shares of the Series B
Auction Rate Cumulative Preferred Stock were outstanding with an annualized
dividend rate of 1.38 percent per share and accrued dividends amounted to $958.
The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of Common Stock (one vote per share) and will vote together
with holders of shares of Common Stock as a single class. In addition, the 1940
Act requires that along with approval of a majority of the holders of Common
Stock, approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Fund's subclassification as a
closed-end investment company or changes in its fundamental investment
restrictions. 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.
Under Emerging Issues Task Force (EITF) promulgating Topic D-98,
Classification and Measurement of Redeemable Securities, which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are to be classified outside of permanent equity to the extent that the
redemption is at a fixed or determinable price and at the option of the holder
or upon the occurrence of an event that is not solely within the control of the
issuer. Subject to the guidance of the EITF, the Fund's Cumulative Preferred
Stock has been reclassified outside of permanent equity (net assets attributable
to common stock shareholders) in the accompanying financial statements.
6. INDUSTRY CONCENTRATION. Because the Utility Trust primarily invests in common
stocks and other securities of foreign and domestic companies in the utility
industry, its portfolio may be subject to greater risk and market fluctuations
than a portfolio of securities representing a broad range of investments.
7. OTHER MATTERS. On October 7, 2003, the Fund's Adviser received a subpoena
from the Attorney General of the State of New York requesting information on
mutual fund shares trading practices. The Adviser has also received requests for
information from the SEC regarding mutual fund trading practices and valuation
of portfolio securities. The Adviser has responded to the requests. The Fund
does not believe that these matters will have a material adverse effect on the
Fund's financial position or the results of its operations.
8. 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 expect the risk of loss to be remote.
11
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
SELECTED DATA FOR A UTILITY TRUST COMMON SHARE SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2004 -------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999(a)
----------- ------ ------ ------ ------ -------
OPERATING PERFORMANCE:
Net asset value, beginning of period ................. $ 6.83 $ 6.27 $ 7.32 $ 8.21 $ 7.62 $ 7.50
------ ------ ------ ------ ------ ------
Net investment income ................................ 0.06 0.10 0.11 0.12 0.15 0.08
Net realized and unrealized gain (loss) on investments 0.18 1.17 (0.62) (0.32) 1.44 0.19
------ ------ ------ ------ ------ ------
Total from investment operations ..................... 0.24 1.27 (0.51) (0.20) 1.59 0.27
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ................................ (0.04) (0.01) -- -- -- --
Net realized gain on investments ..................... -- (0.04) -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions to preferred stock shareholders .. (0.04) (0.05) -- -- -- --
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS ...................................... 0.20 1.22 (0.51) (0.20) 1.59 0.27
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ................................ (0.02) (0.09) (0.11) (0.21) (0.06) (0.08)
Net realized gain on investments ..................... -- (0.22) (0.36) (0.49) (0.94) (0.07)
Paid-in capital ...................................... (0.34)* (0.41) (0.25) -- -- --
------ ------ ------ ------ ------ ------
Total distributions to common stock shareholders ..... (0.36) (0.72) (0.72) (0.70) (1.00) (0.15)
------ ------ ------ ------ ------ ------
CAPITAL SHARE TRANSACTIONS:
Increase in net asset value from common stock share
transactions ..................................... 0.01 0.03 0.03 0.01 -- --
Increase in net asset value from shares issued in
rights offering .................................. -- 0.12 0.15 -- -- --
Offering costs for preferred shares charged to
paid-in capital .................................. -- (0.09) -- -- -- --
------ ------ ------ ------ ------ ------
Total capital share transactions ..................... 0.01 0.06 0.18 0.01 -- --
------ ------ ------ ------ ------ ------
NET ASSET VALUE ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS, END OF PERIOD ...................... $ 6.68 $ 6.83 $ 6.27 $ 7.32 $ 8.21 $ 7.62
====== ====== ====== ====== ====== ======
Net asset value total return + ....................... 3.14% 18.60% (6.79)% (3.15)% 22.01% 3.62%
====== ====== ====== ====== ====== ======
Market value, end of period .......................... $ 9.22 $ 9.60 $ 8.72 $ 9.33 $ 8.75 $ 7.63
====== ====== ====== ====== ====== ======
Total investment return ++ ........................... 0.04% 19.86% 1.70% 15.82% 29.95% 3.70%
====== ====== ====== ====== ====== ======
-------------------------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder. 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 rights
offering, assuming full subscription by shareholder. Total return for the
period 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, 2004 and the years
ended December 31, 2003, 2002, 2001 and 2000, the ratios of operating
expenses to average net assets attributable to common stock would be
1.77%, 2.04%, 1.93%, 2.00%, and 1.93%, respectively, and the ratios of
operating expenses to average total net assets including liquidation value
of preferred shares would be 1.30% and 1.68%.
(e) Based on weekly prices.
(f) Asset coverage is calculated by combining all series of preferred stock.
* Based on current earnings and subject to change and recharacterization at
fiscal year end.
See accompanying notes to financial statements.
12
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS (CONTINUED) (UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2004 ----------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999(a)
----------- -------- -------- -------- -------- --------
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred
shares, end of period (in 000's) ................ $208,663 $211,507 $ 95,111 $ 82,197 $ 90,669 $ 83,330
Net assets attributable to common shares,
end of period (in 000's) ........................ $154,031 $156,507 $ 95,111 $ 82,197 $ 90,669 $ 83,330
Ratio of net investment income to average net assets
attributable to common shares (c) ............... 1.87%(b) 1.52% 1.65% 1.57% 1.88% 2.27%(b)
Ratio of operating expenses to average net assets
attributable to common shares (c)(d) ............ 1.77%(b) 2.04% 1.93% 2.00% 1.95% 1.85%(b)
Ratio of operating expenses to average total net
assets including liquidation value of preferred
shares (d) ...................................... 1.30%(b) 1.68% -- -- -- --
Portfolio turnover rate ............................. 8% 28% 29% 41% 92% 37%
PREFERRED STOCK:
5.625% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ......... $ 29,618 $ 30,000 -- -- -- --
Total shares outstanding (in 000's) ................. 1,185 1,200 -- -- -- --
Liquidation preference per share .................... $ 25.00 $ 25.00 -- -- -- --
Average market value (e) ............................ $ 24.64 $ 25.12 -- -- -- --
Asset coverage per share ............................ $ 95.50 $ 96.14 -- -- -- --
AUCTION RATE CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ......... $ 25,000 $ 25,000 -- -- -- --
Total shares outstanding (in 000's) ................. 1 1 -- -- -- --
Liquidation preference per share .................... $ 25,000 $ 25,000 -- -- -- --
Average market value (e) ............................ $ 25,000 $ 25,000 -- -- -- --
Asset coverage per share ............................ $ 95,504 $ 96,140 -- -- -- --
ASSET COVERAGE (f) .................................. 382% 385% -- -- -- --
--------------------------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder. 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 rights
offering, assuming full subscription by shareholder. Total return for the
period 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, 2004 and the years
ended December 31, 2003, 2002, 2001 and 2000, the ratios of operating
expenses to average net assets attributable to common stock would be
1.77%, 2.04%, 1.93%, 2.00%, and 1.93%, respectively, and the ratios of
operating expenses to average total net assets including liquidation value
of preferred shares would be 1.30% and 1.68%.
(e) Based on weekly prices.
(f) Asset coverage is calculated by combining all series of preferred stock.
* Based on current earnings and subject to change and recharacterization at
fiscal year end.
See accompanying notes to financial statements.
13
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 or requesting a copy of the terms of the
Plan may contact EquiServe at (800) 336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must
do so in writing or by telephone. Please submit your request to the above
mentioned address or telephone number. Include in your request your name,
address and account number. The cost to liquidate shares is $2.50 per
transaction as well as the brokerage commission incurred. Brokerage charges are
expected to be less than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Utility Trust's Common Stock is equal to
or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Utility Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Utility Trust valued at market
price. If the Utility Trust should declare a dividend or capital gains
distribution payable only in cash, EquiServe will buy Common Stock in the open
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that EquiServe will endeavor to terminate purchases in the open
market and cause the Utility Trust to issue shares at net asset value if,
following the commencement of such purchases, the market value of the Common
Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Utility Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by EquiServe on at least 90 days' written
notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Utility Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Utility Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. EquiServe will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. EquiServe will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment until the next purchase
date. 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.
14
TRUSTEES AND OFFICERS
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN AND CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
KEYSPAN ENERGY CORP.
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
John D. Gabelli
SENIOR VICE PRESIDENT,
GABELLI & COMPANY, INC.
Robert J. Morrissey
ATTORNEY-AT-LAW
MORRISSEY, HAWKINS & LYNCH
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT & TREASURER
David I. Schachter
VICE PRESIDENT & OMBUDSMAN
James E. McKee
SECRETARY
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
Mellon Trust of New England, N.A.
COUNSEL
Skadden, Arps, Slate, Meagher & Flom, LLP
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
5.625%
Common Preferred
------ ---------
NYSE-Symbol: GUT GUT PrA
Shares Outstanding: 23,047,888 1,184,700
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "Specialized Equity Funds," in Sunday's The New York Times and in
Monday's The Wall Street Journal. It is also listed in Barron's Mutual
Funds/Closed End Funds section under the heading "Specialized Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Utility Trust may, from time to time,
purchase its shares in the open market when the Utility Trust shares are trading
at a discount of 10% or more from the net asset value of the shares. The Utility
Trust may also, from time to time, purchase shares of its 5.625% Series A
Cumulative Preferred Shares in the open market when the shares are trading at a
discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
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
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
=============================================================================================================================
(D) MAXIMUM NUMBER (0R
(C) TOTAL NUMBER OF SHARES APPROXIMATE DOLLAR VALUE) OF SHARES
(A) TOTAL NUMBER (B) AVERAGE (OR UNITS) PURCHASED AS PART (0R UNITS) THAT MAY YET BE
OF SHARES (OR PRICE PAID PER OF PUBLICLY ANNOUNCED PLANS PURCHASED UNDER THE PLANS OR
PERIOD UNITS) PURCHASED SHARE (OR UNIT) OR PROGRAMS PROGRAMS
=============================================================================================================================
Month #1 Common - N/A Common - N/A Common - N/A Common - 22,906,232
01/01/04
through 01/31/04 Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,200,000
- N/A Series A - N/A
=============================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 22,928,068
02/01/04
through 02/29/04 Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,200,000
- N/A Series A - N/A
=============================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 22,950,477
03/01/04
through 03/31/04 Preferred Series A Preferred Preferred Series A - N/A Preferred Series A - 1,200,000
- N/A Series A - N/A
=============================================================================================================================
Month #4 Common - N/A Common - N/A Common - N/A Common - 22,972,717
04/01/04
through 04/30/04 Preferred Series A Preferred Preferred Series A - 1,200 Preferred Series A - 1,200,000 - 1,200
- 1,200 Series A - = 1,198,800
$23.8950
=============================================================================================================================
Month #5 Common - N/A Common - N/A Common - N/A Common - 23,023,640
05/01/04
through 05/31/04 Preferred Series A Preferred Preferred Series A - 8,600 Preferred Series A - 1,198,800 - 8,600
- 8,600 Series A - = 1,190,200
$22.8241
====================== =======================================================================================================
Month #6 Common - N/A Common - N/A Common - N/A Common - 23,047,902
06/01/04
through 06/30/04 Preferred Series A Preferred Preferred Series A - 5,500 Preferred Series A - 1,190,200 - 5,500
- 5,500 Series A - = 1,184,700
$23.3285
=============================================================================================================================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series A Preferred Preferred Series A - 15,300
- 15,300 Series A -
$23.0894
=============================================================================================================================
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 9. 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 10. 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 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 11. 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(a) 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
-----------------------------------------------------
By (Signature and Title)* /s/ BRUCE N. ALPERT
-----------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date September 7, 2004
----------------------------------------------------------------------------
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 and
Principal Financial Officer
Date September 7, 2004
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.