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 811-09423
---------
The Gabelli Utility Trust
-----------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
-----------------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
-----------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
--------------
Date of fiscal year end: December 31
-----------
Date of reporting period: December 31, 2007
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[LOGO]
THE GABELLI
UTILITY TRUST
THE GABELLI UTILITY TRUST
Annual Report
December 31, 2007
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2007.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2007 (a)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year (07/09/99)
------- ------ ------ ------ ----------
GABELLI UTILITY TRUST
NAV TOTAL RETURN (b) ............ 4.11% 9.03% 15.07% 15.92% 11.06%
INVESTMENT TOTAL RETURN (c) ..... 3.84 3.42 9.10 9.77 11.43
S&P 500 Utilities Index ............ 7.55 19.38 19.06 21.50 6.56
Lipper Utility Fund Average ........ 5.10 19.53 19.14 21.05 7.80
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE. WHEN SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE
INFORMATION AS OF THE MOST RECENT MONTH END. PERFORMANCE RETURNS FOR
PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. INVESTORS SHOULD CAREFULLY
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE
FUND BEFORE INVESTING. THE STANDARD & POOR'S ("S&P") 500 UTILITIES INDEX
IS AN UNMANAGED INDICATOR OF ELECTRIC AND GAS UTILITY STOCK PERFORMANCE.
THE LIPPER UTILITY FUND AVERAGE REFLECTS THE AVERAGE PERFORMANCE OF
OPEN-END MUTUAL FUNDS CLASSIFIED IN THIS PARTICULAR CATEGORY. DIVIDENDS
ARE CONSIDERED REINVESTED. YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN THE NET ASSET
VALUE ("NAV") PER SHARE, REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE
EX-DIVIDEND DATE, AND ADJUSTMENTS FOR RIGHTS OFFERINGS AND ARE NET OF
EXPENSES. SINCE INCEPTION RETURN IS BASED ON AN INITIAL NAV OF $7.50.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF DISTRIBUTIONS, AND
ADJUSTMENTS FOR RIGHTS OFFERINGS. SINCE INCEPTION RETURN IS BASED ON AN
INITIAL OFFERING PRICE OF $7.50.
--------------------------------------------------------------------------------
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 22, 2008
THE GABELLI UTILITY TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments as of December 31, 2007:
Energy and Utilities: Electric Integrated ............................ 44.7%
U.S. Treasury Bills .................................................. 11.2%
Energy and Utilities:
Electric Transmission and Distribution ............................ 7.2%
Energy and Utilities: Natural Gas Integrated ......................... 6.8%
Energy and Utilities: Natural Gas Utilities .......................... 5.3%
Telecommunications ................................................... 4.7%
Energy and Utilities: Global Utilities ............................... 3.7%
Cable and Satellite .................................................. 3.0%
Wireless Communications .............................................. 2.8%
Energy and Utilities: Water .......................................... 2.8%
Energy and Utilities: Merchant Energy ................................ 2.0%
Energy and Utilities: Natural Resources .............................. 1.2%
Entertainment ........................................................ 1.2%
Diversified Industrial ............................................... 1.0%
Computer Software and Services ....................................... 0.8%
Energy and Utilities: Services ....................................... 0.5%
Communications Equipment ............................................. 0.4%
Transportation ....................................................... 0.2%
Aerospace ............................................................ 0.2%
Energy and Utilities: Alternative Energy ............................. 0.2%
Real Estate .......................................................... 0.1%
Equipment and Supplies ............................................... 0.0%
Automotive: Parts and Accessories .................................... 0.0%
Publishing ........................................................... 0.0%
Agriculture .......................................................... 0.0%
-----
100.0%
=====
THE GABELLI UTILITY TRUST (THE "FUND") FILES A COMPLETE SCHEDULE OF
PORTFOLIO HOLDINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") FOR
THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH
WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2007. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE SEC'S PUBLIC REFERENCE
ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE
ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. A description of
the Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
2
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS -- 87.1%
ENERGY AND UTILITIES -- 74.3%
ENERGY AND UTILITIES: ALTERNATIVE ENERGY -- 0.2%
10,000 Ormat Technologies Inc. ........ $ 150,000 $ 550,100
-------------- --------------
ENERGY AND UTILITIES: ELECTRIC INTEGRATED -- 44.7%
248,000 Allegheny Energy Inc. .......... 7,414,609 15,775,280
23,000 ALLETE Inc. .................... 728,776 910,340
75,000 Alliant Energy Corp. ........... 1,824,383 3,051,750
10,000 Ameren Corp. ................... 437,020 542,100
80,000 American Electric
Power Co. Inc. ............... 2,629,105 3,724,800
1,800,000 Aquila Inc.+ ................... 6,816,425 6,714,000
10,000 Avista Corp. ................... 199,636 215,400
35,000 Black Hills Corp. .............. 1,060,967 1,543,500
30,000 Cleco Corp. .................... 570,612 834,000
150,000 CMS Energy Corp. ............... 1,635,059 2,607,000
70,000 Constellation Energy
Group Inc. ................... 4,354,534 7,177,100
2,000 Dominion Resources Inc. ........ 86,700 94,900
160,000 DPL Inc. ....................... 3,365,523 4,744,000
24,000 DTE Energy Co. ................. 978,366 1,055,040
200,000 Duke Energy Corp. .............. 3,853,613 4,034,000
90,000 Edison International ........... 3,861,403 4,803,300
189,300 El Paso Electric Co.+ .......... 3,420,893 4,840,401
3,000 Entergy Corp. .................. 84,249 358,560
51,000 FirstEnergy Corp. .............. 2,118,209 3,689,340
137,000 Florida Public Utilities Co. ... 1,196,633 1,609,750
90,000 FPL Group Inc. ................. 3,906,908 6,100,200
100,000 Great Plains Energy Inc. ....... 3,108,739 2,932,000
55,000 Hawaiian Electric
Industries Inc. .............. 1,433,833 1,252,350
92,000 Integrys Energy Group Inc. ..... 4,632,153 4,755,480
61,000 Maine & Maritimes Corp.+ ....... 1,926,684 2,028,250
66,000 MGE Energy Inc. ................ 1,951,270 2,341,020
45,000 NiSource Inc. .................. 970,021 850,050
110,000 NorthWestern Corp. ............. 3,401,768 3,245,000
100,000 OGE Energy Corp. ............... 2,406,346 3,629,000
24,000 Otter Tail Corp. ............... 637,145 830,400
48,000 PG&E Corp. ..................... 1,280,160 2,068,320
20,000 PNM Resources Inc. ............. 290,976 429,000
100,000 Progress Energy Inc. ........... 4,383,880 4,843,000
40,000 Progress Energy Inc.,
CVO+ (a) ..................... 20,800 13,200
19,000 Public Service Enterprise
Group Inc. ................... 996,629 1,866,560
41,000 Puget Energy Inc. .............. 963,390 1,124,630
60,500 SCANA Corp. .................... 1,918,305 2,550,075
35,000 Sierra Pacific Resources ....... 312,248 594,300
104,000 TECO Energy Inc. ............... 1,560,497 1,789,840
20,000 The Empire District
Electric Co. ................. 426,495 455,600
145,000 Unisource Energy Corp. ......... 4,693,063 4,574,750
35,000 Unitil Corp. ................... 926,911 994,000
47,000 Vectren Corp. .................. 1,162,166 1,363,470
260,000 Westar Energy Inc. ............. 5,973,605 6,744,400
90,000 Wisconsin Energy Corp. ......... 3,273,387 4,383,900
195,000 Xcel Energy Inc. ............... 3,384,476 4,401,150
-------------- --------------
102,578,570 134,484,506
-------------- --------------
MARKET
SHARES COST VALUE
------------ -------------- --------------
ENERGY AND UTILITIES:
ELECTRIC TRANSMISSION AND DISTRIBUTION -- 7.2%
50,000 CH Energy Group Inc. ........... $ 2,261,677 $ 2,227,000
58,000 Consolidated Edison Inc. ....... 2,626,340 2,833,300
100,000 Energy East Corp. .............. 2,316,873 2,721,000
135,000 Northeast Utilities ............ 2,670,943 4,226,850
215,000 NSTAR .......................... 5,293,459 7,787,300
22,500 Pepco Holdings Inc. ............ 449,918 659,925
36,666 UIL Holdings Corp. ............. 966,693 1,354,809
-------------- --------------
16,585,903 21,810,184
-------------- --------------
ENERGY AND UTILITIES: GLOBAL UTILITIES -- 3.7%
1,500 Areva SA ....................... 613,197 1,721,567
8,000 Chubu Electric Power Co. Inc. .. 189,551 208,746
35,000 Electric Power
Development Co. Ltd. ......... 1,256,887 1,306,449
28,800 Endesa SA, ADR ................. 1,544,139 1,526,400
200,000 Enel SpA ....................... 1,531,070 2,378,759
300,000 Hera SpA ....................... 433,286 1,352,033
8,000 Hokkaido Electric
Power Co. Inc. ............... 156,870 173,298
8,000 Hokuriku Electric Power Co. .... 146,449 166,853
1,500 Huaneng Power
International Inc., ADR ...... 70,842 61,950
30,000 Korea Electric
Power Corp., ADR+ ............ 486,564 625,500
8,000 Kyushu Electric
Power Co. Inc. ............... 167,818 196,930
2,000 Niko Resources Ltd. ............ 113,769 180,860
8,000 Shikoku Electric
Power Co. Inc. ............... 155,987 214,474
8,000 The Chugoku Electric
Power Co. Inc. ............... 150,761 155,754
8,000 The Kansai Electric
Power Co. Inc. ............... 158,472 186,546
8,000 The Tokyo Electric
Power Co. Inc. ............... 191,450 206,955
15,000 Tohoku Electric
Power Co. Inc. ............... 284,854 338,361
-------------- --------------
7,651,966 11,001,435
-------------- --------------
ENERGY AND UTILITIES: MERCHANT ENERGY -- 1.8%
20,000 Calpine Corp.+ ................. 52,600 5,200
35,810 Dynegy Inc., Cl. A+ ............ 175,000 255,683
8,130 Mirant Corp.+ .................. 37,373 316,908
300,000 Mirant Corp. Escrow+ (a) ....... 0 0
220,000 The AES Corp.+ ................. 3,262,437 4,705,800
-------------- --------------
3,527,410 5,283,591
-------------- --------------
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 5.9%
180,000 El Paso Corp. .................. 1,683,468 3,103,200
34,000 EnergySouth Inc. ............... 1,021,289 1,972,000
110,000 National Fuel Gas Co. .......... 3,549,518 5,134,800
100,000 ONEOK Inc. ..................... 2,674,346 4,477,000
110,000 Southern Union Co. ............. 1,799,367 3,229,600
-------------- --------------
10,727,988 17,916,600
-------------- --------------
See accompanying notes to financial statements.
3
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2007
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
ENERGY AND UTILITIES: NATURAL GAS UTILITIES -- 5.3%
26,000 AGL Resources Inc. ............. $ 643,173 $ 978,640
50,000 Atmos Energy Corp. ............. 1,241,257 1,402,000
10,000 Chesapeake Utilities Corp. ..... 224,112 318,500
6,000 Corning Natural Gas Corp.+ ..... 91,760 100,650
30,000 Delta Natural Gas Co. Inc. ..... 502,057 757,500
90,000 Nicor Inc. ..................... 3,094,432 3,811,500
35,000 Piedmont Natural Gas Co. Inc. .. 553,257 915,600
6,000 RGC Resources Inc. ............. 128,344 181,500
150,000 Southwest Gas Corp. ............ 4,133,813 4,465,500
120,000 Spectra Energy Corp. ........... 3,280,847 3,098,400
-------------- --------------
13,893,052 16,029,790
-------------- --------------
ENERGY AND UTILITIES: NATURAL RESOURCES -- 1.2%
4,000 Anadarko Petroleum Corp. ....... 141,060 262,760
19,000 Compania de Minas
Buenaventura SA, ADR ......... 423,453 1,075,400
18,000 Exxon Mobil Corp. .............. 1,053,313 1,686,420
300 Patriot Coal Corp.+ ............ 7,197 12,522
3,000 Peabody Energy Corp. ........... 112,745 184,920
4,000 Royal Dutch Shell plc,
Cl. A, ADR ................... 237,320 336,800
-------------- --------------
1,975,088 3,558,822
-------------- --------------
ENERGY AND UTILITIES: SERVICES -- 0.5%
50,000 ABB Ltd., ADR .................. 546,150 1,440,000
3,572 Renegy Holdings Inc.+ .......... 124,649 22,396
-------------- --------------
670,799 1,462,396
-------------- --------------
ENERGY AND UTILITIES: WATER -- 2.8%
14,000 American States Water Co. ...... 312,701 527,520
21,833 Aqua America Inc. .............. 221,008 462,860
24,750 Artesian Resources Corp.,
Cl. A ........................ 257,250 467,775
20,500 BIW Ltd. ....................... 385,070 483,800
20,000 California Water
Service Group ................ 555,152 740,400
7,500 Connecticut Water Service
Inc. ......................... 146,455 176,775
51,333 Middlesex Water Co. ............ 801,882 972,760
24,388 Pennichuck Corp. ............... 479,047 651,403
80,000 SJW Corp. ...................... 1,482,532 2,773,600
8,101 Southwest Water Co. ............ 52,047 101,425
12,000 Suez SA ........................ 387,529 810,562
12,000 Suez SA, Strips+ ............... 0 175
9,000 York Water Co. ................. 108,269 139,500
-------------- --------------
5,188,942 8,308,555
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 1.0%
1,000 Alstom ......................... 218,220 214,922
1,000 Bouygues SA .................... 87,168 83,337
8,000 Cooper Industries Ltd., Cl. A .. 300,920 423,040
65,000 General Electric Co. ........... 2,441,850 2,409,550
-------------- --------------
3,048,158 3,130,849
-------------- --------------
EQUIPMENT AND SUPPLIES -- 0.0%
50,000 Capstone Turbine Corp.+ ........ 83,080 81,500
2,000 Mueller Industries Inc. ........ 88,019 57,980
-------------- --------------
171,099 139,480
-------------- --------------
TOTAL ENERGY
AND UTILITIES ................ 166,168,975 223,676,308
-------------- --------------
SHARES/ MARKET
UNITS COST VALUE
------------ -------------- --------------
COMMUNICATIONS -- 10.3%
CABLE AND SATELLITE -- 3.0%
60,000 Cablevision Systems Corp.,
Cl. A+ ....................... $ 1,708,634 $ 1,470,000
5,000 Cogeco Cable Inc. .............. 105,008 242,211
20,000 Cogeco Inc. .................... 389,461 800,446
30,000 Comcast Corp., Cl. A+ .......... 651,983 547,800
50,000 EchoStar Communications
Corp., Cl. A+ ................ 1,560,335 1,886,000
35,000 Liberty Global Inc., Cl. A+ .... 739,454 1,371,650
20,000 Liberty Global Inc., Cl. C+ .... 421,966 731,800
2,112 PT Multimedia Servicos de
Telecomunicacoes e
Multimedia SGPS SA ........... 20,761 29,489
8,000 Rogers Communications Inc.,
Cl. B ........................ 119,139 362,000
65,000 The DIRECTV Group Inc.+ ........ 1,080,493 1,502,800
-------------- --------------
6,797,234 8,944,196
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.4%
280,000 The Furukawa Electric Co.
Ltd. ......................... 1,441,034 1,087,768
-------------- --------------
TELECOMMUNICATIONS -- 4.1%
45,000 AT&T Inc. ...................... 1,183,996 1,870,200
4,350 Bell Aliant Regional
Communications
Income Fund (a)(b) ........... 117,218 128,020
30,000 BT Group plc, ADR .............. 1,026,589 1,617,600
1,000 CenturyTel Inc. ................ 42,540 41,460
220,000 Cincinnati Bell Inc.+ .......... 985,376 1,045,000
10,000 Citizens Communications Co. .... 136,800 127,300
500 Comstar United Telesystems,
GDR+ ......................... 6,453 4,935
20,000 D&E Communications Inc. ........ 190,498 289,000
30,000 Deutsche Telekom AG, ADR ....... 543,620 650,100
2,000 France Telecom SA, ADR ......... 22,799 71,260
500 Golden Telecom Inc.+ ........... 41,235 50,475
200 Hutchison Telecommunications
International Ltd. ........... 163 301
500 Mobistar SA .................... 44,141 45,506
200 Nippon Telegraph &
Telephone Corp. .............. 929,640 1,000,761
15,000 Portugal Telecom SGPS SA ....... 210,164 195,842
200 PT Indosat Tbk ................. 128 184
500 Rostelecom, ADR ................ 32,190 34,775
500 Sistema JSFC, GDR .............. 17,383 20,875
1,200 Tele2 AB, Cl. B ................ 14,604 24,044
6,000 Telecom Italia SpA, ADR ........ 182,248 185,040
40,000 Touch America Holdings Inc.+ ... 38,488 0
115,000 Verizon Communications Inc. .... 4,312,581 5,024,350
-------------- --------------
10,078,854 12,427,028
-------------- --------------
WIRELESS COMMUNICATIONS -- 2.8%
600 America Movil SAB de CV,
Cl. L, ADR ................... 9,424 36,834
2,000 China Mobile Ltd., ADR ......... 33,988 173,740
2,000 China Unicom Ltd., ADR ......... 16,278 44,800
200 Cosmote Mobile
Telecommunications SA ........ 3,701 7,573
4,500 Mobile TeleSystems OJSC,
ADR .......................... 175,074 458,055
171 MobileOne Ltd. ................. 210 226
1,200 NTT DoCoMo Inc. ................ 1,732,443 1,997,941
3,000 QUALCOMM Inc. .................. 115,589 118,050
40,000 Rural Cellular Corp., Cl. A+ ... 1,756,634 1,763,600
See accompanying notes to financial statements.
4
THE GABELLI UTILITY TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2007
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
COMMUNICATIONS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
600 SK Telecom Co. Ltd., ADR ....... $ 12,374 $ 17,904
200 SmarTone Telecommunications
Holdings Ltd. ................ 207 188
3,000 Turkcell Iletisim Hizmet A/S,
ADR .......................... 68,927 82,710
29,000 United States Cellular Corp.+ .. 1,391,580 2,438,900
29,000 Vimpel-Communications, ADR ..... 189,143 1,206,400
-------------- --------------
5,505,572 8,346,921
-------------- --------------
TOTAL COMMUNICATIONS ........... 23,822,694 30,805,913
-------------- --------------
OTHER -- 2.5%
AEROSPACE -- 0.2%
65,000 Rolls-Royce Group plc+ ......... 513,387 706,466
2,626,000 Rolls-Royce Group plc, Cl. B ... 5,367 5,750
-------------- --------------
518,754 712,216
-------------- --------------
AGRICULTURE -- 0.0%
800 Cadiz Inc.+ .................... 3,000 16,800
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
1,000 BERU AG ........................ 106,092 109,800
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.8%
40,000 Cognos Inc.+ ................... 2,296,817 2,302,800
-------------- --------------
ENTERTAINMENT -- 1.2%
100,000 Time Warner Inc. ............... 1,870,137 1,651,000
40,000 Vivendi ........................ 1,403,488 1,835,168
-------------- --------------
3,273,625 3,486,168
-------------- --------------
PUBLISHING -- 0.0%
3,000 Idearc Inc. .................... 96,328 52,680
-------------- --------------
REAL ESTATE -- 0.1%
6,075 Brookfield Asset
Management Inc., Cl. A ....... 65,353 216,695
-------------- --------------
TRANSPORTATION -- 0.2%
20,000 GATX Corp. ..................... 610,022 733,600
-------------- --------------
TOTAL OTHER .................... 6,969,991 7,630,759
-------------- --------------
TOTAL COMMON STOCKS ............ 196,961,660 262,112,980
-------------- --------------
CONVERTIBLE PREFERRED STOCKS -- 1.5%
ENERGY AND UTILITIES -- 0.9%
ENERGY AND UTILITIES: NATURAL GAS INTEGRATED -- 0.9%
2,000 El Paso Corp.,
4.990% Cv. Pfd. (b) .......... 1,945,987 2,822,168
-------------- --------------
COMMUNICATIONS -- 0.6%
TELECOMMUNICATIONS -- 0.6%
30,000 Citizens Utilities Trust,
5.000% Cv. Pfd. .............. 1,490,995 1,692,000
-------------- --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ............. 3,436,982 4,514,168
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------------ -------------- --------------
CORPORATE BONDS -- 0.0%
COMMUNICATIONS -- 0.0%
TELECOMMUNICATIONS -- 0.0%
$ 100,000 Williams Communications
Group Inc., Escrow,
10.875%, 10/01/09+ (a) ....... $ 0 $ 0
-------------- --------------
SHARES
------------
WARRANTS -- 0.2%
ENERGY AND UTILITIES -- 0.2%
ENERGY AND UTILITIES: MERCHANT ENERGY -- 0.2%
26,107 Mirant Corp., Ser. A,
expire 01/03/11+ ............. 51,616 480,891
-------------- --------------
ENERGY AND UTILITIES: NATURAL GAS UTILITIES -- 0.0%
3,000 Corning Natural Gas Corp.,
expire 08/17/11+ ............. 0 9,075
-------------- --------------
TOTAL ENERGY
AND UTILITIES ................ 51,616 489,966
-------------- --------------
COMMUNICATIONS -- 0.0%
WIRELESS COMMUNICATIONS -- 0.0%
3,000 Bharti Airtel Ltd.,
expire 12/15/16+ (b) ......... 73,163 75,143
-------------- --------------
TOTAL WARRANTS ................. 124,779 565,109
-------------- --------------
PRINCIPAL
AMOUNT
------------
U.S. GOVERNMENT OBLIGATIONS -- 11.2%
$ 33,991,000 U.S. Treasury Bills,
2.487% to 3.186%++,
01/03/08 to 06/05/08 ......... 33,770,263 33,762,502
-------------- --------------
TOTAL INVESTMENTS -- 100.0%. .................. $ 234,293,684 300,954,759
==============
OTHER ASSETS AND LIABILITIES (NET) ............ (745,136)
PREFERRED SHARES
(1,184,700 preferred shares outstanding) ... (54,592,500)
--------------
NET ASSETS -- COMMON SHARES
(30,021,188 common shares outstanding) ...... $ 245,617,123
==============
NET ASSET VALUE PER COMMON SHARE
($245,617,123 / 30,021,188 shares
outstanding) ............................... $ 8.18
==============
----------
(a) Security fair valued under procedures established by the Board of
Trustees. The procedures may include reviewing available financial
information about the company and reviewing the valuation of comparable
securities and other factors on a regular basis. At December 31, 2007, the
market value of fair valued securities amounted to $141,220 or 0.05% of
total investments.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At December
31, 2007, the market value of Rule 144A securities amounted to $3,025,331
or 1.01% of total investments.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
CVO Contingent Value Obligation
GDR Global Depository Receipt
See accompanying notes to financial statements.
5
THE GABELLI UTILITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2007
ASSETS:
Investments, at value (cost $234,293,684) ................. $ 300,954,759
Cash ...................................................... 959
Foreign currency, at value (cost $47) ..................... 46
Receivable for investments sold ........................... 378,363
Dividends and interest receivable ......................... 481,256
Prepaid expense ........................................... 8,837
--------------
TOTAL ASSETS .............................................. 301,824,220
--------------
LIABILITIES:
Payable for investments purchased ......................... 374,990
Distributions payable ..................................... 51,701
Payable for investment advisory fees ...................... 756,494
Payable for payroll expenses .............................. 105,066
Payable for accounting fees ............................... 11,251
Payable for shareholder communications expenses ........... 150,090
Unrealized depreciation on swap contracts ................. 86,101
Other accrued expenses .................................... 78,904
--------------
TOTAL LIABILITIES ......................................... 1,614,597
--------------
PREFERRED SHARES:
Series A Cumulative Preferred Shares (5.625%, $25
liquidation value, $0.001 par value, 1,200,000 shares
authorized with 1,183,700 shares issued
and outstanding) ........................................ 29,592,500
Series B Cumulative Preferred Shares (Auction Market,
$25,000 liquidation value, $0.001 par value,
1,000 shares authorized with 1,000 shares issued
and outstanding) ........................................ 25,000,000
--------------
TOTAL PREFERRED SHARES .................................... 54,592,500
--------------
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ............ $ 245,617,123
==============
NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS CONSIST OF:
Paid-in capital, at $0.001 par value ...................... $ 180,036,943
Accumulated distributions in excess of net
investment income ....................................... (230,825)
Accumulated distributions in excess of net realized
gain on investments, swap contracts, and foreign
currency transactions ................................... (764,305)
Net unrealized appreciation on investments ................ 66,661,075
Net unrealized depreciation on swap contracts ............. (86,101)
Net unrealized appreciation on foreign
currency translations ................................... 336
--------------
NET ASSETS ................................................ $ 245,617,123
==============
NET ASSET VALUE PER COMMON SHARE:
($245,617,123 / 30,021,188 shares outstanding;
unlimited number of shares authorized) .................. $ 8.18
==============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007
INVESTMENT INCOME:
Dividends (net of foreign taxes of $81,832) ............... $ 7,603,595
Interest .................................................. 1,381,744
--------------
TOTAL INVESTMENT INCOME ................................... 8,985,339
--------------
EXPENSES:
Investment advisory fees .................................. 3,002,900
Shareholder communications expenses ....................... 303,133
Payroll expenses .......................................... 281,841
Shareholder services fees ................................. 143,832
Trustees' fees ............................................ 68,077
Legal and audit fees ...................................... 62,059
Auction agent expenses .................................... 60,980
Accounting fees ........................................... 45,000
Custodian fees ............................................ 38,259
Interest expense .......................................... 367
Miscellaneous expenses .................................... (8,636)
--------------
TOTAL EXPENSES ............................................ 3,997,812
Less: Custodian fee credits ............................... (8,780)
--------------
NET EXPENSES .............................................. 3,989,032
--------------
NET INVESTMENT INCOME ..................................... 4,996,307
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAP CONTRACTS, AND FOREIGN CURRENCY:
Net realized gain on investments .......................... 12,073,886
Net realized gain on swap contracts ....................... 325,637
Net realized gain on foreign currency transactions ........ 2,852
--------------
Net realized gain on investments, swap contracts,
and foreign currency transactions ....................... 12,402,375
--------------
Net change in unrealized appreciation/depreciation:
on investments ............................................ 7,499,268
on swap contracts ......................................... (883,070)
on foreign currency translations .......................... 272
--------------
Net change in unrealized appreciation/depreciation on
investments, swap contracts, and foreign
currency translations ..................................... 6,616,470
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAP CONTRACTS, AND FOREIGN CURRENCY ...................... 19,018,845
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... 24,015,152
Total Distributions to Preferred Shareholders ................ (2,986,133)
--------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS .................... $ 21,029,019
==============
See accompanying notes to financial statements.
6
THE GABELLI UTILITY TRUST
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
YEAR ENDED YEAR ENDED
DECEMBER 31, 2007 DECEMBER 31, 2006
----------------- -----------------
OPERATIONS:
Net investment income .................................................................. $ 4,996,307 $ 4,905,845
Net realized gain on investments, swap contracts, and foreign currency transactions .... 12,402,375 19,161,236
Net change in unrealized appreciation/depreciation on investments, swap contracts,
and foreign currency translations ................................................... 6,616,470 34,951,608
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................... 24,015,152 59,018,689
------------- -------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
Net investment income .................................................................. (950,642) (630,852)
Net realized short-term gain on investments, swap contracts, and foreign currency
transactions ........................................................................ (247,668) (155,897)
Net realized long-term gain on investments, swap contracts, and foreign currency
transactions ........................................................................ (1,787,823) (2,102,354)
------------- -------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS .......................................... (2,986,133) (2,889,103)
------------- -------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS RESULTING FROM
OPERATIONS .......................................................................... 21,029,019 56,129,586
------------- -------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income .................................................................. (4,733,339) (4,633,883)
Net realized short-term gain on investments, swap contracts, and foreign currency
transactions ........................................................................ (1,188,222) (1,145,139)
Net realized long-term gain on investments, swap contracts, and foreign currency
transactions ........................................................................ (8,589,683) (15,442,712)
Return of capital ...................................................................... (6,966,691) --
------------- -------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS ............................................. (21,477,935) (21,221,734)
------------- -------------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment of
distributions ....................................................................... 3,159,205 3,175,985
Net increase in net assets from repurchase of preferred shares ......................... 790 --
Offering costs for issuance of rights charged to paid-in capital ....................... -- 124,180
------------- -------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ................................ 3,159,995 3,300,165
------------- -------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ......................... 2,711,079 38,208,017
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Beginning of period .................................................................... 242,906,044 204,698,027
------------- -------------
End of period (including undistributed net investment income of $0 and $116,559,
respectively) ....................................................................... $ 245,617,123 $ 242,906,044
============= =============
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Utility Trust (the "Fund") is a non-diversified
closed-end management investment company organized as a Delaware statutory trust
on February 25, 1999 and registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). Investment operations commenced on July 9, 1999.
The Fund's primary objective is long-term growth of capital and income.
The Fund will invest 80% of its assets, under normal market conditions, in
common stocks and other securities of foreign and domestic companies involved in
providing products, services, or equipment for (i) the generation or
distribution of electricity, gas, and water and (ii) telecommunications services
or infrastructure operations (the "80% Policy"). The 80% Policy may be changed
without shareholder approval. However, the Fund has adopted a policy to provide
shareholders with notice at least 60 days prior to the implementation of any
change in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the Board
if market conditions change significantly after the close of the foreign market
but prior to the close of business on the day the securities are being valued.
Debt instruments with remaining maturities of 60 days or less that are not
credit impaired are valued at amortized cost, unless the Board determines such
amount does not reflect the securities' fair value, in which case these
securities will be fair valued as determined by
7
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the Board. Debt instruments having a maturity greater than 60 days for which
market quotations are readily available are valued at the average of the latest
bid and asked prices. If there were no asked prices quoted on such day, the
security is valued using the closing bid price. Futures contracts are valued at
the closing settlement price of the exchange or board of trade on which the
applicable contract is traded.
Securities and assets for which market quotations are not readily
available are fair valued as determined by the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons 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.
In September 2006, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December
31, 2007, there were no open repurchase agreements.
SWAP AGREEMENTS. The Fund may enter into equity swap and interest rate
swap or cap transactions. The use of swaps and caps is a highly specialized
activity that involves investment techniques and risks different from those
associated with ordinary portfolio transactions. Swap agreements may involve, to
varying degrees, elements of market and counterparty risk, and exposure to loss
in excess of the related amounts reflected in the Statement of Assets and
Liabilities. In an interest rate swap, the Fund would agree to pay to the other
party to the interest rate swap (which is known as the "counterparty")
periodically a fixed rate payment in exchange for the counterparty agreeing to
pay to the Fund periodically a variable rate payment that is intended to
approximate the Fund's variable rate payment obligation on the Series B
Preferred Shares. In an interest rate cap, the Fund would pay a premium to the
counterparty and, to the extent that a specified variable rate index exceeds a
predetermined fixed rate, would receive from the counterparty payments of the
difference based on the notional amount of such cap. In an equity swap, a set of
future cash flows are exchanged between two counterparties. One of these cash
flow streams will typically be based on a reference interest rate combined with
the performance of a notional value of shares of a stock. The other will be
based on the performance of the shares of a stock. Swap and cap transactions
introduce additional risk because the Fund would remain obligated to pay
preferred stock dividends when due in accordance with the Statement of
Preferences even if the counterparty defaulted. If there is a default by the
counterparty to a swap contract, the Fund will be limited to contractual
remedies pursuant to the agreements related to the transaction. There is no
assurance that the swap contract counterparties will be able to meet their
obligations pursuant to the swap contracts or that, in the event of default, the
Fund will succeed in pursuing contractual remedies. The Fund thus assumes the
risk that it may be delayed in or prevented from obtaining payments owed to it
pursuant to the swap contracts. The creditworthiness of the swap contract
counterparties is closely monitored in order to minimize this risk. Depending on
the general state of short-term interest rates and the returns on the Fund's
portfolio securities at that point in time, such a default could negatively
affect the Fund's ability to make dividend payments. In addition, at the time an
interest rate swap or cap transaction reaches its scheduled termination date,
there is a risk that the Fund will not be able to obtain a replacement
transaction or that the terms of the replacement will not be as favorable as on
the expiring transaction. If this occurs, it could have a negative impact on the
Fund's ability to make dividend payments.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities.
The change in the value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps,
8
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
is reported as unrealized gains or losses in the Statement of Operations. A
realized gain or loss is recorded upon payment or receipt of a periodic payment
or termination of swap agreements.
The Fund has entered into an interest rate swap agreement with Citibank
N.A. Under the agreement, the Fund receives a floating rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at December 31, 2007 are as follows:
NOTIONAL FLOATING RATE* TERMINATION NET UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE DEPRECIATION
------------ ---------- -------------------- ----------- --------------
$ 25,000,000 4.000% 5.225% 06/02/10 $ (86,483)
----------
* Based on Libor (London Interbank Offered Rate).
The Fund has entered into equity swap agreements with Bear, Stearns
International Limited. Details of the swaps at December 31, 2007 are as follows:
NOTIONAL EQUITY SECURITY INTEREST RATE/ TERMINATION NET UNREALIZED
AMOUNT RECEIVED EQUITY SECURITY PAID DATE APPRECIATION
------------------------ --------------------- -------------------------------- ----------- --------------
Market Value Overnight LIBOR plus 40 bps plus
Appreciation on: Market Value Depreciation on:
$378,335 (35,000 Shares) Rolls-Royce Group plc Rolls-Royce Group plc 10/15/08 $ 382
FUTURES CONTRACTS. The Fund may engage in futures contracts for the
purpose of hedging against changes in the value of its portfolio securities and
in the value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.
There are several risks in connection with the use of futures contracts as
a hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At December 31, 2007, there were no
open futures contracts.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation (depreciation) on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At December 31, 2007, there were no open forward
foreign exchange contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are
maintained in U.S. dollars. Foreign currencies, investments, and other assets
and liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain (loss) on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
9
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains
on investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are
maintained in the custody account, the Fund receives credits which are used to
offset custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits." When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 110% of the 90 day
Treasury Bill rate. This amount, if any, would be shown as "interest expense" in
the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common shareholders are
recorded on the ex-dividend date. Distributions to shareholders are based on
income and capital gains as determined in accordance with federal income tax
regulations, which may differ from income and capital gains as determined under
U.S. generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
and foreign currency transactions held by the Fund, timing differences, and
differing characterizations of distributions made by the Fund. Distributions
from net investment income include net realized gains on foreign currency
transactions. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise.
Permanent differences for the fiscal year ended December 31, 2007 were primarily
attributable to reclassifications for swap gains and capital gain dividends from
underlying funds. These reclassifications have no impact on the NAV of the Fund.
For the fiscal year ended December 31, 2007, reclassifications were made to
decrease accumulated distributions in excess of net investment income by
$340,290 and to increase accumulated distributions in excess of net realized
gain on investments, swap contracts, and foreign currency transactions by
$340,290.
Distributions to shareholders of the Fund's 5.625% Series A Cumulative
Preferred Shares and Series B Auction Market Cumulative Preferred Shares
("Cumulative Preferred Shares") are recorded on a daily basis and are determined
as described in Note 5.
The tax character of distributions paid during the fiscal years ended
December 31, 2007 and December 31, 2006 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2007 DECEMBER 31, 2006
-------------------------- --------------------------
COMMON PREFERRED COMMON PREFERRED
------------ ----------- ------------ -----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ....... $ 5,894,993 $ 1,213,076 $ 5,779,022 $ 786,749
Net long-term capital gains ...................... 8,616,251 1,773,057 15,442,712 2,102,354
Return of capital ................................ 6,966,691 -- -- --
------------ ----------- ------------ -----------
Total distributions paid ......................... $ 21,477,935 $ 2,986,133 $ 21,221,734 $ 2,889,103
============ =========== ============ ===========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for federal income taxes is required.
At December 31, 2007, the difference between book basis and tax basis
unrealized appreciation (depreciation) was primarily due to deferral of losses
from wash sales for tax purposes, mark-to-market adjustments on passive foreign
investment companies, and basis adjustments due to income accruals on hybrid
securities.
At December 31, 2007, the components of accumulated earnings (losses) on a
tax basis were as follows:
Net unrealized appreciation on investments ........ $ 65,827,316
Net unrealized depreciation on foreign currency
and swap contracts ............................. (85,765)
Other temporary differences* ...................... (161,371)
------------
Total ............................................. $ 65,580,180
============
----------
* Other temporary differences are primarily due to accrued income on swap
gains.
10
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation (depreciation) at December 31, 2007:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------- ------------ ------------ --------------
Investments ..... $ 235,127,443 $ 68,945,764 $ (3,118,448) $ 65,827,316
Swap contracts .. -- 382 (86,483) (86,101)
------------- ------------ ------------ --------------
$ 235,127,443 $ 68,946,146 $ (3,204,931) $ 65,741,215
============= ============ ============ ==============
FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109" (the "Interpretation")
established a minimum threshold for financial statement recognition of the
benefit of positions taken in filing tax returns (including whether the Fund is
taxable in a particular jurisdiction) and required certain expanded tax
disclosures. The Fund has adopted the Interpretation for all open tax years and
it had no impact on the amounts reported in the financial statements.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Fund has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Fund will pay the Adviser a fee, computed weekly and paid
monthly, equal on an annual basis to 1.00% of the value of its average weekly
net assets including the liquidation value of the preferred stock. In accordance
with the Advisory Agreement, the Adviser provides a continuous investment
program for the Fund's portfolio and oversees the administration of all aspects
of the Fund's business and affairs. The Adviser has agreed to reduce the
management fee on the incremental assets attributable to the Cumulative
Preferred Shares if the total return of the NAV of the common shares of the
Fund, including distributions and advisory fee subject to reduction, does not
exceed the stated dividend rate or corresponding swap rate of the Cumulative
Preferred Shares for the fiscal year.
The Fund's total return on the NAV of the common shares is monitored on a
monthly basis to assess whether the total return on the NAV of the common shares
exceeds the stated dividend rate or corresponding swap rate of each particular
series of Cumulative Preferred Shares for the period. For the fiscal year ended
December 31, 2007, the Fund's total return on the NAV of the common shares did
exceed the stated dividend rate or corresponding swap rate of all outstanding
preferred shares. Thus, management fees were accrued on these assets.
During the fiscal year ended December 31, 2007, the Fund paid brokerage
commissions of $62,379 to Gabelli & Company, Inc. ("Gabelli & Company"), an
affiliate of the Adviser.
The cost of calculating the Fund's NAV per share is a Fund expense
pursuant to the Advisory Agreement between the Fund and the Adviser. During the
fiscal year ended December 31, 2007, the Fund paid or accrued $45,000 to the
Adviser in connection with the cost of computing the Fund's NAV.
As per the approval of the Board, the Fund compensates officers of the
Fund, who are employed by the Fund and are not employed by the Adviser (although
the officers may receive incentive based variable compensation from affiliates
of the Adviser) and pays its allocated portion of the cost of the Fund's Chief
Compliance Officer. For the fiscal year ended December 31, 2007, the Fund paid
or accrued $281,841, which is included in payroll expenses in the Statement of
Operations.
The Fund pays each Trustee who is not considered to be an affiliated
person an annual retainer of $6,000 plus $500 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $500 per meeting attended. In
addition, the Audit Committee Chairman receives an annual fee of $3,000 and the
Nominating Committee Chairman receives an annual fee of $2,000. Trustees who are
directors or employees of the Adviser or an affiliated company receive no
compensation or expense reimbursement from the Fund.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2007, other than short-term and U.S. Government
securities, aggregated $78,484,871 and $35,398,318, respectively.
5. CAPITAL. The Fund is authorized to issue an unlimited number of shares of
beneficial interest (par value $0.001). The Board has authorized the repurchase
of its common shares on the open market when the shares are trading at a
discount of 10% or more (or such other percentage as the Board may determine
from time to time) from the NAV of the shares. During the fiscal year ended
December 31, 2007, the Fund did not repurchase any common shares of beneficial
interest in the open market.
Transactions in common shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2007 DECEMBER 31, 2006
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------- ----------- ------- -----------
Net increase from shares issued upon
reinvestment of distributions .......... 347,381 $ 3,159,205 366,005 $ 3,175,985
11
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund is authorized to issue up to 2,005,000 shares of $0.001 par value
Cumulative Preferred Shares. The Cumulative Preferred Shares are senior to the
common shares and result in the financial leveraging of the common shares. Such
leveraging tends to magnify both the risks and opportunities to common
shareholders. Dividends on shares of the Cumulative Preferred Shares are
cumulative. The Fund is required by the 1940 Act and by the Statement of
Preferences to meet certain asset coverage tests with respect to the Cumulative
Preferred Shares. If the Fund fails to meet these requirements and does not
correct such failure, the Fund may be required to redeem, in part or in full,
the 5.625% Series A and Series B Auction Market Cumulative Preferred Shares at a
redemption price of $25.00 and $25,000, respectively, per share plus an amount
equal to the accumulated and unpaid dividends whether or not declared on such
shares in order to meet these requirements. Additionally, failure to meet the
foregoing asset coverage requirements could restrict the Fund's ability to pay
dividends to common shareholders and could lead to sales of portfolio securities
at inopportune times. The income received on the Fund's assets may vary in a
manner unrelated to the fixed and variable rates, which could have either a
beneficial or detrimental impact on net investment income and gains available to
common shareholders.
On July 31, 2003, the Fund received net proceeds of $28,895,026 (after
underwriting discounts of $945,000 and offering expenses of $159,974) from the
public offering of 1,200,000 shares of 5.625% Series A Cumulative Preferred
Shares. Commencing July 31, 2008 and thereafter, the Fund, at its option, may
redeem the 5.625% Series A Cumulative Preferred Shares in whole or in part at
the redemption price at any time. During the fiscal year ended December 31,
2007, the Fund repurchased 500 shares of 5.625% Series A Cumulative Preferred
Shares in the open market at a cost of $11,710 and an average discount of
approximately 6.40% from its liquidation value of $25.00 per share. All
repurchased shares of 5.625% Series A Cumulative Preferred Shares have been
retired. At December 31, 2007, 1,183,700 shares of 5.625% Series A Cumulative
Preferred Shares were outstanding and accrued dividends amounted to $27,743.
On July 31, 2003, the Fund received net proceeds of $24,590,026 (after
underwriting discounts of $250,000 and offering expenses of $159,974) from the
public offering of 1,000 shares of Series B Auction Market Cumulative Preferred
Shares. The dividend rate, as set by the auction process, which is generally
held every seven days, is expected to vary with short-term interest rates. The
dividend rates of Series B Auction Market Cumulative Preferred Shares ranged
from 4.427% to 6.200% for the fiscal year ended December 31, 2007. If the number
of Series B Auction Market Cumulative Preferred Shares subject to bid orders by
potential holders is less than the number of Series B Auction Market Cumulative
Preferred Shares subject to sell orders, then the auction is considered to be a
failed auction, and the dividend rate will be the maximum rate. In that event,
holders that have submitted sell orders may not be able to sell any or all of
the Series B Auction Market Cumulative Preferred Shares for which they have
submitted sell orders. The current maximum rate is 125% of the seven day
Telerate/British Bankers Association LIBOR on the day of such auction. Existing
shareholders may submit an order to hold, bid, or sell such shares on each
auction date. Series B Auction Market Cumulative Preferred Shares shareholders
may also trade shares in the secondary market. The Fund, at its option, may
redeem the Series B Auction Market Cumulative Preferred Shares in whole or in
part at the redemption price at any time. During the fiscal year ended December
31, 2007, the Fund did not redeem any shares of Series B Auction Market
Cumulative Preferred Shares. At December 31, 2007, 1,000 shares of Series B
Auction Market Cumulative Preferred Shares were outstanding with an annualized
dividend rate of 5.75% per share and accrued dividends amounted to $23,958.
The holders of Cumulative Preferred Shares generally are entitled to one
vote per share held on each matter submitted to a vote of shareholders of the
Fund and will vote together with holders of common stock as a single class. The
holders of Cumulative Preferred Shares voting together as a single class also
have the right currently to elect two Trustees and under certain circumstances
are entitled to elect a majority of the Board of Trustees. In addition, the
affirmative vote of a majority of the votes entitled to be cast by holders of
all outstanding shares of the preferred shares, voting as a single class, will
be required to approve any plan of reorganization adversely affecting the
preferred shares, and the approval of two-thirds of each class, voting
separately, of the Fund's outstanding voting stock must approve the conversion
of the Fund from a closed-end to an open-end investment company. The approval of
a majority (as defined in the 1940 Act) of the outstanding preferred shares and
a majority (as defined in the 1940 Act) of the Fund's outstanding voting
securities are required to approve certain other actions, including changes in
the Fund's investment objectives or fundamental investment policies.
6. INDUSTRY CONCENTRATION. Because the Fund primarily invests in common stocks
and other securities of foreign and domestic companies in the utility industry,
its portfolio may be subject to greater risk and market fluctuations than a
portfolio of securities representing a broad range of investments.
7. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
12
THE GABELLI UTILITY TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. OTHER MATTERS. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. On a
separate matter, in September 2005, the Adviser was informed by the staff of the
SEC that the staff may recommend to the Commission that an administrative remedy
and a monetary penalty be sought from the Adviser in connection with the actions
of two of nine closed-end funds managed by the Adviser relating to Section 19(a)
and Rule 19a-1 of the 1940 Act. These provisions require registered investment
companies to provide written statements to shareholders when a dividend is made
from a source other than net investment income. While the two closed-end funds
sent annual statements and provided other materials containing this information,
the funds did not send written statements to shareholders with each distribution
in 2002 and 2003. The Adviser believes that all of the funds are now in
compliance. The Adviser believes that these matters would have no effect on the
Fund or any material adverse effect on the Adviser or its ability to manage the
Fund.
13
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
2007 2006 2005 2004 2003
------- ------- ------- ------- -------
OPERATING PERFORMANCE:
Net asset value, beginning of period ................................. $ 8.19 $ 6.98 $ 7.14 $ 6.83 $ 6.27
------- ------- ------- ------- -------
Net investment income ................................................ 0.19 0.17 0.18 0.16 0.10
Net realized and unrealized gain on investments ...................... 0.61 1.84 0.45 0.99 1.17
------- ------- ------- ------- -------
Total from investment operations ..................................... 0.80 2.01 0.63 1.15 1.27
------- ------- ------- ------- -------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS: (a)
Net investment income ................................................ (0.03) (0.02) (0.02) (0.06) (0.01)
Net realized gain on investments ..................................... (0.07) (0.08) (0.07) (0.03) (0.04)
------- ------- ------- ------- -------
Total distributions to preferred shareholders ........................ (0.10) (0.10) (0.09) (0.09) (0.05)
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ............................................ 0.70 1.91 0.54 1.06 1.22
------- ------- ------- ------- -------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ................................................ (0.16) (0.16) (0.14) (0.10) (0.09)
Net realized gain on investments ..................................... (0.33) (0.56) (0.58) (0.05) (0.22)
Paid-in capital ...................................................... (0.23) -- -- (0.57) (0.41)
------- ------- ------- ------- -------
Total distributions to common shareholders ........................... (0.72) (0.72) (0.72) (0.72) (0.72)
------- ------- ------- ------- -------
FUND SHARE TRANSACTIONS:
Increase in net asset value from common share transactions ........... 0.01 0.02 0.02 0.03 0.03
Increase (decrease) in net asset value from shares issued
in rights offering ................................................ -- -- -- (0.06) 0.12
Increase in net asset value from repurchase of preferred shares ...... 0.00(f) -- -- 0.00(f) --
Offering costs for preferred shares charged to paid-in capital ....... -- -- 0.00(f) 0.00(f) (0.09)
Offering costs for issuance of rights charged to paid-in capital ..... -- 0.00(f) (0.00)(f) (0.00)(f) --
------- ------- ------- ------- -------
Total fund share transactions ........................................ 0.01 0.02 0.02 (0.03) 0.06
------- ------- ------- ------- -------
NET ASSET VALUE ATTRIBUTABLE TO COMMON SHAREHOLDERS, END OF PERIOD ... $ 8.18 $ 8.19 $ 6.98 $ 7.14 $ 6.83
======= ======= ======= ======= =======
Net asset value total return + ....................................... 8.08% 27.46% 5.71% 13.43% 18.60%
======= ======= ======= ======= =======
Market value, end of period .......................................... $ 9.50 $ 9.94 $ 9.27 $ 9.30 $ 9.60
======= ======= ======= ======= =======
Investment total return ++ ........................................... 3.42% 16.47% 7.79% 5.11% 19.86%
======= ======= ======= ======= =======
See accompanying notes to financial statements.
14
THE GABELLI UTILITY TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred
shares, end of period (in 000's) ...................... $ 300,210 $ 297,511 $ 259,303 $ 261,563 $ 211,507
Net assets attributable to common shares, end of
period (in 000's) ..................................... $ 245,617 $ 242,906 $ 204,698 $ 206,958 $ 156,507
Ratio of net investment income to average net assets
attributable to common shares before preferred
share distributions ................................... 2.03% 2.24% 2.42% 2.32% 1.52%
Ratio of operating expenses to average net assets
attributable to common shares net of advisory
fee reduction, if any (b)(c) .......................... 1.63% 1.75% 1.85% 2.04% 2.04%
Ratio of operating expenses to average net assets
including liquidation value of preferred shares
net of advisory fee reduction, if any (b)(c) .......... 1.34% 1.40% 1.47% 1.52% 1.68%
Portfolio turnover rate .................................. 13% 33% 19% 18% 28%
PREFERRED SHARES:
5.625% SERIES A CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) .............. $ 29,593 $ 29,605 $ 29,605 $ 29,605 $ 30,000
Total shares outstanding (in 000's) ...................... 1,184 1,184 1,184 1,184 1,200
Liquidation preference per share ......................... $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (d) ................................. $ 23.36 $ 23.80 $ 25.02 $ 24.68 $ 25.12
Asset coverage per share ................................. $ 137.48 $ 136.21 $ 118.72 $ 119.75 $ 96.14
AUCTION MARKET SERIES B CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) .............. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Total shares outstanding (in 000's) ...................... 1 1 1 1 1
Liquidation preference per share ......................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (d) ................................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share ................................. $ 137,478 $ 136,210 $ 118,718 $ 119,752 $ 96,140
ASSET COVERAGE (e) ....................................... 550% 545% 475% 479% 385%
----------
+ Based on net asset value per share, adjusted for reinvestment of
distributions at prices obtained under the Fund's dividend reinvestment
plan, including the effect of shares issued pursuant to 2004 and 2003
rights offerings, assuming full subscription by shareholder.
++ Based on market value per share, adjusted for reinvestment of
distributions at prices obtained under the Fund's dividend reinvestment
plan, including the effect of shares issued pursuant to rights 2004 and
2003 rights offerings, assuming full subscription by shareholder.
(a) Calculated based upon average common shares outstanding on the record
dates throughout the period.
(b) 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 fiscal year ended December 31, 2007, the
ratios of operating expenses to average net assets attributable to common
stock net of advisory fee reduction would have been 1.63% and the ratios
of operating expenses to average net assets including liquidation value of
preferred shares net of advisory fee reduction would have been 1.33%.
Custodian fee credits for the fiscal years ended December 31, 2003 through
2006 were minimal.
(c) The Fund incurred interest expense during the fiscal year ended December
31, 2007. If interest expense had not been incurred, the ratios of
operating expenses to average net assets attributable to common shares
would have been 1.62% and the ratios of operating expenses to average net
assets including liquidation value of preferred shares would have been
1.33%.
(d) Based on weekly prices.
(e) Asset coverage is calculated by combining all series of preferred shares.
(f) Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
15
THE GABELLI UTILITY TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
The Gabelli Utility Trust:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Utility Trust
(hereafter referred to as the "Trust") at December 31, 2007, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2007 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 29, 2008
16
THE GABELLI UTILITY TRUST
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Trustees and is available,
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Utility Trust at One Corporate Center, Rye, NY
10580-1422.
NUMBER OF
TERM OF FUNDS IN FUND
NAME, POSITION(S) OFFICE AND COMPLEX
ADDRESS(1) LENGTH OF OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE TIME SERVED(2) TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE(4)
-------------------------- -------------- ---------------- --------------------------------------- --------------------------
INTERESTED TRUSTEES(3):
MARIO J. GABELLI Since 1999** 26 Chairman and Chief Executive Officer of Director of Morgan Group
Trustee and GAMCO Investors, Inc. and Chief Holdings, Inc. (holding
Chief Investment Officer Investment Officer - Value Portfolios company); Chairman of the
Age: 65 of Gabelli Funds, LLC and GAMCO Asset Board of LICT Corp.
Management Inc.; Director/Trustee or (multimedia and
Chief Investment Officer of other communication services
registered investment companies in the company)
Gabelli/GAMCO Funds complex; Chairman
and Chief Executive Officer of GGCP,
Inc.
JOHN D. GABELLI Since 1999* 10 Senior Vice President of Gabelli & Director of GAMCO
Trustee Company, Inc. Investors, Inc.
Age: 63
INDEPENDENT TRUSTEES(5):
THOMAS E. BRATTER Since 1999** 4 Director, President, and Founder of The --
Trustee John Dewey Academy (residential college
Age: 68 preparatory therapeutic high school)
ANTHONY J. COLAVITA Since 1999*** 35 Partner in the law firm of Anthony J. --
Trustee Colavita, P.C.
Age: 72
JAMES P. CONN Since 1999* 16 Former Managing Director and Chief --
Trustee Investment Officer of Financial
Age: 69 Security Assurance Holdings Ltd.
(insurance holding company) (1992-1998)
VINCENT D. ENRIGHT Since 1999** 15 Former Senior Vice President and Chief --
Trustee Financial Officer of KeySpan
Age: 64 Corporation (public utility)
FRANK J. FAHRENKOPF JR. Since 1999*** 5 President and Chief Executive Officer --
Trustee of the American Gaming Association;
Age: 68 Co-Chairman of the Commission on
Presidential Debates; Former Chairman
of the Republican National Committee
(1983-1989)
ROBERT J. MORRISSEY Since 1999*** 6 Partner in the law firm of Morrissey, --
Trustee Hawkins & Lynch
Age: 68
ANTHONY R. PUSTORINO Since 1999* 14 Certified Public Accountant; Professor Director of The LGL Group,
Trustee Emeritus, Pace University Inc. (diversified
Age: 82 manufacturing)
SALVATORE J. ZIZZA Since 1999*** 26 Chairman of Zizza & Co., Ltd. Director of Hollis-Eden
Trustee (consulting) Pharmaceuticals
Age: 62 (biotechnology); Director
of Earl Scheib, Inc.
(automotive services)
17
THE GABELLI UTILITY TRUST
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS(1) LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED(2) DURING PAST FIVE YEARS
-------------------------- -------------- ------------------------------------------------------------------------------
OFFICERS:
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC
President since 1988 and an officer of most of the registered investment companies in
Age: 56 the Gabelli/GAMCO Funds complex. Director and President of Gabelli Advisers,
Inc. since 1998
DAVID I. SCHACHTER Since 1999 Vice President of The Gabelli Global Utility & Income Trust since 2004, The
Vice President Gabelli Global Deal Fund since 2006, and The Gabelli Healthcare & Wellness(Rx)
Age: 54 Trust since 2007; Vice President of Gabelli & Company, Inc. since 1999
JAMES E. MCKEE Since 1999 Vice President, General Counsel, and Secretary of GAMCO Investors, Inc. since
Secretary 1999 and GAMCO Asset Management Inc. since 1993; Secretary of all of the
Age: 44 registered investment companies in the Gabelli/GAMCO Funds complex
AGNES MULLADY Since 2006 Vice President of Gabelli Funds, LLC since 2007; Officer of all of the
Treasurer registered investment companies in the Gabelli/GAMCO Funds complex; Senior
Age: 49 Vice President of U.S. Trust Company, N.A. and Treasurer and Chief Financial
Officer of Excelsior Funds from 2004 through 2005; Chief Financial Officer of
AMIC Distribution Partners from 2002 through 2004; Controller of Reserve
Management Corporation and Reserve Partners, Inc. and Treasurer of Reserve
Funds from 2000 through 2002
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief
Chief Compliance Officer Compliance Officer of all of the registered investment companies in the
Age: 54 Gabelli/GAMCO Funds complex; Vice President of Goldman Sachs Asset Management
from 2000 through 2004
----------
(1) Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
(2) The Fund's Board of Trustees is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Fund's 2009 Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
** - Term expires at the Fund's 2010 Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
*** - Term expires at the Fund's 2008 Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
Each officer will hold office for an indefinite term until the date he or
she resigns or retires or until his or her successor is elected and
qualified.
(3) "Interested person" of the Fund as defined in the 1940 Act. Messrs.
Gabelli are each considered an "interested person" because of their
affiliation with Gabelli Funds, LLC which acts as the Fund's investment
adviser. Mario J. Gabelli and John D. Gabelli are brothers.
(4) This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
(5) Trustees who are not interested persons are considered "Independent"
Trustees.
CERTIFICATIONS
The Utility Trust's Chief Executive Officer has certified to the New York
Stock Exchange ("NYSE") that, as of June 13, 2007, he was not aware of any
violation by the Utility Trust of applicable NYSE corporate governance listing
standards. The Utility Trust reports to the SEC on Form N-CSR which contains
certifications by the Fund's principal executive officer and principal financial
officer that relate to the Fund's disclosure in such reports and that are
required by Rule 30a-2(a) under the 1940 Act.
18
THE GABELLI UTILITY TRUST
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2007
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL RETURN OF REINVESTMENT
DATE DATE PER SHARE (a) INCOME (a) GAINS (a) CAPITAL (c) PRICE
-------- -------- ------------- ---------- --------- ----------- ------------
COMMON SHARES
01/25/07 01/17/07 $ 0.06000 $ 0.01909 $ 0.02241 $ 0.01850 $ 9.17700
02/22/07 02/13/07 0.06000 0.01594 0.02414 0.01992 9.38600
03/26/07 03/16/07 0.06000 0.01594 0.02414 0.01992 9.69000
04/04/07 04/16/07 0.06000 0.01594 0.02414 0.01992 9.46200
05/24/07 05/16/07 0.06000 0.01594 0.02414 0.01992 9.43350
06/25/07 06/15/07 0.06000 0.01594 0.02414 0.01992 9.16750
07/25/07 07/17/07 0.06000 0.01594 0.02414 0.01992 9.33850
08/27/07 08/17/07 0.06000 0.01594 0.02414 0.01992 8.74950
09/24/07 09/14/07 0.06000 0.01594 0.02414 0.01992 8.83500
10/25/07 10/17/07 0.06000 0.01594 0.02414 0.01992 8.80650
11/26/07 11/15/07 0.06000 0.01594 0.02414 0.01992 8.70200
12/17/07 12/12/07 0.06000 0.01594 0.02414 0.01992 8.53100
--------- --------- --------- ---------
$ 0.72000 $ 0.19443 $ 0.28795 $ 0.23762
5.625% PREFERRED SHARES
03/26/07 03/19/07 $ 0.35156 $ 0.14484 $ 0.20672
06/26/07 06/19/07 0.35156 0.13983 0.21174
09/26/07 09/19/07 0.35156 0.13983 0.21174
12/26/07 12/18/07 0.35156 0.13983 0.21174
--------- --------- ---------
$ 1.40625 $ 0.56432 $ 0.84193
AUCTION MARKET PREFERRED SHARES
Auction Market Preferred Shares pay dividends weekly based on a rate set
at auction, usually held every seven days. The percentage of 2007 distributions
derived from long-term capital gains for the Auction Market Preferred Shares was
59.87%.
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2007 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. Ordinary income is reported in
box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2a of
Form 1099-DIV. The long-term gain distributions for the fiscal year ended
December 31, 2007 were $10,389,308, or the maximum allowable.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME, AND U.S.
GOVERNMENT SECURITIES INCOME
The Fund paid to common and 5.625% Series A preferred shareholders
ordinary income dividends of $0.1944 and $0.5643 per share, respectively, in
2007. The Fund paid to Series B Auction Market preferred shareholders an
ordinary income dividend totaling $537.8998 per share in 2007. For the fiscal
year ended December 31, 2007, 100% of the ordinary income dividend qualified for
the dividend received deduction available to corporations, and 100% of the
ordinary income distribution was deemed qualified dividend income. The
percentage of the ordinary income dividends paid by the Fund during 2007 derived
from U.S. Government Securities was 0.38%. Such income is exempt from state and
local tax in all states. However, many states, including New York and
California, allow a tax exemption for a portion of the income earned only if a
mutual fund has invested at least 50% of its assets at the end of each quarter
of the Fund's fiscal year in U.S. Government Securities. The Fund did not meet
this strict requirement in 2007. The percentage of net assets of U.S. Government
Securities held as of December 31, 2007 was 11.25%.
HISTORICAL DISTRIBUTION SUMMARY
SHORT-TERM LONG-TERM ADJUSTMENT
INVESTMENT CAPITAL CAPITAL RETURN OF TOTAL TO COST
INCOME (b) GAINS (b) GAINS CAPITAL (c) DISTRIBUTIONS (a) BASIS (d)
----------- ----------- ----------- ----------- ----------------- ----------
COMMON SHARES
2007 ........................... $ 0.15458 $ 0.03985 $ 0.28795 $ 0.23762 $ 0.72000 $ 0.23762
2006 ........................... 0.15750 0.03900 0.52350 -- 0.72000 --
2005 ........................... 0.15240 0.02280 0.54480 -- 0.72000 --
2004 (g) ....................... 0.09348 0.02958 0.00229 0.59465 0.72000 0.59465
2003 (f) ....................... 0.08544 0.01128 0.21240 0.41088 0.72000 0.41088
2002 (e) ....................... 0.11175 0.00210 0.35900 0.24690 0.72000 0.24690
2001 ........................... 0.20835 0.33142 0.16023 -- 0.70000 --
2000 ........................... 0.05620 0.14020 0.80360 -- 1.00000 --
1999 ........................... 0.08049 0.00090 0.06861 -- 0.15000 --
5.625% PREFERRED SHARES
2007 ........................... $ 0.44768 $ 0.11663 $ 0.84194 -- $ 1.40625 --
2006 ........................... 0.30694 0.07589 1.02342 -- 1.40625 --
2005 ........................... 0.29785 0.04494 1.06346 -- 1.40625 --
2004 ........................... 1.04873 0.33179 0.02572 -- 1.40625 --
AUCTION RATE PREFERRED SHARES
2007 ........................... $ 426.72648 $ 111.17336 $ 802.52016 -- $ 1340.42000 --
2006 ........................... 266.52830 65.89950 888.68220 -- 1221.11000 --
2005 ........................... 177.88970 26.83920 635.15100 -- 839.88000 --
2004 ........................... 280.59420 88.77260 6.88340 -- 376.20000 --
----------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income.
(c) Non-taxable.
(d) Decrease in cost basis.
(e) On May 22, 2002, the Fund distributed Rights equivalent to $0.09 per share
based upon full subscription of all issued shares.
(f) On August 20, 2003, the Fund also distributed Rights equivalent to $0.18
per share based upon full subscription of all issued shares.
(g) On October 20, 2004, the Fund also distributed Rights equivalent to $0.03
per share based upon full subscription of all issued shares.
19
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Utility Trust (the "Fund") to
automatically reinvest dividends payable to common shareholders. As a
"registered" shareholder you automatically become a participant in the Fund's
Automatic Dividend Reinvestment Plan (the "Plan"). The Plan authorizes the Fund
to credit common shares to participants upon an income dividend or a capital
gains distribution regardless of whether the shares are trading at a discount or
a premium to net asset value. All distributions to shareholders whose shares are
registered in their own names will be automatically reinvested pursuant to the
Plan in additional shares of the Fund. Plan participants may send their share
certificates to Computershare Trust Company, N.A. ("Computershare") to be held
in their dividend reinvestment account. Registered shareholders wishing to
receive their distributions in cash must submit this request in writing to:
The Gabelli Utility Trust
c/o Computershare
P.O. Box 43010
Providence, RI 02940-3010
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan or requesting a copy of the terms of the
Plan may contact Computershare at (800) 336-6983.
If your shares are held in the name of a broker, bank, or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and reregistered in your own name.
Once registered in your own name your distributions will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of common shares distributed to participants in the Plan in
lieu of cash dividends is determined in the following manner. Under the Plan,
whenever the market price of the Fund's common shares is equal to or exceeds net
asset value at the time shares are valued for purposes of determining the number
of shares equivalent to the cash dividends or capital gains distribution,
participants are issued common shares valued at the greater of (i) the net asset
value as most recently determined or (ii) 95% of the then current market price
of the Fund's common shares. The valuation date is the dividend or distribution
payment date or, if that date is not a New York Stock Exchange ("NYSE") trading
day, the next trading day. If the net asset value of the common shares at the
time of valuation exceeds the market price of the common shares, participants
will receive common shares from the Fund valued at market price. If the Fund
should declare a dividend or capital gains distribution payable only in cash,
Computershare will buy common shares in the open market, or on the NYSE or
elsewhere, for the participants' accounts, except that Computershare will
endeavor to terminate purchases in the open market and cause the Fund to issue
shares at net asset value if, following the commencement of such purchases, the
market value of the common shares exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
20
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Fund. In order to participate
in the Voluntary Cash Purchase Plan, shareholders must have their shares
registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to Computershare for investments in the Fund's common
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. Computershare will use these funds to purchase shares in the
open market on or about the 1st and 15th of each month. Computershare will
charge each shareholder who participates $0.75, plus a pro rata share of the
brokerage commissions. Brokerage charges for such purchases are expected to be
less than the usual brokerage charge for such transactions. It is suggested that
any voluntary cash payments be sent to Computershare, P.O. Box 43010,
Providence, RI 02940-3010 such that Computershare receives such payments
approximately 10 days before the 1st and 15th of the month. Funds not received
at least five days before the investment date shall be held for investment until
the next purchase date. A payment may be withdrawn without charge if notice is
received by Computershare at least 48 hours before such payment is to be
invested.
SHAREHOLDERS WISHING TO LIQUIDATE SHARES HELD AT COMPUTERSHARE must do so
in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address, and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.
For more information regarding the Automatic Dividend Reinvestment Plan
and Voluntary Cash Purchase Plan, brochures are available by calling (914)
921-5070 or by writing directly to the Fund.
The Fund reserves the right to amend or terminate the Plan as applied to
any voluntary cash payments made and any dividend or distribution paid
subsequent to written notice of the change sent to the members of the Plan at
least 90 days before the record date for such dividend or distribution. The Plan
also may be amended or terminated by Computershare on at least 90 days written
notice to participants in the Plan.
--------------------------------------------------------------
The Annual Meeting of The Gabelli Utility Trust's shareholders
will be held on Monday, May 19, 2008 at the Greenwich Library
in Greenwich, Connecticut.
--------------------------------------------------------------
21
--------------------------------------------------------------------------------
THE GABELLI UTILITY TRUST
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Utility Trust (the "Fund") is a closed-end management investment
company registered with the Securities and Exchange Commission under the
Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is
affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held
company that has subsidiaries that provide investment advisory or brokerage
services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
SHAREHOLDER?
When you purchase shares of the Fund on the New York Stock Exchange, you have
the option of registering directly with our transfer agent in order, for
example, to participate in our dividend reinvestment plan.
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include
information about the shares that you buy or sell; it may also include
information about whether you sell or exercise rights that we have issued
from time to time. If we hire someone else to provide services--like a
transfer agent--we will also have information about the transactions that
you conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers or
former customers to anyone other than our affiliates, our service providers who
need to know such information, and as otherwise permitted by law. If you want to
find out what the law permits, you can read the privacy rules adopted by the
Securities and Exchange Commission. They are in volume 17 of the Code of Federal
Regulations, Part 248. The Commission often posts information about its
regulations on its website, WWW.SEC.GOV.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the people
who need to know that information in order to provide services to you or the
Fund and to ensure that we are complying with the laws governing the securities
business. We maintain physical, electronic, and procedural safeguards to keep
your personal information confidential.
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
CHAIRMAN & CHIEF EXECUTIVE OFFICER, PRESIDENT
GAMCO INVESTORS, INC.
Peter D. Goldstein
Dr. Thomas E. Bratter CHIEF COMPLIANCE OFFICER
PRESIDENT & FOUNDER, JOHN DEWEY ACADEMY
James E. McKee
Anthony J. Colavita SECRETARY
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C. Agnes Mullady
TREASURER
James P. Conn
FORMER MANAGING DIRECTOR & David I. Schachter
CHIEF INVESTMENT OFFICER, VICE PRESIDENT & OMBUDSMAN
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
INVESTMENT ADVISER
Vincent D. Enright Gabelli Funds, LLC
FORMER SENIOR VICE PRESIDENT & One Corporate Center
CHIEF FINANCIAL OFFICER, Rye, New York 10580-1422
KEYSPAN CORP.
CUSTODIAN
Frank J. Fahrenkopf, Jr. Mellon Trust of New England, N.A.
PRESIDENT & CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION COUNSEL
Willkie Farr & Gallagher LLP
John D. Gabelli
SENIOR VICE PRESIDENT, TRANSFER AGENT AND REGISTRAR
GABELLI & COMPANY, INC. Computershare Trust Company, N.A.
Robert J. Morrissey STOCK EXCHANGE LISTING
ATTORNEY-AT-LAW, 5.625%
MORRISSEY, HAWKINS & LYNCH Common Preferred
---------- ---------
Anthony R. Pustorino NYSE-Symbol: GUT GUT PrA
CERTIFIED PUBLIC ACCOUNTANT, Shares Outstanding: 30,021,188 1,183,700
PROFESSOR EMERITUS, PACE UNIVERSITY
The Net Asset Value per share appears in
Salvatore J. Zizza the Publicly Traded Funds column, under
CHAIRMAN, ZIZZA & CO., LTD. the heading "Specialized Equity Funds,"
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 per share may be
obtained each day by calling (914)
921-5070 or visiting www.gabelli.com.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
its common shares in the open market when the Fund's shares are trading at a
discount of 10% or more from the net asset value of the shares. The Fund may
also, from time to time, purchase shares of its Cumulative Preferred Shares in
the open market when the shares are trading at a discount to liquidation value.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM
GUT Q4/2007
--------------------------------------------------------------------------------
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Trustees has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$38,300 for 2006 and $40,000 for 2007.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $13,400 for 2006 and $5,800 for 2007. Audit-related fees
represent services provided in the preparation of Preferred Shares
Reports.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $3,100 for 2006 and $4,350
for 2007. Tax fees represent tax compliance services provided in
connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2006 and $0 for 2007.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) 100%
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0 for 2006 and $0 for 2007.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following members: Anthony J. Colavita, Vincent D. Enright and Anthony R.
Pustorino.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
THE VOTING OF PROXIES ON BEHALF OF CLIENTS
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli
Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively,
the "Advisers") to determine how to vote proxies relating to portfolio
securities held by their clients, including the procedures that the Advisers use
when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of
the Advisers; the principal underwriter; or any affiliated person of the
investment company, the Advisers, or the principal underwriter. These procedures
will not apply where the Advisers do not have voting discretion or where the
Advisers have agreed to with a client to vote the client's proxies in accordance
with specific guidelines or procedures supplied by the client (to the extent
permitted by ERISA).
I. PROXY VOTING COMMITTEE
The Proxy Voting Committee was originally formed in April 1989 for the
purpose of formulating guidelines and reviewing proxy statements within the
parameters set by the substantive proxy voting guidelines originally published
in 1988 and updated periodically, a copy of which are appended as Exhibit A. The
Committee will include representatives of Research, Administration, Legal, and
the Advisers. Additional or replacement members of the Committee will be
nominated by the Chairman and voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in which
the Advisers should vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.
All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.
A. CONFLICTS OF INTEREST.
The Advisers have implemented these proxy voting procedures in
order to prevent conflicts of interest from influencing their
proxy voting decisions. By following the Proxy Guidelines, as
well as the recommendations of ISS, other third-party services
and the analysts of Gabelli & Company, the Advisers are able
to avoid, wherever possible, the influence of potential
conflicts of interest. Nevertheless, circumstances may arise
in which one or more of the Advisers are faced with a conflict
of interest or the appearance of a conflict of interest in
connection with its vote. In general, a conflict of interest
may arise when an Adviser knowingly does business with an
issuer, and may appear to have a material conflict between its
own interests and the interests of the shareholders of an
investment company managed by one of the Advisers regarding
how the proxy is to be voted. A conflict also may exist when
an Adviser has actual knowledge of a material business
arrangement between an issuer and an affiliate of the Adviser.
In practical terms, a conflict of interest may arise, for
example, when a proxy is voted for a company that is a client
of one of the Advisers, such as GAMCO Asset Management Inc. A
conflict also may arise when a client of one of the Advisers
has made a shareholder proposal in a proxy to be voted upon by
one or more of the Advisers. The Director of Proxy Voting
Services, together with the Legal Department, will scrutinize
all proxies for these or other situations that may give rise
to a conflict of interest with respect to the voting of
proxies.
B. OPERATION OF PROXY VOTING COMMITTEE
For matters submitted to the Committee, each member of the
Committee will receive, prior to the meeting, a copy of the
proxy statement, any relevant third party research, a summary
of any views provided by the Chief Investment Officer and any
recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may
be invited to present their viewpoints. If the Director of
Proxy Voting Services or the Legal Department believe that the
matter before the committee is one with respect to which a
conflict of interest may exist between the Advisers and their
clients, counsel will provide an opinion to the Committee
concerning the conflict. If the matter is one in which the
interests of the clients of one or more of Advisers may
diverge, counsel will so advise and the Committee may make
different recommendations as to different clients. For any
matters where the recommendation may trigger appraisal rights,
counsel will provide an opinion concerning the likely risks
and merits of such an appraisal action.
Each matter submitted to the Committee will be determined by the vote
of a majority of the members present at the meeting. Should the vote concerning
one or more recommendations be tied in a vote of the Committee, the Chairman of
the Committee will cast the deciding vote. The Committee will notify the proxy
department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the
voting of any shares not covered by a contrary investment guideline provided by
the client, the Committee is not bound by the preferences set forth in the Proxy
Guidelines and will review each matter on its own merits. Written minutes of all
Proxy Voting Committee meetings will be maintained. The Advisers subscribe to
ISS, which supplies current information on companies, matters being voted on,
regulations, trends in proxy voting and information on corporate governance
issues.
If the vote cast either by the analyst or as a result of the
deliberations of the Proxy Voting Committee runs contrary to the recommendation
of the Board of Directors of the issuer, the matter will be referred to legal
counsel to determine whether an amendment to the most recently filed Schedule
13D is appropriate.
II. SOCIAL ISSUES AND OTHER CLIENT GUIDELINES
If a client has provided special instructions relating to the voting of
proxies, they should be noted in the client's account file and forwarded to the
proxy department. This is the responsibility of the investment professional or
sales assistant for the client. In accordance with Department of Labor
guidelines, the Advisers' policy is to vote on behalf of ERISA accounts in the
best interest of the plan participants with regard to social issues that carry
an economic impact. Where an account is not governed by ERISA, the Advisers will
vote shares held on behalf of the client in a manner consistent with any
individual investment/voting guidelines provided by the client. Otherwise the
Advisers will abstain with respect to those shares.
III. CLIENT RETENTION OF VOTING RIGHTS
If a client chooses to retain the right to vote proxies or if there is
any change in voting authority, the following should be notified by the
investment professional or sales assistant for the client.
- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account
In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. VOTING RECORDS
The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers will supply information on how
an account voted its proxies upon request.
A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.
V. VOTING PROCEDURES
1. Custodian banks, outside brokerage firms and clearing firms are responsible
for forwarding proxies directly to the Advisers.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms ("VAFs") - Issued by Broadridge
Financial Solutions, Inc. ("Broadridge") VAFs must be voted through the
issuing institution causing a time lag. Broadridge is an outside service
contracted by the various institutions to issue proxy materials.
o Proxy cards which may be voted directly.
2. Upon receipt of the proxy, the number of shares each form represents is
logged into the proxy system according to security.
3. In the case of a discrepancy such as an incorrect number of shares, an
improperly signed or dated card, wrong class of security, etc., the issuing
custodian is notified by phone. A corrected proxy is requested. Any arrangements
are made to insure that a proper proxy is received in time to be voted
(overnight delivery, fax, etc.). When securities are out on loan on record date,
the custodian is requested to supply written verification.
4. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system. The system is backed up
regularly.
Proxy Edge records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.
6. Shareholder Vote Authorization Forms issued by Broadridge are always sent
directly to a specific individual at Broadridge.
7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:
o VAFs can be faxed to Broadridge up until the time of the meeting. This is
followed up by mailing the original form.
o When a solicitor has been retained, the solicitor is called. At the
solicitor's direction, the proxy is faxed.
8. In the case of a proxy contest, records are maintained for each opposing
entity.
9. Voting in Person
a) At times it may be necessary to vote the shares in person. In this case, a
"legal proxy" is obtained in the following manner:
o Banks and brokerage firms using the services at Broadridge:
The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to Broadridge. Broadridge issues individual
legal proxies and sends them back via overnight (or the Adviser can pay
messenger charges). A lead-time of at least two weeks prior to the meeting is
needed to do this. Alternatively, the procedures detailed below for banks not
using Broadridge may be implemented.
o Banks and brokerage firms issuing proxies directly:
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."
b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:
o A limited Power of Attorney appointing the attendee an Adviser
representative.
o A list of all shares being voted by custodian only. Client names and account
numbers are not included. This list must be presented, along with the
proxies, to the Inspectors of Elections and/or tabulator at least one-half
hour prior to the scheduled start of the meeting. The tabulator must
"qualify" the votes (i.e. determine if the vote have previously been cast, if
the votes have been rescinded, etc. vote have previously been cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
APPENDIX A
PROXY GUIDELINES
PROXY VOTING GUIDELINES
GENERAL POLICY STATEMENT
It is the policy of GAMCO INVESTORS, INC. to vote in the best economic interests
of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.
BOARD OF DIRECTORS
The advisers do not consider the election of the Board of Directors a routine
issue. Each slate of directors is evaluated on a case-by-case basis.
Factors taken into consideration include:
o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance
SELECTION OF AUDITORS
In general, we support the Board of Directors' recommendation for auditors.
BLANK CHECK PREFERRED STOCK
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.
CLASSIFIED BOARD
A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.
Where a classified board is in place we will generally not support attempts to
change to an annually elected board.
When an annually elected board is in place, we generally will not support
attempts to classify the board.
INCREASE AUTHORIZED COMMON STOCK
The request to increase the amount of outstanding shares is considered on a
case-by-case basis.
Factors taken into consideration include:
o Future use of additional shares
-Stock split
-Stock option or other executive compensation plan
-Finance growth of company/strengthen balance sheet
-Aid in restructuring
-Improve credit rating
-Implement a poison pill or other takeover defense
o Amount of stock currently authorized but not yet issued or reserved for
stock option plans
o Amount of additional stock to be authorized and its dilutive effect
We will support this proposal if a detailed and verifiable plan for the use of
the additional shares is contained in the proxy statement.
CONFIDENTIAL BALLOT
We support the idea that a shareholder's identity and vote should be treated
with confidentiality.
However, we look at this issue on a case-by-case basis.
In order to promote confidentiality in the voting process, we endorse the use of
independent Inspectors of Election.
CUMULATIVE VOTING
In general, we support cumulative voting.
Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.
Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.
Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.
DIRECTOR LIABILITY AND INDEMNIFICATION
We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.
EQUAL ACCESS TO THE PROXY
The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.
FAIR PRICE PROVISIONS
Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.
We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.
Reviewed on a case-by-case basis.
GOLDEN PARACHUTES
Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.
We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by-case basis.
NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.
ANTI-GREENMAIL PROPOSALS
We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.
LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS
We support the right of shareholders to call a special meeting.
CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER
This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.
As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the
following:
o State of Incorporation
o Management history of responsiveness to shareholders
o Other mitigating factors
POISON PILL
In general, we do not endorse poison pills.
In certain cases where management has a history of being responsive to the needs
of shareholders and the stock is very liquid, we will reconsider this position.
REINCORPORATION
Generally, we support reincorporation for well-defined business reasons. We
oppose reincorporation if proposed solely for the purpose of reincorporating in
a state with more stringent anti-takeover statutes that may negatively impact
the value of the stock.
STOCK OPTION PLANS
Stock option plans are an excellent way to attract, hold and motivate directors
and employees. However, each stock option plan must be evaluated on its own
merits, taking into consideration the following:
o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing
stock option plans
SUPERMAJORITY VOTE REQUIREMENTS
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of a simple majority of the outstanding shares. In
general, we oppose supermajority-voting requirements. Supermajority requirements
often exceed the average level of shareholder participation. We support
proposals' approvals by a simple majority of the shares voting.
LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT
Written consent allows shareholders to initiate and carry on a shareholder
action without having to wait until the next annual meeting or to call a special
meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a
shareholder meeting.
Reviewed on a case-by-case basis.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
PORTFOLIO MANAGER
Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of The Gabelli Utility Trust, (the Trust). Mr. Gabelli has served as
Chairman, Chief Executive Officer, and Chief Investment Officer -Value
Portfolios of GAMCO Investors, Inc. and its affiliates since their organization.
MANAGEMENT OF OTHER ACCOUNTS
The table below shows the number of other accounts managed by Mario J. Gabelli
and the total assets in each of the following categories: registered investment
companies, other paid investment vehicles and other accounts. For each category,
the table also shows the number of accounts and the total assets in the accounts
with respect to which the advisory fee is based on account performance.
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Total Assets
No. of Accounts in Accounts
Name of Portfolio Total where Advisory where Advisory
Manager or Type of No. of Accounts Total Fee is Based on Fee is Based
Team Member Accounts Managed Assets Performance on Performance
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
1. Mario J. Gabelli Registered 23 $15.6B 6 $5.3B
Investment
Companies:
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 12 $269.6M 11 $188.6M
Investment
Vehicles:
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 1991 $10.6B 6 $1.6B
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
POTENTIAL CONFLICTS OF INTEREST
As reflected above, Mr. Gabelli manages accounts in addition to the Trust.
Actual or apparent conflicts of interest may arise when a Portfolio Manager also
has day-to-day management responsibilities with respect to one or more other
accounts. These potential conflicts include:
ALLOCATION OF LIMITED TIME AND ATTENTION. As indicated above, Mr. Gabelli
manages multiple accounts. As a result, he will not be able to devote all of his
time to management of the Trust. Mr. Gabelli, therefore, may not be able to
formulate as complete a strategy or identify equally attractive investment
opportunities for each of those accounts as might be the case if he were to
devote all of his attention to the management of only the Trust.
ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, Mr. Gabelli
manages managed accounts with investment strategies and/or policies that are
similar to the Trust. In these cases, if the he identifies an investment
opportunity that may be suitable for multiple accounts, a Fund may not be able
to take full advantage of that opportunity because the opportunity may be
allocated among all or many of these accounts or other accounts managed
primarily by other Portfolio Managers of the Adviser, and their affiliates. In
addition, in the event Mr. Gabelli determines to purchase a security for more
than one account in an aggregate amount that may influence the market price of
the security, accounts that purchased or sold the security first may receive a
more favorable price than accounts that made subsequent transactions.
SELECTION OF BROKER/DEALERS. Because of Mr. Gabelli's position with the
Distributor and his indirect majority ownership interest in the Distributor, he
may have an incentive to use the Distributor to execute portfolio transactions
for a Fund.
PURSUIT OF DIFFERING STRATEGIES. At times, Mr. Gabelli may determine that an
investment opportunity may be appropriate for only some of the accounts for
which he exercises investment responsibility, or may decide that certain of the
funds or accounts should take differing positions with respect to a particular
security. In these cases, he may execute differing or opposite transactions for
one or more accounts which may affect the market price of the security or the
execution of the transaction, or both, to the detriment of one or more other
accounts.
VARIATION IN COMPENSATION. A conflict of interest may arise where the financial
or other benefits available to Mr. Gabelli differ among the accounts that he
manages. If the structure of the Adviser's management fee or the Portfolio
Manager's compensation differs among accounts (such as where certain accounts
pay higher management fees or performance-based management fees), the Portfolio
Manager may be motivated to favor certain accounts over others. The Portfolio
Manager also may be motivated to favor accounts in which he has an investment
interest, or in which the Adviser, or their affiliates have investment
interests. Similarly, the desire to maintain assets under management or to
enhance a Portfolio Manager's performance record or to derive other rewards,
financial or otherwise, could influence the Portfolio Manager in affording
preferential treatment to those accounts that could most significantly benefit
the Portfolio Manager. For example, as reflected above, if Mr. Gabelli manages
accounts which have performance fee arrangements, certain portions of his
compensation will depend on the achievement of performance milestones on those
accounts. Mr. Gabelli could be incented to afford preferential treatment to
those accounts and thereby by subject to a potential conflict of interest.
The Adviser, and the Funds have adopted compliance policies and procedures that
are designed to address the various conflicts of interest that may arise for the
Adviser and their staff members. However, there is no guarantee that such
policies and procedures will be able to detect and prevent every situation in
which an actual or potential conflict may arise.
COMPENSATION STRUCTURE FOR MARIO J. GABELLI
Mr. Gabelli receives incentive-based variable compensation based on a percentage
of net revenues received by the Adviser for managing the Trust. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Trust. Five
closed-end registered investment companies (including this Trust) managed by Mr.
Gabelli have arrangements whereby the Adviser will only receive its investment
advisory fee attributable to the liquidation value of outstanding preferred
stock (and Mr. Gabelli would only receive his percentage of such advisory fee)
if certain performance levels are met. Additionally, he receives similar
incentive based variable compensation for managing other accounts within the
firm and its affiliates. This method of compensation is based on the premise
that superior long-term performance in managing a portfolio should be rewarded
with higher compensation as a result of growth of assets through appreciation
and net investment activity. The level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. One of the other registered investment companies managed by Mr.
Gabelli has a performance (fulcrum) fee arrangement for which his compensation
is adjusted up or down based on the performance of the investment company
relative to an index. Mr. Gabelli manages other accounts with performance fees.
Compensation for managing these accounts has two components. One component is
based on a percentage of net revenues to the investment adviser for managing the
account. The second component is based on absolute performance of the account,
with respect to which a percentage of such performance fee is paid to Mr.
Gabelli. As an executive officer of the Adviser's parent company, GBL, Mr.
Gabelli also receives ten percent of the net operating profits of the parent
company. He receives no base salary, no annual bonus, and no stock options.
OWNERSHIP OF SHARES IN THE FUND
Mario Gabelli owned over $1,000,000 of shares of the Trust as of December 31,
2007.
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
============= ========================= ============================= ========================== ===============================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PER PUBLICLY ANNOUNCED PLANS YET BE PURCHASED UNDER THE
PERIOD PURCHASED SHARE (OR UNIT) OR PROGRAMS PLANS OR PROGRAMS
============= ========================= ============================= ========================== ===============================
Month #1 Common - N/A Common - N/A Common - N/A Common - 29,871,169
07/01/07
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
07/31/07
============= ========================= ============================= ========================== ===============================
Month #2 Common - N/A Common - N/A Common - N/A Common - 29,901,130
08/01/07
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,184,200
08/31/07
============= ========================= ============================= ========================== ===============================
Month #3 Common - N/A Common - N/A Common - N/A Common - 29,930,702
09/01/07
through Preferred Series A - 500 Preferred Series A - Preferred Series A - 500 Preferred Series A - 1,183,700
09/30/07 $23.4200
============= ========================= ============================= ========================== ===============================
Month #4 Common - N/A Common - N/A Common - N/A Common - 29,960,348
10/01/07
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,183,700
10/31/07
============= ========================= ============================= ========================== ===============================
Month #5 Common - N/A Common - N/A Common - N/A Common - 29,990,468
11/01/07
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,183,700
11/30/07
============= ========================= ============================= ========================== ===============================
Month #6 Common - N/A Common - N/A Common - N/A Common - 30,021,189
12/01/07
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 1,183,700
12/31/07
============= ========================= ============================= ========================== ===============================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series A - 500 Preferred Series A - Preferred Series A - 500
$23.4200
============= ========================= ============================= ========================== ===============================
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the
potential repurchase of common and preferred shares occurs quarterly in
the Fund's quarterly report in accordance with Section 23(c) of the
Investment Company Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all
common shares outstanding may be repurchased when the Fund's common
shares are trading at a discount of 10% or more from the net asset
value of the shares. Any or all preferred shares outstanding may be
repurchased when the Fund's preferred shares are trading at a discount
to the liquidation value of $25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior
to expiration, or under which the registrant does not intend to make
further purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Utility Trust
--------------------------------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 03/07/08
----------------------------------------------------------------------------
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 03/07/08
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date 03/07/08
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.