Gabelli Utility Trust

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number             811-09243                    

                         The Gabelli Utility Trust                        

(Exact name of registrant as specified in charter)

One Corporate Center

                         Rye, New York 10580-1422                        

(Address of principal executive offices) (Zip code)

Bruce N. Alpert

Gabelli Funds, LLC

One Corporate Center

                         Rye, New York 10580-1422                        

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-800-422-3554

Date of fiscal year end:  December 31

Date of reporting period:  June 30, 2013

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. § 3507.


Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.


The Gabelli Utility Trust

 

Semiannual Report — June 30, 2013

   LOGO
  

 

Mario J. Gabelli, CFA

Portfolio Manager

 

To Our Shareholders,

For the six months ended June 30, 2013, the net asset value (“NAV”) total return of The Gabelli Utility Trust (the “Fund”) was 9.9%. The total return for the Standard & Poor’s (“S&P”) 500 Utilities Index was 6.8%. The total return for the Fund’s publicly traded shares was 10.6%. The Fund’s NAV per share was $5.72, while the price of the publicly traded shares closed at $6.50 on the New York Stock Exchange (“NYSE”). See below for additional performance information.

Enclosed are the schedule of investments and financial statements as of June 30, 2013.

Comparative Results

 

Average Annual Returns through June 30, 2013 (a) (Unaudited)    Since
     Year to Date    1 Year    5 Year    10 Year    Inception
(07/09/99)

Gabelli Utility Trust

              

NAV Total Return (b)

        9.91%       11.18%       8.12%         9.73%       8.92%

Investment Total Return (c)

   10.57    (11.03)    3.14      5.14    8.13

S&P 500 Utilities Index

     6.79      6.23    2.85      9.69        5.16(d)

Lipper Utility Fund Average

     9.81    13.36    4.18    10.45    5.54

S&P 500 Index

   13.39    20.60    7.01      7.30    3.03

 

  (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 of less than one year are not annualized. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The S&P 500 Utilities Index is an unmanaged market capitalization weighted index of large capitalization stocks that may include facilities generation and transmission or distribution of electricity, gas, or water. The Lipper Utility Fund Average reflects the average performance of open-end mutual funds classified in this particular category. The S&P 500 Index is an unmanaged indicator of stock market performance. Dividends are considered reinvested. You cannot invest directly in an index.

 
  (b)

Total returns and average annual returns reflect changes in the 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 NYSE, reinvestment of distributions, and adjustments for rights offerings. Since inception return is based on an initial offering price of $7.50.

 
  (d)

From June 30, 1999, the date closest to the Fund’s inception for which data is available.

 
   


Summary of Portfolio Holdings (Unaudited)

The following table presents portfolio holdings as a percent of total investments as of June 30, 2013:

The Gabelli Utility Trust

 

Energy and Utilities: Electric Integrated

     39.8

U.S. Government Obligations

     12.3

Energy and Utilities: Electric Transmission and Distribution

     7.9

Energy and Utilities: Natural Gas Integrated

     7.6

Energy and Utilities: Natural Gas Utilities

     6.9

Cable and Satellite

     6.1

Telecommunications

     4.1

Energy and Utilities: Global Utilities

     3.0

Energy and Utilities: Water

     2.8

Wireless Communications

     2.2

Energy and Utilities: Merchant Energy

     1.3

Energy and Utilities: Natural Resources

     1.1

Diversified Industrial

     1.1

Equipment and Supplies

     1.0

Aerospace

     0.6

Transportation

     0.5

Entertainment

     0.5

Independent Power Producers and Energy Traders

     0.4

Communications Equipment

     0.2

Energy and Utilities: Services

     0.2

Investment Companies

     0.1

Energy and Utilities: Alternative Energy

     0.1

Environmental Services

     0.1

Real Estate

     0.1

Agriculture

     0.0
  

 

 

 
       100.0
  

 

 

 
 

 

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. 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 800-SEC-0330.

Proxy Voting

The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 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.

Certifications

The Fund’s Chief Executive Officer has certified to the New York Stock Exchange (“NYSE”) that, as of June 10, 2013, he was not aware of any violation by the Fund of applicable NYSE corporate governance listing standards. The Fund 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.

 

2


The Gabelli Utility Trust

Schedule of Investments — June 30, 2013 (Unaudited)

 

 

Shares

        

Cost

   

Market
Value

 
  

COMMON STOCKS — 87.2%

  

  

ENERGY AND UTILITIES — 72.8%

  

 
  

Energy and Utilities: Alternative Energy — 0.1%

  

  6,000      

Ormat Industries Ltd.†

  $ 68,688      $ 33,105   
  12,000      

Ormat Technologies Inc.

    254,979        282,240   
  8,100      

Renegy Holdings Inc.

    57,108        648   
    

 

 

   

 

 

 
       380,775        315,993   
    

 

 

   

 

 

 
  

Energy and Utilities: Electric Integrated — 39.8%

  

  23,000      

ALLETE Inc.

    728,776        1,146,550   
  72,000      

Alliant Energy Corp.

    1,751,407        3,630,240   
  17,000      

Ameren Corp.

    560,038        585,480   
  75,000      

American Electric Power Co. Inc.

    2,478,398        3,358,500   
  10,000      

Avista Corp.

    199,636        270,200   
  50,000      

Black Hills Corp.

    1,431,322        2,437,500   
  27,000      

Cleco Corp.

    524,506        1,253,610   
  114,000      

CMS Energy Corp.

    1,363,739        3,097,380   
  29,000      

Dominion Resources Inc.

    1,273,200        1,647,780   
  23,000      

DTE Energy Co.

    934,776        1,541,230   
  105,000      

Duke Energy Corp.

    5,558,602        7,087,500   
  80,000      

Edison International

    3,504,228        3,852,800   
  170,000      

El Paso Electric Co.

    3,150,342        6,002,700   
  1,000      

Emera Inc.

    21,639        31,406   
  3,000      

Entergy Corp.

    75,249        209,040   
  98,000      

FirstEnergy Corp.

    4,273,234        3,659,320   
  178,000      

Great Plains Energy Inc.

    4,551,602        4,012,120   
  52,000      

Hawaiian Electric Industries Inc.

    1,253,981        1,316,120   
  89,000      

Integrys Energy Group Inc.

    4,500,171        5,209,170   
  63,000      

MGE Energy Inc.

    1,859,897        3,449,880   
  95,000      

NextEra Energy Inc.

    4,094,308        7,740,600   
  48,000      

NiSource Inc.

    1,020,001        1,374,720   
  105,000      

NorthWestern Corp.

    3,163,658        4,189,500   
  35,000      

NV Energy Inc.

    312,248        821,100   
  98,000      

OGE Energy Corp.

    2,360,215        6,683,600   
  30,000      

Otter Tail Corp.

    774,407        852,000   
  48,000      

PG&E Corp.

    1,280,160        2,195,040   
  100,000      

PNM Resources Inc.

    1,119,082        2,219,000   
  38,000      

Public Service Enterprise Group Inc.

    996,629        1,241,080   
  56,000      

SCANA Corp.

    1,779,652        2,749,600   
  101,000      

TECO Energy Inc.

    1,488,403        1,736,190   
  25,000      

The Empire District Electric Co.

    515,057        557,750   
  16,500      

Unitil Corp.

    427,366        476,520   
  133,000      

UNS Energy Corp.

    4,070,298        5,949,090   
  47,000      

Vectren Corp.

    1,162,166        1,590,010   
  227,000      

Westar Energy Inc.

    5,169,682        7,254,920   
  172,000      

Wisconsin Energy Corp.

    3,139,999        7,050,280   
  175,000      

Xcel Energy Inc.

    3,077,795        4,959,500   
    

 

 

   

 

 

 
       75,945,869        113,439,026   
    

 

 

   

 

 

 

Shares

        

Cost

   

Market
Value

 
  

Energy and Utilities: Electric Transmission and Distribution — 7.9%

  

  243      

Brookfield Infrastructure Partners LP

  $ 5,103      $ 8,874   
  58,000      

Consolidated Edison Inc.

    2,658,239        3,381,980   
  125,000      

Exelon Corp.

    3,496,775        3,860,000   
  317,000      

Northeast Utilities(a)

    5,814,922        13,320,340   
  22,500      

Pepco Holdings Inc.

    449,918        453,600   
  36,666      

UIL Holdings Corp.

    966,693        1,402,475   
    

 

 

   

 

 

 
       13,391,650        22,427,269   
    

 

 

   

 

 

 
  

Energy and Utilities: Global Utilities — 3.0%

  

  14,500      

Areva SA†

    596,647        225,070   
  8,000      

Chubu Electric Power Co. Inc.

    189,551        113,410   
  134,000      

Electric Power Development Co. Ltd.

    3,824,074        4,188,344   
  27,000      

Endesa SA

    824,183        576,719   
  300,000      

Enel SpA

    1,862,753        941,088   
  490,000      

Hera SpA

    756,588        929,282   
  11,000      

Hokkaido Electric Power Co. Inc.†

    185,270        150,393   
  8,000      

Hokuriku Electric Power Co.

    146,449        125,670   
  3,000      

Huaneng Power International Inc., ADR

    81,590        115,350   
  41,000      

Korea Electric Power Corp., ADR†

    630,569        463,710   
  13,000      

Kyushu Electric Power Co. Inc.†

    232,303        196,088   
  3,000      

Niko Resources Ltd.

    120,788        24,475   
  8,000      

Shikoku Electric Power Co. Inc.†

    155,987        144,465   
  8,000      

The Chugoku Electric Power Co. Inc.

    150,761        125,670   
  15,000      

The Kansai Electric Power Co. Inc.†

    229,800        205,535   
  13,000      

Tohoku Electric Power Co. Inc.†

    172,497        162,402   
    

 

 

   

 

 

 
       10,159,810        8,687,671   
    

 

 

   

 

 

 
  

Energy and Utilities: Merchant Energy — 1.3%

  

  300,000      

GenOn Energy Inc., Escrow†

    0        0   
  320,000      

The AES Corp.(a)

    3,887,880        3,836,800   
    

 

 

   

 

 

 
       3,887,880        3,836,800   
    

 

 

   

 

 

 
  

Energy and Utilities: Natural Gas Integrated — 7.2%

  

  1,000      

Devon Energy Corp.

    54,420        51,880   
  128,000      

Kinder Morgan Inc.

    2,964,833        4,883,200   
  132,000      

National Fuel Gas Co.

    4,547,827        7,649,400   
  194,000      

ONEOK Inc.

    2,609,668        8,014,140   
    

 

 

   

 

 

 
       10,176,748        20,598,620   
    

 

 

   

 

 

 
  

Energy and Utilities: Natural Gas Utilities — 6.9%

  

  92,000      

AGL Resources Inc.

    3,290,231        3,943,120   
  28,000      

Atmos Energy Corp.

    696,786        1,149,680   
  20,000      

Chesapeake Utilities Corp.

    502,271        1,029,800   
  12,000      

CONSOL Energy Inc.

    404,193        325,200   
 

 

See accompanying notes to financial statements.

 

3


The Gabelli Utility Trust

Schedule of Investments (Continued) — June 30, 2013 (Unaudited)

 

 

Shares

        

Cost

   

Market

Value

 
  

COMMON STOCKS (Continued)

  

  

ENERGY AND UTILITIES (Continued)

  

  

Energy and Utilities: Natural Gas Utilities (Continued)

  

  25,219      

Corning Natural Gas Corp.

  $ 284,308      $ 424,184   
  59,600      

Delta Natural Gas Co. Inc.

    498,507        1,266,500   
  11,445      

GDF Suez

    387,206        224,130   
  35,000      

Piedmont Natural Gas Co. Inc.

    553,257        1,180,900   
  12,000      

RGC Resources Inc.

    128,344        243,120   
  127,000      

Southwest Gas Corp.

    3,511,423        5,942,330   
  112,000      

Spectra Energy Corp.

    3,057,603        3,859,520   
  3,000      

The Laclede Group Inc.

    117,524        136,980   
    

 

 

   

 

 

 
       13,431,653        19,725,464   
    

 

 

   

 

 

 
  

Energy and Utilities: Natural Resources — 1.1%

  

 
  5,000      

Anadarko Petroleum Corp.

    282,110        429,650   
  32,000      

Compania de Minas Buenaventura SA, ADR

    360,262        472,320   
  10,000      

Exxon Mobil Corp.

    547,153        903,500   
  2,000      

Hess Corp.

    129,120        132,980   
  70,000      

Peabody Energy Corp.

    1,586,752        1,024,800   
  4,000      

Royal Dutch Shell plc, Cl. A, ADR

    237,320        255,200   
    

 

 

   

 

 

 
       3,142,717        3,218,450   
    

 

 

   

 

 

 
  

Energy and Utilities: Services — 0.2%

  

 
  25,000      

ABB Ltd., ADR

    273,075        541,500   
    

 

 

   

 

 

 
  

Energy and Utilities: Water — 2.8%

  

 
  13,500      

American States Water Co.

    300,087        724,545   
  27,000      

American Water Works Co. Inc.

    580,500        1,113,210   
  21,833      

Aqua America Inc.

    221,008        683,155   
  24,000      

Artesian Resources Corp., Cl. A

    249,469        534,720   
  40,000      

California Water Service Group

    555,152        780,400   
  7,500      

Connecticut Water Service Inc.

    146,455        215,250   
  50,000      

Middlesex Water Co.

    784,887        996,000   
  24,000      

Severn Trent plc

    688,061        607,410   
  80,000      

SJW Corp.

    1,482,532        2,096,000   
  9,000      

The York Water Co.

    108,269        171,270   
    

 

 

   

 

 

 
       5,116,420        7,921,960   
    

 

 

   

 

 

 
  

Diversified Industrial — 1.1%

  

 
  1,000      

Alstom SA

    72,833        32,749   
  130,000      

General Electric Co.

    2,122,253        3,014,700   
    

 

 

   

 

 

 
       2,195,086        3,047,449   
    

 

 

   

 

 

 
  

Environmental Services — 0.0%

  

 
  3,000      

Suez Environnement Co.

    0        38,753   
    

 

 

   

 

 

 
  

Equipment and Supplies — 1.0%

  

 
  50,000      

Capstone Turbine Corp.†

    83,080        58,500   
  30,000      

Lufkin Industries Inc.

    2,649,750        2,654,100   
  2,000      

Mueller Industries Inc.

    92,261        100,860   
    

 

 

   

 

 

 
       2,825,091        2,813,460   
    

 

 

   

 

 

 

Shares

        

Cost

   

Market

Value

 
  

Independent Power Producers and Energy
Traders — 0.4%

  

  42,802      

NRG Energy Inc.

  $ 1,003,954      $ 1,142,813   
    

 

 

   

 

 

 
  

TOTAL ENERGY AND UTILITIES

    141,930,728        207,755,228   
    

 

 

   

 

 

 
  

COMMUNICATIONS — 12.6%

   
  

Cable and Satellite — 6.1%

  

 
  12,000      

AMC Networks Inc., CI. A†

    239,791        784,920   
  10,000      

British Sky Broadcasting Group plc

    104,676        120,460   
  100,000      

Cablevision Systems Corp., Cl. A

    1,473,865        1,682,000   
  5,000      

Cogeco Cable Inc.

    105,008        213,511   
  20,000      

Cogeco Inc.

    389,461        798,707   
  30,000      

DIRECTV†

    480,619        1,848,600   
  59,000      

DISH Network Corp., Cl. A

    1,186,534        2,508,680   
  10,000      

EchoStar Corp., CI. A†

    280,860        391,100   
  22,582      

Liberty Global plc, CI A†

    638,406        1,672,875   
  21,928      

Liberty Global plc, CI C†

    560,146        1,488,692   
  8,000      

Rogers Communications Inc., Cl. B

    119,139        313,600   
  100,900      

Telenet Group Holding NV

    4,805,483        4,630,898   
  8,000      

Time Warner Cable Inc.

    330,056        899,840   
    

 

 

   

 

 

 
       10,714,044        17,353,883   
    

 

 

   

 

 

 
  

Communications Equipment — 0.2%

  

 
  230,000      

Furukawa Electric Co. Ltd.

    1,052,385        533,374   
  1,000      

QUALCOMM Inc.

    37,010        61,080   
    

 

 

   

 

 

 
       1,089,395        594,454   
    

 

 

   

 

 

 
  

Telecommunications — 4.1%

  

 
  40,000      

AT&T Inc.

    1,039,609        1,416,000   
  3,000      

Belgacom SA

    97,094        67,301   
  200      

Bell Aliant Inc.

    5,496        5,374   
  3,800      

Bell Aliant Inc., OTC(b)

    101,567        102,528   
  11,000      

BT Group plc, ADR

    343,602        516,890   
  230,000      

Cincinnati Bell Inc.†

    864,262        703,800   
  43,000      

Deutsche Telekom AG, ADR

    678,352        501,380   
  2,000      

France Telecom SA, ADR

    22,799        18,900   
  200      

Hutchison Telecommunications Hong Kong Holdings Ltd.

    19        106   
  1,000      

Mobistar SA

    56,624        20,826   
  18,500      

Nippon Telegraph & Telephone Corp.

    859,917        958,762   
  11,800      

Orascom Telecom Holding SAE, GDR†(c)

    53,385        33,158   
  11,800      

Orascom Telecom Media and Technology Holding SAE, GDR(b)

    20,761        2,714   
  20,000      

Portugal Telecom SGPS SA

    221,096        77,838   
  2,000      

PT Indosat Tbk

    1,061        1,058   
  3,000      

Sistema JSFC, GDR(c)

    66,136        59,250   
  1,200      

Tele2 AB, Cl. B

    14,604        14,092   
  35,000      

Telekom Austria AG

    397,662        221,592   
 

 

See accompanying notes to financial statements.

 

4


The Gabelli Utility Trust

Schedule of Investments (Continued) — June 30, 2013 (Unaudited)

 

 

Shares

        

Cost

   

Market

Value

 
  

COMMON STOCKS (Continued)

  

  

COMMUNICATIONS (Continued)

  

  

Telecommunications (Continued)

  

  25,000      

T-Mobile US Inc.

  $ 406,250      $ 620,250   
  40,000      

Touch America Holdings Inc.†

    38,488        0   
  110,000      

Verizon Communications Inc.

    3,846,319        5,537,400   
  75,000      

VimpelCom Ltd., ADR

    720,805        754,500   
    

 

 

   

 

 

 
       9,855,908        11,633,719   
    

 

 

   

 

 

 
  

Wireless Communications — 2.2%

  

 
  1,200      

America Movil SAB de CV, Cl. L, ADR

    9,424        26,100   
  1,000,000      

Cable & Wireless Communications plc

    613,691        622,833   
  2,000      

China Mobile Ltd., ADR

    33,988        103,540   
  2,000      

China Unicom Hong Kong Ltd., ADR

    16,278        26,280   
  171      

M1 Ltd.

    210        406   
  19,000      

Millicom International Cellular SA, SDR

    1,476,163        1,368,739   
  1,154      

Mobile Telesystems OJSC

    6,303        9,183   
  11,250      

Mobile TeleSystems OJSC, ADR

    175,074        213,075   
  26,000      

NII Holdings Inc.†

    255,501        173,420   
  1,000      

NTT DoCoMo Inc.

    1,438,659        1,553,741   
  2,000      

SK Telecom Co. Ltd., ADR

    32,986        40,660   
  400      

SmarTone Telecommunications Holdings Ltd

    207        664   
  25,000      

Turkcell Iletisim Hizmetleri A/S, ADR†

    404,775        359,250   
  36,000      

United States Cellular Corp

    1,623,857        1,320,840   
  20,000      

Vodafone Group plc, ADR

    576,702        574,800   
    

 

 

   

 

 

 
       6,663,818        6,393,531   
    

 

 

   

 

 

 
  

TOTAL COMMUNICATIONS

    28,323,165        35,975,587   
    

 

 

   

 

 

 
  

OTHER — 1.8%

   
  

Aerospace — 0.6%

   
  100,000      

Rolls-Royce Holdings plc

    809,939        1,724,768   
  11,900,000      

Rolls-Royce Holdings plc, Cl. C†(d)

    18,190        18,099   
    

 

 

   

 

 

 
       828,129        1,742,867   
    

 

 

   

 

 

 
  

Agriculture — 0.0%

  

 
  3,000      

Cadiz Inc.†

    30,211        13,800   
    

 

 

   

 

 

 
  

Entertainment — 0.5%

  

 
  70,000      

Vivendi SA

    2,243,823        1,325,723   
    

 

 

   

 

 

 
  

Investment Companies — 0.1%

  

 
  10,000      

Kinnevik Investment AB, Cl. A

    221,538        257,228   
  3,000      

Kinnevik Investment AB, Cl. B

    41,537        76,900   
    

 

 

   

 

 

 
       263,075        334,128   
    

 

 

   

 

 

 

Shares

       

Cost

   

Market

Value

 
 

Real Estate — 0.1%

   
  4,500     

Brookfield Asset Management Inc., Cl. A

  $ 48,735      $ 162,090   
  258     

Brookfield Property Partners LP

    5,583        5,237   
   

 

 

   

 

 

 
      54,318        167,327   
   

 

 

   

 

 

 
 

Transportation — 0.5%

  

 
  30,000     

GATX Corp.

    911,610        1,422,900   
   

 

 

   

 

 

 
 

TOTAL OTHER

    4,331,166        5,006,745   
   

 

 

   

 

 

 
 

TOTAL COMMON STOCKS

    174,585,059        248,737,560   
   

 

 

   

 

 

 
 

WARRANTS — 0.4%

   
 

ENERGY AND UTILITIES — 0.4%

   
 

Energy and Utilities: Natural Gas
Integrated — 0.4%

   

  211,200     

Kinder Morgan Inc., expire 05/25/17†

    281,849        1,081,344   
   

 

 

   

 

 

 
 

COMMUNICATIONS — 0.0%

  

 
 

Wireless Communications — 0.0%

  

 
  16,000     

Bharti Airtel Ltd., expire 09/19/13†(b)

    108,378        78,599   
   

 

 

   

 

 

 
 

TOTAL WARRANTS

    390,227        1,159,943   
   

 

 

   

 

 

 

Principal

Amount

                 
 

CONVERTIBLE CORPORATE BONDS — 0.1%

  

 

ENERGY AND UTILITIES — 0.1%

  

 
 

Environmental Services — 0.1%

  

 
$ 100,000     

Covanta Holding Corp., Cv.,
3.250%, 06/01/14

    100,000        129,250   
   

 

 

   

 

 

 
 

U.S. GOVERNMENT OBLIGATIONS — 12.3%

  

  35,192,000     

U.S. Treasury Bills,
0.046% to
0.105%††,
08/22/13 to
12/26/13(e)

    35,182,454        35,183,748   
   

 

 

   

 

 

 
  TOTAL INVESTMENTS — 100.0%   $ 210,257,740        285,210,501   
   

 

 

   

Notional
Amount

       

Termination
Date

   

Unrealized
Appreciation/
Depreciation

 
 

EQUITY CONTRACT FOR DIFFERENCE SWAP AGREEMENTS

  

$ 18,677     

Rolls-Royce Holdings plc, Cl. C

    07/09/13        (605

 

(11,900,000 Shares)

   
  1,717,510      Rolls-Royce Holdings plc     06/27/14        6,423   

 

(100,000 Shares)

   
     

 

 

 
 

TOTAL EQUITY CONTRACT FOR DIFFERENCE SWAP AGREEMENTS

   

    5,818   
     

 

 

 
 

 

See accompanying notes to financial statements.

 

5


The Gabelli Utility Trust

Schedule of Investments (Continued) — June 30, 2013 (Unaudited)

 

 

            

Market

Value

 
  

Other Assets and Liabilities (Net)

    $ 3,050,823   
  

PREFERRED STOCK
(1,154,188 preferred shares outstanding)

      (51,332,200
      

 

 

 
  

NET ASSETS — COMMON STOCK
(41,424,337 common shares outstanding)

    $ 236,934,942   
      

 

 

 
  

NET ASSET VALUE PER COMMON SHARE ($236,934,942 ÷ 41,424,337 shares outstanding)

    $ 5.72   
      

 

 

 

 

(a)

Securities, or a portion thereof, with a value of $5,910,850, are reserved and/or pledged with the custodian for current or potential holdings of swaps.

(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 June 30, 2013, the market value of Rule 144A securities amounted to $183,841 or 0.06% of total investments.

(c)

Security purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. At June 30, 2013, the market value of Regulation S securities amounted to $92,408 or 0.03% of total investments, which were valued under methods approved by the Board of Trustees as follows:

 

Acquisition
Shares
   

Issuer

  Acquisition
Date
    Acquisition
Cost
    06/30/13
Carrying
Value
Per Share
 
  11,800     

Orascom Telecom Holding SAE, GDR

    07/27/09      $ 53,385      $ 2.8100   
  3,000     

Sistema JSFC, GDR

    10/10/07        66,136        19.7500   
(d)

At June 30, 2013, the Fund held an investment in a restricted and illiquid security amounting to $18,099 or 0.01% of total investments, which was valued under methods approved by the Board of Trustees as follows:

 

Acquisition
Shares
   

Issuer

  Acquisition
Date
    Acquisition
Cost
    06/30/13
Carrying
Value
Per Share
 
  11,900,000     

Rolls-Royce Holdings plc, Cl. C

    04/24/13        $18,190        $0.0015   

 

(e)

Securities, or a portion thereof, with a value of $350,000 were pledged as collateral for the equity contract for difference swap agreements.

Non-income producing security.

††

Represents annualized yield at date of purchase.

ADR

American Depositary Receipt

GDR

Global Depositary Receipt

JSFC

Joint Stock Financial Corporation

OJSC

Open Joint Stock Company

SDR

Swedish Depositary Receipt

 

 

See accompanying notes to financial statements.

 

6


The Gabelli Utility Trust

 

Statement of Assets and Liabilities

June 30, 2013 (Unaudited)

 

Assets:

  

Investments, at value (cost $210,257,740)

   $ 285,210,501   

Cash

     343   

Receivable for investments sold

     3,250,000   

Dividends and interest receivable

     689,766   

Deferred offering expense

     92,388   

Unrealized appreciation on swap contracts

     6,423   

Prepaid expenses

     3,006   
  

 

 

 

Total Assets

     289,252,427   
  

 

 

 

Liabilities:

  

Distributions payable

     27,716   

Payable for investments purchased

     101,447   

Payable for investment advisory fees

     449,623   

Payable for payroll expenses

     39,624   

Payable for accounting fees

     7,500   

Payable for auction agent fees

     199,836   

Payable for rights offering expenses

     60,472   

Payable for shareholder communications expenses

     52,215   

Unrealized depreciation on swap contracts

     605   

Other accrued expenses

     46,247   
  

 

 

 

Total Liabilities

     985,285   
  

 

 

 

Preferred Shares:

  

Series A Cumulative Preferred Shares (5.625%, $25 liquidation value, $0.001 par value, 1,200,000 shares authorized with 1,153,288 shares issued and outstanding)

     28,832,200   

Series B Cumulative Preferred Shares (Auction Market, $25,000 liquidation value, $0.001 par value, 1,000 shares authorized with 900 shares issued and outstanding)

     22,500,000   
  

 

 

 

Total Preferred Shares

     51,332,200   
  

 

 

 

Net Assets Attributable to Common Shareholders

   $ 236,934,942   
  

 

 

 

Net Assets Attributable to Common Shareholders Consist of:

  

Paid-in capital

   $ 162,139,531   

Accumulated net realized loss on investments, swap contracts, and foreign currency transactions

     (161,008

Net unrealized appreciation on investments

     74,952,761   

Net unrealized appreciation on swap contracts

     5,818   

Net unrealized depreciation on foreign currency translations

     (2,160
  

 

 

 

Net Assets

   $ 236,934,942   
  

 

 

 

Net Asset Value per Common Share:

  

($236,934,942 ÷ 41,424,337 shares outstanding at $0.001 par value; unlimited number of shares authorized)

   $ 5.72   
  

 

 

 

Statement of Operations

For the Six Months Ended June 30, 2013 (Unaudited)

 

Investment Income:

  

Dividends (net of foreign withholding taxes of $135,146)

   $ 5,475,600   

Interest

     19,134   
  

 

 

 

Total Investment Income

     5,494,734   
  

 

 

 

Expenses:

  

Investment advisory fees

     1,448,091   

Shareholder communications expenses

     94,612   

Shareholder services fees

     83,896   

Trustees’ fees

     58,184   

Legal and audit fees

     38,352   

Payroll expenses

     26,624   

Accounting fees

     22,500   

Custodian fees

     18,426   

Miscellaneous expenses

     56,839   
  

 

 

 

Total Expenses

     1,847,524   
  

 

 

 

Net Investment Income

     3,647,210   
  

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments, Swap Contracts, and Foreign Currency:

  

Net realized gain on investments

     1,603,527   

Net realized gain on swap contracts

     313,708   

Net realized loss on foreign currency transactions

     (4,480
  

 

 

 

Net realized gain on investments, swap contracts, and foreign currency transactions

     1,912,755   
  

 

 

 

Net change in unrealized appreciation/depreciation:

  

on investments

     17,439,938   

on swap contracts

     264   

on foreign currency translations

     (1,839
  

 

 

 

Net change in unrealized appreciation/depreciation on investments, swap contracts, and foreign currency translations

     17,438,363   
  

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments, Swap Contracts, and Foreign Currency

     19,351,118   
  

 

 

 

Net Increase in Net Assets Resulting from Operations

     22,998,328   
  

 

 

 

Total Distributions to Preferred Shareholders

     (995,462
  

 

 

 

Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations

   $ 22,002,866   
  

 

 

 
 

 

See accompanying notes to financial statements.

 

7


The Gabelli Utility Trust

Statement of Changes in Net Assets Attributable to Common Shareholders

 

 

     Six Months Ended
June 30, 2013
(Unaudited)
  Year Ended
December 31, 2012

Operations:

        

Net investment income

     $ 3,647,210       $ 5,043,298  

Net realized gain on investments, swap contracts, and foreign currency transactions

       1,912,755         10,002,256  

Net change in unrealized appreciation/depreciation on investments, swap contracts, and foreign currency translations

       17,438,363         (5,197,924 )
    

 

 

     

 

 

 

Net Increase in Net Assets Resulting from Operations

       22,998,328         9,847,630  
    

 

 

     

 

 

 

Distributions to Preferred Shareholders:

        

Net investment income

       (766,506 )*       (683,458 )

Net realized long term gain

       (228,956 )*       (1,298,347 )
    

 

 

     

 

 

 

Total Distributions to Preferred Shareholders

       (995,462 )       (1,981,805 )
    

 

 

     

 

 

 

Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations

       22,002,866         7,865,825  
    

 

 

     

 

 

 

Distributions to Common Shareholders:

        

Net investment income

       (2,724,684 )*       (4,468,482 )

Net realized long term gain

       (743,096 )*       (8,488,654 )

Return of capital

       (8,917,149 )*       (6,240,961 )
    

 

 

     

 

 

 

Total Distributions to Common Shareholders

       (12,384,929 )       (19,198,097 )
    

 

 

     

 

 

 

Fund Share Transactions:

        

Net increase in net assets from common shares issued in rights offering

               53,963,237  

Net increase in net assets from common shares issued upon reinvestment of distributions

       1,537,693         2,502,183  

Offering costs for common shares charged to paid-in capital

       42,562         (500,000 )
    

 

 

     

 

 

 

Net Increase in Net Assets from Fund Share Transactions

       1,580,255         55,965,420  
    

 

 

     

 

 

 

Net Increase in Net Assets Attributable to Common Shareholders

       11,198,192         44,633,148  

Net Assets Attributable to Common Shareholders:

        

Beginning of period

       225,736,750         181,103,602  
    

 

 

     

 

 

 

End of period (including undistributed net investment income of $0 and $0, respectively)

     $ 236,934,942       $ 225,736,750  
    

 

 

     

 

 

 

 

*

Based on year to date book income. Amounts are subject to change and recharacterization at year end.

 

 

See accompanying notes to financial statements.

 

8


The Gabelli Utility Trust

Financial Highlights

 

Selected data for a share of beneficial interest outstanding throughout each period:

 

    Six Months Ended
June 30, 2013
  Year Ended December 31,
    (Unaudited)   2012   2011   2010   2009   2008

Operating Performance:

                       

Net asset value, beginning of period

    $ 5.48       $ 5.69       $ 5.33       $ 5.20       $ 5.09       $ 8.18  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income (a)

      0.09         0.15         0.15         0.15         0.17         0.18  

Net realized and unrealized gain/(loss) on investments, swap contracts, and foreign currency transactions

      0.48         0.19         0.86         0.73         0.69         (2.48 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total from investment operations

      0.57         0.34         1.01         0.88         0.86         (2.30 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions to Preferred Shareholders: (a)

                       

Net investment income

      (0.02 )*       (0.02 )       (0.04 )       (0.06 )       (0.06 )       (0.06 )

Net realized gain

      (0.01 )*       (0.04 )       (0.02 )                       (0.03 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions to preferred shareholders

      (0.03 )       (0.06 )       (0.06 )       (0.06 )       (0.06 )       (0.09 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations

      0.54         0.28         0.95         0.82         0.80         (2.39 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions to Common Shareholders:

                       

Net investment income

      (0.07 )*       (0.14 )       (0.11 )       (0.08 )       (0.08 )       (0.10 )

Net realized gain

      (0.01 )*       (0.26 )       (0.07 )                       (0.04 )

Paid-in capital

      (0.22 )*       (0.20 )       (0.42 )       (0.64 )       (0.64 )       (0.58 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions to common shareholders

      (0.30 )       (0.60 )       (0.60 )       (0.72 )       (0.72 )       (0.72 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Fund Share Transactions:

                       

Increase in net asset value from common share transactions

      0.00 (b)       0.02         0.01         0.03         0.03         0.02  

Increase in net asset value from common shares issued in rights offering

              0.11                                  

Increase in net asset value from repurchase of preferred shares

                                      0.00 (b)       0.00 (b)

Offering costs for issuance of rights charged to paid-in capital

      0.00 (b)       (0.02 )                               (0.00 )(b)
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Fund share transactions

      0.00 (b)       0.11         0.01         0.03         0.03         0.02  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net Asset Value Attributable to Common Shareholders, End of Period

    $ 5.72       $ 5.48       $ 5.69       $ 5.33       $ 5.20       $ 5.09  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

NAV total return†

      9.38 %       4.56 %       16.90 %       13.76 %       14.19 %       (31.68 )%
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Market value, end of period

    $ 6.50       $ 6.16       $ 7.80       $ 6.39       $ 9.02       $ 5.90  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Investment total return††

      10.57 %       (14.26 )%       33.67 %       (21.38 )%       70.88 %       (31.81 )%
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

See accompanying notes to financial statements.

 

9


The Gabelli Utility Trust

Financial Highlights (Continued)

 

Selected data for a share of beneficial interest outstanding throughout each period:

 

    Six Months Ended
June 30, 2013
    Year Ended December 31,  
    (Unaudited)     2012     2011     2010     2009     2008  

Ratios to Average Net Assets and Supplemental Data:

           

Net assets including liquidation value of preferred shares, end of period (in 000’s)

    $288,267      $ 277,069      $ 232,436      $ 218,843      $ 212,179      $ 206,724   

Net assets attributable to common shares, end of period (in 000’s)

    $236,935      $ 225,737      $ 181,104      $ 167,511      $ 160,847      $ 154,898   

Ratio of net investment income to average net assets attributable to common shares before preferred share distributions

    3.06 %(c)      2.84     2.72     3.01     3.68     2.68

Ratio of operating expenses to average net assets attributable to common shares before fee waived

    1.55 %(c)      1.75     1.92     1.93     2.04     1.77

Ratio of operating expenses to average net assets attributable to common shares net of advisory fee reduction, if any.

    1.55 %(c)      1.59     1.92     1.91     2.04     1.50

Ratios to Average Net Assets and Supplemental Data (Continued):

           

Ratio of operating expenses to average net assets including liquidation value of preferred shares before fee waived

    1.28 %(c)      1.36     1.48     1.45     1.50     1.39

Ratio of operating expenses to average net assets including liquidation value of preferred shares net of advisory fee reduction, if any

    1.28 %(c)      1.23     1.48     1.44     1.50     1.18

Portfolio turnover rate

    3     3     1     1     4     14

Preferred Shares:

           

5.625% Series A Cumulative Preferred Shares

           

Liquidation value, end of period (in 000’s)

    $  28,832      $ 28,832      $ 28,832      $ 28,832      $ 28,832      $ 29,326   

Total shares outstanding (in 000’s)

    1,153        1,153        1,153        1,153        1,153        1,173   

Liquidation preference per share

    $    25.00      $ 25.00      $ 25.00      $ 25.00      $ 25.00      $ 25.00   

Average market value (d)

    $    25.66      $ 26.00      $ 25.47      $ 25.15      $ 23.86      $ 22.76   

Asset coverage per share

    $  140.39      $ 134.94      $ 113.20      $ 106.58      $ 103.34      $ 99.72   

Series B Auction Rate Cumulative Preferred Shares

           

Liquidation value, end of period (in 000’s)

    $  22,500      $ 22,500      $ 22,500      $ 22,500      $ 22,500      $ 22,500   

Total shares outstanding (in 000’s)

    1        1        1        1        1        1   

Liquidation preference per share

    $  25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Average market value (e)

    $  25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Asset coverage per share

    $140,393      $ 134,939      $ 113,202      $ 106,582      $ 103,336      $ 99,721   

Asset Coverage (f)

    562     540     453     426     413     399

 

Based on net asset value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan. Total return for a period of less than one year is not annualized.

††

Based on market value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan. Total return for a period of less than one year is not annualized.

*

Based on year to date book income. Amounts are subject to change and recharacterization at year end.

(a)

Calculated based upon average common shares outstanding on the record dates throughout the period.

(b)

Amount represents less than $0.005 per share.

(c)

Annualized.

(d)

Based on weekly prices.

(e)

Liquidation value. Since February 2008, the weekly auctions have failed. Holders that have submitted orders have not been able to sell any or all of their shares in the auctions.

(f)

Asset coverage is calculated by combining all series of preferred shares.

 

See accompanying notes to financial statements.

 

10


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited)

 

 

1. Organization. The Gabelli Utility Trust (the “Fund”) operates as a 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 sixty days prior to the implementation of any change in the 80% Policy.

2. Significant Accounting Policies. The Fund’s financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), which may require the use of management estimates and assumptions. 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 sixty 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 the Board. Debt instruments having a maturity greater than sixty 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. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.

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 with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt 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.

 

11


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:

 

   

Level 1 – quoted prices in active markets for identical securities;

   

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and

   

Level 3 – significant unobservable inputs (including the Fund’s determinations as to the fair value of investments).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of June 30, 2013 is as follows:

 

     Valuation Inputs    
     Level 1
Quoted Prices
   Level 2 Other Significant
Observable Inputs
   Level 3 Significant
Unobservable Inputs
  Total Market Value
at 6/30/13

INVESTMENTS IN SECURITIES:

                  

ASSETS (Market Value):

                  

Common Stocks:

                  

ENERGY AND UTILITIES

                  

Energy and Utilities: Alternative Energy

     $ 315,345                 $ 648       $ 315,993  

Energy and Utilities: Merchant Energy

       3,836,800                   0         3,836,800  

Other Industries (a)

       203,602,435                           203,602,435  

COMMUNICATIONS

                  

Telecommunications

       11,633,719                   0         11,633,719  

Other Industries (a)

       24,341,868                           24,341,868  

OTHER

                  

Aerospace

       1,724,768                   18,099         1,742,867  

Other Industries (a)

       3,263,878                           3,263,878  

Total Common Stocks

       248,718,813                   18,747         248,737,560  

Warrants (a)

       1,081,344        $ 78,599                  1,159,943  

Convertible Corporate Bonds (a)

                129,250                  129,250  

U.S. Government Obligations

                35,183,748                  35,183,748  

TOTAL INVESTMENTS IN SECURITIES – ASSETS

     $ 249,800,157        $ 35,391,597        $ 18,747       $ 285,210,501  

OTHER FINANCIAL INSTRUMENTS:

                  

ASSETS (Unrealized Appreciation):*

                  

EQUITY CONTRACT:

                  

Contract for Difference Swap Agreement

              $ 6,423                $ 6,423  

LIABILITIES (Unrealized Depreciation):*

                  

EQUITY CONTRACT:

                  

Contract for Difference Swap Agreement

                       $ (605 )     $ (605 )

TOTAL OTHER FINANCIAL INSTRUMENTS

              $ 6,423        $ (605 )     $ 5,818  

 

(a)

Please refer to the Schedule of Investments (“SOI”) for the industry classifications of these portfolio holdings.

*

Other financial instruments are derivatives reflected in the SOI, such as futures, forwards, and swaps, which are valued at the unrealized appreciation/depreciation of the instrument.

 

12


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

The Fund did not have transfers between Level 1 and Level 2 during the six months ended June 30, 2013. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.

Additional Information to Evaluate Qualitative Information.

General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.

The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.

Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purposes of hedging or protecting its exposure to interest rate movements and movements in the securities markets, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or that, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.

 

13


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded derivatives, while collateral terms are contract specific for derivatives traded over-the-counter. Securities pledged to cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported separately in the Statement of Assets and Liabilities.

The Fund’s policy with respect to offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the master netting agreement does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.

The Fund’s derivative contracts held at June 30, 2013, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.

Swap Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, a set of future cash flows is 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. Depending on the general state of short term interest rates and the returns on the Fund’s portfolio securities at the time an equity contract for difference swap 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.

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 received or paid on swaps, is reported as unrealized gain or loss in the Statement of Operations. A realized gain or loss is recorded upon receipt or payment of a periodic payment or termination of swap agreements.

The Fund has entered into equity contract for difference swap agreements with The Goldman Sachs Group, Inc. Details of the swaps at June 30, 2013 are reflected within the Schedule of Investments and further details are as follows:

 

Notional

Amount

  

Equity Security

Received

  

Interest Rate/

Equity Security Paid

  

Termination

Date

  

Net Unrealized

Appreciation/Depreciation

  

Market Value

Appreciation on:

   One month LIBOR plus 90 bps plus
Market Value Depreciation on:
         

$18,677 (11,900,000 Shares)

   Rolls-Royce Holdings plc, Cl. C    Rolls-Royce Holdings plc, Cl. C        07/09/13        $ (605 )

1,717,510 (100,000 Shares)

   Rolls-Royce Holdings plc    Rolls-Royce Holdings plc        06/27/14          6,423  
               

 

 

 
                $ 5,818  
               

 

 

 

The Fund’s volume of activity in equity contract for difference swap agreements during the six months ended June 30, 2013 had an average monthly notional amount of approximately $1,628,046.

 

14


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

At June 30, 2013, the Fund’s derivative assets and liabilities (by type) are as follows:

 

          Gross Amounts Not Offset in the
Statement of Assets and Liabilities
     Gross Amounts of
Recognized Assets
Presented in the
Statement of Assets
and Liabilities
   Gross Amounts
Available for Offset
in the Statement of
Assets and Liabilities
  

Financial

Instruments

  

Cash

Collateral

Received

   Net Amount

Assets

                        

Equity Contract for Difference
Swap Agreement

     $ 6,423        $ (605 )                        $ 5,818  
          Gross Amounts Not Offset in the
Statement of Assets and Liabilities
     Gross Amounts of
Recognized Liabilities
Presented in the
Statement of Assets
and Liabilities
   Gross Amounts
Available for Offset
in the Statement of
Assets and Liabilities
  

Financial

Instruments

  

Cash

Collateral

Pledged

   Net Amount

Liabilities

                        

Equity Contract for Difference
Swap Agreement

     $ 605        $ (605 )                           

As of June 30, 2013, the value of equity contract for difference swap agreements can be found in the Statement of Assets and Liabilities under Assets, Unrealized appreciation on swap contracts and Liabilities, Unrealized depreciation on swap contracts. For the six months ended June 30, 2013, the effect of equity contract for difference swap agreements can be found in the Statement of Operations under Net Realized and Unrealized Gain/(Loss) on Investments, Swap Contracts, and Foreign Currency, Net realized gain on swap contracts and Net change in unrealized appreciation/depreciation on swap contracts.

Limitations on the Purchase and Sale of Futures Contracts, Certain Options, and Swaps. Subject to the guidelines of the Board, the Fund may engage in “commodity interest” transactions (generally, transactions in futures, certain options, certain currency transactions, and certain types of swaps) only for bona fide hedging or other permissible transactions in accordance with the rules and regulations of the Commodity Futures Trading Commission (“CFTC”). Pursuant to amendments by the CFTC to Rule 4.5 under the Commodity Exchange Act (“CEA”), the Adviser has filed a notice of exemption from registration as a “commodity pool operator” with respect to the Fund. The Fund and the Adviser are therefore not subject to registration or regulation as a commodity pool operator under the CEA. Due to the recent amendments to Rule 4.5 under the CEA, certain trading restrictions are now applicable to the Fund as of January 1, 2013. These trading restrictions permit the Fund to engage in commodity interest transactions that include (i) “bona fide hedging” transactions, as that term is defined and interpreted by the CFTC and its staff, without regard to the percentage of the Fund’s assets committed to margin and options premiums and (ii) non-bona fide hedging transactions, provided that the Fund does not enter into such non-bona fide hedging transactions if, immediately thereafter, either (a) the sum of the amount of initial margin deposits on the Fund’s existing futures positions or swaps positions and option or swaption premiums would exceed 5% of the market value of the Fund’s liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions, or (b) the aggregate net notional value of the Fund’s commodity interest transactions would not exceed 100% of the market value of the Fund’s

 

15


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions. Therefore, in order to claim the Rule 4.5 exemption, the Fund is limited in its ability to invest in commodity futures, options, and certain types of swaps (including securities futures, broad based stock index futures, and financial futures contracts). As a result, in the future, the Fund will be more limited in its ability to use these instruments than in the past, and these limitations may have a negative impact on the ability of the Adviser to manage the Fund, and on the Fund’s performance.

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 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 purchase 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 inability 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 securities of comparable U.S. issuers.

Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.

Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(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 from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.

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 on outstanding balances. This amount, if any, would be included in the Statement of Operations.

 

16


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

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 GAAP. 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 for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.

The Fund declares and pays quarterly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the year. Distributions during the year may be made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. This may restrict the Fund’s ability to pass through to shareholders all of its net realized long term capital gains as a Capital Gain Dividend and may cause such gains to be treated as ordinary income, subject to the maximum federal income tax rate. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s NAV and the financial market environment. The Fund’s distribution policy is subject to modification by the Board at any time.

Distributions to shareholders of the Fund’s 5.625% Series A Cumulative Preferred Shares (“Series A Preferred”) and Series B Auction Market Cumulative Preferred Shares (“Series B Preferred”) are recorded on a daily basis and are determined as described in Note 5.

The tax character of distributions paid during the year ended December 31, 2012 was as follows:

 

     Common      Preferred  

Distributions paid from:

     

Ordinary income

   $ 4,468,482       $ 683,458   

Net long term capital gains

     8,488,654         1,298,347   

Return of capital

     6,240,961           
  

 

 

    

 

 

 

Total distributions paid

   $ 19,198,097       $ 1,981,805   
  

 

 

    

 

 

 

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, 2012, the components of accumulated earnings/losses on a tax basis were as follows:

 

Net unrealized appreciation/depreciation on investments, swap contracts, and
foreign currency translations

   $ 56,350,690   

Other temporary differences*

     (38,930
  

 

 

 

Total.

   $ 56,311,760   
  

 

 

 

 

*

Other temporary differences are primarily due to adjustments on preferred share class distribution payables and mark-to-market and accrual adjustments on investments in swap contracts.

 

17


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

Under the Regulated Investment Company Modernization Act of 2010, the Fund will be permitted to carry forward for an unlimited period capital losses incurred in years beginning after December 22, 2010. As a result of the rule, post-enactment capital losses that are carried forward will retain their character as either short term or long term capital losses rather than being considered all short term as under previous law.

The following summarizes the tax cost of investments and the related net unrealized appreciation at June 30, 2013:

 

     Cost    Gross
Unrealized
Appreciation
   Gross
Unrealized
Depreciation
   Net Unrealized
Appreciation

Investments

     $ 211,367,701        $ 82,252,829        $ (8,410,029 )      $ 73,842,800  

The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the six months ended June 30, 2013, the Fund did not incur any income tax, interest, or penalties. As of June 30, 2013, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. Tax years ended December 31, 2009 through December 31, 2012 remain subject to examination by the Internal Revenue Service and state taxing authorities. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

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 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 Preferred Shares for the 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 Preferred Shares for the period. For the six months ended June 30, 2013, the Fund’s total return on the NAV of the common shares exceeded the stated dividend rate or corresponding swap rate of Series B Preferred Shares. Thus, advisory fees were accrued on these assets.

During the six months ended June 30, 2013, the Fund paid brokerage commissions on security trades of $8,081 to G.research, Inc. (formerly Gabelli & Company, Inc.), an affiliate of the Adviser.

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement. During the six months ended June 30, 2013, the Fund paid or accrued $22,500 to the Adviser in connection with the cost of computing the Fund’s NAV.

 

18


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

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). For the six months ended June 30, 2013, the Fund paid or accrued $26,624 in payroll expenses in the Statement of Operations.

The Fund pays each Trustee who is not considered an affiliated person an annual retainer of $6,000 plus $1,500 for each Board meeting attended. Each Trustee is reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000 per meeting attended, the Audit Committee Chairman receives an annual fee of $3,000, the Nominating Committee Chairman and the Lead Trustee each receive an annual fee of $2,000. A Trustee may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. 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 sales of securities during the six months ended June 30, 2013, other than short term securities and U.S. Government obligations, aggregated $15,530,725 and $8,182,544, 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 six months ended June 30, 2013 and the year ended December 31, 2012, the Fund did not repurchase any common shares of beneficial interest in the open market.

Transactions in shares of beneficial interest were as follows:

 

     Six Months Ended
June 30, 2013
(Unaudited)
     Year Ended
December 31, 2012
 
     Shares      Amount      Shares      Amount  

Net increase from common shares issued in offering

                     8,993,873       $ 53,963,237   

Net increase from common shares issued upon reinvestment of distributions

     240,528       $ 1,537,693         344,013         2,502,183   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase

     240,528       $ 1,537,693         9,337,886       $ 56,465,420   
  

 

 

    

 

 

    

 

 

    

 

 

 

A shelf registration authorizing the offering of an additional $100 million of common or preferred shares was declared effective by the SEC on October 18, 2012.

The Fund’s Declaration of Trust, as amended, authorizes the issuance of an unlimited number of shares of $0.001 par value Preferred Shares. The 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 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 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 Series A and Series B Preferred 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

 

19


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

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.

The Fund may redeem at anytime, in whole or in part, the Series A Preferred at the redemption price. During the six months ended June 30, 2013 and the year ended December 31, 2012, the Fund did not repurchase any shares of Series A Preferred.

The Series B Preferred dividend rate, as set by the auction process that is generally held every seven days is expected to vary with short term interest rates. Since February 2008, the number of Series B Preferred subject to bid orders by potential holders has been less than the number of Series B Preferred subject to sell orders. Therefore, the weekly auctions have failed, and the dividend rate since then has been the maximum rate. Holders that have submitted sell orders have not been able to sell any or all of the Series B Preferred for which they have submitted sell orders. The current maximum rate is 150% of the seven day Telerate/British Bankers Association LIBOR rate on the day of such auction. Existing shareholders may submit an order to hold, bid, or sell such shares on each auction date. Shareholders of the Series B Preferred may also trade their shares in the secondary market. The Fund may redeem at anytime, in whole or in part, the Series B Preferred at the redemption price. There were no redemptions of Series B Preferred during the six months ended June 30, 2013 and the year ended December 31, 2012.

The following table summarizes Cumulative Preferred Stock information:

 

Series    Issue Date    Issued/
Authorized
   Number of Shares
Outstanding at
06/30/2013
   Net Proceeds    2013 Dividend
Rate Range
   Dividend
Rate at
06/30/2013
  Accrued
Dividend at
06/30/2013

A 5.625%

       July 31, 2003          1,200,000          1,153,288        $ 28,895,026      Fixed Rate        5.625 %     $ 22,525  

B Auction Market

       July 31, 2003          1,000          900          24,590,026      1.660% to 1.683%        1.683 %       5,191  

The holders of 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 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.

On November 12, 2012, the record date, the Fund distributed one transferable right for each of the 32,120,972 common shares outstanding. Five rights were required to purchase one additional common share at the subscription price of $6.00 per share. Record date shareholders who exercised their full primary subscription rights were eligible for an over-subscription privilege entitling them to subscribe, subject to certain limitations and a pro-rata allotment, for any additional shares not purchased pursuant to the primary subscription plus such additional amounts as authorized by the Board in accordance with the offering document. On December 21, 2012, the

 

20


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

Fund issued 8,993,873 shares of common stock, receiving net proceeds of $53,463,237, after $500,000 of estimated offering expenses. The NAV per share of the Fund was enhanced by approximately $0.11 per share as a result of the issuance of shares above NAV.

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. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

8. Other Matters. On April 24, 2008, the Adviser entered into a settlement with the SEC to resolve an inquiry regarding prior frequent trading in shares of the GAMCO Global Growth Fund (the “Global Growth Fund”) by one investor who was banned from the Global Growth Fund in August 2002. Under the terms of the settlement, the Adviser, without admitting or denying the SEC’s findings and allegations, paid $16 million (which included a $5 million civil monetary penalty). On the same day, the SEC filed a civil action in the U.S. District Court for the Southern District of New York against the Executive Vice President and Chief Operating Officer of the Adviser, alleging violations of certain federal securities laws arising from the same matter. The officer, who also is an officer of the Global Growth Fund and other funds in the Gabelli/GAMCO complex, including this Fund, denies the allegations and is continuing in his positions with the Adviser and the funds. The settlement by the Adviser did not have, and the resolution of the action against the officer is not expected to have, a material adverse impact on the Adviser or its ability to fulfill its obligations under the Advisory Agreement.

9. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent event requiring recognition or disclosure in the financial statements.

 

21


The Gabelli Utility Trust

Notes to Financial Statements (Unaudited) (Continued)

 

 

Shareholder Meeting – May 13, 2013 – Final Results

The Fund’s Annual Meeting of Shareholders was held on May 13, 2013 at the Greenwich Library in Greenwich, Connecticut. At that meeting, common and preferred shareholders, voting together as a single class, elected Mario J. Gabelli, CFA, Vincent D. Enright, and Kuni Nakamura as Trustees of the Fund. A total of 34,260,552 votes, 34,182,700 votes, and 34,216,450 votes were cast in favor of these Trustees and a total of 869,038 votes, 946,890 votes, and 913,140 votes were withheld for these Trustees, respectively.

Anthony J. Colavita, James P. Conn, Frank J. Fahrenkopf, Jr., John D. Gabelli, Robert J. Morrissey, Anthony R. Pustorino, and Salvatore J. Zizza continue to serve in their capacities as Trustees of the Fund.

We thank you for your participation and appreciate your continued support.

 

22


The Gabelli Utility Trust

Board Consideration and Re-Approval of Investment Advisory Agreements (Unaudited)

 

At its meeting on February 27, 2013, the Board of Trustees (“Board”) of the Fund approved the continuation of the investment advisory agreement with the Adviser for the Fund on the basis of the recommendation by the trustees who are not “interested persons” of the Fund (the “Independent Board Members”). The following paragraphs summarize the material information and factors considered by the Independent Board Members as well as their conclusions relative to such factors.

Nature, Extent, and Quality of Services. The Independent Board Members considered information regarding the portfolio managers, the depth of the analyst pool available to the Adviser and the portfolio managers, the scope of administrative, shareholder, and other services supervised or provided by the Adviser and the absence of significant service problems reported to the Board. The Independent Board Members noted the experience, length of service, and reputation of the portfolio manager.

Investment Performance. The Independent Board Members considered one year, three year, five year, and ten year investment performance for the Fund as compared with relevant equity indices and the performance of other sector equity closed-end and open-end funds prepared by Lipper, including other funds focused on the utility industry. The Independent Board Members noted that the Fund’s performance was above the median of funds in its peer group for the prior three, five, and ten year periods, but below the median for the one year period. The Independent Board Members recognized that many of the Lipper peers were not utility funds so that performance comparisons were of limited use. The Independent Board Members also noted that the Fund had (i) outperformed the Standard & Poor’s Utility Index over the one year and five year periods and underperformed the Standard & Poor’s Utility Index over the ten year period, and (ii) outperformed the Lipper Utility Fund Average over the five year period and underperformed the Lipper Utility Fund Average over the one year and ten year periods.

Profitability. The Independent Board Members reviewed summary data regarding the profitability of the Fund to the Adviser both with an administrative overhead charge and without such a charge.

Economies of Scale. The Independent Board Members discussed the major elements of the Adviser’s cost structure and the relationship of those elements to potential economies of scale. The Independent Board Members noted that the Fund was a closed-end fund and its ability to realize any economies of scale through growth or appreciation was limited.

Sharing of Economies of Scale. The Independent Board Members noted that the investment management fee schedule for the Fund does not take into account any potential sharing of economies of scale through breakpoints.

Service and Cost Comparisons. The Independent Board Members compared the investment management fee, other expenses, and total expenses of the Fund with similar expenses of the peer group of sector equity closed-end funds and noted that the Adviser’s management fee includes substantially all administrative services for the Fund as well as investment advisory services. The Independent Board Members noted that within this group, the Fund’s management fee and total expense ratio were above average, recognizing that, unlike the Fund, some of the peer funds were not leveraged and did not incur the expenses associated with leverage. The Independent Board Members also noted that the management fee structure was the same as that in effect for most of the Gabelli funds, except for the presence of leverage and fees chargeable as assets attributable to leverage in certain circumstances.

 

23


The Gabelli Utility Trust

Board Consideration and Re-Approval of Investment Advisory Agreements (Unaudited) (Continued)

 

Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced portfolio management services and good ancillary services, and that the performance record had been above average during certain reporting periods in comparison with peers, and the Fund had performed satisfactorily in relation to a utility index and a narrowly based utility fund average. The Independent Board Members concluded that the profitability to the Adviser of managing the Fund was reasonable and that, in part due to the Fund’s structure as a closed-end fund, economies of scale were not a significant factor in their consideration. The Independent Board Members concluded that potential “fall out” benefits that the Adviser and its affiliates may receive, such as brokerage commissions paid to an affiliated broker, greater name recognition, or increased ability to obtain research services, appear to be reasonable and may in some cases benefit the Fund. On the basis of the foregoing and without assigning particular weight to any single conclusion, the Independent Board Members determined to recommend continuation of the Advisory Agreement to the full Board. As a part of its decision making process, the Independent Board Members noted that the Adviser has managed the Fund since its inception, and the Independent Board Members believe that a long term relationship with a capable, conscientious adviser is in the best interests of the Fund. The Independent Board Members considered, generally, that shareholders invested in the Fund knowing that the Adviser managed the Fund and knowing its investment management fee schedule. As such, the Independent Board Members considered, in particular, whether the Adviser managed the Fund in accordance with its investment objectives and policies as disclosed to shareholders. The Independent Board Members concluded that the Fund was managed by the Adviser consistent with its investment objectives and policies.

 

24


AUTOMATIC DIVIDEND REINVESTMENT

AND VOLUNTARY CASH PURCHASE PLANS

Enrollment in the Plan

It is the policy of The Gabelli Utility Trust 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 shares of common stock 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 stock certificates to Computershare Trust Company, N.A. (“Computershare”) to be held in their dividend reinvestment account. Registered shareholders wishing to receive their distribution in cash must submit this request in writing to:

The Gabelli Utility Trust

c/o Computershare

P.O. Box 43010

Providence, RI 02940-3010

Shareholders requesting this cash election must include the shareholder’s name and address as they appear on the share certificate. Shareholders with additional questions regarding the Plan or requesting a copy of the terms of the Plan may contact Computershare at (800) 336-6983.

If your shares are held in the name of a broker, bank, or nominee, you should contact such institution. If such institution is not participating in the Plan, your account will be credited with a cash dividend. In order to participate in the Plan through such institution, it may be necessary for you to have your shares taken out of “street name” and re-registered in your own name. Once registered in your own name, your dividends will be automatically reinvested. Certain brokers participate in the Plan. Shareholders holding shares in “street name” at participating institutions will have dividends automatically reinvested. Shareholders wishing a cash dividend at such institution must contact their broker to make this change.

The number of shares of common stock distributed to participants in the Plan in lieu of cash dividends is determined in the following manner. Under the Plan, whenever the market price of the Fund’s common stock is equal to or exceeds net asset value at the time shares are valued for purposes of determining the number of shares equivalent to the cash dividends or capital gains distribution, participants are issued shares of common stock valued at the greater of (i) the net asset value as most recently determined or (ii) 95% of the then current market price of the Fund’s common stock. 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 stock at the time of valuation exceeds the market price of the common stock, participants will receive 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 stock 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 stock exceeds the then current net asset value.

The automatic reinvestment of dividends and capital gains distributions will not relieve participants of any income tax which may be payable on such distributions. A participant in the Plan will be treated for federal income tax purposes as having received, on a dividend payment date, a dividend or distribution in an amount equal to the cash the participant could have received instead of shares.

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 shares at the then current market price. Shareholders may send an amount from $250 to $10,000. Computershare will use these funds to purchase shares in the open market on or about the 1st and 15th of each month. Computershare will charge each shareholder who participates $0.75, plus a pro rata share of the brokerage commissions. Brokerage charges for such purchases are expected to be less than the usual brokerage charge for such transactions. It is suggested that any voluntary cash payments be sent to Computershare, P.O. Box 43010, Providence, RI 02940–3010 such that Computershare receives such payments approximately 10 days before the 1st and 15th of the month. Funds not received at least five days before the investment date shall be held for investment until the next purchase date. A payment may be withdrawn without charge if notice is received by Computershare at least 48 hours before such payment is to be invested.

Shareholders wishing to liquidate shares held at Computershare must do so in writing or by telephone. Please submit your request to the above mentioned address or telephone number. Include in your request your name, address, and account number. The cost to liquidate shares is $2.50 per transaction as well as the brokerage commission incurred. Brokerage charges are expected to be less than the usual brokerage charge for such transactions.

For more information regarding the Dividend Reinvestment Plan and Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by writing directly to the Fund.

The Fund reserves the right to amend or terminate the Plan as applied to any voluntary cash payments made and any dividend or distribution paid subsequent to written notice of the change sent to the members of the Plan at least 90 days before the record date for such dividend or distribution. The Plan also may be amended or terminated by Computershare on at least 90 days written notice to participants in the Plan.

 

25


THE GABELLI UTILITY TRUST

One Corporate Center

Rye, NY 10580-1422

Investment Objective:

The Gabelli Utility Trust is a diversified, closed-end management investment company whose primary objectives are long term growth of capital and income. The Fund will invest in companies that provide products, services, or equipment for the generation or distribution of electricity, gas, and water. Additionally, the Fund will invest in companies in telecommunications services or infrastructure operations.

Stock Exchange Listing

 

    

Common

     Series A
Preferred
 

NYSE–Symbol:

     GUT         GUT PrA   

Shares Outstanding:

     41,424,337         1,153,288   

 

We have separated the portfolio manager’s commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio manager’s commentary is unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com

The Net Asset Value per share appears in the Publicly Traded Funds column, under 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.

The NASDAQ symbol for the Net Asset Value is “XGUTX.”

 

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 its preferred shares in the open market when the preferred shares are trading at a discount to the liquidation value.


THE GABELLI UTILITY TRUST

One Corporate Center

Rye, NY 10580-1422

Portfolio Manager Biography

Mario J. Gabelli, CFA, is Chairman and Chief Executive Officer of GAMCO Investors, Inc. that he founded in 1976 and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and an Honorary Doctorate Degree from Roger Williams University in Rhode Island.


 

THE GABELLI UTILITY TRUST

One Corporate Center

Rye, NY 10580-1422

 

t

800-GABELLI (800-422-3554)

 

f

914-921-5118

 

e

info@gabelli.com

 

  

GABELLI.com

 

 

 

TRUSTEES

 

Mario J. Gabelli, CFA

Chairman &

Chief Executive Officer,

GAMCO Investors, Inc.

 

Anthony J. Colavita

President,

Anthony J. Colavita, P.C.

 

James P. Conn

Former Managing Director &

Chief Investment Officer,

Financial Security Assurance

Holdings Ltd.

 

Vincent D. Enright

Former Senior Vice President & Chief Financial Officer,

KeySpan Corp.

 

Frank J. Fahrenkopf, Jr.

Former President &

Chief Executive Officer,

American Gaming Association

 

John D. Gabelli

Senior Vice President,

G.research, Inc.

 

Robert J. Morrissey

Partner,

Morrissey, Hawkins & Lynch

 

Kuni Nakamura

President,

Advanced Polymer, Inc.

 

Anthony R. Pustorino

Certified Public Accountant,

Professor Emeritus,

Pace University

 

Salvatore J. Zizza

Chairman,

Zizza & Associates Corp.

  

OFFICERS

 

Bruce N. Alpert

President &

Acting Chief Compliance Officer

 

Agnes Mullady

Treasurer & Secretary

 

David I. Schachter

Vice President & Ombudsman

 

INVESTMENT ADVISER

 

Gabelli Funds, LLC

One Corporate Center

Rye, New York 10580-1422

 

CUSTODIAN

 

The Bank of New York Mellon

 

COUNSEL

 

Willkie Farr & Gallagher LLP

 

TRANSFER AGENT AND REGISTRAR

 

Computershare Trust Company, N.A.

 

  

 

GUT Q2/2013

LOGO

 


Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed registrants.

Not applicable.

Item 6. Investments.

 

(a) 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.

 

(b) Not applicable.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.


There has been no change, as of the date of this filing, in any of the portfolio managers identified in response to paragraph (a)(1) of this Item in the registrant’s most recently filed annual report on Form N-CSR.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

REGISTRANT PURCHASES OF EQUITY SECURITIES

 

Period  

 

 

(a) Total Number of
Shares (or Units)
Purchased

 

 

(b) Average Price Paid per  

Share (or Unit)

 

 

(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs

 

 

(d) Maximum Number (or

Approximate Dollar Value) of

Shares (or Units) that May

Yet Be Purchased Under the

Plans or Programs

 

Month #1  
01/01/13
  Common – N/A   Common – N/A   Common – N/A   Common – 41,224,944
through
01/31/13

 

  Preferred Series A – N/A     Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – 1,153,288
Month #2
02/01/13
  Common – N/A   Common – N/A   Common – N/A   Common – 41,263,260
through
02/28/13

 

  Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – 1,153,288
Month #3
03/01/13
  Common – N/A   Common – N/A   Common – N/A   Common – 41,300,930
through
03/31/13

 

  Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – 1,153,288
Month #4
04/01/13
  Common – N/A   Common – N/A   Common – N/A   Common – 41,341,974
through
04/30/13

 

  Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – 1,153,288
Month #5
05/01/13
  Common – N/A   Common – N/A   Common – N/A   Common – 41,383,664
through
05/31/13

 

  Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – 1,153,288
Month #6
06/01/13
  Common – N/A   Common – N/A   Common – N/A   Common – 41,424,310
through
06/30/13

 

  Preferred Series A – N/A   Preferred Series A – N/A   Preferred Series A – N/A     Preferred Series A – 1,153,288
Total   Common – N/A   Common – N/A   Common – N/A   N/A
         
   

Preferred Series A – N/A

 

  Preferred Series A – N/A   Preferred Series A – N/A    


Footnote columns (c) and (d) of the table, by disclosing the following information in the aggregate for all plans or programs publicly announced:

 

a. The date each plan or program was announced – The notice of the potential repurchase of common and preferred shares occurs quarterly in the Fund’s quarterly report in accordance with Section 23(c) of the Investment Company Act of 1940, as amended.

 

b. The dollar amount (or share or unit amount) approved – Any or all common shares outstanding may be repurchased when the Fund’s common shares are trading at a discount of 10% or more from the net asset value of the shares.

Any or all preferred shares outstanding may be repurchased when the Fund’s preferred shares are trading at a discount to the liquidation value of $25.00.

 

c. The expiration date (if any) of each plan or program – The Fund’s repurchase plans are ongoing.

 

d. Each plan or program that has expired during the period covered by the table – The Fund’s repurchase plans are ongoing.

 

e. Each plan or program the registrant has determined to terminate prior to expiration, or under which the registrant does not intend to make further purchases. – The Fund’s repurchase plans are ongoing.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 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) Not applicable.

 

  (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

 

  (a)(3) Not applicable.

 

  (b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

 

      The Gabelli Utility Trust

By (Signature and Title)*

 

    /s/ Bruce N. Alpert

 

         Bruce N. Alpert, Principal Executive Officer

Date

 

    9/6/13

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

 

    9/6/13

By (Signature and Title)*

 

    /s/ Agnes Mullady

 

 Agnes Mullady, Principal Financial Officer and Treasurer

Date

 

    9/6/13

* Print the name and title of each signing officer under his or her signature.