Gabelli Utility Trust

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

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:  March 31, 2018

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q 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 the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


Item 1. Schedule of Investments.

The Schedule(s) of Investments is attached herewith.


The Gabelli Utility Trust

First Quarter Report — March 31, 2018

To Our Shareholders,

For the quarter ended March 31, 2018, the net asset value (“NAV”) total return of The Gabelli Utility Trust (the “Fund”) was (6.0)%, compared with a total return of (3.3)% for the Standard & Poor’s (“S&P”) 500 Utilities Index. The total return for the Fund’s publicly traded shares was (7.8)%. The Fund’s NAV per share was $4.87, while the price of the publicly traded shares closed at $6.23 on the New York Stock Exchange (“NYSE”). See below for additional performance information.

Enclosed is the schedule of investments as of March 31, 2018.

Comparative Results

 

 

Average Annual Returns through March 31, 2018 (a) (Unaudited)

    Since
Inception
 
    Quarter     1 Year     5 Year     10 Year     15 Year     (07/09/99)  

Gabelli Utility Trust

           

NAV Total Return (b)

    (5.98)     (1.50)%       6.98%       8.33%       10.12%       8.60%  

Investment Total Return (c)

    (7.76)       3.97          8.29          6.36          7.10          8.49     

S&P 500 Utilities Index

    (3.30)       1.89          9.16          7.07          11.14          6.44     

Lipper Utility Fund Average

    (2.57)       2.64          7.13          6.46          10.56          6.09     

S&P 500 Index

    (0.76)       13.99          13.31          9.49          10.10          5.44     

 

  (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 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.

 

 


The Gabelli Utility Trust

Schedule of Investments — March 31, 2018 (Unaudited)

 

 

Shares

        

Market

Value

 
  COMMON STOCKS — 86.6%   
  ENERGY AND UTILITIES — 69.1%   
  Alternative Energy — 0.5%   
  20,000     NextEra Energy Partners LP    $ 799,800  
  11,445     Ormat Technologies Inc., New York      645,269  
  1,555     Ormat Technologies Inc., Tel Aviv      88,853  
    

 

 

 
       1,533,922  
    

 

 

 
  Electric Integrated — 42.4%   
  22,000     ALLETE Inc.      1,589,500  
  125,000     Alliant Energy Corp.      5,107,500  
  17,000     Ameren Corp.      962,710  
  72,000     American Electric Power Co. Inc.      4,938,480  
  40,000     Avangrid Inc.      2,044,800  
  10,000     Avista Corp.      512,500  
  42,000     Black Hills Corp.      2,280,600  
  91,000     CMS Energy Corp.      4,121,390  
  23,000     Dominion Energy Inc.      1,550,890  
  16,500     DTE Energy Co.      1,722,600  
  68,000     Duke Energy Corp.      5,267,960  
  70,000     Edison International      4,456,200  
  186,000     El Paso Electric Co.      9,486,000  
  1,000     Emera Inc.      31,637  
  3,000     Entergy Corp.      236,340  
  165,000     Eversource Energy      9,721,800  
  67,000     FirstEnergy Corp.      2,278,670  
  120,000     Great Plains Energy Inc.      3,814,800  
  62,000     Hawaiian Electric Industries Inc.      2,131,560  
  85,000     MGE Energy Inc.      4,768,500  
  56,500     NextEra Energy Inc.      9,228,145  
  48,000     NiSource Inc.      1,147,680  
  87,000     NorthWestern Corp.      4,680,600  
  185,000     OGE Energy Corp.      6,062,450  
  48,000     Otter Tail Corp.      2,080,800  
  48,000     PG&E Corp.      2,108,640  
  102,000     PNM Resources Inc.      3,901,500  
  38,000     Public Service Enterprise Group Inc.      1,909,120  
  48,000     SCANA Corp.      1,802,400  
  17,000     Unitil Corp.      788,970  
  42,000     Vectren Corp.      2,684,640  
    140,000     WEC Energy Group Inc.      8,778,000  
  276,000     Westar Energy Inc.      14,514,840  
  160,000     Xcel Energy Inc.      7,276,800  
    

 

 

 
         133,989,022  
    

 

 

 
  Electric Transmission and Distribution — 2.4%  
  38,000     Consolidated Edison Inc.      2,961,720  
  120,000     Exelon Corp.      4,681,200  
    

 

 

 
       7,642,920  
    

 

 

 

Shares

        

Market

Value

 
  Global Utilities — 3.0%       
  8,000     Chubu Electric Power Co. Inc.    $ 114,055  
  133,000     Electric Power Development Co. Ltd.      3,399,840  
  30,000     Endesa SA      660,199  
  300,000     Enel SpA      1,834,603  
  494,900     Hera SpA      1,811,018  
  15,000     Hokkaido Electric Power Co. Inc.      98,962  
  12,000     Hokuriku Electric Power Co.†.      104,206  
  3,000     Huaneng Power International Inc., ADR      80,550  
  41,000     Korea Electric Power Corp.,, ADR†      630,990  
  15,000     Kyushu Electric Power Co. Inc.      179,879  
  8,000     Shikoku Electric Power Co. Inc.      95,409  
  8,000     The Chugoku Electric Power Co. Inc.      97,138  
  20,000     The Kansai Electric Power Co. Inc.      259,198  
  13,000     Tohoku Electric Power Co. Inc.      175,321  
    

 

 

 
       9,541,368  
    

 

 

 
  Merchant Energy — 1.2%   
  300,000     GenOn Energy Inc., Escrow†(a)      0  
  323,500     The AES Corp.(b)      3,678,195  
    

 

 

 
       3,678,195  
    

 

 

 
  Natural Gas Integrated — 5.7%   
  4,000     Devon Energy Corp.      127,160  
  90,000     Kinder Morgan Inc.      1,355,400  
  136,000     National Fuel Gas Co.      6,997,200  
    165,000     ONEOK Inc.      9,391,800  
    

 

 

 
         17,871,560  
    

 

 

 
  Natural Gas Utilities — 5.8%   
  25,000     Atmos Energy Corp.      2,106,000  
  25,000     Chesapeake Utilities Corp.      1,758,750  
  30,262     Corning Natural Gas Holding Corp.      532,460  
  15,500     Engie      258,521  
  68,066     National Grid plc, ADR      3,840,964  
  42,000     ONE Gas Inc.      2,772,840  
  18,000     RGC Resources Inc.      457,200  
  93,000     Southwest Gas Holdings Inc.      6,289,590  
  2,000     Spire Inc.      144,600  
  1,000     WGL Holdings Inc.      83,650  
    

 

 

 
       18,244,575  
    

 

 

 
  Natural Resources — 1.1%   
  6,500     Anadarko Petroleum Corp.      392,665  
  3,000     Apache Corp.      115,440  
  25,000     California Resources Corp.†      428,750  
  55,000     Cameco Corp.      499,950  
  25,000     CNX Resources Corp.†      385,750  
  32,000     Compania de Minas Buenaventura SAA, ADR      487,360  
  3,125     CONSOL Energy Inc.†      90,531  
  10,000     Exxon Mobil Corp.      746,100  
  3,000     Hess Corp.      151,860  
 

 

See accompanying notes to schedule of investments.

 

2


The Gabelli Utility Trust

Schedule of Investments (Continued) — March 31, 2018 (Unaudited)

 

 

Shares

        

Market

Value

 
  COMMON STOCKS (Continued)   
  ENERGY AND UTILITIES (Continued)   
  Natural Resources (Continued)   
  3,000     Royal Dutch Shell plc, Cl. A, ADR    $ 191,430  
    

 

 

 
       3,489,836  
    

 

 

 
  Services — 1.2%   
  20,000     ABB Ltd., ADR      474,800  
  102,336     Enbridge Inc.      3,220,514  
  65,000     Weatherford International plc†      148,850  
    

 

 

 
       3,844,164  
    

 

 

 
  Water — 4.6%   
  27,000     American States Water Co.      1,432,620  
  25,000     American Water Works Co. Inc.      2,053,250  
  27,291     Aqua America Inc.      929,531  
  24,000     Artesian Resources Corp., Cl. A      875,520  
  40,000     California Water Service Group      1,490,000  
  7,000     Connecticut Water Service Inc.      423,710  
  48,000     Middlesex Water Co.      1,761,600  
  100,000     Severn Trent plc      2,587,126  
  50,000     SJW Group      2,635,500  
  9,000     The York Water Co.      279,000  
    

 

 

 
       14,467,857  
    

 

 

 
  Diversified Industrial — 0.5%   
  2,000     Alstom SA      90,094  
  2,000     AZZ Inc.      87,400  
  3,800     Bouygues SA      190,348  
  90,000     General Electric Co.      1,213,200  
    

 

 

 
       1,581,042  
    

 

 

 
  Environmental Services — 0.2%   
  3,000     Suez      43,447  
  30,000     Veolia Environnement SA      710,401  
    

 

 

 
       753,848  
    

 

 

 
  Equipment and Supplies — 0.1%   
  2,500     Capstone Turbine Corp.†      2,863  
  12,000     Mueller Industries Inc.      313,920  
    

 

 

 
       316,783  
    

 

 

 
  Independent Power Producers and Energy Traders — 0.4%  
  40,000     NRG Energy Inc.      1,221,200  
    

 

 

 
  TOTAL ENERGY AND UTILITIES        218,176,292  
    

 

 

 
  COMMUNICATIONS — 14.9%   
  Cable and Satellite — 6.6%   
  4,200     Charter Communications Inc., Cl. A†      1,307,124  
  20,000     Cogeco Inc.      1,063,220  
  62,000     DISH Network Corp., Cl. A†      2,349,180  
  10,000     EchoStar Corp., Cl. A†      527,700  
  100,000     ITV plc      202,242  
  42,421     Liberty Global plc, Cl. A†      1,328,202  

Shares

        

Market

Value

 
     108,771     Liberty Global plc, Cl. C†        $ 3,309,902  
  6,417     Liberty Latin America Ltd., Cl. A†      124,811  
  21,000     Liberty Latin America Ltd., Cl. C†      400,890  
  8,000     Rogers Communications Inc., Cl. B      357,440  
  170,000     Sky plc      3,094,660  
  100,000     Telenet Group Holding NV†      6,675,198  
    

 

 

 
       20,740,569  
    

 

 

 
  Communications Equipment — 0.3%   
  20,000     Furukawa Electric Co. Ltd.      1,056,341  
    

 

 

 
  Telecommunications — 4.8%   
  75,000     AT&T Inc.      2,673,750  
  1,280     BCE Inc., New York      55,091  
  67     BCE Inc., Toronto      2,883  
  20,000     BT Group plc, ADR      323,200  
  30,000     CenturyLink Inc.      492,900  
  56,000     Cincinnati Bell Inc.†      775,600  
  5,000     Cogeco Communications Inc.      273,761  
  43,000     Deutsche Telekom AG, ADR      704,770  
  59,000     Global Telecom Holding SAE†      21,987  
  200    

Hutchison Telecommunications Hong Kong Holdings Ltd.

     70  
  6,038     Internap Corp.†      66,418  
  37,000     Nippon Telegraph & Telephone Corp.      1,704,563  
  1,000     Orange Belgium SA      20,450  
  2,000     Orange SA, ADR      34,160  
  11,800    

Orascom Telecom Media and Technology Holding SAE, GDR

     2,360  
  30,000     Pharol SGPS SA†      8,416  
  3,000     Proximus SA      93,133  
  2,000     PT Indosat Tbk      690  
  80,000     Sistema PJSC FC, GDR      323,200  
  1,350     Tele2 AB, Cl. B      16,192  
  10,000     Telefonica Deutschland Holding AG      46,954  
  85,000     Telekom Austria AG      809,514  
  1,200     Telesites SAB de CV†      942  
  20,000     T-Mobile US Inc.†      1,220,800  
  110,000     VEON Ltd., ADR      290,400  
  105,000     Verizon Communications Inc.      5,021,100  
    

 

 

 
         14,983,304  
    

 

 

 
  Wireless Communications — 3.2%   
  2,500     America Movil SAB de CV, Cl. L, ADR      47,725  
  2,000     China Mobile Ltd., ADR      91,500  
  2,000     China Unicom Hong Kong Ltd., ADR†      25,660  
  171     M1 Ltd.      227  
  42,000     Millicom International Cellular SA, SDR      2,864,620  
  1,154     Mobile Telesystems PJSC      5,908  
  11,250     Mobile TeleSystems PJSC, ADR      128,137  
  100,000     NTT DoCoMo Inc.      2,527,607  
  2,000     SK Telecom Co. Ltd., ADR      48,340  
  400    

SmarTone Telecommunications Holdings Ltd.

     426  
 

 

See accompanying notes to schedule of investments.

 

3


The Gabelli Utility Trust

Schedule of Investments (Continued) — March 31, 2018 (Unaudited)

 

 

Shares

        

Market

Value

 
  COMMON STOCKS (Continued)   
  COMMUNICATIONS (Continued)   
  Wireless Communications (Continued)  
  30,000     Turkcell Iletisim Hizmetleri A/S, ADR    $ 286,800  
  40,000     United States Cellular Corp.†      1,607,600  
  90,000     Vodafone Group plc, ADR.      2,503,800  
    

 

 

 
       10,138,350  
    

 

 

 
  TOTAL COMMUNICATIONS      46,918,564  
    

 

 

 
  OTHER — 2.6%   
  Aerospace — 0.4%   
  100,000     Rolls-Royce Holdings plc      1,222,852  
    

 

 

 
  Agriculture — 0.0%   
  3,000     Cadiz Inc.†      40,500  
    

 

 

 
  Entertainment — 0.4%   
  45,000     Vivendi SA      1,162,776  
    

 

 

 
  Financial Services — 1.2%   
  22,000     Kinnevik AB, Cl. A      800,977  
  80,000     Kinnevik AB, Cl. B      2,878,153  
    

 

 

 
       3,679,130  
    

 

 

 
  Machinery — 0.1%   
  15,000     CNH Industrial NV      186,000  
    

 

 

 
  Transportation — 0.5%   
  25,000     GATX Corp      1,712,250  
    

 

 

 
  TOTAL OTHER      8,003,508  
    

 

 

 
  TOTAL COMMON STOCKS        273,098,364  
    

 

 

 
  CONVERTIBLE PREFERRED STOCKS — 0.0%  
  ENERGY AND UTILITIES — 0.0%   
  Natural Gas Utilities — 0.0%   
  4,203    

Corning Natural Gas Holding Corp., 4.800%, Ser. B

     92,004  
    

 

 

 
  WARRANTS — 0.0%   
  COMMUNICATIONS — 0.0%   
  Telecommunications — 0.0%   
  16,000     Bharti Airtel Ltd., expire 11/30/20†(c)      97,920  
    

 

 

 

Principal

Amount

        

Market

Value

 
  CORPORATE BONDS — 0.0%   
  Equipment and Supplies — 0.0%   
$ 30,000    

Mueller Industries Inc.,
6.000%, 03/01/27

   $ 30,113  
    

 

 

 
  U.S. GOVERNMENT OBLIGATIONS — 13.4%  
  42,345,000     U.S. Treasury Bills, 1.228% to 1.742%††, 04/12/18 to 07/12/18(d)      42,270,014  
    

 

 

 
 

TOTAL INVESTMENTS — 100.0%
(Cost $262,110,330)

   $ 315,588,415  
    

 

 

 

 

(a)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(b)

Securities, or a portion thereof, with a value of $1,421,250 are reserved and/or pledged with the custodian for current or potential holdings of swaps.

(c)

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2018, the market value of the Rule 144A security amounted to $97,920 or 0.03% of total investments.

(d)

At March 31, 2018, $500,000 of the principal amount was pledged as collateral for 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

SDR

Swedish Depositary Receipt

 

 

As of March 31, 2018, equity contract for difference swap agreements outstanding were as follows:

 

Market Value

Appreciation Received

 

One Month LIBOR
Plus 90 bps

plus Market Value
Depreciation Paid

    Counterparty     Payment
Frequency
    Termination
Date
    Notional
Amount
    Value     Upfront
Payments/
Receipts
    Unrealized
Depreciation

Rolls-Royce Holdings plc

   

Rolls-Royce Holdings

plc

 

 

   

The Goldman Sachs

Group, Inc.

 

 

    1 month       06/28/2018     $ 1,267,255     $ (45,008     —         $(45,008)  
               

 

                  $(45,008)  
               

 

 

See accompanying notes to schedule of investments.

 

4


The Gabelli Utility Trust

Notes to Schedule of Investments (Unaudited)

 

As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its schedule of investments. 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 schedule of investments.

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”). Investments in open-end investment companies are valued at each underlying Fund’s NAV per share as of the report date.

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 obligations 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, 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. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC futures and options on futures for which market quotations are readily available will be valued by quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.

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.

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

 

5


The Gabelli Utility Trust

Notes to Schedule of Investments (Unaudited) (Continued)

 

 

   

Level 3 — significant unobservable inputs (including the Board’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 March 31, 2018 is as follows:

 

    Valuation Inputs        
    Level 1
Quoted Prices
    Level 2 Other Significant
Observable Inputs
    Level 3 Significant
Unobservable Inputs
    Total Market Value
at 3/31/18
 

INVESTMENTS IN SECURITIES:

       

ASSETS (Market Value):

       

Common Stocks:

       

ENERGY AND UTILITIES

       

Merchant Energy

  $ 3,678,195             $  0       $    3,678,195       

Natural Gas Utilities

    17,712,115       $      532,460         —       18,244,575       

Other Industries (a)

    196,253,522               —       196,253,522       

COMMUNICATIONS

       

Other Industries (a)

    46,918,564               —       46,918,564       

OTHER

       

Other Industries (a)

    8,003,508               —       8,003,508       

Total Common Stocks

    272,565,904       532,460          0       273,098,364       

Convertible Preferred Stocks (a)

          92,004         —       92,004       

Warrants (a)

          97,920         —       97,920       

Corporate Bonds (a)

          30,113         —       30,113       

U.S. Government Obligations

          42,270,014         —       42,270,014       

TOTAL INVESTMENTS IN SECURITIES – ASSETS

  $ 272,565,904       $43,022,511       $  0       $315,588,415       

OTHER FINANCIAL INSTRUMENTS:*

       

LIABILITIES (Unrealized Depreciation):

       

EQUITY CONTRACT:

       

Contract for Difference Swap Agreements

          $     (45,008       —       $       (45,008)      

TOTAL OTHER FINANCIAL INSTRUMENTS

          $     (45,008       —       $       (45,008)      

 

(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 options, futures, forwards, and swaps, which may be valued at the unrealized appreciation/depreciation of the instrument.

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 are 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.

 

6


The Gabelli Utility Trust

Notes to Schedule of Investments (Unaudited) (Continued)

 

 

Fair Valuation. Fair valued securities may be common or preferred equities, warrants, options, rights, or 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. When fair valuing a security, factors to consider include 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 may include backtesting 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 derivative financial instruments for the purposes of increasing the income of the Fund, 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, 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.

The Fund’s derivative contracts held at March 31, 2018, 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. For the swaps the fund held at March 31, 2018, refer to the Schedule of Investments.

 

7


The Gabelli Utility Trust

Notes to Schedule of Investments (Unaudited) (Continued)

 

 

The following table summarizes the net unrealized depreciation of derivatives held at March 31, 2018 by primary risk exposure:

 

     Net Unrealized

Liability Derivatives:

 

  

Depreciation

 

    Equity Contract for Difference Swap Agreements

   $(45,008)
  

 

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. In addition, certain trading restrictions are now applicable to the Fund which 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 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.

Investments in Other Investment Companies. The Fund may invest, from time to time, in shares of other investment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the “Acquired Funds”) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. At March 31, 2018, the Fund had no periodic expenses charged by Acquired Funds.

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

 

8


The Gabelli Utility Trust

Notes to Schedule of Investments (Unaudited) (Continued)

 

 

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.

Restricted Securities. The Fund is not subject to an independent limitation on the amount it may invest in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. At March 31, 2018, the Fund held no restricted securities.

Tax Information. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.

 

9


THE GABELLI UTILITY TRUST

One Corporate Center

Rye, NY 10580-1422

Portfolio Manager Biography

Mario J. Gabelli, CFA, is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is also Executive Chairman of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.

 

 

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

 

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.

Executive Chairman,

Associated Capital Group, 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

 

Michael J. Ferrantino

Chief Executive Officer,

InterEx, Inc.

 

John D. Gabelli

Senior Vice President,

G.research, LLC

 

Michael J. Melarkey

Of Counsel

McDonald Carano Wilson LLP

 

Robert J. Morrissey

Partner,

Morrissey, Hawkins & Lynch

 

 

Kuni Nakamura

President,

Advanced Polymer, Inc.

 

Salvatore J. Zizza

Chairman,

Zizza & Associates Corp.

 

OFFICERS

 

Bruce N. Alpert

President

 

John C. Ball

Treasurer

 

Agnes Mullady

Vice President

 

Andrea R. Mango

Secretary & Vice President

 

Richard J. Walz

Chief Compliance Officer

 

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 Q1/2018     

LOGO

 


Item 2. Controls and Procedures.

 

  (a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

  (b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 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 5/24/18                                                                                                                                          

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 5/24/18                                                                                                                                          

By (Signature and Title)*    /s/ John C. Ball                                                                                        

John C. Ball, Principal Financial Officer and Treasurer

Date 5/24/18                                                                                                                                          

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